Condonation of delay in GST appeal - Opportunity to explain delay - Rejection of a GST appeal filed within the condonable period without considering the registered person's explanation for delay - HELD THAT: - The appeal was rejected because the petitioner did not respond to the notice seeking an explanation for delayed filing. As no material was produced to discredit the stated circumstances, the Court found sufficient cause to permit the petitioner an opportunity to justify the delay beyond the period stipulated for filing the appeal. [Paras 4]

The rejection order was set aside and the petitioner was directed to submit its response before the Appellate Authority, which shall consider the explanation after affording a hearing.

Final Conclusion: The writ petition was disposed of by restoring the opportunity to explain the delay in filing the GST appeal and requiring the Appellate Authority to consider that explanation after hearing the petitioner.

Cancellation of GST registration for non-filing of returns - Restoration of GST registration on furnishing pending returns and payment of dues

Restoration of GST registration cancelled for continuous non-filing of returns where the registered person undertakes to furnish all pending returns and discharge tax dues with applicable interest and late fee - HELD THAT: - The proviso to Rule 22(4) permits the proper officer to drop cancellation proceedings and issue the prescribed order where, instead of replying to the notice issued for contravention relating to non-furnishing of returns, the registered person furnishes all pending returns and makes full payment of tax dues, interest and late fee. In view of the serious civil consequences of cancellation, the empowered officer has authority and jurisdiction to consider restoration upon compliance with those requirements. [Paras 9, 11]

The petitioner was permitted to approach the concerned authority for restoration of registration within the stipulated period; upon compliance with Rule 22(4), the application must be considered and disposed of in accordance with law.

Final Conclusion: The writ petition was disposed of with liberty to seek restoration of GST registration by complying with the requirement of furnishing pending returns and paying the applicable tax dues, interest, penalty and late fee. The concerned authority was directed to consider the application expeditiously in accordance with law.

Maintainability of public interest litigation in tax-evasion allegations - Judicial supervision of statutory tax investigations

Maintainability of a public interest petition seeking court-monitored investigation and recovery of alleged GST and income-tax liabilities arising from private commercial transactions -HELD THAT: - A public interest petition must disclose a genuine public injury and cannot be employed to pursue a private cause or to supervise matters committed to statutory authorities. Determination of alleged tax evasion, its quantum and consequential liability requires examination of commercial and tax records in accordance with the statutory procedure.

As enquiries had been initiated and no material established mala fides or a failure by the authorities to discharge their statutory duties, non-disclosure of the enquiry's progress to the petitioner did not warrant mandamus or judicial monitoring. The earlier dismissal of substantially similar reliefs for want of locus also could not be overcome merely by styling the petition as a PIL. [Paras 7, 8, 9, 10]

The petition was held to be a misconceived and non-bona fide PIL, not warranting exercise of writ jurisdiction.

Final Conclusion: The PIL was dismissed at the threshold. The security deposit made at institution was forfeited for abuse of the jurisdiction intended for genuine public causes.

Extended time-limit for input tax credit - Entitlement to input tax credit claimed in a return filed after the earlier statutory cut-off for Financial Year 2018-19 - HELD THAT: - Section 16(5) permitted a registered person to avail input tax credit in a return under Section 39 filed on or before 30.11.2021 for the specified financial years. As the petitioner availed the credit on 20.12.2019, the claim fell within the extended period. [Paras 9, 11]

The assessment order requiring payment or reversal of the input tax credit was set aside.

Final Conclusion: The writ petition was allowed and the impugned assessment order was set aside in view of the extended period introduced by Section 16(5) of the GST Act.

Penalty for delayed GST return filing after payment of late fee - Statutory maximum limit on GST penalty - UP GST

Validity of penalty imposed under the GST enactments despite the petitioner having filed the return and paid the applicable late fee, where the penalty exceeded the statutory maximum - HELD THAT: - The Court noted that the return had already been filed and late fee paid in accordance with law. It further found that the aggregate penalty imposed exceeded the maximum limit prescribed under the U.P. GST Act, 2017. [Paras 3, 4]

The show-cause notice and the consequential penalty order were quashed.

Final Conclusion: The writ petition was disposed of by quashing the impugned show-cause notice and penalty order.

Writ petition challenging the GST adjudication order - Alternative statutory remedy - Exercise of writ jurisdiction in exceptional circumstances - Violation of principles of natural justice - Writ jurisdiction against GST adjudication - challenge alleged denial of hearing, non-consideration of reply, inadmissible electronic evidence, denial of cross-examination and overlap with an earlier statutory audit.

HELD THAT: - The petitioner had participated through its authorised representative and submitted a detailed reply; therefore, the grievance concerned the appreciation of its defence and adequacy of the adjudicating authority's reasons, not denial of opportunity or demonstrated prejudice from alleged defects in service. Questions concerning admissibility, authenticity and evidentiary value of electronic material, the need for cross-examination, and the effect of the earlier audit required examination of disputed facts and evidence and fell within the appellate authority's jurisdiction. No recognised exception to the rule requiring exhaustion of the efficacious statutory appeal was established. [Paras 22, 23, 24, 25, 26]

The writ petition was dismissed, leaving all factual and legal contentions open for consideration in a statutory appeal.

Final Conclusion: The writ petition was dismissed on account of the available statutory appellate remedy. The period during which the writ petition remained pending was directed not to be reckoned for limitation if an appeal is preferred.

Valid Service of show-cause notice and adjudication order through Common Portal - Electronic service under the CGST Act

Whether Uploading a show-cause notice and order-in-original in the 'View Additional Notices and Orders' tab on the Common Portal does not by itself constitute valid service where the assessee neither acknowledged receipt nor filed a reply? - HELD THAT: - Following Luxmi Traders [2026 (7) TMI 1602 - PUNJAB AND HARYANA HIGH COURT] and its clarification in The Amar Cooperative LC Society Ltd [2026 (8) TMI 75 - PUNJAB AND HARYANA HIGH COURT] the Court held that the retrospective amendment enabling functions under the CGST Rules to be performed on the Common Portal did not alter the position.

The Rules do not provide for service of a show-cause notice or order through the Common Portal; its specified functions do not substitute formal service. Portal upload alone, particularly where it entails civil consequences and the assessee had no knowledge of it, is insufficient service. [Paras 6, 7]

The writ petition was disposed of on the same terms as Luxmi Traders.

Final Conclusion: The writ petition was disposed of in terms of the decisions holding that mere upload of the show-cause notice and order-in-original on the Common Portal does not amount to valid service in the absence of acknowledgement or response by the assessee.

Opportunity of personal hearing in tax adjudication - Non-consideration of reply to show-cause notice - Application of mind in assessment proceedings

Validity of an assessment order passed without considering the reply filed before its issuance and without affording a personal hearing in proceedings initiated for short-paid GST - HELD THAT: - Section 75(4) requires an opportunity of hearing where a written request is made or an adverse decision is contemplated. Issuance of a show-cause notice itself indicates contemplation of adverse proceedings, and a written request is consequently not necessary in such a case. The DRC-01 form specifically contemplates a personal hearing; no hearing date was fixed after expiry of the time for reply. Since the reply and request for personal hearing were on record before the assessment order was passed, the authority could not proceed as though no reply had been filed. [Paras 8, 10, 11]

The assessment order was set aside, with liberty to commence fresh proceedings from consideration of the reply after granting a personal hearing in accordance with law.

Non-application of mind in assessment proceedings - Consequences of the assessing authority recording that no reply had been filed despite the reply being available on record - HELD THAT: - The authority's treatment of the proceedings as if no reply had been submitted disclosed gross failure to apply its mind to the material before it. The resulting hardship to the assessee warranted imposition of exemplary costs. [Paras 12]

Exemplary costs were directed to be paid by the concerned respondent authority.

Final Conclusion: The writ petition was allowed and the assessment order was set aside for non-consideration of the reply and denial of the requisite personal hearing. Fresh proceedings may be undertaken from the stage of considering the reply, after affording personal hearing in accordance with law.

Statutory pre-deposit for GST appeal - Remand for adjudication after opportunity to reply to show cause notice

Rejection of a time-barred GST appeal where the pre-deposit made was below the statutory requirement and the assessee asserted prior recovery from its electronic ledger - HELD THAT: - The appeal had been filed after expiry of limitation and without the mandatory pre-deposit. As the asserted recovery from the electronic ledger could not be confirmed by the respondents, the rejection order was quashed on terms. The amount already recovered or paid was directed to be adjusted, subject to verification, towards 50% of the disputed tax required to be deposited; the assessee was also required to submit a reply with supporting documents, treating the impugned order as an addendum to the earlier show cause notice. [Paras 9, 10, 11, 12, 13]

The matter was remitted for a fresh merits decision upon deposit of 50% of the disputed tax and filing of a reply; on compliance, any bank-account attachment was to stand vacated subject to the stated conditions.

Final Conclusion: The writ petition was disposed of by quashing the appellate rejection and remitting the matter for fresh adjudication subject to the stipulated pre-deposit, adjustment of verified recoveries and submission of a reply to the show cause notice.

Effective service of GST notices - Opportunity of personal hearing in assessment

Validity of an ex parte GST assessment where the show-cause notice was uploaded on the common portal, the taxpayer did not respond, and no personal hearing was afforded - HELD THAT: - Although uploading a notice on the portal constitutes sufficient service, where repeated portal communications receive no response, the officer must apply mind to the use of other statutorily prescribed modes of service under Section 169(1), preferably RPAD, to ensure effective service. Passing an ex parte assessment merely by completing formalities, without affording an effective opportunity and personal hearing, would lead to avoidable litigation. [Paras 9, 10]

The assessment order was set aside and remanded for fresh consideration after the taxpayer files objections; the respondent shall issue a clear 14-day notice fixing personal hearing and decide the matter on merits.

Final Conclusion: The writ petition was disposed of by setting aside the impugned assessment and remanding the matter for a fresh decision after effective notice and personal hearing.

Assignment of long-term leasehold rights as transfer of immovable property - GST on assignment of GIDC leasehold rights - taxable supply of services under the GST law

Taxability under GST of assignment of leasehold rights in a GIDC plot to a third-party assignee for consideration - HELD THAT: - Following Gujarat Chamber of Commerce, Industries & Ors. [2026 (7) TMI 1434 - SC ORDER] the Court held that, unlike GIDC's original grant of a long-term lease, the lessee's assignment transfers its entire right and interest in the land and building to the assignee. Such assignment is a transfer of benefits arising out of immovable property and falls outside the scope of supply of services; it is consequently not liable to GST. [Paras 9]

The show cause notice treating the assignment of leasehold rights as a taxable supply of service was quashed.

Final Conclusion: The petition was allowed and the impugned GST show cause notice was quashed, since assignment of the GIDC leasehold rights constituted transfer of immovable property and not a taxable supply of service.

Revocation of GST registration cancellation for nil returns - Revocation of cancellation of GST registration where nil returns were filed owing to absence of business transactions caused by financial and health problems.

HELD THAT: - The Court found the explanation for non-conduct of business and consequent filing of nil returns for three consecutive years to be genuine. It therefore revoked the cancellation, while requiring filing of pending returns and payment of tax dues, interest and belated-return fee; any unutilised input tax credit could be used only after scrutiny and approval by the competent officer. [Paras 8, 9]

The cancellation of GST registration was revoked subject to the stipulated conditions; failure to comply with them would cause the benefit to cease automatically.

Final Conclusion: The writ petition was disposed of by revoking the cancellation of the GST registration, subject to compliance with the conditions prescribed by the Court.

Classification of Papad Khar - GST exemption for inputs used in exempt final products - Carbonates and bicarbonates

Classification of Papad Khar, an alkaline salt mixture used to impart crispness and puffing to papad and similar snacks, under heading 2501, heading 2102 or heading 2836 - HELD THAT: - Papad Khar, comprising sodium chloride, sodium carbonate and sodium bicarbonate, is manufactured by mixing and processing the constituents and is neither common salt nor rock salt in its crude state or a product of the limited processes contemplated by heading 2501. It is also neither yeast nor prepared baking powder within heading 2102, as its composition, function and culinary use differ from those products.

Though sodium chloride forms the larger proportion, it acts as a diluent/carrier; the carbonates and bicarbonates are the functionally active constituents. Papad Khar, being sodium sesquicarbonate/carbonate-bicarbonate in character, is classifiable as other disodium carbonate under sub-heading 28362090. [Paras 13, 14, 15, 17]

Papad Khar is classifiable under sub-heading 28362090 and not under headings 2501 or 2102.

GST rate on inorganic chemicals - GST exemption for inputs used in exempt final products - GST rate and exemption eligibility of Papad Khar classified as a carbonate/bicarbonate product, notwithstanding its use in manufacturing exempt papad - HELD THAT: - Papad Khar is not covered by the specified exclusions or other schedules and therefore falls within the entry for inorganic chemicals in Schedule II of Notification No. 09/2025-Central Tax (Rate). The exemption applicable to papad does not extend to Papad Khar merely because it is an input in papad manufacture: inputs and finished products are separately classified and taxed under their respective tariff entries and rate schedules. [Paras 18, 19]

Papad Khar is liable to GST at 18% and does not qualify for the claimed GST exemption.

Final Conclusion: The application was answered against the applicant. Papad Khar was held classifiable under sub-heading 28362090 and chargeable to GST at 18%, without exemption.

Composite supply of job work services - GST rate on offset printing of kraft paper and duplex paper - taxable at 5% or 18% GST

GST rate applicable to the composite job work supply involving offset printing on kraft paper and duplex paper owned by principal manufacturers - HELD THAT: - The sequential activities of cutting, sorting, plate preparation, offset printing, drying or curing, finishing, quality checking, bundling and return of the printed paper were naturally bundled and supplied together in the ordinary course of business. Offset printing was the principal supply and the remaining activities were ancillary. A composite supply is taxable as its principal supply.

The concessional job-work entry for printing goods under Chapters 48 and 49 applies only where the goods on which printing is undertaken attract central tax at 2.5% or nil. Since kraft paper and duplex paper were taxable at 18%, that entry was inapplicable and the residuary job-work entry governed the supply.

Ruling:- GST rate of 18% (9%CGST + 9%SGST) is applicable on the job work services (composite supply where offset printing is the principal supply) provided by the applicant on Kraft Paper and Duplex Paper supplied by the principal manufacturers in view of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended).[Paras 10, 11, 12]

The composite job work supply, with offset printing as its principal supply, is taxable at 18%.

Final Conclusion: The application was answered by holding that offset-printing job work on kraft paper and duplex paper supplied by principal manufacturers attracts GST at 18%. The separate question concerning ancillary charges was not required to be answered.

Classification of detergent soap bars as laundry soaps - Common-parlance test for distinguishing toilet soaps - Inapplicability of definitions under statutes with different objects

Classification and GST rate of semi-detergent and detergent soap bars manufactured for washing clothes and perfuming apparel - HELD THAT: - We find that the term ‘toilet soap’ is not defined under the CGST Act, 2017. We also find that the applicant is looking for definitions of ‘toilet soap’ in other Acts instead of referring to the definition of the said product as available in common parlance, to support his cause. This does not appear to be justifiable. It is a settled principle of law that definition of one statute cannot be made applicable in another statute.

The Hon’ble Supreme Court in it’s judgement [2012 (12) TMI 149 - SUPREME COURT] in the case of appeal filed in Connaught Plaza Restaurant (P) Ltd. involving the classification of ‘soft serve’ served at the restaurant, has discussed the aspect of non-applicability of the definition of one statute in another statute.

The definition of a toilet preparation under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 could not be imported for GST classification, since that enactment has a different object and scheme. Applying the common-parlance meaning, toilet soap is intended specifically for washing the body, hands or face, whereas the products in question were intended to remove stains and deodorise apparel. Their stated use and composition, including substantial fillers and absence of constituents identified as characteristic of toilet soaps, established that they were laundry soaps. [Paras 13, 14, 15, 16, 19]

The products are classifiable as laundry soaps under sub-heading 34011942 and, being covered by Entry 66 of Schedule II to Notification No. 09/2025-Central Tax (Rate), are liable to GST at 18%.

Final Conclusion: The detergent and semi-detergent soap bars manufactured for washing clothes were held to be laundry soaps, classifiable under sub-heading 34011942 and taxable at 18%.

Limitation for final assessment pursuant to DRP directions - Harmonious construction of sections 144C and 153

Validity of the final assessment order for Assessment Year 2018-19 where it was passed beyond the limitation prescribed u/s 153 read with section 144C - HELD THAT: - Following the binding Roca Bathroom Products [2022 (6) TMI 848 - MADRAS HIGH COURT] precedent, the Tribunal held that sections 144C and 153 are interdependent and must be harmoniously construed. The non-obstante clause in section 144C(13) does not exclude the outer limitation under section 153; the prescribed time limit governs completion of the final assessment. The Revenue's objection seeking deferral of adjudication pending the Supreme Court proceedings was rejected. [Paras 4, 10]

The final assessment order was held barred by limitation and quashed, with liberty to the parties to seek revival if the Supreme Court's decision necessitates modification.

Final Conclusion: The appeal was allowed on the limitation issue and the final assessment order was quashed. The merits grounds were kept open, subject to liberty to seek revival depending on the Supreme Court's decision.

Authority for Advance Rulings - withdrawal of AAR application - abeyance of departmental proceedings - maintainability of show cause notice - compliance with CBDT Circular - jurisdiction of the Assessing Officer - Article 226 writ remedy

HELD THAT:- The special leave petitions were dismissed as the show cause notice issued to the assessee had been withdrawn and nothing survived for consideration.

Reasoned orders on stay of disputed tax demand - Application of prescribed parameters for stay pending appeal

Validity of the condition requiring payment of part of the disputed demand for stay pending appeal without reasons under the applicable administrative instructions - HELD THAT: - The authorities were required to decide the stay application by applying the parameters prescribed under the relevant circulars and to record reasons for the extent of demand stayed and made recoverable. As neither impugned order disclosed why only part of the demand was stayed while the balance was made collectible, the order affirming that condition could not be sustained. [Paras 4, 5]

The order of the Principal Commissioner was quashed and the stay application was restored for expeditious reconsideration after opportunity to the petitioner by a reasoned order; recovery was barred until such reconsideration.

Final Conclusion: The petition was partly allowed. The restored stay application was directed to be decided expeditiously by a reasoned order, with no coercive recovery in the meantime.

Condonation of delay on sufficient cause - Foreign tax credit for taxes paid in Germany

Condonation of delay on sufficient cause - Condonation of delay in filing the appeal against the intimation denying foreign tax credit - HELD THAT: - The assessee's explanation comprised personal difficulties, disruption caused by the COVID-19 pandemic, income-tax portal glitches and the complexity of the foreign tax credit claim. The Tribunal held that it was not unusual for a taxpayer to encounter such difficulties when these circumstances coincided. Documentary proof of portal glitches was not indispensable, since such difficulties were a matter of common experience. An assessee need not explain every day's delay; its length is not decisive where sufficient cause is established. [Paras 7]

Sufficient cause for the delay was established; the delay was condoned and the appellate order refusing condonation was reversed.

Foreign tax credit for taxes paid in Germany - Claim for foreign tax credit in respect of German taxes paid on stock option plan payout - HELD THAT: - Though the Tribunal noted that Form No. 67 was on record and that the assessee sought only proportionate credit, it expressly refrained from deciding the claim on merits. The claim requires substantiation and examination in accordance with law. [Paras 8, 9]

The foreign tax credit claim was remanded to the jurisdictional Assessing Officer for fresh examination and grant of the correct admissible credit, if any.

Final Conclusion: The appeal was allowed for statistical purposes. The delay in filing the first appeal was condoned, and the foreign tax credit claim was restored to the Assessing Officer for fresh adjudication in accordance with law.

Credit of tax deducted at source on jointly owned property income - Procedural requirements and substantial justice - Credit of TDS reflected against deductee's PAN

Entitlement of a co-owner to credit of the entire tax deducted at source on rental income from jointly owned property, where the entire deduction was reported against that co-owner's PAN and the other co-owners neither claimed nor sought credit for their respective shares - HELD THAT: - Section 199 read with rule 37BA contemplates TDS credit in favour of the deductee, while transfer of credit to another person assessable on the income requires compliance with the prescribed declaration and reporting requirements.

Since the entire TDS stood deducted and reported against the assessee's PAN, no declaration had been furnished for transfer of credit, and the other co-owners had not claimed their shares of TDS and supported the assessee's claim, the unclaimed credit could not be granted to them. Procedural requirements must advance rather than defeat substantial justice; the Revenue cannot permanently retain TDS without allowing credit to any person. [Paras 12, 13, 14, 15]

The assessee was entitled to credit of the entire TDS deducted against his PAN; the restriction of credit to his one-third share was set aside.

Final Conclusion: The appeal was allowed and the Assessing Officer was directed to grant credit for the whole TDS deducted against the assessee's PAN. The remaining grounds were left open.

Penalty u/s 271B for failure to obtain tax audit - reasonable cause u/s 273B

Levy of penalty for failure to obtain audit of books in respect of milk-pouch sales conducted on commission/trade-discount basis - HELD THAT: - The assessee had furnished materials explaining the nature of the business, the commission income and the reasonable cause for non-audit. The statutory protection available where reasonable cause is established was not considered by either lower authority. This was material particularly as the reassessment accepted the income returned and no addition was made. [Paras 5]

The penalty levied for non-audit of books was directed to be deleted.

Final Conclusion: The appeal was allowed and the penalty for failure to obtain tax audit was deleted.

Addition u/s 56(2)(x) - difference between the purchase consideration stated in the sale deed and the stamp-duty valuation - Reference to Departmental Valuation Officer

HELD THAT: - The assessee had specifically disputed the stamp duty valuation, explained that the basement and ground floor could not be valued on the same footing, and requested a reference to the Departmental Valuation Officer. The Assessing Officer neither considered those objections through a reasoned finding nor referred the property for valuation. Once such a request was made, the Assessing Officer was required to make the reference; adoption of the stamp duty value without doing so was unjustified. [Paras 5]

The addition, as sustained to the assessee's share by the Commissioner (Appeals), was deleted.

Final Conclusion: The appeal was allowed and the addition based on the difference between the declared consideration and stamp duty valuation was deleted.

Notional rent assessable as income from other sources - Deduction of expenditure incurred for income from other sources - Trade incentives as revenue expenditure - Depreciation on assets put to use

Notional rent assessable as income from other sources - Taxability of notional usage charges for premises occupied by the assessee's sister concern, where the income was assessable under the head "Income from Other Sources" - HELD THAT: - The agreement contemplated usage charges and/or reimbursement of expenses, and the parties had implemented only the reimbursement arrangement. The Tribunal held that this was not a subsequent private understanding overriding the agreement. Where no evidence established that the usage charges were received or had become receivable, notional rent could not be taxed under the head "Income from Other Sources". [Paras 15]

The addition of notional rent was deleted for Assessment Year 2004-05; the same finding was directed to apply mutatis mutandis for Assessment Year 2005-06.

Deduction of expenditure incurred for income from other sources - Building expenditure relatable to house-property rent - Disallowance of repairs and maintenance, service charges and depreciation on the building in relation to premises occupied by the sister concern and premises let to a third party - HELD THAT: - As the amount relating to the sister concern was assessable as income from other sources, the related expenditure had to be considered under the statutory provisions allowing expenditure laid out wholly and exclusively for earning such income. The disallowance attributable to the sister concern was therefore unsustainable. However, rent actually received from the third-party occupant was undisputedly assessable as income from house property; consequently, only depreciation and building-related expenses pertaining to that occupied area could be disallowed. [Paras 17]

The disallowance relatable to the sister concern was deleted, and the Assessing Officer was directed to recompute and restrict the disallowance to depreciation and building-related expenses pertaining to the third-party occupant's area.

Ad hoc disallowance of brand-promotion expenditure - Disallowance of trade incentives on the ground that expenditure incurred for promotion of product brands yielded an enduring benefit. - HELD THAT: - The Commissioner (Appeals) had restricted the disallowance by following the order for a subsequent assessment year A.Y. 2007-08 [2026 (4) TMI 1903 - ITAT MUMBAI]. Since the Coordinate Bench had subsequently deleted the corresponding disallowance for that year, the Tribunal followed that decision and held that the disallowance sustained could not continue. [Paras 26]

The disallowance of trade incentives was deleted.

Depreciation on assets put to use - Moulds and dies used in manufacture of plastic containers - Allowability of depreciation on moulds and dies used for manufacture of shampoo bottles - HELD THAT: - The manufacture or packing of final products in plastic containers made using the moulds and dies demonstrated their utilization during the relevant financial year. The condition that the assets be put to use was thus satisfied. [Paras 31]

Depreciation on the moulds and dies was directed to be allowed.

Final Conclusion: The assessee's appeals were allowed to the extent indicated: notional rent from the sister concern was deleted, the related expenditure disallowance was deleted subject to recomputation for the third-party tenant, and the trade-incentive and depreciation claims were allowed. The Revenue's cross-appeal was disposed of consistently with those directions.

Consequential assessment founded on annulled revisional order - Business character of interest income having direct nexus with real estate business

Validity of an assessment framed solely pursuant to revisional directions after the revisional order was quashed - HELD THAT: - The revisional order was the sole source of jurisdiction for the consequential assessment. Once that foundational order had been annulled, the assessment resting exclusively upon it could not survive independently; the consequential proceeding necessarily collapsed with its foundation. [Paras 4]

The assessment could not be sustained, and the relief granted by the Commissioner (Appeals) was upheld.

Business character of interest income having direct nexus with real estate business - Set-off of brought-forward business losses against business income - Assessment of interest earned on temporarily deployed funds generated in the real estate business and entitlement to set off brought-forward business losses against it - HELD THAT: - The issue had already been concluded in the assessee's own case [2022 (7) TMI 1592 - ITAT MUMBAI] the interest income bore a direct nexus with its business activities and was assessable as business income. The Commissioner (Appeals) had followed that binding coordinate-Bench decision, and the Revenue showed no distinguishing feature requiring a contrary view. [Paras 4]

Interest income was rightly treated as business income, against which the brought-forward business losses were allowable to be set off.

Final Conclusion: The Revenue's appeal was dismissed. The consequential assessment, being founded exclusively on an annulled revisional order, could not survive, and the treatment of the interest receipts as business income with corresponding set-off of brought-forward business losses was sustained.

Unexplained cash credit u/s 68 - Genuineness and creditworthiness of loan transaction- funds received from a corporate lender and placed in short-term deposits, claimed as a loan or advance treated as unexplained

HELD THAT: - For Section 68, the assessee must establish the creditor's identity and creditworthiness and the genuineness of the transaction. Although the creditor's identity stood established as it was a corporate entity having a valid PAN and address, neither its capacity to advance the funds nor a genuine business purpose for the advance was established. Repayment in the same financial year, after the funds had been invested in short-term deposits, was by itself insufficient to prove genuineness, particularly when no explanation was placed on record for an advance without an identified object or purpose. [Paras 15, 16, 17]

The deletion was not justified; the addition as unexplained cash credit was restored.

Final Conclusion: The Revenue's appeal was allowed and the addition under Section 68 was restored.

Valididty of Reassessment - communication of reasons recorded for reopening - Valid assumption of reassessment jurisdiction - Principles of natural justice

Validity of reassessment where the reasons recorded for reopening were not supplied to the assessee despite repeated requests - HELD THAT: - Hon’ble High Court of Bombay in the case of Agarwal Metals and Alloys Vs. ACIT & Ors. [2012 (8) TMI 612 - BOMBAY HIGH COURT] has held where the A.O failed to communicate the “reasons to believe” on the basis of which the case of the assessee was reopened, the Hon’ble High Court quashed the assessment by treating the same as having been passed in a brazen violation of the governing principles of law. Also see JAGAT TALKIES DISTRIBUTORS [2017 (9) TMI 192 - DELHI HIGH COURT] gave ruling therein is failure of the A.O to supply to the assessee a copy of the “reasons to believe” for reopening of the assessment u/s.147 of the Act, the re-assessment proceedings stands vitiated in law.

The Assessing Officer's recording of reasons was insufficient where the recorded reasons were not communicated to the assessee on request. Non-supply deprived the assessee of the right to object to the reopening and obtain a speaking determination of such objections. Compliance with this jurisdictional requirement is essential to the valid exercise of reassessment power; its breach vitiates the reassessment proceedings. [Paras 5, 7, 8, 9, 10]

The notice for reassessment and the consequent reassessment order were held void for want of valid jurisdiction and were quashed.

Final Conclusion: The appeal was allowed. The reassessment notice and reassessment order were quashed because the recorded reasons for reopening were not furnished despite the assessee's repeated requests.

Deduction of interest income from co-operative bank under section 80P(2)(d)

HELD THAT: - The Tribunal found that the facts were identical to those in the assessee's earlier case [2025 (8) TMI 1848 - ITAT SURAT] wherein deduction was allowed on interest earned from investments with a co-operative bank which was itself a co-operative society. As the Revenue produced no distinguishing facts or fresh material, the binding co-ordinate Bench decision was followed. [Paras 4, 5]

The assessee was held entitled to deduction under section 80P(2)(d) for both assessment years.

Final Conclusion: Both appeals were allowed, and the claimed deduction under section 80P(2)(d) on interest income from co-operative banks was directed to be allowed.

Conditional remand and statutory right of appeal - Automatic confirmation of ex parte appellate order - Speaking order by first appellate authority - Unsecured loan addition under Section 68

Conditional remand and statutory right of appeal - Automatic confirmation of ex parte appellate order - Validity of making remand after breach of natural justice conditional upon payment of costs and providing for automatic confirmation of the ex parte appellate order upon default - HELD THAT: - Though the Tribunal may regulate its proceedings and impose ordinary costs for procedural delay, its discretion u/s 254(1) cannot be exercised to defeat the substantive statutory right of appeal.

Having found that the assessee had been denied a hearing, Tribunal was required to secure a merits adjudication through remand; it could not make non-payment of costs result in automatic validation of an otherwise invalid ex parte order. Such a default clause impermissibly fetters access to justice and renders the appellate remedy illusory. [Paras 16, 17, 18, 21]

The automatic-confirmation clause was quashed the cost was reduced, and the matter was restored unconditionally for fresh appellate adjudication on merits.

Reasoned appellate order u/s 250(6) - Validity of the ex parte first appellate order which did not state the points for determination, decision and reasons - HELD THAT: - Section 250(6) requires the first appellate authority to render a reasoned decision disclosing application of mind. A summary, non-speaking confirmation of the assessment is void in law and cannot attain finality merely because a procedural cost imposed by the Tribunal was not paid. [Paras 19]

The first appellate authority was directed to consider the evidence and pass a reasoned speaking order in the fresh de novo adjudication.

Unsecured loan addition u/s 68 - Identity, creditworthiness and genuineness of lender - Addition in respect of an unsecured loan under Section 68 where the assessee relied on banking records and corporate details of the lender - HELD THAT: - Section 68 places an initial burden on the assessee to establish the lender's identity and creditworthiness and the genuineness of the transaction. As the assessee had produced contemporaneous banking and corporate records and the revenue authorities had relied on generalised third-party reports without independent inquiry or evaluation of that evidence, the addition required fresh factual examination after full opportunity to the assessee. [Paras 20, 21]

The merits of the unsecured-loan addition were remanded to the first appellate authority for fresh, unhindered adjudication.

Final Conclusion: The appeal was partly allowed. The conditional default clause was quashed, the cost was reduced, and the assessment appeal was restored to the first appellate authority for a fresh reasoned adjudication on merits.

Maintainability of an appeal u/s 260A - challenge concerns refusal to condone delay on medical grounds and adoption of stamp-duty value of immovable property over its stated purchase price - HELD THAT: - An appeal under section 260A is maintainable only upon a substantial question of law. Questions concerning sufficiency of cause for delay, appreciation of medical evidence and valuation of immovable property are questions of fact; absent statutory interpretation, conflict of judicial opinion, or perversity capable of converting the factual dispute into a legal question, they cannot meet that threshold. The monetary-limit circulars issued for Revenue appeals do not dispense with the statutory requirement for an assessee to establish a substantial question of law. [Paras 7, 9, 10, 11]

No substantial question of law arose and the appeal was dismissed as non-maintainable.

Final Conclusion: The appeal and connected application were dismissed for want of a substantial question of law, leaving the Tribunal's order undisturbed.

Retrospective taxation by clarificatory amendment - Taxability of non-resident technical-service income - Beneficial interpretation of tax treaty

Retrospective application of the Finance Act, 2010 amendment to tax fees for technical services paid to non-residents for services rendered outside India - Whether Section 9(1)(vii) requires a nexus between the services rendered by the non-resident in India, and the income generated from such services.?

Whether the earlier judgment granting relief on offshore technical-service payments was liable to be modified because of the Finance Act, 2010 amendment to Section 9 AND Whether the amendment to Section 9 could operate retrospectively from 01.06.1976? - HELD THAT: - The Explanation to section 9(2), though expressed to be for removal of doubts, widened the charging provision by dispensing with the requirement that services be rendered in India and thereby created a fresh tax charge on non-residents.

In the present case, the phrase ‘for the removal of doubts’ in Explanation to Section 9(2) of the Act added by the impugned Amendment is applicable from 01.06.1976. Such retrospective application of the amendment, which is admittedly a mere clarification by the Legislature, is to be interpreted in a prospective manner. The benefits accrued to the Appellant-Petitioner from such provision prior to the impugned Amendment cannot be taken away by the retrospective application of a mere clarification. A provision of law added by an amendment under the garb of a clarification cannot create a fresh charge of tax and impose tax liability on an assessee whose transaction was not covered by the said amendment. It is well settled that retrospective amendments cannot impose a tax liability on the Assessee. In UNION OF INDIA V. MARTIN LOTTERY AGENCIES LTD. [2009 (5) TMI 1 - SUPREME COURT] the Supreme Court held that an Explanation clause, which appears to be a charging provision and widens the taxing net, cannot be held to be retrospective in operation on the premise that it is clarificatory or declaratory in nature.

An amendment which alters or broadens the taxing provision cannot retrospectively take away benefits accrued under the unamended law. The withdrawal of beneficial Board circulars was likewise prospective. Further, where domestic law and the India-USA DTAA admit competing interpretations, the interpretation more beneficial to the assessee must prevail; Article 12(4) was held to concern services rendered, rather than merely utilised. The amendment could not consequently displace the earlier interpretation requiring rendition and utilisation of the technical services in India for taxability.

The phrase ‘business or profession carried on by such person in India’ still holds the interpretation as laid down in ISHIKAWAJIMA-HARIMA HEAVY INDUSTRIES LTD.[2007 (1) TMI 91 - SUPREME COURT] i.e., requiring the condition of the service to be rendered in India. The decision of this Court dated 16.03.2009 interpreted that the operation of the Finance Act, 2007 does not affect the interpretation of Section 9 as laid down in ISHIKAWAJIMA-HARIMA HEAVY INDUSTRIES LTD. (SUPRA), we do not have any hesitation to hold that the impugned amendment does not have any effect on the interpretation of Section 9 as per the ISHIKAWAJMA Case.[Paras 34, 36, 37, 38, 40]

The Finance Act, 2010 amendment was read down as prospective and incapable of retrospective operation from 01.06.1976; the appeals and writ petition were allowed and the review petitions were dismissed.

Final Conclusion: The Finance Act, 2010 amendment to section 9 was held prospective in operation and could not retrospectively impose liability for offshore technical services. The appeals and writ petition were allowed, and the review petitions were dismissed.

Benami transaction - Cross-examination of foundational retracted statement - Benami proceedings and income-tax assessment findings - Burden of proving benami transaction

Cross-examination of foundational retracted statement - Natural justice in benami adjudication - Reliance on the retracted statement recorded under the Income-tax Act for establishing that the consideration for the appellant's properties was provided by another person, without affording cross-examination in benami adjudication - HELD THAT: - Though statements recorded under the Income-tax Act may be used in proceedings under the PBPT Act, the statement in question was the direct and foundational material for the alleged routing of unaccounted cash; the remaining circumstances were insufficient independently to establish that another person provided the consideration. A statement retracted shortly after its recording, and not tested despite a specific request for cross-examination, could not sustain a finding carrying confiscatory and penal consequences. At the adjudicatory stage, the statutory power to summon and examine the witness had to be exercised if the statement was to be relied upon. [Paras 23, 28, 29, 31, 32]

The denial of cross-examination vitiated the finding founded substantially on the retracted statement; the matter was remanded, with cross-examination to be afforded by the Adjudicating Authority if the statement and its retraction are relied upon.

Evidentiary relevance of income-tax assessment in benami proceedings - Independent operation of income-tax and benami laws - Effect of the assessment order accepting the source and banking trail of the investments in the same properties on the benami proceedings - HELD THAT: - Section 69 of the Income-tax Act and Section 2(9)(A) of the PBPT Act operate in distinct fields: absence of an addition for unexplained investment does not itself preclude a benami finding, and the source of the source remains examinable in benami proceedings. However, the assessment order, rendered on the same investment, fund-flow and material, was relevant evidentiary material and could not be ignored. The statutory independence of the enactments does not resolve inconsistent factual conclusions without examination of the differing inquiries undertaken. [Paras 21, 30, 31, 33]

The assessment order was not conclusive of benami ownership, but required consideration by the Initiating Officer in the fresh determination.

Burden of proving benami transaction - Source of consideration for company-owned property - Failure to examine the appellant-company's document-backed explanation that its pre-existing reserves and recycled loans and advances funded the property purchases - HELD THAT: - A company is not immune from being treated as a benamidar merely because it is a corporate entity, if the statutory conditions are established. Under Section 2(9)(A), however, the Initiating Officer must initially establish, on credible material, both that another person provided the consideration and that the property was held for that person's immediate or future benefit. Once a documented explanation of the source is furnished, it must be specifically examined and accepted or rejected by reasoned findings; an untraced allegation of cash elsewhere cannot substitute proof of the consideration for the particular acquisition. [Paras 21, 31, 32, 33]

As the explanation concerning the vintage of reserves and recycling of advances had not been specifically considered, the issue was remanded for fresh reasoned consideration without an adjudication on the merits of benami ownership.

Final Conclusion: The orders affirming the benami finding and attachment were set aside and the matter was remanded to the Initiating Officer for a fresh determination after considering the assessment order and the appellant's explanation of funds. The provisional attachment was directed to continue pending that determination, with all merits kept open.

Provisional attachment of cash and goldheld by Income Tax Department - Apprehension of alienation under benami law

Validity of provisional attachment of cash and gold already seized and attached by the Income Tax Department on the stated apprehension of tax adjustment or release - HELD THAT: - Provisional attachment is permissible only where the Initiating Officer forms an opinion that the person in possession of the alleged benami property may alienate it during the notice period. As the cash and gold were in the custody and attachment of the Income Tax Department and not with the appellants, no apprehension of their alienation by the appellants was established. Mere apprehension that the Department might adjust the cash against tax liability or release the property did not furnish the statutory basis for attachment; action could be taken if and when release was contemplated. [Paras 5, 6]

The provisional attachment order and its confirmation were quashed, with liberty to initiate a fresh attachment if the statutory conditions are made out; if the cash and gold have been released by the Income Tax Department, the impugned order may remain operative.

Final Conclusion: The appeals were allowed and the provisional attachment and its confirmation were quashed for want of a statutory basis to apprehend alienation of property already under the Income Tax Department's custody, subject to the stated liberty for fresh action.

Benami acquisition of shares through intermediary funding - Attachment limited to property identified in benami proceedings

Benami acquisition of shares through intermediary funding - Burden of proving benami transaction - Acquisition of shares by the alleged benamidar was a benami transaction for the benefit of the alleged beneficial owner - HELD THAT: - The Tribunal held that the benamidar lacked the economic capacity and genuine operational existence to acquire the shares. The admitted funding from an entity connected with the share broker, its repayment through funds received from entities in the promoter group, the absence of documentary support for the asserted commercial dealings, and the directors' lack of knowledge or control over the company's affairs established the fund trail and the beneficial owner's control.

Applying the recognised indicia for determining benami character, particularly the source of consideration, relationship of the parties and surrounding circumstances, Tribunal found that the consideration had been indirectly routed by the beneficial owner through closely connected entities. [Paras 8, 9, 10]

The confirmation of attachment of the identified shares as benami property was upheld; the beneficial owner and benamidar were held to be as alleged.

Attachment limited to identified benami property - Freezing of demat account beyond provisional attachment - Freezing of shares in excess of those identified in the show-cause notice, provisional attachment order and impugned order was impermissible - HELD THAT: - Tribunal found no material showing that the additional shares were the subject of the benami proceedings. The provisional attachment order, show-cause notice and impugned order consistently concerned only the specified shares; consequently, the general description of shares held in the demat account could not enlarge the attachment to other shares. [Paras 11]

The freezing and attachment of the excess shares was set aside, with a direction to clarify their release to the rightful owner.

Final Conclusion: The appeals challenging confirmation of attachment of the identified shares were dismissed. The excess shares, not forming part of the benami proceedings, were directed to be released.

Benami property attachment - inadequate investigation of alleged beneficial ownership - attachment of bank funds as alleged benami property - Whether no investigation into the source of demonetised currency, the persons controlling the alleged benamidar companies, and the genuineness of the bullion-sale transactions?

HELD THAT: - The Tribunal found that the record did not establish that the appellant had supplied demonetised currency to the directors of the alleged benamidar companies. The alleged person who delivered the currency had not been traced, and material particulars concerning the incorporation, shareholding, bank accounts and management of those companies had not been investigated. Equally, the appellant's claimed gold-bullion transactions required verification through stock records, sales to other purchasers, bank receipts, VAT statements and supporting invoices. A comprehensive re-investigation of these material aspects was therefore necessary. [Paras 4, 5, 6]

The attachment confirmation was not sustained on the existing investigation; the matter was remanded for re-investigation, while status quo over the attached properties was directed to be maintained.

Final Conclusion: The appeal was remanded for re-investigation of the alleged benami transactions. Status quo in respect of the attached funds was ordered pending further orders.

Rejection of plaint seeking declaration of property as joint family property - Benami transaction - joint family property and property purchased in child's name - scope of inquiry under Order VII Rule 11 CPC -

Rejection of a suit claiming property purchased in the name of a son from joint family income as barred by the prohibition against benami claims - HELD THAT: - As per Section 2(9)(i), the joint family properties are excluded from the definition of Benami transaction and as per Section 2(9)(iii), the property purchased in the name of spouse or child of such of individual is not covered in the definition of Benami transaction.

Therefore, if the definition of Benami transaction is seen, then the plaint assertions do not disclose the transaction of sale of year 1976 to be Benami transaction, though the defendant no. 2 can take such defence in the written statement and it would be for the defendant No. 2 to prove the fact in support of his assertions if he takes such an objection. However, the plaint pleadings and documents attached to this plaint do not disclose the transaction in question to be Benami transaction.

At the stage of considering an application under Order VII Rule 11 CPC, the inquiry is confined to the averments in the plaint and the documents annexed thereto. The plaint asserted that the property was purchased from the nucleus of joint family income in the name of a son and was held as joint family property.

Such assertions did not, on their face, disclose a benami transaction, since property held by a Karta or member for the benefit of the Hindu undivided family out of its known sources, and property purchased by an individual in the name of a child out of known sources, stand excluded from the statutory definition. Any defence that the transaction was benami could be raised and established at trial. [Paras 9, 10, 11, 12]

The plaint could not be rejected as barred by the prohibition against benami claims; the defendant was left free to raise the benami objection in the written statement and at trial.

Final Conclusion: The appeal was allowed, the order rejecting the plaint was set aside, and the application under Order VII Rule 11 CPC was rejected.

Benami transaction through accommodation RTGS entries - Cross-examination and prejudice in quasi-judicial proceedings

Benami transaction through accommodation RTGS entries - Burden of substantiating claimed gold sales - RTGS credits received from entities controlled by the alleged benamidar, claimed to represent sale proceeds of gold bullion, constituted a benami transaction - HELD THAT: - The deposit of demonetised cash with the alleged benamidar and the RTGS transfers to the appellant were undisputed. The appellant failed to establish any prior business relationship with the remitting firms, while the explanation founded on invoices, purchase bills, ledger and stock statements lacked independent corroboration. The timing of the transactions soon after demonetisation and the bank records supported the finding that the claimed gold-sale documentation did not substantiate the explanation. [Paras 16]

The confirmation of provisional attachment was upheld and the appellant's claim that the credits were genuine gold-sale proceeds was rejected.

Cross-examination and prejudice in quasi-judicial proceedings - Principles of natural justice - Whether Denial of cross-examination of the intermediary and the alleged benamidar violate principles of natural justice? - HELD THAT: - No statement of the intermediary was on record, and therefore no question of cross-examination arose. A copy of the alleged benamidar's statement had been supplied and he had been summoned for cross-examination but did not appear. Cross-examination is not an inflexible requirement in quasi-judicial proceedings; procedural breach warrants relief only where actual prejudice is demonstrated. No prejudice to the appellant was established. [Paras 17, 21, 22]

The plea of breach of natural justice was rejected.

Final Conclusion: The appeal was dismissed and the impugned order confirming the provisional attachment was upheld.

Benami transaction through alleged accommodation entries for gold sales - Cross-examination and prejudice in quasi-judicial proceedings

Confirmation of provisional attachment of bank funds alleged to represent cash routed through entities controlled by the benamidar and shown as proceeds of gold sales - HELD THAT: - The receipt of RTGS transfers from entities linked to the benamidar and the deposit of cash with him were undisputed. The appellant produced no material establishing a prior business relationship with those entities, and its invoices, ledgers and stock statements did not independently substantiate the asserted gold sales. The bank records instead corroborated transfers from unknown entities in the circumstances alleged by the respondent. [Paras 16]

The transaction was held to justify confirmation of the provisional attachment under the PBPTA.

Cross-examination and prejudice in quasi-judicial proceedings - Denial of cross-examination of the alleged intermediary and benamidar in the benami attachment proceedings - HELD THAT: - No statement of the alleged intermediary was on record, and therefore no question of his cross-examination arose. The appellant had been supplied the benamidar's statement; he was summoned for cross-examination but did not appear. Observing that cross-examination is not invariably required in quasi-judicial proceedings and that procedural breach invalidates an order only upon actual prejudice, the Tribunal found no prejudice or violation of natural justice. [Paras 17, 21, 22]

The objection based on denial of cross-examination was rejected.

Final Conclusion: The appeal was dismissed and the impugned order confirming provisional attachment of the bank funds was upheld.

Vague show cause notice in Customs Broker disciplinary proceedings - Natural justice-specific allegations in show cause notice

Validity of disciplinary proceedings against a Customs Broker for alleged breach of the duties to advise the client and exercise due diligence, where the show cause notices merely reproduced material from proceedings against the importer without specifying the alleged contraventions attributable to the Customs Broker - HELD THAT: - The show cause notices and the orders were founded on the earlier order concerning misclassification and undervaluation of the imported boiled betel nuts, but did not substantiate or specify how the appellant had violated the applicable Customs Broker obligations. The notices were materially identical to those considered in the appellant's earlier case, in which it was held that the noticee could not be left to decipher the allegations. A show cause notice is the foundation of departmental action; where it is vague and the order travels beyond its allegations, the noticee is denied an effective opportunity to meet the case. Case followed M/S. ENTIRE LOGISTICS PVT. LTD. [2026 (3) TMI 860 - DELHI HIGH COURT]. [Paras 7, 9, 10]

The show cause notices were set aside as vague, and the consequential orders revoking the Customs Broker licence, forfeiting the security deposit and imposing penalty were also set aside.

Final Conclusion: The appeals were allowed. The disciplinary action failed because the show cause notices did not disclose specific allegations establishing the Customs Broker's alleged regulatory breaches.

Extended limitation for deliberate misclassification and wrongful exemption claim - Invocation of the extended period for recovery of customs duty arising from classification of optical network terminals as subscriber end equipment and consequential availing of exemption - HELD THAT: - The importer had adopted inconsistent classifications for goods having the relevant technical features, while describing optical network terminals as subscriber end equipment to claim exemption. It had also classified ONTs, ONUs and OLTs under tariff items attracting duty in other instances, continued the disputed classification despite provisional reassessment of a Bill of Entry, and possessed an equipment approval describing the goods as GPON ONT rather than subscriber end equipment. These circumstances established intentional availment of ineligible exemption with intent to evade customs duty; the bare oral assertion that the Department had not previously raised the classification dispute did not displace those findings. [Paras 10]

The finding of deliberate misclassification and intentional wrongful availment of exemption, warranting the extended period, was upheld.

Final Conclusion: The three appeals were dismissed, the Tribunal upholding the demand on the finding that the appellant had intentionally availed ineligible exemption by misclassifying the imported goods.

Rejection of declared transaction value on corroborated evidence - Exclusion of refundable VAT from assessable value - Exemption for temporarily registered new motor vehicle - Redemption fine where goods are unavailable for confiscation - Penalties for deliberate undervaluation

Rejection of declared transaction value on corroborated evidence - Exclusion of refundable VAT from assessable value - Rejection and enhancement of the declared transaction value of the imported Maserati GranTurismo - HELD THAT: - Transaction value has statutory primacy and cannot be rejected on suspicion alone; however, Rule 12 applies where objective and reliable material creates reasonable doubt as to its truth or accuracy. The contemporaneous invoices for the same vehicle, corroborated by official overseas verification, electronic correspondence and commercial records, established deliberate misdeclaration of value. The refundable VAT shown in the higher invoice did not form part of the price paid or payable for export to India and was consequently excluded from assessable value. [Paras 11, 15, 16, 18, 25]

Rejection of the declared value and enhancement were upheld, subject to exclusion of the refundable VAT component; re-quantification was remanded on that limited basis.

Exemption for temporarily registered new motor vehicle - Independent examination of exemption eligibility - Eligibility of the imported Maserati GranTurismo for concessional duty as a new motor vehicle notwithstanding its registration in the United Kingdom before export - HELD THAT: - Temporary registration in the exporting country, without evidence that the vehicle was actually used, does not render it a used motor vehicle. Registration undertaken as a statutory or transportation formality cannot by itself defeat the exemption. Valuation and exemption operate on distinct statutory foundations; established undervaluation does not by itself deny an exemption whose substantive conditions are otherwise fulfilled. [Paras 21, 22, 23, 24, 25]

The benefit of Serial No. 344(2) of Notification No. 21/2002-Cus. was held available, and the duty was directed to be re-quantified accordingly.

Confiscation for misdeclaration of value - Redemption fine where goods are unavailable for confiscation - Sustainability of confiscation and redemption fine in respect of the imported vehicle misdeclared in value and already cleared - HELD THAT: - Deliberate misdeclaration of value rendered the vehicle liable to confiscation, independently of the importer's entitlement to the exemption. However, redemption fine could not be imposed when the vehicle had already been cleared and was no longer available for confiscation. [Paras 26, 27, 30]

Confiscation was upheld, but the redemption fine was set aside.

Penalties for deliberate undervaluation - Consequential modification of penalty - Penalties for deliberate undervaluation of the imported Maserati GranTurismo - HELD THAT: - The finding of deliberate undervaluation was affirmed on the corroborated documentary evidence. Since the differential duty required re-quantification after allowing the exemption and excluding refundable VAT, the penalty linked to such duty could not survive at its original quantum; the penalty on the intermediary for facilitating the undervaluation was unaffected. [Paras 28, 29, 30]

The penalty under Section 114A was restricted to the penalty legally leviable on the re-quantified duty, while the penalty under Section 112(a) on the intermediary was confirmed.

Final Conclusion: The appeals were partly allowed to the extent of granting the concessional notification benefit, excluding refundable VAT from assessable value, setting aside redemption fine and modifying the duty-linked penalty. The matter was remanded solely for re-quantification; confiscation and the penalty on the intermediary were sustained.

Appellate jurisdiction over goods imported as baggage - gold ornament found worn on an arriving passenger's wrist -Strict construction of exclusionary appellate provisions - scope of word “imported or exported as baggage” appearing in the proviso

Maintainability of an appeal concerning a gold kada found worn on an international passenger's wrist under the exclusion for goods imported or exported as baggage - HELD THAT: - The statutory exclusion applies only where the challenged order relates to goods imported or exported as baggage. An exclusion of the ordinary appellate remedy must be applied only where its conditions are clearly and unambiguously satisfied. Arrival from abroad or interception at an international airport does not by itself establish that an article worn on the person is baggage. Since the gold kada was recovered from the appellant's wrist, and its character as a personal ornament, bona fide personal effect, declarable article and concealed goods requires examination on merits, it could not conclusively be treated at the preliminary stage as goods imported as baggage. The Revenue authorities cited, involving goods recovered from baggage, luggage or articles admittedly presented as baggage, were factually distinguishable; nor could the description assigned by the Department determine jurisdiction. [Paras 19, 20, 21, 22, 23]

The preliminary objection was rejected and the appeal was held maintainable for hearing on merits.

Final Conclusion: The appeal was held maintainable because the gold kada found worn on the appellant's wrist could not, at the preliminary stage, conclusively be regarded as goods imported as baggage. The matter was directed to be listed for disposal on merits.

Customs exemption for flavour compounds - Compound alcoholic preparations used for manufacture of beverages - Burden to establish applicability of exemption exclusion

Eligibility of imported Tab Mapelein ST, classified under Customs Tariff Heading 3302, for the exemption available to goods other than compound alcoholic preparations of a kind used for manufacture of beverages with alcoholic strength exceeding the prescribed limit - HELD THAT: - The exclusion applies only where the imported goods are established to be compound alcoholic preparations of the specified alcoholic strength and of a kind used for manufacture of beverages. The earlier Tribunal order in the appellant's case [2009 (12) TMI 786 - CESTAT BANGALORE] had denied exemption to beverage flavours actually used in beverage manufacture, but required a categorical finding regarding flavour compounds not sold to beverage manufacturers. The Revenue could not deny the exemption merely by relying on that earlier order, without proving that the present goods, supplied to a tobacco manufacturer, were of a kind used in manufacture of beverages. Reliance on an earlier test report, without a test report for the present consignment, did not establish the exclusion. [Paras 8, 10]

The Revenue having failed to establish that the imported goods fell within the exclusion, denial of the claimed exemption was unsustainable.

Final Conclusion: The impugned order denying the customs exemption was set aside and the appeal was allowed.

Penalty for involvement in gold smuggling - Confiscation of vehicle used for carriage of passengers possessing smuggled gold

Liability of the driver to penalty and of the hired vehicle to confiscation where smuggled gold was recovered from passengers travelling in the vehicle - HELD THAT: - Mere carriage of passengers from whose possession smuggled gold was recovered did not establish that the driver was engaged in smuggling. In the absence of corroborative statement or other evidence connecting the driver with the smuggling activity, neither penalty nor confiscation of the vehicle was sustainable. [Paras 7, 8]

The penalty on the driver was dropped, and the vehicle was held not liable to confiscation and directed to be released.

Penalty for involvement in gold smuggling - Liability of the hotel operators to penalty for alleged involvement in smuggling of gold recovered from other persons - HELD THAT: - Revenue produced no evidence that the hotel operators had knowledge of, connection with, or involvement in the smuggling activity of the persons from whose custody the gold was recovered. Their penal liability could not therefore be sustained. [Paras 9, 10]

The penalties imposed on the hotel operators were dropped.

Final Conclusion: The appeals were allowed. The penalties were set aside, and the seized vehicle was directed to be released.

Rejection of declared transaction value for imported Main PCB Boards - Redetermination of customs value on contemporaneous imports - Penalties for deliberate undervaluation and abetment of misdeclaration - Cross-examination in customs adjudication

Rejection of declared transaction value for imported Main PCB Boards - Contemporaneous-import valuation - Extended-period customs demand - Rejection and redetermination of the declared value of imported Main PCB Boards for Digital Satellite Receivers, with consequential recovery of duty, interest and confiscation for misdeclaration - HELD THAT: - The declared transaction value was rightly rejected where the importer acted merely as a commission conduit, the goods were imported through the overseas supplier's arrangement and were immediately supplied to the domestic beneficiary. The valuation adopted the lowest contemporaneous value of comparable Main PCB Boards imported from the same country during the same period and in comparable quantities. In the absence of declared distinguishing technical specifications, the appellants could not dispute comparability. Subsequent investigation disclosing suppression and undervaluation also sustained proceedings for recovery notwithstanding initial clearance. [Paras 6, 9]

The redetermined value, consequential duty with interest, and confiscation were upheld.

Penalty on importer for deliberate undervaluation - Penalty for abetment of customs misdeclaration - Penalties on the importer, the person managing the proprietary concern, and persons coordinating and benefiting from the undervalued imports - HELD THAT: - The proprietor, through the authorised representative, accepted responsibility for import-related declarations and admitted that the imports were undertaken for third parties at non-genuine declared values. The person managing the concern admitted lending its import entitlement, receiving commission, issuing fabricated invoices and routing the goods to the beneficiary, thereby attracting penalty for acts rendering the goods liable to confiscation. The overseas supplier's controller and the domestic beneficiary were found, on statements and documentary evidence, to have respectively coordinated the undervalued exports and actively abetted the scheme. [Paras 7]

The penalties imposed under Sections 112(a), 112(b) and 114A were sustained.

Cross-examination of witnesses in customs adjudication - Reliance on voluntary admissions and documentary evidence - Necessity of cross-examination where the customs adjudication rested on Bills of Entry, documentary material and voluntary admissions of the appellants - HELD THAT: - Cross-examination was neither relevant nor necessary because the adjudication was founded on documentary evidence and the appellants' own voluntary admissions, and no statement of an investigating officer was relied upon against them. [Paras 8]

The challenge based on denial of cross-examination was rejected.

Final Conclusion: The appeals were dismissed and the impugned order, including the redetermined value, consequential duty, confiscation and penalties, was upheld.

Penalty for misdeclaration of retail sale price of imported mobile phones and laptops

Sustainability of personal penalties imposed on co-noticees for alleged post-importation replacement of retail price stickers on imported mobile phones and laptops - HELD THAT: - The duty demand and allegations in the adjudication order had been dropped by the Commissioner (Appeals) in respect of the main noticee and other co-noticees. Since the foundation for the penalties no longer survived, the penalties imposed on the present appellants were held unsustainable. [Paras 6, 7]

The personal penalties imposed on the appellants were dropped.

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

Penalty for alleged involvement in smuggling of cigarettes - Admissibility of hostile witness testimony in cross-examination

Penalty on the respondent for alleged involvement in the smuggling of cigarettes, founded on the statement of the IEC holder - HELD THAT: - The witness, during cross-examination, stated that the respondent had no role in the matter, could not produce substantial documents establishing the respondent's ownership, and acknowledged a friendly relationship with the respondent. That testimony was admissible notwithstanding that the witness had turned hostile; it did not establish the respondent's involvement in smuggling. [Paras 7, 8, 9]

The dropping of penalties was upheld and the Revenue's appeal was dismissed.

Final Conclusion: The Tribunal upheld the order dropping the penalties imposed on the respondent, as the evidence relied upon did not establish his involvement in the smuggling activity.

Condonation of delay in brand rate drawback applications - Liberal construction of beneficial drawback scheme

Rejection of applications for fixation of drawback Brand Rate or Special Brand Rate for export shipping bills on the ground of delay - HELD THAT: - The Tribunal followed M/s. Amber Distilleries Ltd. [2016 (4) TMI 1197 - CESTAT MUMBAI] which held that the provision permitting an application beyond the initial period but within twelve months from the Let Export Order must be construed in accordance with the beneficial character of the drawback scheme.

Delay in filing an application for fixation of brand rate within the statutorily extendable period is to be considered liberally rather than on a narrow or technical approach. [Paras 14, 15]

The delay was condoned; the matter was remanded for consideration of the applications on merits and fixation of the drawback Brand Rate/Special Brand Rate in accordance with law, with consequential relief.

Final Conclusion: The appeal was allowed by remand. The applications for fixation of drawback Brand Rate or Special Brand Rate are to be considered on merits after condoning the delay.

Independent adjudication of separate show cause notices - Scope of interim stay order - Alternative statutory remedy

Stay of proceedings under one show-cause notice barred adjudication of another notice arising from the same investigation - Whether adjudication of the show cause notice concerning seized goods was barred by the stay of proceedings under a distinct show cause notice concerning earlier imports? -HELD THAT: - Though both notices arose from the same investigation, were assigned to a common adjudicating authority and were heard together, they concerned distinct subject matters and had independent statutory foundations. Common hearings for administrative convenience did not merge them into a composite proceeding. The interim order expressly stayed only further proceedings under the notice concerning earlier imports, and its scope could not be enlarged by implication to restrain adjudication under the notice concerning seized goods. [Paras 17, 18, 20, 21, 23]

The adjudication order concerning the seized goods was not invalid merely because proceedings under the separate notice had been stayed.

Alternative statutory remedy against customs adjudication order - Writ jurisdiction - Whether the writ court should examine objections to the customs adjudication order based on alleged denial of natural justice and non-supply of relied-upon documents? - HELD THAT: - The assertions regarding supply of relied-upon documents, adequacy of hearing, justification for adjournments and resultant prejudice involved disputed matters requiring examination of the adjudication record. As an effective statutory appeal lay to the Customs, Excise and Service Tax Appellate Tribunal, which could examine those objections as well as the evidence and legality of the adjudicating authority's findings, no exceptional circumstance warranted exercise of writ jurisdiction. [Paras 26, 27, 29, 30, 31]

Interference with the adjudication order was declined, leaving the petitioners to pursue the statutory appellate remedy.

Effective opportunity of hearing in customs adjudication - Continuation of adjudication under the show cause notice concerning earlier imports after vacation of the interim stay - HELD THAT: - The questions concerning limitation, the Call Book mechanism, extension of the adjudication period and communication of such extension were left open, since they remained to be determined in the pending adjudication. The adjudicating authority was directed to afford an effective hearing and comply with principles of natural justice before making a final order. [Paras 37, 38, 39, 43, 44]

The interim stay was vacated and adjudication was permitted to continue, without any adjudication on the merits of the parties' contentions.

Final Conclusion: The challenge to the adjudication order was declined in view of the available statutory appeal. The stay of proceedings under the separate notice was vacated, with all merits contentions left open for determination in accordance with law.

Exclusion of period of institutional incapacity from statutory limitation - Abatement of customs settlement proceedings for want of quorum - Computation of the statutory period for disposal of admitted customs settlement applications where the Interim Board became non-functional for want of quorum after final hearing

Whether Section 127C(12) of the Customs Act mandates automatic abatement of settlement proceedings even where the competent statutory authority itself had become legally incapable of deciding the proceedings for want of quorum, or whether the period during which such institutional incapacity continued deserves to be excluded while computing the statutory period prescribed for disposal of the settlement applications? - HELD THAT: - The statutory timeline for passing a settlement order must be construed in the context of the entire settlement scheme and presupposes a duly constituted forum legally competent to discharge its adjudicatory functions. Abatement for non-passing of an order cannot equate a failure by a functioning authority with a situation in which the Interim Board was legally incapable of acting for want of quorum, particularly where the applicant had completed all required steps. Accordingly, the period of the Interim Board's institutional incapacity must be excluded while computing the period under Section 127C(8A), as extended under Section 127C(12). [Paras 32, 33, 34, 35, 36]

The period from 01.10.2025 until the date of the judgment was directed to be excluded; the settlement proceedings had not abated, and the communications treating them as abated were set aside.

Final Conclusion: The writ petition was allowed. The duly constituted Interim Board was directed to resume the pending settlement applications from the stage immediately preceding the impugned communications and decide them expeditiously in accordance with law, without any opinion on their merits.

Appellate jurisdiction over interest on delayed duty drawback - Statutory interest on delayed duty drawback - Deemed filing of drawback claim upon Let Export Order

Appellate jurisdiction over interest on delayed duty drawback - Strict construction of exclusion of statutory appeal - Maintainability before the Appellate Tribunal of an appeal seeking interest on delayed payment of sanctioned duty drawback - HELD THAT: - The exclusion in the first proviso to Section 129A(1) is confined to disputes relating to payment of drawback and must be strictly construed. Interest under Section 75A, though consequential upon drawback being payable, arises from a distinct statutory liability caused by delay in its disbursement. As the entitlement to and quantum of drawback stood concluded and the controversy concerned only the commencement of statutory interest, it did not fall within the limited exclusion of appellate jurisdiction. [Paras 21, 22, 23, 24, 25]

The appeal before the Appellate Tribunal was maintainable, and its order was not without jurisdiction.

Statutory interest on delayed duty drawback - Deemed filing of drawback claim upon Let Export Order - Commencement of interest on delayed disbursement of duty drawback where the exporter's entitlement was subjected to adjudicatory proceedings - Whether interest under Section 75A became payable only after culmination of the adjudicatory proceedings? - HELD THAT: - Rule 13 deems the shipping bill to be the drawback claim on the date of the Let Export Order. Section 75A makes interest payable where drawback is not paid within one month from filing of that claim, without making its accrual contingent upon completion or finality of adjudication. Pending proceedings questioning valuation did not displace the statutory deeming fiction; once those proceedings concluded in favour of the exporter, the sanction merely gave effect to the entitlement already claimed. A contrary construction would permit postponement of statutory interest through prolonged adjudication. [Paras 34, 35, 36, 37, 38]

Interest was payable from expiry of one month after the Let Export Order until actual payment of the sanctioned drawback.

Final Conclusion: The appeal was dismissed, no substantial question of law arising. The exporter's entitlement to interest on delayed drawback from expiry of one month after the Let Export Order was sustained.

CBI investigation against corruption by Customs officials - credible material of cognizable offence - Customs clearance - verification of misdescription and valuation - Compensation claim involving disputed facts - writ jurisdiction - Judicial restraint in policy formulation

CBI investigation - credible material of cognizable offence - Customs clearance - verification of misdescription and valuation - Whether allegations of corruption arising from delayed clearance of cryptocurrency mining equipment justified a direction for investigation by the CBI? - HELD THAT: - The discrepancy between the description of the goods as a server and their stated nature as cryptocurrency mining equipment, together with the difference between the declared and market values, required verification by Customs before clearance.

A valuation or clearance dispute under the Customs Act does not, by itself, establish corruption. A direction for CBI investigation requires credible material disclosing a cognizable offence or reasonable suspicion of abuse of office; suspicion, conjecture, personal belief, or delay unconnected with extraneous considerations cannot substitute such material.

No material showed illegal gratification, abuse of authority, manipulation of records, or other circumstances from which corruption could reasonably be inferred. [Paras 12, 13, 14, 15, 16]

The prayer for a CBI investigation was rejected.

Compensation claim involving disputed facts - writ jurisdiction - Whether compensation for loss allegedly caused by delayed clearance of the imported equipment could be awarded in writ jurisdiction. - HELD THAT: - The existence and causation of the alleged loss, including the respective responsibility of Customs authorities, the courier agency, the foreign supplier, and the petitioner, involved disputed questions requiring evidence. Such claims cannot be satisfactorily adjudicated under Article 226 and must be pursued before the competent Civil Court or other available forum. [Paras 17, 18]

The compensation claim was declined, without prejudice to remedies available before the competent forum.

Judicial restraint in policy formulation - Fiscal and administrative policy - separation of powers - Whether the Court could compel the Government to formulate a policy for import and clearance of cryptocurrency mining equipment or to create a mechanism penalising Customs for delay? - HELD THAT: - Policy formulation, including fiscal and administrative mechanisms concerning import clearance, lies within the legislative and executive domain. In the absence of a statutory or constitutional obligation to formulate a particular policy, writ jurisdiction cannot be used to compel the executive to frame policy or exercise its policy-making power in a specified manner. [Paras 19, 20]

The policy-related prayers were rejected.

Final Conclusion: No material established arbitrariness, mala fides, abuse of statutory power, violation of a legal right, or circumstances warranting an independent investigation. The writ petition was disposed of, with liberty to pursue such civil remedies as may be available in law.

Limitation for customs interest refund - Statutory refund remedy for alleged unauthorised collection

Limitation for customs interest refund - Payment under protest - Whether a refund claim for interest paid u/s 47(2) of the Customs Act, 1962, filed after one year from payment, is maintainable under Section 27 of the Customs Act, 1962? - HELD THAT: - A refund application before the Customs authorities for duty or interest is governed by the statutory limitation u/s 27. Payment made to enable generation of electronic challans or clearance of goods does not by itself establish payment under written protest. As no material showed such protest, the exception to the one-year limitation was unavailable. Neither the statutory authorities nor the Tribunal has power to condone delay where the Act confers none; technical difficulty, bona fide conduct or late knowledge of the procedure cannot enlarge the prescribed period. [Paras 15, 22, 25]

The refund claim was barred by limitation and could not be entertained on merits.

Statutory refund remedy for alleged unauthorised collection - whether Interest collected u/s 47(2), alleged to have been not legally payable because of Electronic Cash Ledger system failure, could be refunded outside the limitation under Section 27? - HELD THAT: - Following Mafatlal Industries Ltd. [1996 (12) TMI 50 - SUPREME COURT] refund claims presented before statutory customs authorities, including claims alleging an illegal or unauthorised levy, must be pursued within the statutory refund mechanism and its limitation. The limited constitutional exception does not apply to a statutory refund proceeding. Administrative waiver orders could not dispense with the limitation enacted by Parliament, and describing the amount as an unauthorised collection did not take the claim outside Section 27. [Paras 17, 19, 21, 23, 24]

The challenge to the levy could not avoid the statutory limitation applicable to the refund claim.

Final Conclusion: The rejection of the time-barred claim for refund of customs interest was upheld and the appeal was dismissed.

Locus standi of former Director in winding-up proceedings - Finality of prior adjudication - Maintainability of an appeal by a former Director in an individual capacity against orders passed in winding-up proceedings concerning creditors' claims

HELD THAT: - An earlier Division Bench order [2018 (11) TMI 1861 - DELHI HIGH COURT] between the same parties, rendered in identical circumstances, had held that objections by the former Director in his individual capacity could not be entertained for want of locus standi. As that order had attained finality inter se the appellant and the Official Liquidator, no different view could be taken in the present appeal. [Paras 9, 10]

The appeal was held not maintainable and was dismissed with costs.

Final Conclusion: The appeal was dismissed as barred by the appellant's lack of locus standi, already conclusively determined between him and the Official Liquidator. Costs were imposed on the appellant.

Substantial compliance with service requirements for ex parte injunction - Cause of action for recovery of alleged provident fund defalcation - Civil court jurisdiction in provident fund trust defalcation dispute - Material suppression in ex parte injunction proceedings - High Court power to direct SFIO investigation

Substantial compliance with service requirements for ex parte injunction - Service of the interlocutory application with the plaint annexed, while the plaint annexures were separately appended to the application, constituted substantial compliance with Order XXXIX Rule 3 CPC - HELD THAT: - The purpose of the rule is to enable defendants to effectively oppose an ex parte injunction on the returnable date. The defendants had received the application and the plaint, the relevant plaint annexures were available with the application, and they were able to make extensive submissions without surprise. Though service was beyond the prescribed time, it was effected before the returnable date; the delay and absence of separately served plaint papers did not warrant vacation of the injunction.

The interim order was not liable to be vacated for non-compliance with Order XXXIX Rule 3 CPC.

Cause of action for recovery of alleged provident fund defalcation - Civil court jurisdiction in provident fund trust defalcation dispute - Non-joinder of trustees - The plaintiff, as the exempted establishment answerable for provident fund deposits, had a prima facie cause of action concerning the alleged defalcation of the exempted provident fund trust; the suit was neither barred by the PF Act nor liable to fail at the interim stage for non-joinder or misjoinder - HELD THAT: - Provident fund dues stood outside the resolution plan by virtue of the statutory exclusion, and the plaintiff could examine the funds held by the trust after taking over management. The plaintiff remained accountable as the establishment granted exemption, while employees dealt with the employer and their claims were certified and routed through it. The defendants did not produce cogent material for the subsequent periods to prima facie displace the alleged shortfall or defalcation. The statutory inquiry powers of provident fund authorities did not exclude the civil court's jurisdiction over the dispute. Further, specific allegations against impleaded trustees precluded a finding, at this stage, that the suit was barred merely because other trustees had not been joined.

The objections to the plaintiff's cause of action, the maintainability of the suit, jurisdiction, and joinder of parties were rejected for purposes of the interim application.

Material suppression in ex parte injunction proceedings - Parallel civil and criminal proceedings - whether plaintiff had not suppressed any material fact by failing to disclose the police complaint and subsequent FIR, or the controversy regarding revocation of provident fund exemption? - HELD THAT: - A suppression justifying discharge of an ex parte order must be material, namely one which, if disclosed, would have dissuaded the Court from granting relief. The plaint and application had been affirmed and filed before the FIR was registered, and the plaint indicated that a complaint was contemplated. Disclosure of the complaint when the injunction was sought would not have altered the grant of interim protection. Civil recovery proceedings and criminal proceedings arising from a common cause may continue simultaneously in the absence of a legal bar. The legality of the exemption-revocation notice was not an issue determinable in the present defalcation suit.

No ground was made out to vary or discharge the interim order for material suppression.

High Court power to direct SFIO investigation - Investigation into affairs of an exempted provident fund establishment - whether direction for SFIO investigation into alleged defalcation of funds of the exempted provident fund trust was valid and was to continue? - HELD THAT: - The alleged deductions and employer contributions were reflected in the plaintiff company's accounts and their proper deposit in the exempted trust formed part of the company's affairs. The matter concerned multiple units across different States, whereas regional provident fund authorities and local police could face practical and statutory limitations in conducting a comprehensive inquiry. The High Court's constitutional and inherent authority to direct an appropriate investigation was not curtailed by the statutory power conferred on the Central Government under the Companies Act. Given the social-security character of the funds and the need for a comprehensive inquiry, SFIO was held to be the preferred investigating agency.

The direction for SFIO investigation was sustained.

Final Conclusion: The interim injunction and the direction for SFIO investigation were continued pending disposal of the injunction application. The vacating applications were dismissed.

Asset disclosure in aid of prospective attachment - Conclusive effect and presumption of jurisdiction of foreign judgments - Appellate restraint in interlocutory discretion

Validity of the direction requiring disclosure of assets from the commencement of the New York proceedings, notwithstanding the pendency of a suit concerning enforcement of the foreign judgments - HELD THAT: - The direction was neither vague nor an impermissible retrospective inquiry, since the commencement of the New York litigation was undisputed. Disclosure merely identifies assets for prospective attachment and does not itself determine their attachability. The appellant's prior anti-enforcement proceedings precluded him from disputing awareness or enforceability of the foreign judgments. Under Sections 13 and 14 of the CPC, a certified foreign judgment carries a mandatory presumption of competent jurisdiction, which the party challenging it must displace by credible evidence; mere disagreement with its findings or reliance upon the exceptions in Section 13 is insufficient. The appellant's conduct, including the findings of diversion of assets, justified the disclosure order. The decisions in L. K. Prabhu vs. K. T. Mathew [2025 (11) TMI 2046 - SUPREME COURT], Bank of Baroda v. Dr. Bavaguthu Raghuram Shetty & Ors [2021 (5) TMI 1097 - KARNATAKA HIGH COURT], Delhi Chemical and Pharmaceutical Works Ltd. vs. Himgiri Realtors Pvt. Ltd. [2021 (7) TMI 1430 - DELHI HIGH COURT], United Phosphorous Ltd. vs. A. K. Kanoria [2002 (6) TMI 611 - BOMBAY HIGH COURT] and Raman Tech. & Process Engg. Co. v. Solanki Traders [2007 (11) TMI 611 - SUPREME COURT] were held inapplicable or unhelpful. [Paras 28, 31, 34, 35, 36]

The disclosure direction from the commencement of the New York proceedings was sustained.

Appellate restraint in interlocutory discretion - Interference in appeal with the Single Judge's interlocutory disclosure and restraint order - HELD THAT: - An appellate court does not substitute its discretion for that of the court of first instance where the latter's view is reasonably possible on the material. Interference is warranted only where the discretion is arbitrary, capricious, perverse, or contrary to settled principles. The impugned exercise of discretion did not suffer from those defects. [Paras 33]

No interference with the interlocutory order was warranted.

Final Conclusion: The appeal was dismissed and the disclosure and restraint directions were maintained. The interim application was consequently disposed of.

Security-service provider's claim for payment for preservation of the company's assets - ongoing insolvency proceedings before the NCLT - High Court [2026 (5) TMI 874 - CALCUTTA HIGH COURT] has taken the view that Section 529 of the Companies Act would not come to the aid of the petitioner before us, however, the petitioner should put forward its claim before the NCLT

HELD THAT:- The petition was disposed of, as the matter has now reached the stage of CIRP before the NCLT. It shall be open for the petitioner to join the proceedings before the NCLT and put forward its claim.

Maintainability of appeal against ex parte ad interim order - Director without shareholding - Bar of civil court jurisdiction in corporate governance matters - Definition of director under Section 2(34) - Statutory removal of director - absence of locus standi before the NCLT revives civil court jurisdiction - Reasoned satisfaction of prima facie case, balance of convenience and irreparable injury - Oppression and mismanagement remedy - Waiver of eligibility requirements - Balance of convenience - Irreparable injury - Clean hands doctrine.

HELD THAT:- Special Leave Petitions were dismissed, the Court finding no ground to interfere with the common impugned order of the High Court [2026 (5) TMI 1384 - CALCUTTA HIGH COURT]

Supervisory jurisdiction under Article 227 - Jurisdiction and executability before the executing Tribunal - Jurisdictional Objection - Maintainability of Execution Proceedings - Restitution - Status Quo Ante

Whether the High Court should, under Article 227, stay execution proceedings arising from the appellate order pending civil appeals before the Supreme Court or determine their jurisdiction and maintainability before the Tribunal considers them? - HELD THAT: - Questions concerning the jurisdiction, maintainability and executability of the execution petition must initially be determined by the Tribunal before which the petition is pending. Exercise of supervisory jurisdiction to pre-empt that determination was neither proper nor necessary. Since the civil appeals were pending before the Supreme Court and the petitioners had sought, but had not obtained, stay, any request to stay the execution proceedings was required to be made before that Court. [Paras 14, 15, 16]

The requests for stay and for a declaration that the execution petition was not maintainable were declined.

Final Conclusion: The original petitions were dismissed, leaving the questions relating to the execution petition for determination by the Tribunal and preserving the parties' recourse before the Supreme Court for any interim relief.

False statements in statutory returns - mens rea of independent professional certifier - Limitation for criminal complaint

False statements in statutory returns - mens rea of independent professional certifier - Criminal liability of an independent Chartered Accountant for certification of allegedly false statutory e-Forms under the Companies Act, 1956 - HELD THAT: - Section 628 applies to any person who knowingly makes a materially false statement or intentionally conceals a material fact; an independent professional is therefore not immune merely because he is not an officer of the company. However, criminal liability requires specific allegations and foundational material establishing conscious knowledge of falsification or active complicity. The complaint attributed the falsification and mala fide intent to the company director and merely alleged that the Chartered Accountant had certified the forms, without pleading knowledge, connivance, or any direct nexus with the falsification. [Paras 24, 25, 26, 33]

The discharge was sustained, as the complaint disclosed no essential ingredients of mens rea or active complicity against the independent professional certifier.

Limitation for criminal complaint - Condonation of delay in taking cognizance - Limitation for prosecution concerning allegedly false e-Forms and share allotments filed between March 2011 and March 2014. - HELD THAT: - For an offence punishable with imprisonment up to two years, the prescribed period for taking cognizance is three years. The decisive date for computing limitation is the date of filing of the complaint. As the complaint was instituted after expiry of that period, and neither an application for condonation nor an explanation for delay was made under Section 473 of the Cr.P.C., the prosecution was barred by limitation. [Paras 29, 30, 31, 32, 33]

The complaint was held incurably time-barred.

Final Conclusion: The revision was dismissed against the surviving independent professional, and the discharge was affirmed for absence of pleaded mens rea and because the prosecution was barred by limitation. The revision stood abated against the deceased accused.

Alternative statutory remedy in corporate disputes - Writ jurisdiction and private rights in company management

Maintainability of a writ petition seeking investigation into alleged fraudulent transfer of shares, removal from directorship, and consequential enforcement of industrial-policy and lease conditions - HELD THAT: - The petition substantially concerned disputed private rights arising from the company's internal affairs, namely the petitioner's directorship, share transfer and alleged misuse of corporate records. Such allegations required examination of disputed facts and evidence and were amenable to the comprehensive statutory mechanism under the Companies Act, including recourse to the National Company Law Tribunal for an investigation into the affairs of the company.

The asserted inaction concerning industrial-policy and lease conditions was intrinsically dependent on resolution of the underlying corporate dispute and did not introduce a public-law element warranting writ jurisdiction. [Paras 32, 33, 34, 35, 36]

The writ petition was held not maintainable in view of the equally efficacious remedies under the Companies Act, with liberty to pursue remedies before the competent authorities.

Final Conclusion: The writ petition was dismissed as a corporate dispute concerning private rights and disputed facts for which efficacious statutory remedies were available under the Companies Act. Interim directions stood vacated.

Cognizance of offences under the Securities Contracts (Regulation) Act on police report - Criminal breach of trust and cheating - essential ingredients

Statutory bar on cognizance under the Securities Contracts (Regulation) Act - Whether offences under the Securities Contracts (Regulation) Act alleged in relation to dabba trading could be prosecuted on a police report? -HELD THAT: - Though the police could investigate the cognizable offence, the statutory requirement of a written complaint before the Court governed cognizance. A police report could not enable the Sessions Court to take cognizance; material collected during investigation could, however, be used by the competent authority for filing a complaint before the appropriate court. [Paras 7]

The FIR and consequential proceedings for the offences under the Securities Contracts (Regulation) Act were quashed qua the applicants, without precluding fresh proceedings in accordance with law.

Criminal breach of trust - entrustment of property - Cheating-dishonest inducement - Whether the allegations relating to dabba trading disclosed criminal breach of trust or cheating under the Indian Penal Code? - HELD THAT: - Even accepting the prosecution case as true, there was no material showing entrustment of property, dishonest misappropriation, financial loss to any person, wrongful gain, or dishonest inducement for delivery of property. The alleged regulatory breach could not, without the requisite ingredients, be characterised as criminal breach of trust or cheating. See case of State of Haryana v. Bhajan Lal [1990 (11) TMI 386 - SUPREME COURT] Apex Court has set out the categories of cases in which the inherent power under Section 482 CrPC can be exercised [Paras 8, 9]

The FIR and consequential proceedings for the offences under Sections 406 and 420 of the Indian Penal Code were quashed qua the applicants; investigation regarding the remaining offences was left to proceed in accordance with law.

Final Conclusion: The application was partly allowed. The FIR was quashed qua the applicants in respect of the offences under Sections 406 and 420 of the Indian Penal Code and the Securities Contracts (Regulation) Act, while investigation into the remaining offences was permitted to continue in accordance with law.

Applicability of Section 32A IBC to extinguish the corporate debtor's criminal liability and its consequence for suspension of sentence where the resolution plan was not approved - Extinguishment of corporate criminal liability under Section 32A IBC - effect of moratorium under Section 14 IBC on criminal liability.

HELD THAT:- We are not inclined to interfere with the impugned order passed by the High Court of Delhi [2026 (3) TMI 1210 - DELHI HIGH COURT]. The Special Leave Petition is, accordingly, dismissed.

Unreasoned fraud classification order - Natural justice in fraud-account classification

Whether the bank's order classifying the company's account as fraud was unreasoned? -HELD THAT: - As in State Bank of India Vs. Rajesh Agarwal [2023 (3) TMI 1205 - SUPREME COURT] the Hon’ble Supreme Court has held that, although the Order declaring a person as fraud must be reasoned, the reasons to be recorded need not be placed on the same pedestal as a Judgment of a Court. The reasons may be brief but they must comport with fairness by indicating a due application of mind.

A fraud-classification order need not contain reasons at the level required of a judicial judgment, but must disclose due application of mind. The order identified the applicable grounds under the Fraud Master Circular and, through its schedules, recorded the transaction auditor's findings concerning diversion of funds through an undisclosed bank account, related-party transactions, unjustified transfers and interest-free advances. It therefore contained adequate reasons for the classification. [Paras 32, 33]

The challenge to the order as unreasoned was rejected.

Natural justice in fraud-account classification - Whether refusal to extend time for replying to the show-cause notice before classifying the company's account as fraud violated natural justice? - HELD THAT: - The petitioners had previously received and discussed the draft transaction audit report, were afforded access to the company's office to furnish material, and were given a further opportunity to provide the required data, which they did not avail. The final transaction audit report was supplied with the show-cause notice, which allowed the prescribed time for a reply. In these circumstances, the request for further time founded on unspecified family and medical issues was rightly refused, since the petitioners had full prior knowledge of the case to be answered. [Paras 35, 36, 37, 38, 39]

There was no breach of natural justice in passing the fraud-classification order.

Final Conclusion: The writ petition was dismissed, the Court holding that the company's account was validly classified as fraud by a reasoned order passed without breach of natural justice.

Enforcement of appellate directions during pendency of challenge before Supreme Court - Distribution under approved resolution plan

Whether directions for redistribution and disbursement under the approved resolution plan could be restrained pending adjudication of the challenge before the Supreme Court? - HELD THAT: - The earlier appellate judgment had crystallised the appellant's admitted claim and directed the Monitoring Committee to redistribute the allocation under the resolution plan and decide distribution of the escrowed amount. Those directions were passed after considering the CoC resolution and the plan-approval order. Since the appellant had challenged that judgment before the Supreme Court and had obtained no stay against distribution, the Tribunal held that it could not interfere with or effectively stay its earlier directions. [Paras 8, 9, 10]

The application seeking suspension of distribution and exclusive implementation of the CoC resolution was dismissed as misconceived.

Final Conclusion: The Tribunal declined to restrain distribution under the resolution plan, holding that its prior directions remained operative in the absence of any stay by the Supreme Court.

Jurisdiction of the Adjudicating Authority in insolvency resolution proceedings - Cooperation by suspended management for recovery of corporate debtor's assets

Whether the Adjudicating Authority had jurisdiction to direct suspended directors of a lessee corporate debtor to assist the resolution professional of the lessor corporate debtor in identifying and recovering leased electric vehicles? - HELD THAT: - Section 60(5) confers wide jurisdiction to determine questions of law or fact arising out of or relating to the insolvency resolution of a corporate debtor. Its expressions "arising out of" and "in relation to" must be construed to facilitate expeditious resolution and preservation of the maximum value of the corporate debtor's assets. Since the vehicles belonged to the corporate debtor represented by the resolution professional and had been leased to the corporate debtor whose suspended management included the appellants, directions requiring their continued cooperation for identification and recovery had a direct nexus with the insolvency resolution process.

The appellants' objection that they could not be directed in their individual capacity was also inconsistent with their acknowledged responsibility to provide information and assistance concerning the vehicles. [Paras 8, 10]

The directions requiring the appellants to assist in identification and recovery of the leased electric vehicles were within jurisdiction and warranted no interference.

Final Conclusion: The appeal was dismissed, the directions to the suspended directors to cooperate in recovery of the electric vehicles being upheld.

Replacement of Interim Resolution Professional - Committee of Creditors' control over replacement of Resolution Professional

Verification and admission of creditors' claims - Reconstitution of Committee of Creditors - Partial admission of secured financial creditors' claims and the consequent reduction in their voting share following admission of homebuyers' claims as grounds for removal of the Interim Resolution Professional - HELD THAT: - The Interim Resolution Professional is statutorily required to receive, verify and collate claims and maintain an updated list of creditors for constitution of the Committee of Creditors. Admission of a claim for a lesser sum upon verification, and reconstitution of the Committee consequent upon admission of further claims, do not by themselves impeach the integrity of the Interim Resolution Professional or furnish a ground for his removal. [Paras 42, 43]

The grievance concerning partial admission of claims and reduction of voting share did not warrant removal of the Interim Resolution Professional.

Removal of Interim Resolution Professional - Commercial wisdom of Committee of Creditors - Exceptional circumstances for judicial interference - Replacement of the Interim Resolution Professional on allegations of bias, misconduct, contractual interference and deadlock in the corporate insolvency resolution process - HELD THAT: - The resolution concerning the contract was not acted upon because its implementation had been stayed by the Adjudicating Authority. Though there was deadlock on certain matters, the creditors in a class supported the Interim Resolution Professional, while the appellants' objections substantially arose from the diminishing voting share caused by admission of homebuyers' claims. Decisions regarding continuation, change or replacement of an Interim Resolution Professional are controlled by the Committee of Creditors and must ordinarily be left to its commercial wisdom; tribunal interference is justified only in exceptional circumstances. No such circumstances were established. [Paras 56, 57, 58, 59, 61]

No ground for interference with the rejection of the applications seeking replacement of the Interim Resolution Professional and restraint on further Committee of Creditors meetings was made out.

Final Conclusion: The appeals were dismissed, the Tribunal finding no exceptional circumstance warranting interference with the refusal to replace the Interim Resolution Professional.

Restoration of corporate debtor's assets depleted during moratorium - Adjudicating Authority's residuary jurisdiction in CIRP - Infructuous penal reference under omitted statutory provision

Restoration of corporate debtor's assets depleted during moratorium - Adjudicating Authority's residuary jurisdiction in CIRP - Restoration of funds dealt with by the suspended management during the CIRP moratorium, notwithstanding that the application also invoked fraudulent and wrongful trading provisions. - HELD THAT: - The application was not confined to the provision concerning fraudulent or wrongful trading; it expressly sought restoration of amounts withdrawn during the moratorium. The provisions governing moratorium and transfer of management operate independently of a finding of fraudulent trading. The Adjudicating Authority's jurisdiction must be determined by the nature of the relief sought, and its residuary jurisdiction extends to consequential directions necessary to preserve and restore the insolvency estate. The sale of the corporate debtor's mortgaged property and dealing with its funds during moratorium were in breach of the statutory framework; the explanation that the withdrawals represented authorised payments was unsupported by satisfactory material. Restoration of the funds protected the insolvency estate and was distinct from imposing liability for fraudulent or wrongful trading. [Paras 56, 57, 58, 60, 65]

The direction to restore the amount to the corporate debtor's account was upheld as a valid consequential direction under the moratorium provisions read with the Adjudicating Authority's jurisdiction in relation to CIRP.

Infructuous penal reference under omitted statutory provision - Validity of the direction forwarding the order to the IBBI and the MCA for action under the provision concerning contravention of moratorium. - HELD THAT: - The statutory provision under which the reference was made had been omitted and was no longer part of the statute. Consequently, the directions relating to that provision had become infructuous. [Paras 64]

The direction concerning action under the omitted provision was held infructuous.

Final Conclusion: The appeal was dismissed. The restoration direction for funds dealt with during the moratorium was sustained, while the reference for action under the omitted statutory provision was rendered infructuous.

Extinguishment of arbitral award claim on approval of resolution plan - Deposit in court as security for arbitral award

Extinguishment of arbitral award claim on approval of resolution plan - Clean slate principle under insolvency resolution - Survival of an arbitral award claim where the award-holder failed to submit its claim during the corporate insolvency resolution process and the resolution plan was approved. - HELD THAT: - An arbitral award constitutes a claim, and its holder is a creditor required to submit that claim to the resolution professional. Upon approval of the resolution plan, claims not forming part of it stand extinguished; no proceeding concerning such claim can thereafter be initiated or continued. Since the award-holder did not lodge its claim, the award debt stood extinguished and the challenge to the award became academic. [Paras 7, 8, 9, 10]

The petition challenging the arbitral award was rendered infructuous.

Deposit in court as security for arbitral award - Ownership of court-deposited assets during insolvency resolution - Entitlement to refund of the amount deposited in court as a condition for stay of execution of the arbitral award after extinction of the award-holder's claim. - HELD THAT: - A deposit directed as a condition for stay secures the award amount pending the challenge and does not constitute payment to the decree-holder or alter ownership of the asset. Release remains subject to the court's permission and conditions, and no vested right to unconditional receipt arises merely from the deposit. The deposited amount remained an asset of the corporate debtor; objections concerning the approved resolution plan or the information memorandum could not be examined in the proceedings under the Arbitration and Conciliation Act. [Paras 14, 15, 16, 19, 20]

The deposited amount, with accrued interest, was directed to be released to the petitioner.

Final Conclusion: The award-holder's unsubmitted claim stood extinguished on approval of the resolution plan. The Section 34 petition was dismissed as infructuous and the court-deposited security, with accrued interest, was ordered to be refunded to the petitioner.

Retroactive application of statutory amendment to pending insolvency applications - Interim moratorium in personal guarantor insolvency proceedings

Retroactive application of statutory amendment to pending insolvency applications- Applicability of the exclusion from the interim moratorium to insolvency applications against personal guarantors that were filed before the amendment came into force and remained pending -HELD THAT: - The words "where an application is filed" in the amended provision encompass applications already filed and pending before the Adjudicating Authority. Its application to pending proceedings is retroactive, not retrospective: it operates prospectively from its commencement upon an existing and continuing status, without impairing vested rights. The provision is indifferent to the identity of the person who initiated the insolvency application. [Paras 11, 14, 15, 16]

The interim moratorium operating in respect of the individual guarantors ceased from the date on which the amendment took effect, and the petition was not barred by the moratorium.

Protective interim measures pending arbitration - Disclosure and preservation of guarantors' assets - Grant of asset disclosure and restraint against dissipation of the guarantors' assets pending arbitration - HELD THAT: - Since the petitioner confined its request to disclosure of assets and preservation against their dissipation, without seeking a deposit, the reliefs were limited and equitable. The availability of such information to the insolvency professional did not preclude the exercise of the Court's equitable jurisdiction to grant the protective measures. [Paras 19, 20]

The petition was disposed of by directing disclosure of assets and restraining their alienation or dissipation, subject to commencement of arbitration and further orders of the arbitral tribunal.

Final Conclusion: The petition was held maintainable upon cessation of the interim moratorium under the amended insolvency provision. Limited protective measures for disclosure and preservation of assets pending arbitration were granted.

Pre-existing dispute over operational debt - Settlement of operational creditor's claim after commencement of CIRP

Admissibility of a corporate insolvency resolution process where the operational debt was settled and the parties admitted a pre-existing dispute regarding transportation charges - HELD THAT: - The operational creditor's claim stood fully satisfied under the settlement, and it consented without objection to setting aside the admission order. The parties had also acknowledged that the transportation-charge claim was disputed before issuance of the demand notice, particularly regarding the measurement of distance. No other creditor's claim survived, the provident fund claim having been discharged. In these circumstances, there was no impediment to setting aside the admission order and closing the CIRP. [Paras 18]

The admission order was set aside and the CIRP was closed.

Final Conclusion: The appeal was allowed, the order admitting the corporate debtor to CIRP was set aside, and the CIRP was closed in view of the settlement, the admitted pre-existing dispute, and absence of surviving creditor claims.

Closure of corporate insolvency resolution process in absence of claims - Inherent power to close insolvency proceedings

Closure of the corporate insolvency resolution process where no claims were received following the public announcement and the proceedings had been stayed - HELD THAT: - The Tribunal noted that no claims had been received in the CIRP despite publication of Form-A. Applying the principle stated in Rajeev Goyal, which referred to the exercise of inherent power in appropriate cases to close insolvency proceedings, it held that there was no impediment to closure of the CIRP. [Paras 4]

The CIRP was closed and the impugned order was set aside.

Final Conclusion: The appeal was disposed of by closing the CIRP and setting aside the impugned order. The bank lien was withdrawn and the funds were directed to be disbursed in terms of the discharge agreements.

Proof of non-physical software import against foreign-exchange remittance - Vicarious liability of officer in charge for FEMA contravention

Contravention relating to foreign-exchange remittances for the purported import of software through a data communication channel - HELD THAT: - The intimation furnished to Customs could not constitute proof of import or acceptance of its contents by Customs. The Chartered Accountant's report, having been issued before the claimed import, was a valuation report for acquisition and finance and did not certify actual receipt of the software. The later expert certificate, based on CDs supplied by the company and recording that one CD was non-functional, was also insufficient to establish import in the relevant period. The failure to establish import was independently found from the material on record and did not rest upon investigations under other enactments. [Paras 15, 16]

The company's FEMA contravention was sustained; however, the penalty was reduced in view of the pleaded financial duress.

Vicarious liability of officer in charge for FEMA contravention - Liability of the Chief Executive Officer and Director for the company's contravention in making foreign-exchange remittances without establishing import of the software - HELD THAT: - We find that the individual Appellant cannot take the plea that the contravention occurred without his knowledge, in view of the evidence that he signed the papers relating to remittances made abroad and his own statement under Section 37 of FEMA, which is admissible evidence, that the software received was of no value, as well as having informed Shri G Dhananjaya Reddy about the same. We also do not find any evidence that he exercised all due diligence to prevent such contravention. We therefore hold him liable for penalty by virtue of his vicarious liability under Section 42(1) of FEMA for the contraventions found established against the Appellant Company.

The officer was a joint authorised signatory for the company's bank accounts and signed the remittance papers. His statement that the software received was of no value, coupled with the absence of evidence of due diligence to prevent the contravention, established that he was responsible for the company's conduct during the relevant period. [Paras 17]

His vicarious liability under Section 42(1) of FEMA was upheld, with reduction of the penalty.

Final Conclusion: The appeals were partly allowed only to the extent of reducing the penalties. The findings of FEMA contravention by the company and vicarious liability of its Chief Executive Officer and Director were maintained.

Delay in FEMA adjudication proceedings - Prejudice from procedural irregularity - Transfer of bank shares to non-residents without Reserve Bank approval - Vicarious liability for corporate contraventions under FEMA - Unauthorised escrow accounts and cross-border deposit arrangements - Guarantee through custody of shares and title deeds for overseas loans - Residential status for foreign exchange repatriation obligations

Delay in FEMA adjudication proceedings - Prejudice from procedural irregularity - Validity of the FEMA adjudication proceedings challenged on delay, alleged non-application of mind in issuance of the show-cause notice, pre-judging of guilt and non-compliance with adjudication procedure - HELD THAT: - The investigation involved cross-border transactions, two banks, numerous noticees and extensive documentation. The time taken was not unreasonable when reckoned from discovery of the contraventions, and the noticees received the complaint, relied-upon material, opportunities to file replies and personal hearings. The provision requiring expeditious disposal within one year accommodates delay where reasons are recorded; in the absence of demonstrated prejudice, the alleged procedural deficiencies did not vitiate the proceedings. [Paras 52]

The preliminary objections were rejected.

Transfer of bank shares to non-residents without Reserve Bank approval - Void subsequent transfer of unauthorised shareholding - Penalty for civil contravention under FEMA - Liability for recording transfers of bank shares to foreign entities other than those approved by the Reserve Bank, and for subsequent transfers by those entities to other non-residents - HELD THAT: - The regulatory approval was granted in specified names, whereas the shares were recorded in the names of different entities. Regulation 4 permitted recording of a transfer to a non-resident only upon Reserve Bank permission. The subsequent transfers could not be protected by the general permission for transfers between non-residents because the transferors did not hold the shares in accordance with the Regulations; the initial unauthorised holding was void from inception. The value of the shares rendered the contravention quantifiable. Penalty for contravention of civil obligations under FEMA does not require proof of mens rea. [Paras 56, 57, 59, 60]

The bank's contraventions in relation to the initial and subsequent share transfers were sustained, subject to reduction of penalty.

Vicarious liability for corporate contraventions under FEMA - Consent, connivance or neglect of company officers - Vicarious liability of the bank's chairman, managing directors, directors, nominee directors and company secretaries for unauthorised recording of transfers of bank shares to non-residents - HELD THAT: - Section 42 applies to contraventions of Regulations made under FEMA, since those Regulations derive from the Act and penalty is expressly attracted for their contravention. A person in charge of and responsible for the company's business is liable unless lack of knowledge or due diligence is established; other officers are liable where consent, connivance or neglect is proved. The responsible officers either countersigned or placed misleading board notes, or approved resolutions without examining the Reserve Bank approval and the relevant material. Non-executive or nominee status did not excuse the failure to exercise due diligence; a managing director's abstention from voting did not establish due diligence where the officer failed to guide the company lawfully. [Paras 65, 66, 67, 68, 69]

The vicarious liability findings were sustained, with penalties on the concerned officers reduced.

Unauthorised escrow accounts and cross-border deposit arrangements - Contravention of the Deposit Regulations through opening and operating sale-consideration and share escrow accounts without prior Reserve Bank permission - HELD THAT: - The Indian bank performed substantive escrow functions by opening the accounts, receiving and disbursing sale consideration, taking custody of share certificates and transfer deeds, and acting independently in seeking registration of shares in names not approved by the Reserve Bank. The arrangement was an escrow arrangement in substance and not merely a current account or a paper sub-agency. Before the applicable amendment took effect, prior Reserve Bank permission was required; in any event, the subsequent relaxation could not assist a transaction involving share transfers contrary to the transfer regulations. [Paras 77, 78, 79]

The contravention of the Deposit Regulations by the Indian bank, and the vicarious liability of its responsible business head, were sustained, subject to reduction of penalty.

Guarantee through custody of shares and title deeds for overseas loans - Contravention of the Guarantee Regulations by custody of bank shares and title deeds as security for loans advanced by an overseas bank to non-resident borrowers - HELD THAT: - The non-disposal undertaking, powers of attorney, physical custody of shares, and custody of title deeds under the security arrangements had the effect of guaranteeing overseas loan obligations. The Indian bank was the security agent and possessed rights over the assets that secured the lending. Regulation 3 prohibits a resident from undertaking, by whatever name called, a transaction having the effect of guaranteeing a non-resident's debt or liability without the requisite Reserve Bank permission; absence of later liquidation of the assets did not negate the guarantee arrangement. [Paras 80, 81]

The contravention of the Guarantee Regulations by the Indian bank, and the vicarious liability of its responsible business head, were sustained, subject to reduction of penalty.

Residential status for foreign exchange repatriation obligations - Liability for holding foreign exchange abroad, maintaining a foreign currency account and failing to repatriate foreign exchange received abroad - HELD THAT: - A co-ordinate bench [2025 (10) TMI 1449 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] had already upheld the finding that, on the relevant date, the appellant was a person resident outside India after excluding the day of arrival while computing the statutory period. That determination was followed. Consequently, the provisions applicable to a person resident in India concerning holding, realisation and repatriation of foreign exchange, and maintenance of a foreign currency account, were inapplicable. [Paras 84]

The contraventions relating to receipt, holding and non-repatriation of foreign exchange abroad were not established and the corresponding penalty was set aside.

Final Conclusion: The appeals were partly allowed. The findings on the unauthorised share transfers, the related vicarious liabilities, and the deposit and guarantee contraventions were maintained with substantial reduction of penalties; the foreign-exchange repatriation contravention against the concerned chairman was set aside.

Committal of scheduled offence to Special Court under the PMLA - Cognizance of money-laundering complaint as pre-condition - Speedy trial and discretionary committal

Committal of the pending disproportionate assets case to the Special Court dealing with the connected money-laundering complaint when that Court had not taken cognizance of the complaint - HELD THAT: - Section 44(1)(c) contemplates that cognizance has already been taken both of the scheduled offence and of the money-laundering complaint by different courts. Its committal mechanism cannot be invoked in anticipation of cognizance by the Special Court. A pre-cognizance notice under the BNSS does not amount to cognizance; further, the required prosecution sanction had not been produced, rendering the application premature.

On the admitted facts here, the Special Court at Madurai has not taken cognizance of the money-laundering complaint. It has only issued a notice under Section 223 of the BNSS calling the accused to appear before it decides whether to take cognizance at all, which is a pre-requisite that is held to be mandatory and must be complied with before cognizance can be taken, as has been held by the Supreme Court in Kushal Kumar Agarwal [2025 (5) TMI 2001 - SUPREME COURT] and was also emphasized in Seeman [2025 (11) TMI 2047 - MADRAS HIGH COURT]

Admittedly, one of the two essential facts on which Section 44(1)(c) of the PMLA is built, viz., cognizance by the Special Court, is not yet satisfied. An application asking the Thoothukudi Court to commit the case, even when cognizance was not taken by the Special Court, in our considered view, is premature.

It also needs to be pointed out that the petitioner had, in April 2023, already sought similar relief by way of an application under Sections 301(2) and 302(2) of the Code before the same court, and that petition was dismissed on merits in July 2024, without any appeal being carried against it. While this Court refrains from treating that dismissal as a formal bar, it is a relevant circumstance bearing on the propriety of a second attempt, through a different provision, to secure what is substantially the same outcome, particularly when raised only after the scheduled-offence trial had progressed still further towards conclusion.[Paras 11, 12, 13, 14, 23]

The refusal to commit the scheduled-offence case was upheld, the application being premature.

Speedy trial and discretionary committal - Interest of justice in committal proceedings - Committal of a nearly concluded disproportionate-assets trial to another court despite the connected money-laundering complaint remaining at the pre-cognizance stage - HELD THAT: - Committal under Section 44(1)(c) is intended to save time and avoid inconsistent findings, not to reopen or delay a trial that has substantially concluded. The discretion to order committal must be exercised in the interests of justice. Since evidence had closed and final arguments had substantially progressed, while the connected complaint had not reached cognizance, committal would cause real prejudice to the accused and frustrate the statutory purpose as well as the imperative of speedy trial. [Paras 18, 19, 20, 21, 23]

Committal was declined; the stay of the scheduled-offence trial was vacated and the trial court was directed to proceed expeditiously.

Final Conclusion: The petition challenging rejection of committal under Section 44(1)(c) of the PMLA was dismissed. The interim stay of the disproportionate-assets trial was vacated, and the trial court was directed to proceed with due expedition, without any expression on the merits of either proceeding.

Regular bail in money-laundering offences - Twin conditions for bail under the Prevention of Money Laundering Act - Proceeds of crime from undervalued asset sales

Grant of regular bail to a corporate executive accused of laundering unrecorded cash generated through irregular sale of corporate land assets - HELD THAT: - The Court held that the material indicating undervalued land sales under revoked board resolutions and diversion of unrecorded cash, allegedly in derogation of the asset-disposal safeguards prescribed for repayment of depositors, disclosed conduct falling within money laundering and not a mere corporate or civil irregularity. The petitioner did not establish reasonable grounds to believe that he was not guilty or that he would not commit an offence while on bail. The continuing investigation, abscondence of other accused, and risks of witness intimidation and data manipulation supported refusal of bail; age, detention, medical grounds and parity with a land broker did not displace the statutory requirements. [Paras 24, 25, 26, 27, 28]

Regular bail was refused for failure to satisfy the mandatory twin conditions under Section 45 of the Prevention of Money Laundering Act.

Final Conclusion: The application for regular bail was dismissed. The Court held that the petitioner had not satisfied the statutory conditions governing bail for the alleged offence of money laundering.

Bona fide purchasers' claim to attached property - Adjudication of third-party ownership claims under the Prevention of Money Laundering Act - Claim for release of attached villa plots by purchasers asserting agreements to sell and payment of substantial sale consideration

Whether the appellants claiming rights in attached villa plots as bona fide purchasers were entitled to release of the properties in the appellate proceedings? - HELD THAT: - The Tribunal found that no sale deeds had been executed in favour of the appellants and that the material did not permit a conclusive determination of whether they were bona fide purchasers or had acted in collusion with the principal accused.

Although the alleged transactions, if genuine, indicated possible misdeclaration by the vendors regarding the plots being unsold, the purchasers' status and entitlement to the attached properties required adjudication upon prosecution and defence evidence before the Special Court under the Prevention of Money Laundering Act. [Paras 42]

The appeals were disposed of with liberty to the Enforcement Directorate to verify the purchasers' claims and report to the Special Court, and to the appellants to pursue their claims before that Court; no conclusive finding on their bona fides or ownership was recorded.

Final Conclusion: The appeals were disposed of without deciding the appellants' ownership or bona fide purchaser claims on merits. Their claims to the attached villa plots were left to be pursued before the Special Court in accordance with law.

Provisional Attachment Orders (PAO) - power and jurisdiction of authority of the Enforcement Directorate/Authorities forattachment- “reason to believe” that the subject properties were proceeds of crime involved in the money laundering -withdrawal of the concessions given by the Advocate - Meaning of term “proceeds of crime” - proceeds of crime involved in the money laundering -

HELD THAT:- Delay was condoned and the special leave petitions were dismissed without interference with the impugned judgments and orders [2026 (1) TMI 655 - BOMBAY HIGH COURT].

Judicial review of Enforcement Case Information Report - Constitutional jurisdiction over consequential money-laundering proceedings

Maintainability of challenge to Enforcement Case Information Report - Article 226 judicial review - Maintainability of a writ petition under Article 226 read with Section 482 of the Cr.P.C. challenging an Enforcement Case Information Report and consequential proceedings under the PMLA - HELD THAT: - An ECIR may be an internal and administrative document and not equivalent to an FIR, but its nomenclature cannot exclude constitutional scrutiny where it forms the foundation for coercive action affecting liberty, property and reputation. The decisions declining to quash an ECIR under Section 482 of the Cr.P.C. were confined to inherent jurisdiction and did not determine the width of judicial review under Article 226.

The High Court's jurisdiction extends to examine the legality of the ECIR and the entire chain of consequential proceedings; otherwise, a single cause of action would be impermissibly fragmented. [Paras 18, 20, 21, 22, 23]

The preliminary objection was rejected; the writ petition is maintainable and is to be heard on merits.

Final Conclusion: The writ petition challenging the ECIR and consequential PMLA action was held maintainable. The Court rejected the Directorate of Enforcement's preliminary objection and directed that the petition be heard on merits.

Jurisdiction to decide CBI closure report - Effect of final Special Court order on investigation or trial

Jurisdiction to decide CBI closure report - The forum competent to take a final decision on a closure report filed by the CBI. - HELD THAT: - The final decision on the CBI's closure report must be taken by the Trial Court. [Paras 4, 5]

The Trial Court was directed to decide the closure report in accordance with law within two months.

Effect of final Special Court order on investigation or trial - Whether a concluded criminal proceeding before the Special Court amounts to impeding investigation or trial. - HELD THAT: - Where the Special Court has passed a final order following conviction, acquittal, or complete discharge of the accused, the matter would not amount to impeding the investigation or trial; the parties remain at liberty to avail the statutory remedy. [Paras 7]

The application was disposed of without interference with the earlier directions.

Final Conclusion: The clarification application was disposed of by directing the Trial Court to decide the CBI closure report. The other applications and petitions were disposed of in accordance with the respective directions, including as infructuous or withdrawn where applicable.

Writ jurisdiction against provisional attachment under PMLA - Alternative statutory remedy - time-bound adjudication of provisional attachment - Manifest lack of jurisdiction Scheduled offence and provisional attachment

Maintainability of the writ petition challenging the provisional attachment on the grounds of absence of a scheduled offence and inclusion of advertising revenue attributable to users outside India - HELD THAT: - Writ jurisdiction despite an efficacious statutory remedy is to be exercised sparingly and only upon a clear demonstration of mala fides, patent arbitrariness or manifest lack of jurisdiction. The provisional attachment referred to FIRs disclosing cheating, a scheduled offence, and the Enforcement Directorate had contemporaneously forwarded information to the jurisdictional police under the statutory disclosure mechanism.

A pre-registered criminal case is not indispensable for provisional attachment, provided the prescribed course for reporting the scheduled offence is followed. The challenge regarding revenue from advertisements targeted outside India concerned quantification of alleged proceeds of crime and disputed facts, not an ex facie jurisdictional defect; it was therefore amenable to the statutory adjudicatory process. [Paras 32, 36, 37, 38, 39]

No manifest lack of jurisdiction was established; the petitioners were relegated to the statutory remedies under the PMLA.

Final Conclusion: The writ petition was dismissed, with all rights and contentions left open for determination in the statutory proceedings under the PMLA.

Regular bail under the Prevention of Money Laundering Act - High Court [2026 (6) TMI 1500 - MADHYA PRADESH HIGH COURT] held that the application for regular bail under the PMLA was dismissed. The Court found that a scheduled offence subsisted and that the applicant failed to meet the statutory requirements for bail. - HELD THAT:- The Special Leave Petition was dismissed, with liberty to the petitioner to renew the prayer before the Trial Court at an appropriate stage.

Seeking regular bail in the money-laundering proceedings - nature and gravity of allegations indicated misuse of local area development funds through 32 tenders for sports equipment and diversion of public funds.

HELD THAT:- This Court has considered the nature and gravity of the allegations as set out in the complaint filed by the ED. The investigation reveals that the petitioner, while serving as an MLA, allowed his MLA Local Area Development (LAD) funds to be misued for the purchase of sports equipment through floating of 32 tenders, which, according to the investigation conducted by the ED, were illegal and constituted a classic case of diversion of public funds.

Having regard to the overall facts and circumstances of the case, this Court is not inclined to entertain the present bail application at this stage

CENVAT credit on input-service invoices bearing an incorrect recipient address - Disallowance of CENVAT credit on technical grounds without consideration of objections

Disallowance of CENVAT credit merely because the recipient address in input-service invoices did not correspond with the address in the ST-2 registration certificate - HELD THAT: - The adjudicating authority had proceeded solely on the mismatch between the address in the invoices and the registered address, without examining the petitioner's entitlement to credit on merits or recording reasons for rejecting its explanation that the former address continued in the service provider's records. The invoices otherwise fulfilled the requirements under Rule 4A of the Service Tax Rules, 1994. Disallowance founded only on such technicality, without consideration of the objections, was unsustainable. [Paras 12, 13]

The impugned order was set aside and the matter was remanded for fresh consideration after notice and opportunity of hearing.

Final Conclusion: The writ petition was allowed. The demand, interest and penalty order was set aside, with a direction for fresh adjudication after affording the petitioner an opportunity of hearing.

High seas sale transactions - characterisation as sale of goods - Banking and other financial services - letter of credit charges - Composite supply - indivisibility of sale price

Liability to service tax on letter of credit charges recovered by a trader from high seas sale buyers - HELD THAT: - The high seas sale agreement was predominantly an agreement for sale of imported goods: the buyer was required to pay the entire invoiced amount, inclusive of letter of credit charges and all costs incurred by the seller. The letter of credit was issued by the bank, which alone furnished the payment guarantee to the foreign supplier. The appellant, being a trading organisation and not a provider of banking or financial services, neither issued the letter of credit nor rendered a service to the buyer; the parties stood in the relationship of seller and buyer. The expression relating to issue of letters of credit in banking and other financial services could not be extended to recovery by the seller of charges incurred for obtaining the banking facility. Under the post-negative-list regime as well, transfer of title in goods by sale was excluded from the definition of service. [Paras 20, 22, 23, 26]

The recovered letter of credit charges formed part of the sale consideration and were not consideration for taxable banking and other financial services.

Composite supply - indivisibility of sale price - Whether letter of credit charges embedded in the high seas sale transaction could be separately subjected to service tax? - HELD THAT: - The principal purpose of the agreement was sale of goods, while procurement of the letter of credit was merely linked to and necessary for execution of that sale. The composite transaction could not be vivisected to levy service tax on the letter of credit charges recovered as part of the price of the imported goods. Applying the principle in Union of India vs. Mohit Minerals Pvt. Ltd. [2022 (5) TMI 968 - SUPREME COURT] the service component accompanying a composite supply of goods could not be separately taxed contrary to the character of the bundled transaction. [Paras 27]

The letter of credit charges could not be isolated from the high seas sale consideration for levy of service tax.

Final Conclusion: The demand of service tax, interest and penalties on letter of credit charges recovered in connection with high seas sales was unsustainable. The impugned order was set aside and the appeal was allowed.

Extended limitation for suppression of facts - Mutual exclusivity of service-tax penalties - Penalty under omitted statutory provision - Penalty beyond show-cause notice allegation - Reasonable cause for service-tax default

Extended limitation for suppression of facts - Penalty for non-payment of service tax - Mutual exclusivity of service-tax penalties - Penalties for non-payment of service tax on services rendered to a multi-system operator, where taxability turned on interpretation of a commercial agreement - HELD THAT: - Invocation of the extended period and penalty for suppression require proof of a positive act of deliberate concealment with intent to evade tax; mere payment of tax after commencement of enquiry does not establish suppression. As the dispute involved interpretation of a multi-clause commercial agreement and no such positive act was established, the penalty for suppression was unsustainable. The penalties for delay in payment and for suppression being mutually exclusive, the former penalty was also set aside. See CHEMPHAR DRUGS & LINIMENTS [1989 (2) TMI 116 - SUPREME COURT] [Paras 6, 7]

The penalties under Sections 76 and 78 were set aside, while the admitted and paid service-tax demand with interest was upheld.

Penalty under omitted statutory provision - Penalty imposed under Section 75A after its omission from the Finance Act, 1994 - HELD THAT: - Section 75A had been omitted with effect from 10.09.2004 and its penal consequence was not saved under the new Finance Act. A penalty under that omitted provision was therefore without jurisdiction. [Paras 7]

The penalty under Section 75A was set aside.

Penalty beyond show-cause notice allegation - Penalty under Section 77 imposed for failure to obtain service-tax registration when the show-cause notice alleged failure to file service-tax returns - HELD THAT: - The adjudicating authority could not confirm a penalty for an infraction different from that specified in the show-cause notice. A proposal concerning failure to file returns could not sustain a penalty imposed for failure to obtain registration. [Paras 7]

The penalty under Section 77 was set aside.

Reasonable cause for service-tax default - Availability of relief from service-tax penalties where the appellant held a bona fide belief that its services were not taxable - HELD THAT: - The appellant obtained registration and paid the tax with interest when taxability came to its notice. This conduct, coupled with the interpretational nature of the dispute, established reasonable cause and absence of deliberate intent to evade tax, attracting the benefit of Section 80. [Paras 8]

The appellant was held entitled to relief from penalties under Section 80.

Final Conclusion: The appeal was partly allowed. The service-tax demand and interest, already paid, were sustained, but all the penalties imposed were set aside.

Commercial or Industrial Construction Service - construction of grain-storage buildings for non-commercial use - Indivisible works contracts - classification under Commercial or Industrial Construction Service - Small-scale service-tax exemption for renting of immovable property

Service-tax demand under Commercial or Industrial Construction Service on construction of godowns, warehouses and office buildings used for storage of grain under indivisible contracts - HELD THAT: - The certificates of the concerned authorities established that the constructed buildings were used only for grain storage, and no evidence was adduced to establish their commercial use. Further, the work orders were indivisible contracts in which the values of materials and services could not be vivisected.

We find that the contracts entered by the appellants/ work order issued to the appellants are of indivisible nature; the value of material and service cannot be vivisected and therefore, in terms of the Hon’ble Supreme Court’s decision in the L & T Ltd.[2007 (5) TMI 1 - SUPREME COURT] demand could not have been raised under the Head “Commercial or Industrial Construction Service”.[Paras 7]

The demand under Commercial or Industrial Construction Service was held unsustainable on both absence of established commercial use and the indivisible nature of the works contracts.

Small-scale service-tax exemption for renting of immovable property - Availability of small-scale exemption for consideration received from renting of immovable property after exclusion of the unsustainable construction-service demand - HELD THAT: - Once the construction-service demand was held unsustainable, there was no allegation or proof of any other taxable service whose value could be included for determining eligibility for the small-scale exemption. The renting receipts were therefore eligible for exemption under Notification No. 06/2005-ST. [Paras 8]

Small-scale exemption was available for the renting of immovable property, with the result that no part of the demand survived.

Final Conclusion: The appeal was allowed. The construction-service demand and the residual demand on renting of immovable property were held unsustainable; the questions concerning limitation and adequacy of the show-cause notices were not examined.

Supply of tangible goods service - Lease of railway wagons-transfer of possession and effective control - Deemed sale-verification of VAT liability

Supply of tangible goods service - Lease of railway wagons-transfer of possession and effective control - Leasing of wagons to the Railways under the Own Your Wagon Scheme, where possession and effective control stand transferred to the Railways, is not taxable as supply of tangible goods service - HELD THAT: - Applying the Larger Bench ruling in M/s Rashtriya Chemicals & Fertilizers Limited [2024 (3) TMI 1341 - CESTAT MUMBAI] which considered Commissioner of Central Excise and Customs vs. M/s MSPL Limited [2023 (2) TMI 1096 - SC ORDER] the Tribunal held that a lease transferring possession and effective control of the wagons to the Railways cannot attract service tax under the taxable category of supply of tangible goods service. [Paras 6, 7]

The service-tax demand cannot be sustained if the lease transaction is established to have been treated as a deemed sale with due discharge of sales tax or VAT.

Deemed sale-verification of VAT liability - Whether VAT or sales tax was discharged on lease rentals from the wagons, treating the transaction as a deemed sale, required factual verification? - HELD THAT: - The certificate tendered before the Tribunal to establish payment of VAT was undated and had not been produced before the original authority. Since the factual claim regarding payment of VAT or sales tax required verification at the original stage, the matter required fresh examination. [Paras 7]

The matter was remanded to the original authority to verify payment of sales tax or VAT; if such liability is found to have been discharged, the proceedings and demand are to be dropped.

Final Conclusion: The impugned order was set aside and the appeals were allowed by remand for verification of VAT or sales-tax payment on the lease rentals. Subject to such verification, the lease of wagons transferring possession and effective control to the Railways is not liable to service tax.

Conversion into a finished article amounts to manufacture - business auxiliary service exclusion where the process amounts to manufacture - eligibility for exemption under Notification No.8/2005-ST for goods produced on behalf of a client - conditional character of exemption under Notification No.24/2003-CE

As decided by CESTAT [2013 (5) TMI 451 - CESTAT BANGALORE] Appeal is allowed: the Tribunal held that the electroplating job work constitutes manufacture (hence outside business auxiliary service) and, alternatively, that Notification No.8/2005 ST applies because Notification No.24/2003 CE is not an unconditional exemption; consequential relief follows and the stay petition is disposed of.

HELD THAT:- The Revenue's application to withdraw the appeal on the ground of low monetary value was allowed, and the appeal was dismissed as not pressed.

Pure agent reimbursements - expenses reimbursed to the assessee by the service recipient for payments made to third parties in the capacity of a pure agent - exclusion from taxable value of clearing and forwarding services

Reimbursement of expenses incurred by a clearing and forwarding service provider on behalf of the service recipient during Financial Year 2014-15 was liable to be excluded from the taxable value as pure-agent expenditure - HELD THAT: - The expenses were incurred by the assessee as pure agent of the service recipient, reimbursed by the recipient, and recorded and adjusted in the assessee's books as amounts paid to third parties. The transaction was therefore held to be squarely covered by Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006, which excludes qualifying pure-agent expenditure from the value of taxable service. [Paras 9, 10]

The service-tax demand was set aside; consequently, interest and the penalty for suppression under Section 78 of the Finance Act, 1994 were also set aside.

Final Conclusion: The appeal was allowed with consequential relief, as the reimbursed pure-agent expenses could not form part of the taxable value.

Original works under works contract valuation - Forfeited advance for purchase of goods - Reimbursement of fire loss

Classification of showroom fit-out works performed on bare structures of newly constructed commercial buildings as original works or completion and finishing services for valuation of the works contract service - HELD THAT: - The work converted bare commercial building structures into functional showrooms through flooring, ceilings, internal walls and partitions, HVAC, fire-suppression, plumbing and other fit-outs, with material being used and VAT paid on the goods component.

We hold that the work undertaken by the appellant is an original work as held by this Tribunal in the case of Kalpakaru Projects Pvt Ltd. [2025 (5) TMI 1832 - CESTAT NEW DELHI] therefore, the appellant has rightly paid service tax under rule 2A(ii)(A) on notional basis by claiming abatement of 60% of the value of works contract. Therefore, no demand is sustainable against the appellant.

The appellant was consequently entitled to determine service tax on the prescribed portion of the contract value under rule 2A(ii)(A). [Paras 13, 14]

The demand founded on denial of valuation applicable to original works was unsustainable.

Forfeited advance for purchase of goods - Taxability of an advance forfeited when the customer abandoned the purchase of ordered goods - HELD THAT: - The forfeited amount arose because the customer did not take delivery of the ordered goods. Such forfeiture could not be characterised as consideration for a service provided by the appellant. [Paras 15]

No service tax was payable on the forfeited advance.

Reimbursement of fire loss - Taxability of reimbursement received for goods lost in a showroom fire - HELD THAT: - The receipt was reimbursement of the loss suffered on account of the fire and did not represent consideration for any service rendered by the appellant. [Paras 16]

No service tax was payable on the reimbursement of fire loss.

Final Conclusion: The impugned order was set aside and the appeal allowed with consequential relief. As no demand survived, the penalties also could not be imposed.

Coal beneficiation/washing as mining service - Taxability asBusiness Auxiliary Service

Taxability of beneficiation or washing of coal under Business Auxiliary Service before introduction of mining service - HELD THAT: - The activity of beneficiation or washing of coal is an activity in relation to mining and became taxable as mining service only with effect from 1 June 2007. Since the introduction of that taxable entry presupposed that the activity was not previously covered, it could not be classified under Business Auxiliary Service for the prior period. [Paras 10]

Thus, activity of beneficiation/ washing of coal does not fall under the category of “Business Auxiliary Service” prior to 01.06.2007 as the same is classified under Mining Service w.e.f. 01.06.2007.

Final Conclusion: The Revenue's appeal was dismissed and the order dropping the demand was upheld.

Demand of service tax on project - Completion certificate for completed construction project - Service tax on construction completed before 1 July 2010

Validity of the completion certificate issued by the Kolkata Municipal Corporation's authorised technical person for establishing completion of the construction project before 1 July 2010 - HELD THAT: - The certificate issued after the authorised technical person examined the project and certified that the building was complete in all respects was valid evidence of completion. The subsequent formal certificate issued by the competent municipal authority was only formal certification based on that certificate; consequently, the project was to be treated as completed on 11.06.2010. [Paras 6]

The completion certificate was accepted, and the service-tax demand founded on its rejection, with consequential interest and penalty, was set aside.

Final Conclusion: The appeal was allowed with consequential relief, as the project stood completed before 1 July 2010 and the confirmed service-tax demand did not survive.

Service tax on indivisible turnkey contracts - Vivisection of composite contracts - true nature of the contracts -Commissioning or installation of ATMs -

Leviability of service tax on a notional installation and commissioning component of composite turnkey contracts for supply of ATMs - HELD THAT: - The contracts were indivisible turnkey contracts for delivery of fully functional ATMs, with supply, installation, testing and commissioning forming integral obligations for a single composite consideration; installation and commissioning were neither independently contracted nor separately remunerated. Prior to the introduction of works contract service, the Finance Act, 1994 contained neither a charging provision nor a valuation machinery authorising segregation of the service element from such composite contracts.

As held in Commissioner, Central Excise and Customs, Kerala vs. Larsen and Toubro Limited [2015 (8) TMI 749 - SUPREME COURT], pre-existing taxable entries applied to service contracts simpliciter and could not be employed to vivisect an indivisible composite contract. A notional attribution of part of the consideration could not create a taxable event absent statutory authority.

In the absence of any statutory authority permitting the artificial segregation of the installation and commissioning component from the composite transaction, the Revenue was not entitled to levy service tax by attributing a notional percentage of the total contractual consideration to the taxable category of “commissioning or installation” under Section 65(105)(zzd) of Finance Act, 1994. The conclusion reached by the CESTAT is thus in consonance with the statutory scheme of the Finance Act, 1994 and the law subsequently declared by this Court in Larsen and Toubro Limited [2015 (8) TMI 749 - SUPREME COURT].[Paras 34, 35, 36, 37, 40]

The demand under the taxable category of commissioning or installation was unsustainable, and the CESTAT's order setting aside the demands was affirmed.

Final Conclusion: The appeals were dismissed. The CESTAT's order was upheld as the Finance Act, 1994 did not permit vivisection of the composite turnkey ATM contracts during the relevant period.

Service tax on construction of residential complexes - Extended limitation-suppression of facts

Service tax on construction of residential complexes - Service-tax liability on construction of residential complexes undertaken during April 2008 to March 2011 - HELD THAT: - Construction of residential complex service became taxable only from 1-7-2010. The appellant was consequently not liable for service tax for the period preceding that date. Though service tax had been paid voluntarily for the earlier non-taxable period, without protest, no refund of such excess payment was admissible. [Paras 8, 11]

The service-tax demand, with interest and penalty, was set aside; voluntary excess tax paid for the pre-taxable period was not refundable.

Extended limitation - suppression of facts - Invocation of the extended period for service-tax demand where the registered assessee paid tax on its share of receipts and filed ST-3 returns - HELD THAT: - As the appellant was registered, paid service tax on its portion of income and filed ST-3 returns, the Revenue had not established suppression. The extended period could therefore not be invoked. [Paras 12]

The demand for the extended period was also held barred by limitation.

Final Conclusion: The appeal was allowed and the impugned demand, interest and penalty were set aside. Consequential relief was directed in accordance with law.

Validity of show cause notice for service tax demand - Identification of taxable service, service recipient and consideration

Sustainability of service tax demand founded on differences between ST-3 returns, income-tax returns and unbilled revenue, without identification of the taxable service, its recipient or the consideration - HELD THAT: - A show cause notice for service tax must identify the service alleged to have been rendered, the recipient and the consideration forming the basis of liability. The notice merely recorded audit objections, correspondence and discrepancies in figures, without stating how those figures established a taxable service.

Registration under several service categories could not dispense with the Department's obligation to identify the particular service and recipient. Following Shubham Electricals [2016 (5) TMI 1055 - DELHI HIGH COURT], the Tribunal held that a vague, non-committal and unclear notice could not sustain the demand. [Paras 16, 17, 18, 21]

The show cause notice and the consequential order were set aside; the remaining issues were not examined.

Final Conclusion: The appeal was allowed because the service tax demand rested on an unsustainable show cause notice that did not identify the taxable service, its recipient or the consideration.

Service tax on pre-levy mining leases - Assignment of right to use natural resources - Reverse charge on mining royalty and statutory contributions

Leviability of service tax under reverse charge on royalty, DMF and NMET contributions and user fee paid during 01.04.2016 to 30.06.2017 pursuant to a mining lease executed before 01.04.2016 - HELD THAT: - The Tribunal followed Tarini Prasad Mohanty v. Commissioner of C.G.S.T. and Central Excise, Rourkela [2026 (6) TMI 1475 - CESTAT KOLKATA] which applied the principle that taxability of the grant of the right to use natural resources is governed by the law in force when that right was assigned. Since the mining lease had been executed before such Government services became taxable with effect from 01.04.2016, the subsequent payments of royalty, DMF and NMET contributions and user fee did not attract service tax. [Paras 13, 14]

The service-tax demand, interest and penalties were held unsustainable and were set aside.

Final Conclusion: The appeal was allowed. The demand of service tax on payments under the pre-01.04.2016 mining lease, with interest and penalties, was set aside.

Mega Exemption for original works predominantly used other than for commerce, industry or business - construction of a mini agricultural market and agricultural facilitation centre for a government organisation -Works contract services provided for government-approved residential housing projects - Pre-1 March 2015 contractual condition for exemption of original works

Commercial use of agricultural market infrastructure - Mega Exemption for original works predominantly used other than for commerce, industry or business - Eligibility of construction of a mini agricultural market and agricultural facilitation centre for exemption as original works provided to Government for use other than commerce, industry or business - HELD THAT: - Though the infrastructure was constructed under a Government scheme for agricultural welfare, the exemption required that it be predominantly for use other than commerce, industry or business. Commercial use must be understood as profit-oriented activity; however, the appellant neither established a statutory mandate for collection of user fee nor showed that such fee was deposited into the Government treasury. The construction was therefore not shown to fall within the non-commercial-use condition of the exemption. [Paras 5]

The service tax demand relating to construction of the mini agricultural market was sustained.

Works contract services provided for government-approved residential housing projects - Services provided to competent governmental authority - Exemption of works contract services for construction of residential units under Government-approved housing projects where the work orders were issued by the Government housing authority - HELD THAT: - The work orders for construction of residential units were issued by the Government housing authority and demonstrated that the activity formed part of Government-approved residential housing projects. The finding that the services were not provided to a competent authority was therefore erroneous. [Paras 5]

The service tax demand relating to construction of residential units was set aside.

Pre-1 March 2015 contractual condition for exemption of original works - Availability of the claimed exemption for construction of a Government high school where the relevant work orders were entered into after 1 March 2015 - HELD THAT: - The exemption invoked was available only where the relevant contract had been entered into before 1 March 2015. As the work orders for construction of the school were admittedly issued after that date, the prescribed condition was not fulfilled. [Paras 5]

Denial of exemption and the service tax demand relating to construction of the Government high school were upheld.

Final Conclusion: The appeal was partly allowed. The demand for construction of residential units was set aside, while the demands concerning the agricultural mini market and Government high school were sustained.

Unjust enrichment in excise-duty refund - Passing on of duty incidence to consumers - Refund of duty paid on UF/PF resin solution

Whether its retention would result in unjust enrichment because the duty incidence had been passed on to consumers? - HELD THAT: - Whether the appellant passed on the duty incidence on UF/PF resin solution to consumers is a question of fact. If the incidence was passed on, retention of the refund would attract unjust enrichment; if it was not passed on, the refund would not be illegal or unfair. The factual issue requires determination by the concerned Assistant Commissioner after affording the appellant an opportunity to establish that the duty had not been passed on. [Paras 8, 9, 10, 11]

The issue was remanded for factual determination by the concerned Assistant Commissioner; no coercive recovery action may be taken until a final decision is rendered.

Final Conclusion: The appeal was disposed of with a direction to seek determination of the unjust-enrichment claim before the concerned Assistant Commissioner within the stipulated period, subject to protection against coercive recovery pending that decision.

CENVAT credit on outward transportation under F.O.R. destination contracts - Scope of input service prior to 1-4-2008 - Place of Removal - Activities Relating to Business

Eligibility to CENVAT credit on goods transport agency service used before 1-4-2008 for transporting final products from the factory or depot to customers' premises under F.O.R. destination contracts - HELD THAT: - We find that the said issue has been dealt by the Larger Bench of this Tribunal in the case of ABB Ltd. [2009 (5) TMI 48 - CESTAT, BANGALORE-LB] which has been affirmed by the Hon’ble Karnataka High Court [2011 (3) TMI 248 - KARNATAKA HIGH COURT] which was further affirmed by the Hon’ble Supreme Court [2015 (12) TMI 874 - SUPREME COURT] and [2018 (3) TMI 993 - SUPREME COURT] to hold that the definition of “input service” has to be interpreted in the light of the requirements of business and it cannot be read restrictively so as to confine only upto the factory or upto the depot of manufacturers.

The pre-amendment definition of input service was required to be construed in the light of business requirements and could not be restrictively confined to the factory or depot. Under the F.O.R. destination contracts, the appellant was obliged to deliver the goods at the buyers' premises and retained ownership until such delivery. The outward transportation service was consequently used for clearance of the final goods, and credit could not be denied merely because freight did not form part of the transaction value. [Paras 7, 8]

CENVAT credit on the outward transportation service was correctly availed; the impugned orders were set aside.

Final Conclusion: The appeals were allowed with consequential relief, as CENVAT credit on outward transportation to buyers' premises under the F.O.R. destination contracts was admissible.

Cash refund of unutilised Education Cess and Secondary and Higher Education Cess - Transitional refund under the CGST regime - Refund admissibility under the existing law

Whether the unutilised balance of Education Cess and Secondary and Higher Education Cess as on 30.06.2017 was refundable in cash under the transitional provisions of the GST law? - HELD THAT: - Section 142(3) permits a transitional cash refund only where such refund was otherwise admissible under the erstwhile law. Since the Cenvat Credit Rules contained no provision allowing cash refund of the unutilised balance of these cesses, the balance did not become refundable merely because it could not be transitioned into the GST regime. [Paras 7, 8]

The rejection of the refund claim was upheld.

Final Conclusion: The appeal was dismissed and the denial of cash refund of the unutilised cess credit was sustained.

Excisability of fly ash generated from burning coal for electricity generation - Manufacture as a condition for levy of central excise duty

Liability of fly ash generated as waste while coal is burnt for captive generation of electricity to central excise duty - HELD THAT: - Marketability alone does not render a product excisable; it must also be produced or manufactured.

Applying Union of India Vs Ahmedabad Electricity Company Ltd.[2003 (10) TMI 47 - SUPREME COURT] the Tribunal held that burning coal as fuel for generation of steam and electricity does not involve a process of manufacture resulting in a new product. Fly ash emerging from that process is therefore not manufactured excisable goods. [Paras 7, 9]

The departmental appeal was dismissed and no central excise duty was held leviable on the fly ash.

Final Conclusion: The appeal was dismissed, the Tribunal holding that fly ash generated from burning coal for captive electricity generation is not the result of manufacture and is not liable to central excise duty.

Manufacture - process incidental or ancillary to manufacture - CENVAT credit - benefit of Notification No. 56/2002-CE - recovery as "erroneous refund" under Section 11A - onus on Revenue to prove manufacture - applicability of Metlex (I) Pvt Ltd - res judicata / estoppel in taxation matters - HELD THAT:- We find no grounds to interfere with the impugned order(s) of the Customs, Excise and Service Tax Appellate Tribunal, Chandigarh [2025 (10) TMI 610 - CESTAT CHANDIGARH]. Hence, the present Appeals are dismissed.

Manufacture - dilution and repacking of styrene butadiene latex - Consistency in departmental stand for different periods

Manufacture - dilution and repacking of styrene butadiene latex - Classification of Sika Latex and Sika Latex Power - whether the process of adding water and preservatives to the inputs classifiable under tariff heading 40.02 and thereafter, packaging the same and marketing it as 'Sika Latex' and 'Sika Latex Power' will amount to 'manufacture' under Section 2(f) of the Central Excise Act, 1944 or not? - HELD THAT: - Manufacture requires transformation into a new and distinct article having a distinctive name, character or use. The Tribunal's earlier decision in the assessee's own case [2017 (7) TMI 715 - CESTAT KOLKATA] which found that the input and resultant products retained the same chemical characteristics and that no new product emerged, governed the controversy. The products therefore continued to merit classification under Chapter Heading 40.02 and were not liable to fresh excise duty. [Paras 7, 8]

The Revenue's contention that the process constituted manufacture and rendered the goods classifiable under tariff heading 3824 4010 was rejected.

Consistency in departmental stand for different periods - HELD THAT: - The earlier Tribunal orders on manufacture and classification had attained finality, as the Department had not challenged them. Having accepted that legal position, the Department could not take an inconsistent view on the same issue for a later period. [Paras 9]

No interference with the order dropping the proceedings was warranted.

Final Conclusion: The Revenue's appeal was dismissed and the order dropping the excise-duty proceedings for April 2007 to September 2015 was sustained. The cross-objection was disposed of.

CENVAT credit on input services for procurement of fly ash - Input services used outside factory premises - Services used outside factory premises

Eligibility to CENVAT credit of loading, unloading, freight and fly ash pond maintenance services used for procuring fly ash from the supplier's power plant for manufacture of cement - HELD THAT: - Fly ash was admittedly an input used in manufacture of the final product. Rule 2(l) permits credit of services used, directly or indirectly, in or in relation to manufacture, including procurement of inputs and inward transportation.

The fact that the services were rendered at the fly ash pond or otherwise outside the factory premises does not disentitle the manufacturer to credit where those services facilitated procurement and movement of the input to the factory. The Tribunal applied CC, Nagpur Vs. Ultratech Cement Ltd [2010 (7) TMI 302 - CESTAT, MUMBAI] and Birla Corporation Ltd. Vs. CCE, Lucknow [2013 (11) TMI 987 - CESTAT NEW DELHI] holding their ratios squarely applicable. [Paras 6, 7, 9]

The denial of CENVAT credit was unsustainable; the impugned order was set aside and the appeal allowed with consequential relief in accordance with law.

Final Conclusion: The appeal was allowed, the denial of CENVAT credit on services used for procurement and transport of fly ash was set aside, and consequential relief was granted in accordance with law.

Manufacture-transformation into distinct marketable commodity - Deemed manufacture-conversion of incomplete article into complete article

Manufacture-kitting of photocopier modules - Distinct name, character or use test - Kitting imported photocopier modules by unpacking, plugging and pinning them into customer-specific sets did not amount to manufacture under the Central Excise Act. - HELD THAT: - Manufacture requires transformation resulting in a new article having a distinct name, character and use, ordinarily recognised and marketable as a separate commodity; labour, skill, expense or value addition alone is insufficient. The Tribunal's factual findings that the components were cleared in their original packing, that no physical assembly occurred at the warehouse, and that the relevant fittings had been made abroad were supported by the record and were not perverse. The Revenue failed to establish that the kitting activity brought a new photocopier into existence. [Paras 14, 15, 17, 20]

The activity did not attract excise duty as manufacture.

Note 6 to Section XVI-conversion of incomplete article - Classification of unassembled goods - Note 6 to Section XVI of the Central Excise Tariff Act was inapplicable to imported photocopier modules classified and assessed as complete machines. - HELD THAT: - The deeming provision requires proof both that the article presented was incomplete or unfinished and that it was converted by the person charged into the complete article. Neither condition was established: the goods were imported and assessed as complete machines and were cleared from the warehouse without any process performed on them. Rule 2(a) of the General Rules for Interpretation is only a classification rule and does not determine whether a subsequent process amounts to manufacture. [Paras 18]

The Revenue could not invoke Note 6 to sustain the demand.

Final Conclusion: The Revenue's appeals were dismissed. The Tribunal's finding that no manufacture occurred at the assessee's warehouse was upheld, and the excise-duty demand could not be sustained.

Clean Energy Cess on removal of raw coal - Penalty for dealing in confiscable excisable goods

Clean Energy Cess on removal of raw coal - Liability of tea-producing purchasers to pay Clean Energy Cess on coal purchased from a seller - HELD THAT: - Under the Clean Energy Cess Rules, 2010, cess on removal of raw coal is payable only by its producer. The appellants, being purchasers of coal for tea production and not producers of coal, were not liable to pay cess on the coal purchased by them. [Paras 5, 6]

The purchasers were held not liable for payment of cess on the purchased coal.

Penalty for dealing in confiscable excisable goods - Penalty on purchasers for possession of confiscated coal without a finding of knowledge or reason to believe that the coal was liable to confiscation - HELD THAT: - Rule 25 of the Central Excise Rules, 2002 was inapplicable because the appellants were not producers, manufacturers, warehouse registrants, importers or registered dealers of the coal. Penalty under Rule 26 required a definite finding that the purchasers knew or had reason to believe that the coal was liable to confiscation; no such finding had been recorded. In the absence of that essential condition, penalty could not be imposed for release of the confiscated coal. [Paras 7, 8, 9, 10]

The penalty was held unsustainable and the amount paid as penalty was directed to be released to the appellants.

Final Conclusion: The appeals were allowed and the impugned orders were set aside insofar as they fastened penalty liability upon the appellants for release of the confiscated coal.

CENVAT credit on proforma invoice containing statutory particulars - Extended period of limitation - absence of suppression

CENVAT credit on proforma invoice containing statutory particulars - Availability of CENVAT credit of service tax paid on services received for setting up the manufacturing plant, where credit was availed on a proforma invoice followed by regular invoices. - HELD THAT: - The service rendered, payment of service tax by the provider, and reflection of the credit in the ER-1 return were undisputed. The proforma invoice and subsequent regular invoices, read harmoniously, contained the relevant particulars concerning service tax registration, service rendered and tax amount. CENVAT credit could not be denied merely because the initial document was described as a proforma invoice when the substantive particulars and actual payment of tax stood established. [Paras 10, 11, 13]

The denial of CENVAT credit was set aside on merits.

Extended period of limitation - absence of suppression - Invocation of the extended period for recovery of CENVAT credit disclosed in the ER-1 return and subsequently noted in the audit report. - HELD THAT: - The credit had been disclosed in the ER-1 return and the audit report had quantified the alleged contravention. No query by the Range Officials after scrutiny of the return, nor any further investigation or verification explaining the delay in issuance of the notice, was shown. These circumstances did not establish suppression by the appellant so as to justify the extended period. [Paras 14]

The demand was independently set aside as time-barred.

Final Conclusion: The appeal was allowed: the CENVAT credit was held admissible on merits and the demand was also held barred by limitation, with consequential relief in accordance with law.

Compression of natural gas for transportation - Manufacture of compressed natural gas- Non payment of Central excise duty -Penalty on Chairman-CEO - HELD THAT: - Compression amounts to manufacture under Chapter Note 5 to Chapter 27 only when natural gas is compressed for marketing as CNG. Where compression is undertaken merely to facilitate transportation and the gas is decompressed at the customers' premises before sale as natural gas, the activity does not amount to manufacture.

The earlier decision concerning the appellant [2017 (9) TMI 413 - CESTAT KOLKATA], and the decision in the Essar Oil and Gas Exploration and Production Limited case [2024 (6) TMI 1010 - CESTAT KOLKATA] were held that the activity of compression taken up by the appellant for transportation does not amount to manufacture in terms of Section 2(f) of the CEA 1944, thus squarely applicable; consequently, the demand failed on merits and the penalty on the Chairman-CEO could not survive. [Paras 12, 13]

The excise duty demand, interest and penalties on the company, as well as the penalty on the Chairman-CEO, were set aside.

Final Conclusion: The appeals were allowed. Compression of natural gas solely for transportation, followed by its decompression and sale as natural gas, was held not to constitute manufacture of CNG.

Classification of welded mesh parts of poultry battery cages - Parts of poultry keeping machinery

Classification of welded mesh top, side, bottom, door and centre-part components, made from galvanised iron wire exclusively for poultry battery cages, under CETH 84369100 as parts of poultry keeping machinery OR under CETH 73089090 as iron and steel structures or parts thereof - HELD THAT: - The undisputed material showed that the goods were manufactured to specified designs as identifiable components of poultry battery cages and were exclusively used for that purpose. The Revenue rejected the declared classification principally because the assembled battery cage had no mechanical function, but did not establish how such galvanised-wire components could answer the description of structures or parts of structures under CETH 7308.

The reliance on Azra Poultry Equipments Vs UOI [2014 (10) TMI 774 - SC ORDER] was misplaced, since the Supreme Court permitted the matter to be agitated before the Commissioner (Appeals), who subsequently accepted classification under CETH 84369100. Rejection of the declared classification without proper justification was therefore erroneous. [Paras 8, 11, 12]

The impugned classification under CETH 73089090 was rejected and the declared classification under CETH 84369100 was restored.

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

Availment of Cenvat Credit in ST-3/ ER-1 returns - Condition No. 25 of Notification No. 12/2012-CE Violation - Concessional excise duty conditional upon non-availment of Cenvat credit - Extended period for wrongful availment of concessional duty

Eligibility to concessional duty where Cenvat credit was reflected in statutory returns but was asserted to be unutilised, unrelated to manufacture, or subsequently lapsed on transition to GST - Whether during the disputed excise period the appellant had availed credit while simultaneously availing concessional excise duty? - HELD THAT: - Condition No. 25 required complete abstinence from taking credit on inputs or input services. Entry and availment of credit in statutory records constituted taking of Cenvat credit; utilisation was a distinct event and non-utilisation could not efface the breach. Nor could subsequent migration or lapse of credit under GST retrospectively cure the completed breach of the strict exemption condition. [Paras 16, 17, 18, 19, 22]

The appellant was ineligible for the concessional rate of duty.

Extended period for wrongful availment of concessional duty - Penalty for short payment of central excise duty - Sustainability of the extended-period demand, consequential interest and penalty for availing concessional duty despite taking prohibited Cenvat credit - HELD THAT: - Mere filing of returns did not absolve the appellant where the discrepancy was detected only in audit and concessional duty continued to be availed despite credit prohibited by the notification. The extended period was therefore invocable; interest followed the differential duty demand, and penalty was justified for the resulting short payment. [Paras 20, 21, 22]

The differential duty demand, interest and penalty were sustained.

Final Conclusion: The impugned order was upheld and the appeal was dismissed. The appellant's availment of Cenvat credit disentitled it to concessional duty, and the consequential demand, interest and penalty were sustained.

Rule 6 CENVAT liability on inevitable by-products - Job-work valuation of goods returned to principal manufacturer

Rule 6 CENVAT liability on inevitable by-products - Liability under Rule 6(3) of the Cenvat Credit Rules, 2004 in respect of coal gas inevitably emerging during manufacture of coke - HELD THAT: - The said issue has been examined by the Hon’ble Apex Court in the case of Union of India Vs. Hindustan Zinc Ltd. [2014 (5) TMI 253 - SUPREME COURT] wherein it has been held that the by-product cannot be said as a final product.

Coal gas emerged in the course of manufacture of coke and was a by-product, not a final product. Applying the principle that a by-product cannot be treated as a final product for this purpose, Rule 6(3) was held inapplicable. [Paras 6]

The demand, interest and penalty founded on Rule 6(3) in respect of coal gas were set aside.

Job-work valuation of goods returned to principal manufacturer - Applicability of Rule 10A(iii) read with Rule 8 of the Central Excise Valuation Rules, 2000 to lam coke manufactured on job work and returned to the principal manufacturer for further manufacture - HELD THAT: - Where job-worked goods are returned to the principal manufacturer and thereafter used by it in further manufacture, Rules 10A(i) and 10A(ii) do not apply, and Rule 8 is equally inapplicable because the goods are not consumed by the job worker or on its behalf. Valuation is to proceed on the basis of the raw-material cost and job-work charges, rather than by applying Rule 10A(iii) read with Rule 8.

Same view has expressed in Rolastar Pvt. Ltd. [2011 (9) TMI 776 - CESTAT, AHMEDABAD] wherein this Tribunal held that in a case where the goods manufactured on job work basis were sent back to the principal manufacturer and used by the latter in further manufacture, Rule 10A(i) and Rule 10A(ii) were not applicable, Rule 8 was not attracted since the goods were not consumed by the assessee or on his behalf and valuation has to be proceeded on the basis of cost of raw materials plus job work charges.[Paras 15, 16]

The appellant's valuation and duty payment were held correct, and the differential-duty demand was set aside.

Final Conclusion: All three appeals were allowed with consequential relief. The demands based on Rule 6(3) for coal gas and on Rule 10A(iii) read with Rule 8 for job-worked lam coke were set aside.

CENVAT credit on capital goods used in captive power plant - CENVAT credit on specified common input services - CENVAT credit on iron and steel items used for repair and maintenance - Duty on clearance of waste and scrap from capital goods

CENVAT credit on capital goods installed in a captive power plant where surplus electricity was supplied outside the factory - Exclusive use of capital goods for exempted goods - Captive consumption of electricity in manufacture of dutiable goods - HELD THAT: - The embargo under Rule 6(4) applies only where capital goods are used exclusively in the manufacture of exempted goods. Since the electricity generated was substantially consumed in manufacturing dutiable final products and only surplus electricity was supplied outside, the capital goods formed part of an integrated manufacturing process and were not put to exclusive exempt use. The principle concerning nexus of inputs used for electricity cleared outside the factory did not govern the distinct statutory test applicable to capital goods.

The aforesaid interpretation also finds support from Circular No. 665/56/2002-CX dated 25.09.2002 issued by the Central Board of Excise and Customs, wherein it has been clarified that CENVAT credit on capital goods used in the manufacture of exempt intermediate goods cannot be denied where such intermediate goods are captively consumed in the manufacture of final products chargeable to duty. Though the Revenue has sought to distinguish the said Circular by contending that electricity supplied outside the factory loses the character of an intermediate product, the Circular unmistakably proceeds on the principle that the decisive consideration is whether the capital goods are employed as part of an integrated manufacturing process culminating in dutiable final products.

Once it is accepted that the capital goods installed in the Captive Power Plant were not used solely for generation of electricity supplied outside the factory but formed part of an integrated manufacturing process resulting in dutiable final products, the essential condition for invoking Rule 6(4) of the CENVAT Credit Rules, 2004 remains unfulfilled. In such circumstances, we are unable to hold that the learned Tribunal committed any error in concluding that denial of CENVAT credit on the entire capital goods was unsustainable merely because a portion of the electricity generated was wheeled out to the Bihar State Electricity Board. [Paras 50, 51, 54, 56, 58]

CENVAT credit on the capital goods was rightly allowed.

Credit on specified input services under Rule 6(5) - Exclusive use of common services for exempted goods - Admissibility of CENVAT credit on specified input services used in the captive power plant generating electricity substantially consumed in manufacture of dutiable products - HELD THAT: - Rule 6(5) permitted full credit on the specified services unless they were used exclusively in relation to exempted goods or exempted services. The specified services were not shown to have been exclusively used for electricity supplied outside the factory; the electricity was substantially consumed in manufacturing dutiable final products. The Board's clarification treating such services as common services supported the allowance of full credit. [Paras 61, 62, 63, 64]

The credit on the specified input services was rightly held admissible.

CENVAT credit on iron and steel items, namely M.S. Angles, Channels, Joists, Plates and other similar goods - Actual use test for iron and steel items - Repair and maintenance of existing plant and machinery - HELD THAT: - Eligibility of iron and steel items turns on their actual use, not merely their description. While credit is ordinarily unavailable where such goods are used in constructing buildings or fabricating immovable supporting structures, the Tribunal's factual finding that the items were used for repair and maintenance of existing manufacturing machinery was neither perverse nor unsupported by evidence. Such a factual finding could not be reopened in an appeal confined to a substantial question of law. [Paras 67, 68, 69, 70]

The denial of credit on the iron and steel items was rightly set aside.

Central Excise Duty on waste and scrap arising from capital goods - Scope of appellate interference with findings of fact - Liability to duty on clearance of waste and scrap arising from capital goods - HELD THAT: - The Revenue failed to identify any statutory provision or material establishing legal infirmity in the Tribunal's finding that the demand was unsustainable. In the absence of perversity or a conclusion contrary to statute, the factual determination of the Tribunal was not open to re-appreciation in an appeal under Section 35G. [Paras 72, 73]

The setting aside of the duty demand on waste and scrap was affirmed.

Final Conclusion: The appeal was dismissed and the order allowing CENVAT credit on the disputed capital goods, specified input services and repair-and-maintenance items, and setting aside the demand on waste and scrap, was affirmed.

Composition permission for restaurant business with resale of liquor - Reassessment on change of opinion

Composition permission for restaurant business with resale of liquor - Retrospective amendment to composition conditions - Entitlement to composition permission for restaurant business where liquor, incapable of lawful production in the State, was purchased from outside the State and resold on payment of tax at the normal rate - HELD THAT: - The retrospective proviso to Rule 28C(6), read with section 14D, permits a composition dealer to purchase goods from outside the State where they cannot be produced in the State for legal or other reasons, provided tax is paid at the normal rate on their resale. The audit assessment had accepted the separate determination of liquor turnover, levy of tax thereon at the normal rate, and composition tax for the restaurant business. The later cancellation of composition permission could not govern the period under consideration.

The provision of Section 14D of the VAT Act read with amended proviso to Rule 28C(6) of the VAT Rules stipulates that a dealer is entitle to the benefit of composition permission if the goods which are not capable of being produced in the State of Gujarat for any reason or are prohibited from being produced in State of Gujarat, the tax is to be paid at normal rate on such goods.

It is not in dispute that the amendment is retrospective for payment of lump sum tax on composition permission for the goods already granted to the appellant in the facts of the case for the period under consideration.

It is pertinent to note that the order for cancellation of composition permission was passed in the year 2010 and therefore, the same would not be applicable for the period 2007-08. [Paras 8, 9, 10, 11, 12]

The assessee was entitled to the composition benefit for the restaurant business, and the rejection of that benefit was unsustainable.

Reassessment on change of opinion - Validity of reassessment withdrawing the accepted composition benefit and taxing the entire restaurant and liquor turnover at the normal rate - HELD THAT: - The original audit assessment had been made after consideration of the books, documents and the assessee's separate treatment of liquor turnover. The reassessment proceeded merely upon a changed view regarding the applicable tax rate and was therefore bad in law. [Paras 7]

The reassessment order was rightly set aside and the original audit assessment was restored.

Final Conclusion: No substantial question of law arose from the Tribunal's order. The Tax Appeal was dismissed.

Penalty for alteration in Form-38 without intention to evade tax - Machinery parts imported for own use and not for sale

Penalty for alteration in Form-38 in respect of machinery parts imported for repair and maintenance of the manufacturing plant, where the goods were not intended for sale - HELD THAT: - The goods were accompanied by the tax invoice, GR, Form-38 and Form-402, and no discrepancy was found in their description, quantity or value. The only discrepancy was use of a white correction marker in the invoice-amount column of Form-38. Since the machinery parts were for the revisionists' own plant maintenance and not for sale, and no material established that they dealt in such goods or had evaded or attempted to evade tax, no adverse inference warranting penalty could be drawn.

The issue in hand is squarely covered by the judgments of this Court in the cases of M/s Garg Photo Films [2025 (10) TMI 605 - ALLAHABAD HIGH COURT] and M/s Vishal International [2026 (8) TMI 321 - ALLAHABAD HIGH COURT] (supra).[Paras 9, 10, 11]

The penalty and the impugned order were quashed, and the questions of law were answered in favour of the revisionists.

Final Conclusion: The revision was allowed and the penalty order was quashed, as no evasion or attempted evasion of tax was established in respect of machinery parts imported for the revisionists' own use.

Maintainability of writ petition in contractual money claims - Arbitration clause as remedy for contractual disputes - scope of private law and a public law remedy under Article 226 of the Constitution of India

Maintainability of a writ petition seeking payment of the differential tax component withheld under a works contract containing an arbitration clause - HELD THAT: - The dispute concerning deduction of the differential tax component arose from the contractual relationship and was a private-law money claim. A public-law remedy under Article 226 was unavailable for such contractual claim, particularly when the contractor had already invoked the agreed arbitral mechanism. The Court did not adjudicate the entitlement to the differential tax component, leaving it for determination in arbitration. [Paras 6, 7, 8]

The writ appeal was allowed and the writ court's order was set aside; the claim may be pursued in the pending arbitration proceedings.

Final Conclusion: The contractual claim for the differential tax component was held not amenable to writ jurisdiction. Its merits and entitlement were left to the arbitrator.

Transfer of right to use Electronic Data Capture Terminals - Separate rental charges for Electronic Data Capture Terminal machines - Deemed sale of goods - Service tax and VAT on distinct taxable components

Transfer of right to use Electronic Data Capture Terminals - Deemed sale of goods - Whether Rental charges for Electronic Data Capture Terminals installed at merchant establishments constituted consideration for transfer of the right to use identified goods? - HELD THAT: - Co-ordinate Bench of this Court in M/s. Atria Convergence Technologies Ltd’s [2025 (2) TMI 883 - KARNATAKA HIGH COURT] considering legal issue considered therein with regard to the scope of Section 2(29)(d) of the KVAT Act namely, whether retention of ownership and contractual obligations relating to maintenance or service would by themselves negate a transfer of the right to use goods, is relevant for consideration in the present case. The Co-ordinate Bench of this Court held that the determination of such issue depends upon the nature of the transaction, the terms of the agreement and the rights conferred upon the user. Mere retention of ownership by the supplier, by itself, would not be conclusive in determining whether there is a transfer of the right to use goods.

The relevant inquiry is whether the user was conferred the right to use identified goods for the agreed purpose, rather than whether title, maintenance obligations, supervisory powers or a right of repossession remained with the supplier. The terminals were tangible and identifiable equipment installed at merchant premises, separately rented and made available for merchants' operational use in accepting customer payments. Contractual restrictions protecting the Bank's ownership and its power to suspend or deactivate the terminals did not negate the right of use conferred during the agreement. [Paras 43, 44, 45, 64, 65]

The terminal rentals were liable to VAT as deemed-sale consideration under the KVAT Act.

Service tax and VAT on distinct taxable components - Payment of service tax on the consideration received from merchant establishments did not preclude VAT on the rental component attributable to transfer of the right to use Electronic Data Capture Terminals - HELD THAT: - A composite transaction may contain distinct service and sale elements taxable under separate statutes, provided the respective taxing fields and statutory requirements are satisfied. Service-tax payment on the service component does not exclude the State's power to tax the discernible deemed-sale component; the authorities had taxed only the terminal-rental charges and not the entire banking service. [Paras 47, 48, 49]

The objection founded on payment of service tax was rejected.

Penalty for non-disclosure of taxable terminal rentals - Statutory interest on VAT liability - Penalty and interest arising from non-disclosure of taxable Electronic Data Capture Terminal rentals were liable to be sustained - HELD THAT: - The concurrent findings established that separate terminal rentals had not been disclosed as taxable turnover. In the absence of perversity in those findings, no interference with the statutory penalty was warranted in revisional jurisdiction; interest followed consequentially from the tax liability. [Paras 57, 58, 59]

The levy of penalty and consequential interest was affirmed.

Final Conclusion: The revision petition was dismissed and the concurrent determination that terminal rentals represented taxable consideration for transfer of the right to use goods was affirmed. The substantial questions of law were answered in favour of the Revenue.

Binding effect of advance rulings - VAT composition on transfer of property in goods in works contracts - Taxability of advance consideration before registration of sale deed - expression “received or receivable” under Section 4(7)(d) of the APVAT Act

Whether VAT under the composition scheme could be levied on advance amounts received from prospective buyers before execution and registration of the sale deeds, despite a binding advance ruling? - HELD THAT: - We are of the considered opinion that the Advance Ruling dated 30.07.2006 issued under Section 67(4) of the APVAT Act which explicitly clarified that VAT liability arises only at the time of execution and registration of the sale deed, and not on advance amounts received during the construction phase has a binding precedence. Section 67(4) of the APVAT Act mandates that advance rulings are binding on all authorities of the Commercial Tax Department, The respondent No. 2 being a subordinate authority had no jurisdiction to deviate from or override this binding ruling. The respondent No. 2 therefore has completely disregarded this binding precedence.

An advance ruling issued under the statutory provision was binding upon all Commercial Tax Department authorities, and the assessing authority had no jurisdiction to depart from it. The ruling fixed the incidence of VAT at execution and registration of the sale deed, not at the stage of receipt of advances during construction. Applying Omega Shelters (P) Limited [2015 (7) TMI 230 - ANDHRA PRADESH HIGH COURT] the Court held that composition tax is computed on the entire consideration stipulated in the initial agreement, including consideration receivable for completion of construction, but becomes payable in the month in which the sale is concluded and registered. [Paras 16, 17, 19]

The assessment levying VAT on pre-registration advances was held contrary to the binding advance ruling and the governing composition provisions, and was quashed.

Final Conclusion: The writ petition was allowed and the assessment order was quashed as it impermissibly levied VAT on advances received before execution and registration of sale deeds in disregard of the binding advance ruling.

Penalty for incomplete transit declaration Form 38

Penalty for incomplete transit declaration Form 38 - Imposition of penalty for leaving columns 7 and 8 of Form 38 blank during transit of goods. - HELD THAT: - The issue stood settled by the earlier judgments of the Court relied upon by the revisionist. Mere non-filling of the specified columns in Form 38 could not warrant an adverse inference against the revisionist. [Paras 8]

The penalty order was quashed and the question of law was answered in favour of the revisionist.

Final Conclusion: The revision was allowed, the penalty was set aside, and any amount deposited was directed to be refunded.

Exemption of seeds used for sowing purposes - Purchase tax on certified seeds produced under research and development programme

Levy of purchase tax on certified seeds procured and processed under a research and development programme for sowing purposes - HELD THAT: - The notification dated 29.03.2006 exempted seeds of all types, other than imported seeds, when used for sowing. The Department neither asserted that the seeds were imported nor established that the processed and certified seeds, produced after germination and other tests, were not meant for sowing. The earlier determination order relied upon by the Department was distinguishable, while the subsequent determination concerning seeds produced under a research and development programme supported the conclusion that purchase tax was not leviable. [Paras 7, 8, 9]

The revisional order levying additional purchase tax, interest and penalty was rightly set aside.

Final Conclusion: The writ petition was dismissed, affirming the setting aside of the revisional levy of purchase tax, interest and penalty.

Violation of principles of natural justice in assessment proceedings - Non Service of show-cause notice and assessment order

Validity of the assessment under the CST Act where the show-cause notice preceding the assessment and the assessment order were not received by the petitioner - HELD THAT: - The Court found that the subsequent show-cause notice could not be served at the principal place of business and that the registered-post cover containing the assessment order was returned. The petitioner had consequently received neither the show-cause notice preceding the impugned assessment nor the assessment order. An assessment made in those circumstances violated the principles of natural justice. [Paras 4]

The assessment order was set aside and the matter was remanded to the appropriate assessing authority for fresh orders after due notice to the petitioner; the intervening period was directed to be excluded for limitation purposes.

Final Conclusion: The writ petition was allowed. Fresh assessment proceedings may be undertaken only after due notice to the petitioner.

Claim for tax concession for the Gurugram automobile-switch manufacturing unit - 'new industrial unit' under Rule 28C - whether it is a new industrial unit or an expansion of the existing Sonepat unit? - HELD THAT: - The appellant's existing Sonepat unit had not availed any tax exemption. The revenue could not resist the claim on alleged suppression, since the application had not been rejected on that ground and had been considered on merits.

The sole question requiring fresh adjudication was whether the Gurugram unit qualified as a new industrial unit or as an expansion unit under Rule 28C; no opinion was expressed on the appellant's substantive entitlement. [Paras 17, 18, 19]

The Tribunal's order was set aside and the claim was remitted for fresh adjudication after hearing the parties, with all questions on entitlement left open.

Final Conclusion: The appeal was allowed and the matter remitted to the Tribunal for fresh adjudication of the tax-concession claim in accordance with law.

Acquittal for cheque dishonour u/s 138 of the Negotiable Instruments Act, 1881 - Presumptions as to consideration and legally enforceable debt under dishonoured cheque - Rebuttal of cheque presumptions by preponderance of probabilities

Entitlement of the complainant to the statutory presumptions in respect of a cheque dishonoured on account of stop-payment instructions, and sufficiency of the accused's defence of repayment - HELD THAT: - The accused admitted the borrowing and issuance of the signed cheque, while asserting that the liability had been discharged. Though a bank entry evidenced part repayment, no cogent evidence supported the asserted repayment of the balance. Keeping the loan amount at home was not inherently improbable in the absence of evidence establishing such improbability; nor did use of different inks for the signature and cheque particulars invalidate or render execution doubtful.

A probable defence rebuts the presumptions only when established on the standard of preponderance of probabilities. The complainant had discharged the initial burden, whereas the defence of full discharge remained unproved. [Paras 17, 18, 19]

The acquittal was set aside and the accused was convicted for the offence under Section 138 of the Negotiable Instruments Act.

Final Conclusion: The appeal was allowed, the acquittal was reversed, and the accused was convicted and sentenced under Section 138 of the Negotiable Instruments Act.

Acquittal for dishonour of cheque - Legally enforceable debt or liability for dishonoured cheque - Rebuttal of statutory presumptions under the Negotiable Instruments Act - Interference with acquittal

Legally enforceable debt or liability for dishonoured cheque - Rebuttal of statutory presumptions under the Negotiable Instruments Act - Personal liability of a former trustee under Section 138 of the Negotiable Instruments Act for a cheque issued towards alleged trust liabilities - HELD THAT: - The documentary evidence, including the memorandum transferring management and liabilities of the trust to newly inducted trustees, and rent receipts acknowledging payment by the trust's management, showed that the alleged dues were liabilities of the trust and not of the accused personally. The complainant failed to establish the alleged advances, including the amount claimed on behalf of his wife, by corroborative evidence. The circumstances constituted a probable defence and displaced the statutory presumption, leaving no legally enforceable debt against the accused proved beyond reasonable doubt. [Paras 25, 31, 35, 44, 45]

The acquittal was sustained, as the ingredients of an offence under Section 138 were not established against the accused.

Interference with acquittal - Interference in an appeal against the appellate acquittal of the accused - HELD THAT: - An appellate court may review and reappreciate evidence, but acquittal reinforces the presumption of innocence; where two reasonable views are possible, interference is unwarranted unless the finding is perverse, manifestly illegal, or unsupported by evidence. The appellate acquittal rested on a detailed appraisal of the oral and documentary evidence and disclosed no such infirmity. [Paras 36, 37, 38, 39, 45]

No ground was made out to interfere with the acquittal.

Final Conclusion: The appeal was dismissed and the appellate acquittal under Section 138 of the Negotiable Instruments Act was confirmed. The complainant failed to prove a legally enforceable personal liability of the accused, and no perversity was shown in the acquittal.

Cancellation of NBFC registration for failure to maintain Net Owned Fund - Pending amalgamation and regulatory eligibility - Judicial review of regulatory cancellation

Validity of cancellation of an NBFI's registration for failure to maintain the prescribed Net Owned Fund, despite pendency of its application for approval of an amalgamation scheme - HELD THAT: - The petitioner admittedly did not meet the prescribed Net Owned Fund threshold when the second show-cause notice was issued and throughout the relevant period. Pendency of the amalgamation application did not confer a right to treat the threshold as satisfied, since approval and implementation of the scheme, and actual attainment of the requisite Net Owned Fund thereafter, remained contingent.

The amalgamation application was ultimately rejected after opportunity of hearing, and its rejection was not independently challenged. In judicial review, the Court would examine legality of the procedure and compliance with natural justice, not re-appreciate the regulatory material; no procedural flaw, patent illegality or jurisdictional defect was found in the cancellation or the appellate order.

It is an admitted position that even if the cancellation of registration is set aside, the petitioner no. 1-Company is at present unable to meet the currently subsisting NOF requirement of Rs.1000 Crore, which was introduced by the RBI vide Notification dated April 29, 2026. Thus, for all practical purposes, the challenge preferred in the writ petition has been rendered infructuous, and it would merely be an exercise in futility if the cancellation of the certificate of registration is now set aside, as it would immediately have to be followed by a surrender of the certificate by the petitioner no. 1-company. [Paras 52, 55, 57, 58, 59, 60]

The cancellation of registration was upheld; the writ petition challenging it was dismissed.

Final Conclusion: The writ petition was dismissed. Failure to maintain the prescribed Net Owned Fund validly sustained cancellation of the registration, and the pending amalgamation proposal afforded no basis to invalidate that action.

Article 32 jurisdiction for quashing FIRs - Multiple FIRs and same transaction

Article 32 jurisdiction for quashing FIRs - Exercise of Article 32 jurisdiction to quash FIRs where no infringement of a fundamental right or exceptional circumstance is established - HELD THAT: - It is well settled that the power of this Court under Article 32 is broad enough to quash criminal proceedings in an appropriate case, so as to prevent abuse of the process of law. The existence of an alternative statutory remedy does not, by itself, bar the exercise of jurisdiction. However, as a matter of judicial principle and orderly procedure, an aggrieved party is expected, in the ordinary course, to firstly approach the High Court. It is only where the facts disclose a violation of fundamental right(s) or other compelling circumstances that this Court would directly exercise its extraordinary jurisdiction under Article 32. [See: Romesh Thappar v. State of Madras [1950 (5) TMI 42 - SUPREME COURT]; Union of India v. Paul Manickam [2003 (10) TMI 61 - SUPREME COURT]; Jagisha Arora v. State of U.P [2019 (6) TMI 1759 - SUPREME COURT] and Sunil Kumar Rai v. State of Bihar[2022 (2) TMI 1534 - SUPREME COURT]

Though a petition under Article 32 for quashing criminal proceedings is maintainable, the extraordinary jurisdiction is ordinarily not to be invoked by bypassing the remedies before the High Court under Article 226 of the Constitution or Section 482 CrPC. The petitioner disclosed neither infringement of a fundamental right nor exceptional or exigent circumstances warranting direct intervention. [Paras 10, 11]

The prayer for quashing the FIRs was declined, with liberty to pursue remedies available in law before the appropriate forum.

Multiple FIRs and same transaction - Test of sameness - Clubbing and composite investigation of FIRs concerning cyber-fraud complaints by different victims - HELD THAT: - Multiple FIRs are impermissible where they concern the same incident or connected offences forming one transaction; but separate FIRs are permissible for distinct occurrences or transactions. Applying the test of sameness, the Court found that the complaints arose from separate inducements, different victims, distinct transactions and consequences, without a live link between them. A common alleged modus operandi and transfer of part of the amounts to the proprietary concern's bank account did not establish one transaction. At the nascent stage of investigation, a composite investigation could also impede effective tracing of funds and the wider chain of events. [Paras 15, 16, 17, 18]

The FIRs were held to disclose prima facie distinct offences and were not directed to be clubbed or consolidated.

Final Conclusion: The writ petition was dismissed. The petitioner was left at liberty to seek such remedies as may be available before the appropriate forum, with all contentions left open.

Complaint by an incorporeal payee through its authorised representative - name of the authorised agent precedes that of the complainant society in cause title - Technical defect in cause title

Maintainability of a cheque-dishonour complaint instituted by a co-operative society through its Secretary where the Secretary's name precedes that of the society in the cause title - HELD THAT: - The complaint, read as a whole and with the documents filed with it, showed that the transaction, cheque, statutory notice and agreement concerned the Society, which was the payee. Its bye-laws and the Managing Committee resolution authorised the Secretary to institute proceedings.

Applying Bhupesh Rathod v. Dayashankar Prasad Chaurasia and Another [2021 (11) TMI 457 - SUPREME COURT] the Court held that naming the authorised office-bearer first in the cause title does not create a fundamental defect where the complaint is plainly instituted for and on behalf of the artificial person. The objection related only to form, not to the Secretary's authority, and could not defeat the prosecution.

In Rathish Babu Unnikrishnan v. State (NCT of Delhi) and Another [2022 (4) TMI 1434 - SUPREME COURT] the Hon’ble Supreme Court has held that when there is a legal presumption under Section 139 of the N.I Act, it would not be judicious to carry out a detailed enquiry on a disputed question of fact at the pre-trial stage to quash the complaint[Paras 13, 14, 16, 19, 20]

The complaint was held to have been validly filed by the Society through its authorised Secretary; the petition to quash it was dismissed.

Final Conclusion: The challenge based solely on the drafting of the cause title was rejected. The complaint was permitted to proceed as one instituted by the payee Society through its duly authorised Secretary.

Vicarious liability for dishonour of company cheque - Mandatory arraignment of company - Section 319 CrPC - curing fatal defect in complaint - vicarious liability of authorised signatory

Maintainability of prosecution against the authorised signatory for dishonour of a cheque drawn on the company's account, where the company was not arraigned as an accused, and the permissibility of subsequently impleading it under Section 319 CrPC - HELD THAT: - Where the cheque is drawn on an account maintained by the company, the company is the person that commits the offence under Section 138 of the Negotiable Instruments Act. Its arraignment is an express condition precedent for fastening vicarious liability upon persons responsible for its business. A complaint omitting the company therefore suffers from a fatal defect and cannot validly found cognizance.

The power under Section 319 CrPC cannot be employed to cure that foundational defect by initiating prosecution against the company beyond the statutory period; a fresh complaint may be instituted only subject to limitation, with delayed cognizance depending upon sufficient cause.

In N. Harihara Krishnan v. J. Thomas [2017 (9) TMI 1 - SUPREME COURT] somewhat similar issue had arisen for consideration before this Court. It was held that power under Section 319 of CrPC should not be used as a device to initiate prosecution against the company beyond the period of limitation stipulated under the Act. We respectfully agree with the aforesaid view of this Court. Besides, in our view, where the complaint suffers from so fundamental a defect that no cognizance can be taken thereupon, the Court cannot proceed and take recourse to the provisions of Section 319 to cure that defect.[Paras 11, 13, 14, 15, 16]

The complaint and all consequential proceedings were quashed; the direction to suo motu arraign the company under Section 319 CrPC was held to be beyond jurisdiction. High Court clearly exceeded its jurisdiction by directing the learned Magistrate/ Trial Court to suo moto arraign company as an accused.

Final Conclusion: The appeal was allowed. The complaint against the authorised signatory, instituted without arraigning the company on whose account the cheque was drawn, and all consequential proceedings were quashed.

Multiple FIRs arising from a single criminal conspiracy - Same transaction for joinder of charges and trial

Single FIR for offences arising from criminal conspiracy - Subsequent complaints as statements during investigation - Registration of a single FIR for alleged cheating of multiple investors pursuant to one criminal conspiracy - HELD THAT: - The reference was premature while investigation was ongoing, as it could not then be determined whether the alleged offences formed part of the same transaction. Chargesheets ultimately alleged a criminal conspiracy resulting in multiple acts of cheating. In that context, registration of one FIR and treatment of the remaining complaints as statements u/s 161 CrPC was the correct course; a subsequent FIR is impermissible where the information relates to the same cognizable offence, occurrence or connected transaction. [Paras 21]

The High Court's answer requiring a separate FIR for each complainant was set aside.

Tests of same transaction - Joinder of charges for connected offences - Joinder and trial of multiple alleged cheating offences against different victims as offences forming part of the same transaction - HELD THAT: - Whether acts constitute the same transaction depends upon unity of purpose and design, proximity of time and place, and continuity of action; these tests are not cumulative. Magistrate must determine from the investigation material whether the alleged acts of cheating form one transaction. If they do, the accused may be charged and tried together; if they constitute distinct transactions and offences, separate trials are required, subject to the statutory provision permitting trial of offences of the same kind committed within a year. Complainants treated as witnesses retain the right to file protest petitions against a closure report or proposed discharge. [Paras 19, 20, 22]

The question of consolidated charges and trial was left for the Magistrate's determination on the investigation material.

Final Conclusion: The appeal was allowed and the High Court's answers requiring separate FIRs and final reports for each complainant were set aside. The Magistrate must determine whether the alleged cheating offences form part of the same transaction for purposes of charge and trial.

Presumption of legally enforceable debt on admitted cheque signature - Limits of revisional reappreciation of concurrent findings

Presumption of legally enforceable debt on admitted cheque signature - Rebuttal of statutory presumptions under the Negotiable Instruments Act - Liability for dishonour of cheque issued towards a hand loan where the drawer admitted the signature but alleged misuse of a blank security cheque. - HELD THAT: - Admission of the signature on the cheque attracted the presumptions that it was drawn for consideration and towards discharge of a debt or liability. The complainant established compliance with the statutory requirements for dishonour of cheque and adduced consistent evidence regarding the hand loan and the financial assistance obtained for advancing it. The accused's assertion that the cheque had been issued as security for a separate loan was unsupported by contemporaneous documentary evidence; the subsequent demand for return of the cheque was held to be an afterthought. The challenge to the complainant's financial capacity also failed, as the accused neither raised it in response to the statutory demand nor produced material sufficient to dislodge the presumptions. [Paras 6]

The accused failed to rebut the statutory presumptions, and the conviction for dishonour of cheque was justified.

Limits of revisional reappreciation of concurrent findings - Interference in revision with concurrent findings of conviction for dishonour of cheque by reappreciating the evidence. - HELD THAT: - Revisional jurisdiction is supervisory and cannot be equated with appellate jurisdiction. A revisional court should not substitute its own conclusion upon an elaborate reappreciation of evidence or reverse concurrent findings merely because another view may be possible, absent perversity, glaring error, non-consideration of relevant material, or miscarriage of justice. The High Court identified no such defect and exceeded its jurisdiction by reassessing the evidence and overturning the concurrent conviction. [Paras 7]

The High Court's revisional order acquitting the accused was unsustainable.

Final Conclusion: The appeal was allowed, the High Court's revisional order was set aside, and the concurrent judgments of conviction and sentence were restored.

Vicarious liability for dishonour of cheque issued by sole proprietorship concern - Liability of non-signatory under dishonoured cheque provisions - Inherent power to quash ex facie groundless prosecution - Revocation of Agency by Death - Abuse of Process

Vicarious liability for sole proprietorship concern - Family relationship and partnership liability - HELD THAT: - This Court observed in N. Mamatha Nagesh [2026 (8) TMI 87 - CALCUTTA HIGH COURT], domestic proximity or a filial connection within a shared household cannot be accepted as a valid legal surrogate for a registered partnership deed or a corporate matrix. The complainant's bold assertion that the petitioner acted as a “partner” of a sole proprietorship concern belonging to his mother is a legal absurdity. Criminal liability under a summary penal statute cannot be widened by crude implications or speculative logic. The failure of the complainant to recognize that a proprietorship concern cannot be sued as an independent juristic entity separate from its master constitutes a fundamental defect that invalidates the invocation of Section 141 against anyone else under the banner of that entity.

Section 141, being an exception to the rule of personal criminal liability, applies only to the entities included in its definition of "company". A sole proprietorship has no legal identity apart from its proprietor and does not fall within that statutory taxonomy. Domestic or filial relationship cannot substitute for a partnership deed or other legally recognised corporate structure so as to create vicarious criminal liability. [Paras 13, 14, 19, 20]

The petitioner could not be prosecuted on the footing that he was a partner or person in charge of the sole proprietorship concern.

Author-centric liability for dishonour of cheque - Revocation of banking mandate on death of account holder - A non-signatory who did not maintain the account could be prosecuted under Section 138 of the Negotiable Instruments Act for cheques allegedly issued from the account of a deceased person. - HELD THAT: - Section 138 creates a strict, author-centric offense. It mandates that the dishonoured instrument must be drawn by a person on an account “maintained by him.” The biological fact established by the death certificate shows that the alleged drawer, Ram Ratan Sharma, had suffered biological and legal demise on 23.11.2017. Under Section 201 of the Indian Contract Act, 1872, the banking mandate and agency stood automatically revoked the moment the account holder expired. A dead person cannot be deemed to maintain an active account, as the underlying relationship of customer and banker stands dissolved by operation of law.

Therefore, the petitioner, being neither the drawer nor the account holder, did not satisfy the essential statutory ingredients. Any alleged deception in negotiating pre-signed cheques of a deceased account holder could attract remedies under general penal law, but could not sustain prosecution under the dishonoured-cheque provisions. [Paras 15, 16, 19, 21]

The prosecution under Section 138 was unsustainable against the petitioner.

Quashing of ex facie groundless cheque dishonour prosecution - HELD THAT: - The procedural bar against a Magistrate recalling process does not limit the High Court's inherent jurisdiction under Section 482 of the Code of Criminal Procedure. Where public records and the complaint itself disclose absence of the statutory foundation for prosecution, the matter is not a factual dispute requiring trial and continuance of proceedings constitutes abuse of process. [Paras 17, 18, 19, 22]

The impugned order was set aside and the proceedings were quashed insofar as they concerned the petitioner.

Final Conclusion: The revisional application was allowed. The proceedings for dishonour of cheque were quashed insofar as they concerned the petitioner, there being no statutory basis to prosecute him either vicariously or as the drawer of the cheques.

Stamp duty on assignment of secured debt to reconstruction company - Double levy of stamp duty on previously mortgaged immovable property

Assignment of debt with underlying immovable-property security - Additional Panchayat and Municipal stamp duty - Levy of additional Panchayat and Municipal stamp duty on an assignment deed by which a reconstruction company acquired a bank's loan, rights and underlying mortgage security - HELD THAT: - The assignment deed merely substituted the reconstruction company for the original lending bank and transferred the latter's rights, liabilities and interest in the financing documents and underlying security. It did not create a fresh mortgage, charge or encumbrance over immovable property. Since stamp duty had been paid when the original mortgage was created, the notification governing securitisation of loan or assignment of debt confined duty on the assignment to 0.1 per cent of the loan securitised or debt assigned; assessment again under the Panchayat and Municipal enactments would entail an impermissible duplicate levy and unjust enrichment.

As relying on SHYAMSUNDAR RADHESHYAM AGRAWAL & ANR. VERSUS PUSHPABAI NILKANTH PATIL & ORS. [2024 (9) TMI 1406 - SUPREME COURT] the approach of the State is required to be just, fair and transparent in the matter of recovery of public exchequer and there cannot be dual liability regarding the same duty when there is change of lending institution on papers. [Paras 8, 10, 11, 12, 15]

The demand founded on the audit objection and the Collector's order were set aside; no duty beyond that already charged on the assignment deed was recoverable.

Final Conclusion: The writ petition was allowed and the impugned demand for additional stamp duty on the assignment of the secured debt was set aside. The duty already charged under the notification was held to be the only duty recoverable.

Statutory presumption of service of demand notice - acquittal for the offence of dishonour of cheque -Presumptions as to consideration and discharge of debt under the Negotiable Instruments Act

Whether the acquittal for the offence of dishonour of cheque was sustainable where the Magistrate found that the statutory demand notice was not served and questioned the complainant's financial capacity? - HELD THAT: - Production of the postal receipt showing dispatch of the notice in writing to the accused's correct address attracts the presumption of issuance under Section 27 of the General Clauses Act; actual service is not a statutory requirement. The Magistrate could not reject the notice merely by comparing the signature on the cheque with that on the acknowledgment card. Where receipt is disputed after the acknowledgment card is tendered, the accused must establish non-receipt, including by examining the postman concerned. [Paras 9]

The finding that no valid demand notice had been issued was reversed.

Presumptions as to consideration and discharge of debt under the Negotiable Instruments Act - Proof of the loan transaction and entitlement to presumptions under Sections 118 and 139 of the Negotiable Instruments Act in respect of the dishonoured cheque - HELD THAT: - The complainant's unchallenged re-examination evidence explained the source of the loan. The defence admitted earlier financial dealings and that the cheque had been entrusted as security, but did not establish discharge of that liability or explain its continued possession by the complainant. The complainant had therefore discharged the initial burden regarding the transaction and execution of the cheque and was entitled to invoke the statutory presumptions. [Paras 10]

The acquittal was set aside and the accused was convicted for the offence under Section 138 of the Negotiable Instruments Act.

Final Conclusion: The appeal was allowed, the acquittal was set aside, and the accused was convicted for dishonour of cheque and sentenced accordingly.