TMI Tax Updates - e-Newsletter
January 31, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. Mandatory GST Registration Due to RCM

   By: Tushar Malik

2. Supreme Court issued notice seeking detailed report on constitution of GST Appellate Tribunal - Stays demand order observing that GSTAT is not yet made functional

   By: Kashish Gupta

3. Legal Duties of an Auditor in Company Audits

   By: Ishita Ramani

4. LEGAL TERMINOLOGY IN GST LAW (PART -7)

   By: Dr. Sanjiv Agarwal

5. Introduction of the New Scheme: "Diamond Imprest Authorization"under Chapter 4 of the Foreign Trade Policy 2023-24 (FTP 2023-24)

   By: YAGAY andSUN

6. Renewal/Updation of Importer Exporter Code (IEC).

   By: YAGAY andSUN

7. SUSPENSION OF TRADING IN THE SHARES OF THE LISTED COMPANY

   By: DR.MARIAPPAN GOVINDARAJAN

8. Testing of Samples under Customs Laws

   By: YAGAY andSUN

9. Geopolitical issues and its' impact on International Trade.(In context with Advance Technologies, Rare Earth Materials and High End Goods).

   By: YAGAY andSUN

News

1. Budget Session of Rajasthan Assembly to begin on January 31 with governor's address

2. Inclusive development, women empowerment: Expectations of social sector from Union Budget

3. UCC, Waqf bill part of schemes to spread hatred; no hope from Union Budget: JK Cong chief

4. Budget Session: President Murmu to address Parliament on Friday

5. Oppn seeks discussion on Kumbh tragedy; BAC to decide agenda of Budget Session, says govt

6. BAC to decide on issues to be discussed in Budget Session: Rijiju

7. Bills on Waqf, immigration and foreigners listed for Budget session

8. Voices of Vision: Entrepreneurial Insights Ahead of India’s Union Budget 2025

9. Challenges galore as Sitharaman and her team sit down to frame FY26 Budget

10. Budget for world's fastest-growing major economy: Key numbers to be watched

11. Nirmala Sitharaman to make history with 8th consecutive budget

12. Govt convenes all-party meet ahead of Budget session

13. Lok Sabha MP Shinde seeks substantial funds for infrastructure, job generation, AI in budget

14. Southern states pushing for more population not good idea, says former RBI Guv Subbarao

15. Lord's Mark Industries Stands Out at the World Economic Forum 2025 in Davos

16. Government Approves Mutual Credit Guarantee Scheme to Strengthen MSME Manufacturing Sector, fulfilling the budget announcement of 2024-25

17. CBIC destroys 10,413 kg seized narcotics and 94.62 lakh tablets worth Rs. 2,246 during Drug Disposal Drivefrom 11th to 26th January, 2025

18. SC strikes down AGI Greenpac’s resolution plan for Hindustan National Glass & Industries Ltd

Notifications

GST - States

1. 08/2025-State Tax (Rate) - dated 16-1-2025 - Gujarat SGST

Amendment in Notification No. 17/2017-State Tax (Rate), dated the 30th June, 2017

2. 07/2025-State Tax (Rate) - dated 16-1-2025 - Gujarat SGST

Amendment in Notification No. 13/2017-State Tax (Rate), dated the 30th June, 2017

3. 05/2025-State Tax (Rate) - dated 16-1-2025 - Gujarat SGST

Amendment in Notification No. 11/2017-State Tax (Rate), dated the 30th June, 2017

4. 03/2025-State Tax (Rate) - dated 16-1-2025 - Gujarat SGST

Amendment in Notification No. 39/2017-State Tax (Rate), dated the 18th October, 2017

5. 01/2025-State Tax (Rate) - dated 16-1-2025 - Gujarat SGST

Amendment in Notification No. 01/2017-State Tax (Rate), dated the 30th June, 2017

IBC

6. IBBI/2024-25/GN/REG119 - dated 28-1-2025 - IBC

Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) (Amendment) Regulations, 2025

7. IBBI/2024-25/GN/REG118 - dated 28-1-2025 - IBC

Insolvency and Bankruptcy Board of India (Inspection and Investigation) (Amendment) Regulations, 2025

8. IBBI/2024-25/GN/REG117 - dated 28-1-2025 - IBC

Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2025

Circulars / Instructions / Orders

SEZ

1. Minutes of the 124th meeting of the SEZ - dated 5-11-2024

Minutes of the 124th meeting of the Board of Approval for SEZs held on 5th November, 2024 in Vanijya Bhawan, New Delhi

GST

2. 246/03/2025 - dated 30-1-2025

Clarification on applicability of late fee for delay in furnishing of FORM GSTR-9C

DGFT

3. Trade Notice No. 27/2024-25 - dated 29-1-2025

Introduction of online module for filing Annual RoDTEP Return (ARR)

Highlights / Catch Notes

GST

• Charitable Trust's Marriage Hall Must Pay GST and Penalties After Deliberately Masking Fees as Donations Under Section 74

  Case-Laws - HC : HC dismissed petition of charitable trust operating marriage hall challenging GST liability. Trust failed to register under GST Act from July 2017 to January 2020, attempting to evade tax by issuing receipts as donations. Post-inspection registration and tax payment were not voluntary but to avoid penalties. Court upheld that trust's conduct constituted suppression and fraud under Section 74 of GST Act. Both Original Authority and Appellate Authority correctly applied law, finding deliberate tax evasion through non-registration and mischaracterization of payments. Trust liable for unpaid taxes and penalties, with no grounds for judicial interference.
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• High Court Invalidates GST Assessment Order Due to Missing Document ID Number (DIN)

  Case-Laws - HC : HC set aside GST assessment proceedings due to absence of Document Identification Number (DIN). Following SC precedent in Pradeep Goyal case and CBIC circular No. 128/47/2019-GST, the court determined that orders without DIN are non-est and invalid. The ruling aligns with previous HC Division Bench decisions in Cluster Enterprises and Sai Manikanta cases which established that non-mention of DIN invalidates proceedings. Court granted liberty to revenue authorities to conduct fresh assessment after proper notice to assessee and assignment of DIN number. The Form GST DRC-07 dated 26.06.2024 was consequently invalidated, emphasizing procedural compliance requirement in GST administration.
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• Maharashtra GST Authority Cannot Proceed with Show Cause Notice After Karnataka HC Stay on Same Transaction Under Section 74

  Case-Laws - HC : HC determined the maintainability of petition challenging show cause notice under Section 74 of CGST Act regarding taxation of reward amounts received from Hong Kong group company. Court rejected preliminary objection, noting dual taxation attempt by Maharashtra and Karnataka authorities on same Rs. 6092 Crores transaction. Karnataka HC had already stayed notice for full amount, while Maharashtra sought to tax a portion. Given significant legal questions and Rs. 75 crores already deposited with Maharashtra authorities, court restrained respondents from further action on show cause notice dated July 21, 2024. Key consideration was prevention of double taxation on identical transaction across jurisdictions.
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• High Court Upholds Right to Cross-Examine Witnesses in GST Proceedings Under Section 75(4), Citing Natural Justice Principles

  Case-Laws - HC : HC quashed the authority's refusal to allow cross-examination of witnesses whose statements were used in show cause notice under CGST Act. The court emphasized that when third-party statements are relied upon in quasi-judicial proceedings, the fundamental right to cross-examine flows from Section 75(4) of CGST Act and principles of natural justice. The court held that unilateral statements made without providing opportunity for cross-examination cannot be justified under rule of law. The impugned order (Ext.P3) was set aside with directions to permit petitioner to cross-examine the persons whose statements were referenced in show cause notice while continuing the proceedings.
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• High Court Allows Revision of GSTR-3B Returns for ITC Claims Under Section 140 CGST Act Due to Technical System Limitations

  Case-Laws - HC : HC ruled in favor of petitioner seeking permission to revise GSTR-3B returns for July-November 2017. The case centered on transitional ITC claims under Section 140 of CGST Act 2017. Court acknowledged system limitations, noting TRAN-01 facility was available only from August 25, 2017, despite GST implementation from July 1, 2017. The delay in ITC availability forced petitioner to discharge liability through cash payments. HC emphasized technical glitches shouldn't penalize compliant taxpayers, particularly those under inverted duty structure. The ruling permits revision of returns, allowing proper ITC utilization despite initial system constraints.
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• GST Tax Demand Order Quashed: High Court Rules Service Notice Irregularities Violated Natural Justice, Grants 2-Week Reply Period

  Case-Laws - HC : HC quashed tax demand order under GST Act due to procedural irregularities in notice service. Petitioner claimed no awareness of notices or orders, preventing timely response within limitation period. Court found merit in petitioner's contention that order was not visible under system's "view notices and orders" tab, constituting violation of natural justice principles. Given that disputed amount was already deposited with State Government, HC directed treating impugned order as final notice, granting petitioner two weeks to submit written reply instead of relegating to statutory remedy. Matter resolved considering procedural fairness and existing tax deposit.
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• High Court Grants Bail to GST Official in Bribery Case After 55 Days Custody Under Section 483 BNSS

  Case-Laws - HC : HC granted regular bail to petitioner accused of demanding bribes for GST registration. Despite prima facie evidence linking petitioner to the alleged crime under Section 483 of Bharatiya Nagarik Suraksha Sanhita, 2023, the court determined that extended pre-trial detention was unwarranted. Key factors in the decision included: pre-trial custody duration of 1 month 25 days, principle that pre-trial detention should not mirror post-conviction sentencing, nature of allegations, and case-specific circumstances. The court emphasized this ruling was based on case-specific facts without commenting on substantive merits. Bail order effective upon upload to court's official webpage.
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Income Tax

• High Court Rules NGO's Poor Relief Activities Qualify as Charitable Under Section 2(15), Remands Case for Income Verification (15)

  Case-Laws - HC : HC allowed appeals, holding appellant's activities qualified as "relief of the poor" under Section 2(15) for charitable purpose definition and Section 11 exemption purposes. Court overturned Appellate Tribunal's order, finding authorities failed to holistically evaluate activities against Memorandum of Association objectives. However, matter remanded to Assessing Officer to determine if appellant satisfied income application requirements under Section 11 for AY 2017-18 and 2018-19. Assessment deemed incomplete without verification of actual fund utilization for claimed exemptions, despite qualifying as charitable entity providing poor relief.
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• High Court Upholds Tribunal's Reliance on Transfer Pricing Analysis for Permanent Establishment Attribution in Adobe India Case

  Case-Laws - HC : HC determined that when addressing Fixed Place PE and DAPE questions, the Tribunal correctly relied on Transfer Pricing Officer's analysis. The assertion that Adobe India performed functions beyond those examined in Transfer Pricing Analysis was found unsupported by evidence. The Tribunal's conclusion that income attributable to PE had already been taxed was upheld, negating need for further assessment. Court dismissed arguments regarding Double Irish model's relevance, noting its inapplicability to income accrued in India. The Court found no merit in appellant's contention that Transfer Pricing Analysis was insufficient to determine PE attribution, as allegations of wider scope of functions lacked evidentiary support.
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• Video Conference Hearing U/s 143(3) Deemed Valid as Assessee Failed to Produce Documents Despite Fair Opportunity

  Case-Laws - HC : HC upheld assessment order issued under Section 143(3) read with 144B, finding no violation of natural justice principles. The assessee had received show cause notice and participated in video conferencing hearing, where they explained loan transactions in detail. The Court determined video conferencing was substantive, not merely procedural. Notably, assessee failed to produce relevant documentation supporting their position despite having opportunity. Court emphasized that burden lies with notice recipient to furnish supporting evidence, and assessing officer cannot be expected to specifically request unknown documents. Finding due process requirements satisfied and no procedural violations established, petition dismissed.
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• ITAT Rules on AOP Rental Income: Maximum Marginal Rate Applies if Any Member's Tax Rate Exceeds MMR Under Section 167B

  Case-Laws - AT : ITAT set aside CIT(A)'s orders concerning taxation of rental income earned by an AOP under s.167B. While co-ownership agreement specified determinate shares, verification of individual members' tax rates was deemed necessary. The Tribunal held that if any AOP member is taxable at rates higher than MMR, entire AOP income must be taxed at MMR per s.167B. Matter remanded to AO for verification of co-owners' applicable tax rates from individual returns. If no member exceeds MMR threshold, income to be taxed at normal slab rates under s.167B(2). Conversely, if any member's rate exceeds MMR, AOP's entire income shall be taxed at MMR. Appeals allowed for statistical purposes.
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• Assessment Order Under Section 143(3) Void: ITAT Rules Search-Related Cases Must Follow Section 153C for Hans Group Matter

  Case-Laws - AT : ITAT quashed assessment order made under section 143(3) for AY 2021-22, declaring it void ab initio. The assessment, based on materials from search operations conducted on Hans Group, should have been processed under section 153C rather than regular assessment under 143(3). Following first proviso to section 153C, AY 2023-24 being search year, assessments for six prior years (2017-18 to 2022-23) required completion under 153C. Despite recording satisfaction note under 153C, AO's completion of assessment under 143(3) was held legally impermissible. Tribunal relied on similar precedent from Mukul Rani Thakur case involving identical Hans Group search circumstances.
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• Tax Registration Denied: Society Fails to Submit Required Documents Under Section 12A Despite Multiple Opportunities from CIT

  Case-Laws - AT : ITAT upheld denial of registration under s.12A(1)(ac)(iii) and s.80G(5)(iii) where applicant society failed to furnish requisite documents despite three opportunities provided by CIT(Exemption). The tribunal rejected appellant's contention regarding lack of adequate opportunity, noting that condoning such failure would set an undesirable precedent allowing applicants to bypass CIT(Exemption)'s scrutiny and seek restoration through tribunal proceedings. Finding no procedural infirmity in CIT(Exemption)'s order, ITAT confirmed rejection of registration application under s.12AB, emphasizing that appellant had sufficient chances to present documentation but failed to utilize them without justifiable cause.
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• Bank Cash Deposits Below Rs. 2 Lakh From Business Sales Not Unexplained Income Under Section 69A When Documented

  Case-Laws - AT : Cash deposits in bank accounts were challenged by AO under section 69A as unexplained. Assessee demonstrated deposits originated from legitimate cash sales recorded in books of account, with complete documentation of purchases, sales, and inventory details. ITAT held that since individual cash transactions were below Rs. 2 lakh threshold, no customer PAN details were required. The tribunal accepted assessee's explanation that deposits during April-May 2019 were from regular business operations. CIT(A)/NFAC's reasoning was upheld, concluding section 69A provisions were inapplicable given proper documentation of source. Revenue's appeal dismissed as assessee successfully established nature and source of deposits through verifiable business records.
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• Parent Taxpayer Wins Appeal for TCS Credit on Minor Child's Income Despite Law Taking Effect in 2025

  Case-Laws - AT : ITAT allowed taxpayer's appeal regarding Tax Collected at Source (TCS) credit for minor child's income clubbed with parent's income. While statutory amendment permitting such credit becomes effective January 2025, ITAT held the amendment should apply retrospectively to prevent undue hardship. Following Allied Motors precedent on curative provisions, tribunal concluded that when minor's income is clubbed with parent's income, corresponding TCS credit must transfer to parent-assessee. Revenue authorities cannot retain collected tax without providing credit mechanism. AO directed to grant TCS credit to parent for minor's clubbed income.
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• Tax Officer Can Conduct Full Scrutiny Without Extra Approval When High-Value Financial Transactions Justify Comprehensive Assessment From Start

  Case-Laws - AT : ITAT ruled that Assessing Officer (AO) did not exceed jurisdiction in conducting complete scrutiny without additional approval. Case involved three significant factors: non-submission of mandatory assets/liabilities schedule for high-income taxpayer, substantial lending operations disproportionate to reported income, and significant loan settlements requiring verification. These aspects inherently warranted comprehensive examination beyond limited scrutiny parameters. CIT(A)'s observation regarding procedural non-compliance with CBDT circular for conversion from limited to unlimited scrutiny was deemed erroneous, as initial selection parameters themselves justified complete scrutiny. Given the nature of financial transactions and reporting requirements, case was inherently qualified for comprehensive examination from inception. ITAT held AO's actions were within jurisdictional scope.
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• CPC's Unilateral TDS Credit Reduction Overturned by ITAT: Prior Notice Required U/s 154 for Credit Modifications

  Case-Laws - AT : ITAT determined CPC's unilateral reduction of TDS credit was improper after previously granting full credit in three separate rectification orders. The subsequent reduction, executed without prior notice to assessee, violated Section 154 procedural requirements and principles of natural justice. CPC's action of diminishing TDS credit and raising demand without show cause notice was deemed unjustified. ITAT set aside CIT(A)'s order, directing AO/CPC to restore complete TDS credit and nullify corresponding demand. The assessee's appeal succeeded, establishing that administrative modifications to tax credits require proper notice and opportunity for response, upholding procedural fairness in tax proceedings.
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• ITAT Accepts NRE Account Cash Deposits and Property Investments as Valid, Rejects Revenue Department's Suspicion of Foreign Fund Sources

  Case-Laws - AT : ITAT ruled in favor of the assessee regarding disputed cash deposits and property investments made through NRE account. The tribunal rejected revenue authorities' contentions about unexplained sources of 50,000 USD cash deposit, finding sufficient documentary evidence proving withdrawal from South African company SPPL where assessee's spouse was director. ITAT dismissed DRP's reasoning that physical transport of dollars was suspicious as irrelevant to transaction legitimacy. Similarly, property investment sourced from foreign entity and registration charges funded by assessee's son through documented transfers were deemed adequately explained. The tribunal emphasized that transactions through NRE account, supported by evidence of foreign source funds from companies where assessee/spouse held positions or family member advances, satisfied burden of proof for transaction genuineness.
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• Tax Tribunal Cancels Penalty Under Section 271I As Import Advance Payments Exempt From Form 15CA/15CB Filing Requirements

  Case-Laws - AT : ITAT reversed penalty imposed under s271I for non-submission of Form 15CA/15CB regarding overseas transactions. Following precedent in M/s Vinay Diamond matter, tribunal acknowledged CBDT Notification GSR 978(E) which exempts certain payments from Form 15CA/15CB filing requirements. Specifically, advance payments against imports fall under exempted categories per Rule 37BB. Tribunal concluded penalty cannot be levied for import-related payments, ruling in appellant's favor. Decision reinforces regulatory exemptions for specified international transactions and clarifies compliance obligations for cross-border advance payments.
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• Tax Exemption Under Section 11 Valid When Return Filed Within Extended Deadline Under Section 139(4A), Rules ITAT

  Case-Laws - AT : ITAT allowed the assessee's appeal regarding denial of exemption under section 11 of Income Tax Act. While the return was not filed within time prescribed under section 139(1), it was filed before the extended deadline under section 139(4A). Following binding CBDT Circular No.173/193/2019, which directs rectification of section 143(1)(a) orders and related demands in such cases, ITAT set aside CIT(A)'s order. Matter remanded to CIT(A) for passing rectification order as per CBDT guidelines. The ruling establishes that belated returns filed within section 139(4A) timeline qualify for exemption, provided other conditions are met.
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• Electricity Companies Exempt from MAT under Section 115JB Prior to 2013 Amendment, Rules Income Tax Appellate Tribunal

  Case-Laws - AT : ITAT determined MAT provisions under s.115JB were inapplicable to electricity companies governed by specific statutes before the 2013 amendment, regardless of incorporation status. Following Raj. HC precedent in Ajmer Vidyut case, the tribunal rejected CIT(A)'s interpretation that excluded only power generation companies under s.115JA(iv). The legislative history confirmed electricity companies were not intended for MAT coverage pre-2012. The tribunal allowed the assessee's appeals, deleting additions to book profits under s.115JB for both assessment years, emphasizing that companies operating under distinct electricity statutes remained outside MAT's scope until the specific amendment effective April 1, 2013.
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Customs

• Lab Grown Diamonds Under One Carat Get Relief: Additional Export Declaration Qualifiers Now Made Optional

  Circulars : CBIC modified requirements for Lab Grown Diamonds (LGD) export declarations through customs notification. While maintaining mandatory additional qualifiers for most synthetic/reconstructed diamonds as per earlier Circular 21/2024-Customs, the Board introduced a significant relaxation. For LGDs (HPHT/CVD) weighing less than one carat, declaration of additional qualifiers is now voluntary rather than mandatory. This modification addresses industry concerns about increased dwell time during export processing of smaller synthetic diamonds. The change aims to facilitate smoother trade operations while maintaining necessary oversight for larger synthetic diamond exports. All other provisions from the previous circular remain in effect.
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• High Court Allows MEIS Benefits for Export Units Under FTP 2015-20 with FIEO Registration, Overturning Rejection Based on EPCES Requirement

  Case-Laws - HC : HC ruled that rejection of petitioner's MEIS scrip applications was improper. Under FTP 2015-20, Export Oriented Units could claim MEIS benefits with either FIEO or EPCES registration, while exclusive EPCES registration requirement was introduced only in FTP 2023. The subsequent policy change was formalized through Circular No.78 of 2022, making EPCES membership mandatory for SEZ Units/Developers. The court found respondent's rejection order based on lack of valid RCMC during export period to be incorrect, as the mandatory EPCES registration requirement did not apply retrospectively. The impugned order was set aside and petition disposed of.
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• High Court Orders DGFT to Process MEIS Benefits for Claims Filed During Scheme's Validity, Despite Later Expiration

  Case-Laws - HC : HC ruled in favor of petitioner's claim for MEIS benefits despite scheme expiration in February 2022. The court determined that since petitioner's application to amend 50 shipping bills was made in April 2018 when MEIS was operational, benefits cannot be denied merely due to scheme expiration. Following precedents in Technocraft Industries and L&T cases, HC rejected DGFT's argument that scheme expiry nullifies prior accrued benefits. Court emphasized that administrative delays cannot prejudice rightful claims initiated during scheme validity. Respondents directed to process MEIS scrip applications within 15 days if eligibility criteria met. Ruling reinforces principle that vested rights under government schemes survive scheme expiration when claims were timely initiated.
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• Smart Meter Communication Modules Classified Under CTI 8517 70 90 as Communication Hub Parts, CESTAT Overturns Earlier Classification

  Case-Laws - AT : CESTAT ruled communication modules imported for smart meters are properly classifiable under CTI 8517 70 90 as parts of communication hubs, not under CTI 9028 90 10/90 as parts of electricity/gas meters. While these modules ultimately become part of smart meters, they maintain distinct identity as communication hub components. The tribunal found no suppression of facts by the appellant, making extended limitation period inapplicable. Penalties under sections 114A, 112, and 114AA were set aside as allegations of intentional misclassification were unfounded. The appellant's classification practice was deemed correct and appeal was allowed with duty demand and interest charges nullified.
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• Customs Tribunal Overturns Penalties in Zinc-Lead Import Case, Rules Supplier's Misdeclaration Was Genuine Error Without Duty Evasion

  Case-Laws - AT : CESTAT ruled in favor of the appellant, setting aside confiscation, redemption fine, and penalties in a case involving misdeclaration of imported zinc ingots as lead ingots. The Tribunal determined this was a bonafide mistake by the foreign supplier rather than intentional duty evasion, noting both items were freely importable with identical duty rates. The appellant would have gained no monetary benefit from the misdeclaration, as lead ingots were actually more expensive than zinc ingots. Given these circumstances and the absence of malafide intent, the Tribunal concluded that an incorrect declaration resulting from supplier error did not warrant punitive measures. The appeal was allowed, reversing the adjudicating authority's original order.
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• Customs Broker License Restored After CESTAT Finds No KYC Violations Under Regulation 10(n) of CBLR 2018

  Case-Laws - AT : CESTAT reversed revocation of Customs Broker (CB) license, finding no violation of Regulation 10(n) of Customs Broker Licensing Regulation, 2018. CB had properly obtained required KYC documents (PAN, Aadhar, IEC) which were genuine. While Department alleged facilitation of exports by non-existent entities, evidence showed exporter was available and provided statements. Issue regarding GSTIN cancellation was explained by automatic ICEGATE software substitution with Aadhar number, which remained uncontroverted. Tribunal held Department failed to establish that CB facilitated fraudulent exports or that exporter obtained undue monetary benefits. No evidence supported allegations of KYC violations or justified license revocation and penalties. Appeal sustained, restoring CB's license.
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• Customs Tribunal Upholds Gold Biscuits Confiscation Under Section 123 After Owner Fails to Prove Legitimate Purchase

  Case-Laws - AT : CESTAT upheld absolute confiscation of two gold biscuits bearing foreign markings (VALCAMBI SUSSIE). Appellant failed to discharge burden of proof under Section 123 of Customs Act, 1962 to establish legitimate acquisition. Department's reasonable belief of smuggled goods was sufficiently established through foreign markings, lack of supporting documentation, and contradictory statements between appellant and alleged parties involved. Appellant claimed receiving funds from P. Radha Krishna for purchasing gold from Ashok Kumar, but Radha Krishna denied involvement, and Kumar failed to respond to summons. Testing by recognized agency confirmed authenticity. Tribunal found no procedural irregularities and dismissed appeal, maintaining confiscation order and penalties.
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• Paddle Wheel Aerators Used in Aquaculture Correctly Classified Under CTH 84368090 as Agricultural Machinery, CESTAT Rules

  Case-Laws - AT : CESTAT allowed appeal regarding classification of Paddle Wheel Aerators used in aquaculture. Initially dismissed by Comm. (Appeals) due to 87-day delay, medical certificate justified late filing. On merits, Tribunal determined that Paddle Wheel Aerators, being agricultural machinery used in fish/shrimp farming, are correctly classifiable under CTH 84368090 (agricultural machinery) rather than CTH 8479. Decision aligned with previous CESTAT ruling which established that paddle wheel aerators used in fisheries/aquaculture fall under heading 8436. Appeal succeeded on both procedural grounds and substantive classification issue.
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DGFT

• Government Removes Import Restrictions on Patrol Boats, Surveillance Vessels and Maritime Equipment Under CTH 890690 of Trade Act

  Notifications : The GOI amended import policies under Foreign Trade (Development & Regulation) Act, 1992, modifying restrictions on vessels under CTH 890690. Items under codes 89069010 (patrol boats, surveillance vessels, air-cushion vehicles, remote operated vehicles) and 89069090 (other vessels) have been reclassified from "Restricted" to "Free" import status. This amendment, executed through powers under Sections 3 and 5 of the Act and aligned with Foreign Trade Policy 2023, removes previous import restrictions on these maritime vessels. The policy change takes immediate effect, liberalizing the import regime for specialized maritime vessels and related equipment.
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Budget

• Infrastructure Investment Plan Targets $7 Trillion Economy Through Railways, Defense, Power and Smart City Development

  News : The Union Budget 2025-26 emphasizes infrastructure-led economic growth, following the Rs 11.1 lakh crore allocation in 2024-25. Key priorities include expansion of railways, defense, power, and data centers through the National Infrastructure Pipeline. The budget aims to achieve a $7 trillion economy by 2030, requiring $2.2 trillion in infrastructure investment with a projected 3x GDP multiplier effect. Critical focus areas include urban development through PMAY and AMRUT schemes, sustainability initiatives, and public-private partnerships. The government's commitment to PM Gati-Shakti National Master Plan and Jal Jeevan Mission remains central, with emphasis on green building practices and smart city development. The plan aligns with Make in India, targeting growth in manufacturing, construction materials, and technological solutions.
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• Finance Minister's Budget Targets 4.5% Fiscal Deficit with Rs 11.1 Lakh Crore Capital Expenditure and Tax Revenue Goals

  News : The Indian Finance Minister's upcoming FY2025-26 Budget presentation focuses on critical fiscal metrics and consolidation targets. The government aims to reduce fiscal deficit to 4.5% of GDP, continuing from the current year's 4.9% target. Capital expenditure is projected at Rs 11.1 lakh crore, though actual spending may be lower due to electoral delays. The Budget addresses debt management with a target to reduce general government debt-to-GDP ratio from 85% to 60%. Key revenue projections include gross tax revenue of Rs 38.40 lakh crore, with Rs 22.07 lakh crore from direct taxes and Rs 16.33 lakh crore from indirect taxes. GST collections are anticipated at Rs 10.62 lakh crore, while nominal GDP growth is estimated at 10.5%.
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• Finance Ministry Team Crafts Rs 50 Lakh Crore Budget with Focus on Growth and Fiscal Deficit Reduction Target

  News : The Finance Ministry team led by Finance Minister is preparing the FY26 Union Budget exceeding Rs 50 lakh crore amid significant economic challenges. Key concerns include decelerating growth projected at 6.4% for FY25, currency depreciation with rupee reaching 86.7 against USD, moderated consumption demand, and stagnant private investment. The budget aims to maintain fiscal prudence while targeting deficit reduction below 4.5% of GDP. The core team comprises Finance Secretary Pandey, Economic Affairs Secretary Seth, Expenditure Secretary Govil, DIPAM Secretary Chawla, Financial Services Secretary Nagaraju, and Chief Economic Advisor Nageswaran. Primary objectives include strengthening growth trajectory, managing fiscal consolidation, and addressing economic headwinds while maintaining developmental priorities.
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Indian Laws

• Supreme Court Restores Arbitral Award in NHAI Contract Dispute, Upholds Tribunal's Interpretation of Clause 51 Under Section 34

  Case-Laws - SC : SC overturned Division Bench's interference with arbitral award concerning contract interpretation between NHAI and contractor regarding geogrid quantities. Court held that Arbitral Tribunal's interpretation of Clause 51 was reasonable, finding no variation in work scope but merely difference between estimated and actual quantities required. SC emphasized limited scope of judicial intervention under Sections 34 and 37 of Arbitration Act, noting appellate jurisdiction is particularly circumscribed when reviewing orders upholding arbitral awards. Court restored original arbitral award, reinforcing principle that frequent interference with arbitration decisions undermines Act's purpose and courts must show great restraint, especially when awards are substantially upheld under Section 34.
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• Court Rejects Bail in International Drug Trafficking Case Under NDPS Act Section 37, Citing Conscious Possession and Flight Risk

  Case-Laws - HC : HC denied bail under Section 439 CrPC for NDPS Act charges. Applicant was apprehended attempting to collect parcels containing psychotropic substances based on Interpol intelligence. Court found prima facie evidence of conscious possession, noting the Applicant's suspicious behavior including face concealment, using false identities, and attempted flight upon detecting CBI presence. Despite claiming lack of knowledge about parcel contents, Applicant's actions demonstrated awareness and control. Court determined twin conditions under Section 37 NDPS Act were not satisfied due to gravity of allegations and evidence suggesting involvement in international drug trafficking network. Given reasonable grounds to believe guilt and likelihood of reoffending, bail application was dismissed.
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SEBI

• SEBI Bans Regulated Entities From Partnering With Unregistered Investment Advisors Under Section 11B, Effective August 2024

  Circulars : SEBI regulations effective August 29, 2024, prohibit regulated entities and their agents from associating with unregistered persons providing securities advice or making performance claims. Association encompasses monetary transactions, client referrals, IT system interactions, or similar arrangements. Regulated entities must ensure compliance within their association scope and terminate existing non-compliant contracts. Exceptions apply for pure investor education activities without specific security recommendations. Violations may result in penalties, registration suspension/cancellation, or debarment under SEBI Act Section 11B. The regulations apply to all SEBI-registered intermediaries, recognized exchanges, clearing corporations, depositories, and their agents including MFDs, APs, PMS and AIF distributors. Professional services like demat accounts remain permissible if not used for prohibited activities.
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• SEBI Mandates Two-Stage Due Diligence Certificates from Debenture Trustees for Debt Securities Under Regulation 40.1

  Circulars : SEBI amended regulations regarding due diligence certificates for debenture trustees (DTs) in secured and unsecured debt securities issuance. DTs must now submit standardized due diligence certificates at two stages: first when filing draft offer documents with stock exchanges, and second when submitting listing applications. For unsecured debt securities, new formats specified in Annex-A and Annex-B require DTs to confirm truthful disclosures, covenant details, and execution of trust deeds. The circular modifies Chapter II of Master Circular for DTs, specifically updating paragraphs 2.3.1(a) and 2.3.1(b) to align with SEBI NCS Regulations 40.1(a) and 44(3)(a). These requirements took immediate effect under SEBI's regulatory authority to protect investor interests and regulate securities markets.
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VAT

• High Court Upholds Penalty for Misusing C-Forms: Construction Materials Not Eligible for Tax Concession Under Section 8(3)(b)

  Case-Laws - HC : HC affirmed penalty under Section 10A of CST Act for misuse of C-Forms. Assessee purchased construction materials claiming concessional tax rates but failed to demonstrate integral connection to manufacturing process. Court held that concessional rates under Section 8(3)(b) apply only when goods listed in Registration Certificate are used for manufacturing or resale. Building materials used for office construction do not qualify for concession. Assessee's failure to prove goods' direct connection to production process violated statutory requirements. HC dismissed appeal, upholding Joint Commissioner's order imposing penalty, emphasizing strict compliance with Registration Certificate specifications for concessional tax eligibility.
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Central Excise

• Tribunal Denies Appeal on Interest Claims for Investigation Deposits Under Section 11BB of Central Excise Act

  Case-Laws - AT : CESTAT dismissed appeal regarding interest claim on refunded deposits made during investigation. While the deposited amount was initially appropriated by Original Authority as duty against demand, appellant sought interest on refund. Following Mafatlal Industries precedent on jurisdictional scope under Art. 226 and Art. 32, tribunal determined appellant's entitlement to statutory interest under Sec. 11BB of Central Excise Act from deposit date until actual refund date. Despite recognizing interest entitlement, appeal failed on other substantive grounds. Decision upholds legislative framework governing refund interest while respecting constitutional remedies' scope.
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Case Laws:

• GST

• 2025 (1) TMI 1429
  Liability of petitioner, a charitable trust operating a marriage hall, to pay GST on the services rendered from July 2017 to January 2020 - HELD THAT:- The entire claim against the petitioner had arisen of its own failure to register itself under the GST Act as required under law. Only pursuant thereto, the petitioner had remitted the tax that he is liable to pay. Even though, such action is claimed to be a voluntary payment by the petitioner, it should be seen that the petitioner had attempted to evade payment of tax which is liable to be taxed and only pursuant to the inspection effected by the respondent, the petitioner had submitted himself for payment of tax and hence, the same cannot be said to be a voluntary payment and has been made only to wriggle out of the penal consequences. This conduct of the petitioner to evade tax will also fall under suppression and fraudulent activities envisaged under Section 74 of the GST Act. Hence, the contention that Section 74 cannot have been invoked against the petitioner cannot be countenanced. A perusal of the orders in original, as affirmed by the Appellate Authority would clearly indicate that there is a deliberate attempt to evade payment of tax by not registering himself under the Act and also issuing receipts as donation to the Trust. Only after the inspection they have agreed to pay the tax by registering themselves. This conduct cannot be said to be a voluntary conduct. There has been contraventions of provisions of the GST Act for which the petitioner is liable to make good the non-payment and also suffer penal consequences for the same. Both the Original Authority as well as the Appellate Authority have considered the case of the petitioner in its proper perspective and had applied the Provisions of law on the issue in its right perspective which do not call for any interference by this Court. Petition dismissed.

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• 2025 (1) TMI 1428
  Rejection of client s prayer for analysis of the bricks produced - challenge to notice for personal hearing - principles of natural justice - HELD THAT:- Present situation on facts is that revenue omitted to obtain sample and is contending that petitioner has subsequently tendered a doctored sample. In the circumstances, revenue has no basis to proceed against petitioner. It follows that we must and do quash impugned order dated 3rd January, 2025, preceding show cause notice dated 29th September, 2023 and reminder dated 4th January, 2025. Petition disposed off.

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• 2025 (1) TMI 1427
  Detention of vehicle - absence of necessary documentation during the transportation of goods - initiation of proceedings under Section 130 of the CGST/SGST Act, 2017 - HELD THAT:- Since the learned counsel for the petitioner submitted that the notices issued under Section 130 of the CGST/ SGST Act, 2017 were received only after the date prescribed for hearing, in order to hasten the matter, this Court should be fixing a date on which the petitioner shall appear and adjudication proceedings be completed. Hence there will be a direction to respondents 1 and 2 to complete the proceedings initiated under Section 130 of the CGST/ SGST Act, 2017 as expeditiously as possible. The petitioner shall appear before the first respondent on 29.01.2025 and before the 2nd respondent on 30.01.2025. On their appearance, the respondents 1 and 2 shall hear the respective matters and conclude the proceedings as expeditiously as possible, at any rate, within ten days from the said date of appearance. Petition disposed off.

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• 2025 (1) TMI 1426
  Challenge to SCN issued u/s 74 of the Central Goods and Services Tax Act, 2017 - it is conceded by the petitioner that the adjudication proceedings are going on and petitioner is being granted an opportunity of cross-examination - HELD THAT:- Since the adjudication proceedings have already commenced pursuant to the show cause notice and the reply notice, the latter of which was issued almost five months ago, there is no reason for this Court to direct the adjudication officer the manner in which the adjudication proceedings should be conducted. If at all the petitioner is aggrieved by the order that may be passed pursuant to Exhibit-P1, certainly the statute provides appropriate remedies. As the proceedings have already commenced and the petitioner has been granted an opportunity for cross-examination as well, exercise of jurisdiction under Article 226 of the Constitution of India is not warranted in the instant case. Petition dismissed.

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• 2025 (1) TMI 1425
  Challenge to assessment order assessing the petitioner under Section 73(9) of the CGST Act apart from penalty and interest for the financial year 2018-19 - HELD THAT:- For the months of November 2018 upto March 2019, the petitioner ought to have, as per section 16(4), filed the returns by 20-10-2019. However petitioner filed the returns GSTR-3B only on 26.11.2019. Hence the claim for input tax credit availed by the petitioner was denied and the demand and penalty were imposed on them. After the introduction of Section 16(5), the time period for filing such returns has been extended upto 30.11.2021. If the return filed by the petitioner is taken into reckoning, there could be significant change in the appreciation of facts carried out in Ext.P1. In view of the above, the impugned order cannot be legally sustained, and it is required to be re-considered. The impugned order Ext. P1 dated 18-04-2024 is set aside and the first respondent is directed to pass fresh orders, within a period of three months from the date of receipt of a certified copy of this judgment, after taking note of the provisions contained in Section 16(5) of the CGST/SGST Act and after affording an opportunity of hearing to the petitioner - petition allowed.

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• 2025 (1) TMI 1424
  Challenge to assessment order - proceeding did not contain a DIN number - HELD THAT:- The question of the effect of non-inclusion of DIN number on proceedings, under the G.S.T. Act, came to be considered by the Hon ble Supreme Court in the case of PRADEEP GOYAL VERSUS UNION OF INDIA ORS. [ 2022 (8) TMI 216 - SUPREME COURT] . The Hon ble Supreme Court, after noticing the provisions of the Act and the circular issued by the Central Board of Indirect Taxes and Customs (herein referred to as C.B.I.C. ), had held that an order, which does not contain a DIN number would be non-est and invalid. A Division Bench of this Court in the case of M/S. CLUSTER ENTERPRISES VERSUS THE DEPUTY ASSISTANT COMMISSIONER (ST) -2 ANDHRA PRADESH, THE ASSISTANT COMMISSIONER (ST) (FAC) , PRODDUTUR-II CIRCLE, THE COMMISSIONER OF STATE TAX, GUNTUR, STATE OF ANDHRA PRADESH. [ 2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT] on the basis of the circular, dated 23.12.2019, bearing No. 128/47/2019-GST, issued by the C.B.I.C., had held that non-mention of a DIN number would mitigate against the validity of such proceedings. Another Division Bench of this Court in the case of SAI MANIKANTA ELECTRICAL CONTRACTORS VERSUS THE DEPUTY COMMISSIONER, SPECIAL CIRCLE, VISAKHAPATNAM-II, THE DEPUTY COMMISSIONER (ST) , STATE OF ANDHRA PRADESH, THE CHAIRMAN, MANAGING DIRECTOR VISAKHAPATNAM, THE EXECUTIVE ENGINEER, OPERATION DIVISION VIZIANAGARAM. [ 2024 (6) TMI 1158 - ANDHRA PRADESH HIGH COURT] had also held that non-mention of a DIN number would require the order to be set aside. Conclusion - The non-mention of a DIN number in the order, which was uploaded in the portal, requires the impugned order to be set aside. This Writ Petition is disposed of setting aside the impugned proceedings in Form GST DRC-07, dated 26.06.2024, issued by the 1st respondent, with liberty to the 1st respondent to conduct fresh assessment, after giving notice to the petitioner and assigning a DIN number to the said order.

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• 2025 (1) TMI 1423
  Maintainability of petition challenging the show cause notice issued under Section 74 of the Central Goods and Service Tax, 2017 - principle ground of challenge to the show cause notice is the fact that the amount that is sought to be taxed by the Respondents herein is the reward amount received by the Petitioner from its Group Company in Honkong in the year 2018-19 and 2019-20. Maintainability of petition - HELD THAT:- There are no merit. Prima facie, after going through the Petition, it is found that the Maharashtra Authorities as well as the Karnataka Authorities are seeking to tax the Petitioner on the very same transaction. The Karnataka Authorities have in fact brought the entire amount of Rs. 6092 Crores to tax. The Maharashtra Authorities are now seeking to bring a part of that consideration (i.e. part of Rs. 6092 Crores) to tax within the state. Further, the Karnataka High Court has already granted a stay on the show cause notice issued by the Karnataka Authorities bringing the entire amount of Rs. 6092 Crores to tax. There is no merit in the Preliminary Objection and the above Writ Petition is certainly entertained. The preliminary objection is therefore rejected. As far as Interim reliefs are concerned, considering that important legal issues are involved and the fact that Rs. 75 crores have already been deposited with the Maharashtra Authorities, the Respondents are restrained from taking any further steps or proceedings in pursuance and/or in furtherance of the show cause notice dated 21st July 2024 issued by Respondent No. 2. Petition disposed off.

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• 2025 (1) TMI 1422
  Challenge to communication refusing to grant an opportunity FOR cross examination of persons whose statements were allegedly utilised by the officer while issuing Ext.P1 SCN - HELD THAT:- In a recent judgment of this Court in NISHAD K.U., PROP. M/S. WOODTUNES ENTERPRISES VERSUS THE JOINT COMMISSIONER, CENTRAL TAX AND CENTRAL EXCISE, CGST KOCHI COMMISSIONERATE KOCHI, THE ADDITIONAL DIRECTOR, DGGI, KOCHI ZONAL UNIT, CENTRAL BOARD OF INDIRECT TAXES CUSTOMS, UNION OF INDIA. [ 2025 (1) TMI 980 - KERALA HIGH COURT] , it was observed that the basic requirement of the rule of law is to grant an opportunity of hearing to the persons against whom proceedings have been initiated. When statements of third parties are relied upon, it is one of the fundamental requirements that the party against whom such statements have been relied upon is granted an opportunity to question the person who gave such statements. This requirement flows from the opportunity of hearing required to be given as per Section 75(4) of the CGST Act. This Court had further observed that unilateral statements behind the back of a person cannot under any circumstances be justified under the rule of law, even if the proceedings are quasi judicial in nature. In the instant case, it is evident that statements of two persons have been used by the respondent to issue show cause notice. Thus, when those statements were proposed to be used against the petitioner, it is a fundamental requirement to grant an opportunity for cross examination. The request of the petitioner as seen from Ext.P2 communication ought to have been allowed by the respondent. Therefore, declining to grant permission to cross-examine as per Ext.P3 is a contravention of the principles of natural justice which flows from the opportunity of hearing required to be granted under Section 75(4) of the CGST Act - Ext.P3 is to be set aside and the petitioner be granted an opportunity to cross-examine those persons whose statements are referred to in the show cause notice while continuing the proceedings initiated pursuant to Ext.P1. Conclusion - The refusal to permit cross-examination contravened the principles of natural justice and the statutory requirement for a fair hearing. Therefore, the decision communicated in Ext.P3 was set aside, and the petitioner was granted the right to cross-examine the individuals whose statements were used in the show cause notice. Petition allowed.

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• 2025 (1) TMI 1421
  Challenge to order passed by the 5th respondent u/s 73 of the JGST Act, 2017 for the financial year 2019-20 - comparison of GSTR-3B and e-way bill - HELD THAT:- In the impugned order passed by the 5th respondent there is no reference to the contention raised by the petitioner at all and it is simply stated that the reply of the petitioner is not satisfactory. Since the purpose of issuing ASMT-10 is to invite a reply and then consider the said reply. It is failed to understand why the 5th respondent did not aver to the contention raised in the reply filed by the petitioner and brushed it aside by simply saying it is not satisfactory. The impugned order dt. 31.08.2024 is set aside, and the matter is remitted to the 5th respondent who shall furnish to the petitioner the basis of making the demand i.e. breakup as to how the difference amount was arrived at; such information be furnished within two weeks from today; petitioner is permitted to file a reply thereto within four weeks from the date of furnishing of the said information by the 5th respondent; personal hearing shall be afforded to the petitioner; and then a reasoned order be passed after considering the reply of the petitioner and the same shall be communicated to the petitioner. Petition allowed by way of remand.

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• 2025 (1) TMI 1420
  Violation of principles of natural justice - no opportunity to participate in the proceedings - challenge to adjudication order - HELD THAT:- Admittedly, the petitioner had no opportunity to participate in the proceedings as the petitioner was not served with show-cause notice since its registration was cancelled by order dated 02.06.2022. To provide an opportunity to the petitioner to submit reply and to participate in the proceedings, impugned orders are set aside and the matter is remitted back to the Adjudicating Authority-respondent No. 1. Since now the petitioner has received the show-cause notice, at the request of the petitioner, two weeks time is granted to submit reply to the show-cause notice from today. Petition allowed by way of remand.

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• 2025 (1) TMI 1419
  Violation of principles of natural justice - passing of Input Tax Credit on the strength of the fake invoices without supply of goods by a fictitious supplier - whether the petitioner should be granted an opportunity to contest the allegations of availing Input Tax Credit (ITC) based on fake invoices? - HELD THAT:- The impugned Order-in-Original 04/2022-GST dated 19.12.2022. The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off.

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• 2025 (1) TMI 1418
  Seeking direction to respondent No.7 to dispose of the petitioner s letter filed by the petitioner seeking permission to file a revised GSTR-3B for the months from July 2017 to November 2017 - HELD THAT:- Chapter XX deals with transitional provisions to transition unutilized ITC. As per Section 140(1) of the CGST Act, 2017, a registered person, other than a person opting to pay tax under Section 10 shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit ( of eligible duties) carried forward in the return relating to the period ending with the day immediately preceding the appointed day i.e., 01.07.2017, furnished by him under the existing law ( within such time and ) in such manner as may be prescribed. As per sub-section 2 to Section 140 of the Central Goods and Services Tax Act, 2017, a registered person, other than a person opting to pay tax under Section 10, shall be entitled to take, in his electronic credit ledger, credit of the unavailed CENVAT credit in respect of capital goods, not carried forward in a return, furnished under the existing law by him, for a period ending with the day immediately preceding the appointed day within such time and in such manner as may be prescribed. Admittedly, the TRAN-01 facility was enabled on the GST portal only on 25.08.2017 which is almost 56 days after the implementation of GST w.e.f 01.07.2017. The petitioner had time upto 29.09.2017 to file TRAN-01 returns as per Rule 117 of the CGST Rules, 2017. Such time was extended upto to 31.10.2017 vide Order No.03/2017 GST dated 21.09.2017. Thereafter, the said time was further extended upto 30.11.2017 vide Order No.07/2017-GST dated 28.10.2017. Once again, the time for filing TRAN-01 returns was further extended upto 27.12.2017 vide Order No.09/2017 GST dated 15.11.2017. There was a delay in availing the ITC and therefore, during the interregnum, part of the liability was discharged by cash by debiting the amounts to the electronic cash ledger. It is under these circumstances, the Honourable Supreme Court observed that non-performance or no-operability of Form GSTR-2A or for that matter, other forms, will be of no avail because the dispensation stipulated at the relevant time obliged the registered person to submit returns on the basis of such self-assessment in Form GSTR-3B manually on electronic platform. This is not the case here. The petitioner cannot be burdened with accumulation of ITC as the petitioner is unable to liquidate the same as it is under inverted duty structure. Conclusion - The technical glitches in the GST system should not penalize taxpayers who are otherwise compliant and entitled to utilize their ITC. Petition allowed.

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• 2025 (1) TMI 1417
  Challenge to tax demand order under Section 73 of the Goods and Services Tax Act, 2017 - petitioner being unaware of issuance of the notices as well as passing of the orders, could neither appear before the authority nor question the validity of the impugned orders within the period of limitation - violation of principles of natural justice - HELD THAT:- At present, it does appear that the petitioner is entitled to a benefit of doubt. No material exist to reject the contention being advanced that the impugned order was not reflecting under the tab view notices and orders . No useful purpose may be served for keeping this petition pending or calling for a counter affidavit or even relegating the petitioner to the available statutory remedy. The entire disputed amount is lying in deposit with the State Government. Therefore, there is no outstanding demand. Accordingly, the writ petition is disposed of, with a direction, the assessee may treat the impugned order as the final notice and submit his written reply within a period of two weeks. Petition allowed.

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• 2025 (1) TMI 1416
  Seeking grant of Regular bail - demand of bribe for grant of GST Registration - Section 483 of Bharatiya Nagarik Suraksha Sanhita, 2023 - HELD THAT:- There is sufficient prima facie evidence connecting the petitioner with the alleged crime. However, pre-trial incarceration should not be a replica of post-conviction sentencing. Per paragraph 5 of the bail petition, the petitioner has been in custody since 08.10.2024. Per the custody certificate dated 02.12.2024, the petitioner s total custody in this FIR is 01 month and 25 days. Given the penal provisions invoked viz-a-viz pre-trial custody, coupled with the prima facie analysis of the nature of allegations, and the other factors peculiar to this case, there would be no justifiability further pre-trial incarceration at this stage. Without commenting on the case s merits, in the facts and circumstances peculiar to this case, and for the reasons mentioned above, the petitioner makes a case for bail. This order shall come into force from the time it is uploaded on this Court s official webpage. Petition disposed off.

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• Income Tax

• 2025 (1) TMI 1415
  Accrual of income in India - Capital gains tax payable by the Mauritian entity in regard to the sale of shares to the petitioner therein - investments originating from Mauritius - Beneficial ownership of shares - Treaty Benefits under India-Mauritius DTAA - whether sale of shares was not covered by Article 13 (3A) of the DTAA ? - determination of shareholding pattern and the role of key individuals - as decided by HC [ 2024 (9) TMI 26 - DELHI HIGH COURT ] the transaction was aimed at tax avoidance is rendered arbitrary and cannot be sustained. The transaction, in our considered opinion, stands duly grandfathered by virtue of Article 13 (3A) of the DTAA.Writ petitioners of the impugned transaction not being designed for avoidance of tax. The petitioners shall be entitled to all consequential reliefs. HELD THAT:- The issues raised in this petition require thorough consideration. In the meantime, the impugned judgment order passed by the High Court shall remain stayed from its operation, implementation and execution.

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• 2025 (1) TMI 1414
  Inaction of Respondents in not passing any order on the Rectification Applications - Respondents have issued an intimation u/s 245 for adjusting the refund against the demand of other years for which Rectification Applications are pending since 2021 - HELD THAT:- Respondents to first adjudicate and pass orders on the Rectification Applications filed for the Assessment Year 2017-2018 to 2020-2021 and thereafter proceed further, if required for adjusting the refund of Assessment Year 2021-2022 against the refund in accordance with law. As informed that for the Assessment Year 2021-2022, Respondent No. 1 has disposed of the Rectification Application filed by the Petitioner by order dated 26 November 2024. However, the said order is also impugned in the present proceeding. We do not wish to adjudicate upon the said order since there is an Appeal provided under Section 246A of the Act against the order rejecting the Rectification Application. The Petitioner is at liberty to file an Appeal against the said order and if such an Appeal is filed within a period of four weeks from the date of uploading of the present order then the Commissioner (Appeal) would adjudicate the same on its merits without going into the limitation since the Petitioner was bona fide pursuing the said matter before this Court in the present Petition.

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• 2025 (1) TMI 1413
  Denial of Exemption u/s 11 - activities of the appellant were more in the nature of business activities carried on with a profit motive - Whether the activities of the appellant qualify as relief of the poor u/s 2(15) ? - HELD THAT:- The payment of such amounts to the poor and marginal farmers, if proved, would have led the authorities below to conclude that the activities of the appellant were carried on with the object of providing relief of the poor. They would have arrived at such a conclusion by looking at the activities of the appellant company in a holistic manner and against the backdrop of its stated objects in its Memorandum of Association. The impugned order of the Appellate Tribunal that upholds the finding of the authorities below is therefore set aside and the appeals allowed to the extent of holding that the activities of the appellant/assessee have to be seen as falling under the head of relief of the poor for the purposes of the definition of charitable purpose u/s 2 (15) and for the purposes of computation of income and grant of exemption u/s 11 of the I.T. Act. That said, we do find force in the submission of Department that there was no enquiry by the authority below, with reference to the accounts and documents produced by the appellant/assessee, on the aspect of whether the appellant had in fact satisfied the requirement of application of income in terms of Section 11 for claiming the exemption. We feel that the assessment of the appellant/company under the I.T. Act for the assessment years 2017-18 and 2018-19 would not be complete unless the above exercise is also completed by the Assessing Officer. While allowing the I.T. Appeals therefore, by finding that the appellant would be entitled to the exemption u/s 11 as an entity providing relief of the poor, we remand the matter to the Assessing Authority to determine whether or not the appellant actually satisfied the requirement of application of income u/s 11 of the I.T. Act during the assessment years in question for the purposes of obtaining the benefit of exemption. Decided in favour of assessee.

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• 2025 (1) TMI 1412
  Fixed Place Permanent Establishment [PE] as well as DAPE -Income deemed to accrue or arise in India - Attribution of profit can be made to the AE when it is renumerated at arm s length - HELD THAT:- While dealing with the principal question of a Fixed Place PE as well as DAPE, the Tribunal has taken note of the Transfer Pricing Analysis which was undertaken by the Transfer Pricing Officer [TPO] and has thus taken the view that since the income attributable to the PE had already been subjected to tax, no further exercise was liable to be undertaken. The submission essentially proceeds on the basis that since all the functions performed and risks assumed by Adobe India had not formed subject matter of examination in the course of the Transfer Pricing Analysis, the mere attribution of profits to the PE would have not justified the Tribunal in proceeding to interfere with the views that were expressed by the AO as well as the CIT(A). We, however, find that although it appears to have been urged before the Tribunal that Adobe India was performing functions which were wider in scope and also stretched to matters which had not formed subject matter of examination in the Transfer Pricing Report, the Tribunal on facts has found that the said conclusions were wholly unjustified and were merely assumptions made by the appellants and were not founded on any material or evidence which formed part of the record. Double Irish model of Corporate Structuring and a perceived scheme of tax avoidance - Double Irish model which is spoken of by various authors essentially alludes to advantages that may be taken by certain entities of a loophole existing in the Irish law so as to escape taxation in that nation. We, however, fail to comprehend or appreciate how that principle could have had any relevance to income which was asserted by the appellants themselves to have arisen or accrued in India.

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• 2025 (1) TMI 1411
  TP adjustment - charging of commission for corporate guarantee at 0.5% - HELD THAT:- Issue decided in favour of revenue we set aside the Tribunal s impugned order to the extent that it concerns a substantial question of law (a) and remand the matter to the Tribunal for fresh consideration, given our above observations and the observations of the Hon ble Supreme Court in the case of Sap Labs India (P.) Ltd. [ 2023 (4) TMI 859 - SUPREME COURT] as held that each case must be examined to determine whether the guidelines laid down in the Act and the Rules were followed by determining the arm s length price. There can be no absolute proposition that the range of corporate guaranteed fees or determining the arm s length price should follow a particular range or formula. Addition of interest expenditure/s 36(1)(iii) - commercial expediency in advancing interest free loans to sister concern - HELD THAT:- We are satisfied that it must be decided against the Revenue and in favour of the assessee, given the decision of South Indian Bank Limited [ 2021 (9) TMI 566 - SUPREME COURT]

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• 2025 (1) TMI 1410
  Validity of assessment order issued u/s 143(3) r.w.s. 144B - violation of principles of natural justice - petitioner contends that the assessment was conducted without proper consideration of the evidence and that the video conferencing hearing was ineffective. HELD THAT:- A perusal of the order impugned would indicate that the petitioner had been given a show cause notice, for which it had replied and a hearing through video conferencing had also taken place. Whether the video conferencing was an empty formality? - As rightly pointed out by respondents, the petitioner in the affidavit had clearly averred that it and its authorized representative had appeared through video conferencing and had explained in detail the way in which the loans were taken and repaid. This itself would mean that the said video conferencing was not an empty formality. When a show cause notice had been issued on certain allegations, it is the duty of the recipient of such show cause notice to assail the same by producing relevant and necessary documents. In the present case, the petitioner had not produced such relevant and necessary documents. The petitioner cannot expect the first respondent to call upon the petitioner to produce further documents, as the first respondent will not be aware of what are the documents available with the petitioner to substantiate the same. Hence, no violation of principles of natural justice as alleged by the petitioner proved. WP dismissed.

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• 2025 (1) TMI 1409
  Bogus purchases - AO has made the addition by stating that assessee had not produced delivery challan as to when stock is received - assessee also did not produce copy of bills and GST challan to show that purchases are genuine - HELD THAT:- AR had submitted that all details were given to AO and CIT(A). We find that assessee had submitted copy of invoice of M/s Om Jewellers, ledger account of Om Jewellers in the books of the assessee, GST portal showing the impugned transaction, B2B invoice list for the month of February, 2018 from GST portal to show that the purchase was in fact made by the assessee from M/s Om Jewellers. The assessee has also submitted ledger account of M/s Om Jewellers where the impugned transaction is reflected. Thus, assessee has given all the details which are needed to explain the genuineness of the purchase made from Om Jewellers. However, the AO has considered the transaction with same other entity, namely M/s Aum Chain Jewellery for making the addition. AR contended that assessee purchased the jewellery from M/s Om Jewellers and not from M/s Aum Chain and Jewellery. The explanation given by the assessee has not been controverted by the lower authorities and there is no corroborative evidence to support the case of revenue that assessee had made another purchase of equivalent value of jewellery from another penalty i.e., M/s Aum Chain Jewellery. Hence, the addition is deleted. Decided in favour of assessee.

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• 2025 (1) TMI 1408
  Levy of surcharge at the maximum marginal rate u/s 167B - rental income from house property earned by the assessee, an Association of Persons (AOP) - levy of surcharge was determined pursuant to intimations issued by the CPC, Bengaluru u/s 143(1) - CIT(A) upheld the CPC s action concluding that Section 167B applies to the income of an AOP where the shares of members are indeterminate - whether the rental income from house property earned by the assessee is to be taxed under Section 26 in the hands of individual co-owners or at the Maximum Marginal Rate (MMR) u/s 167B? HELD THAT:- As per the provisions of Section 167B of the Act, if even one member of the AOP is taxable at a rate higher than MMR, the entire income of the AOP will be taxed at MMR. Although the co-ownership agreement specifies determinate shares, the record does not conclusively establish the tax rates applicable to each co-owner. It is therefore necessary to verify the taxability of each co-owner to ensure that the correct rate of taxation is applied. Co-ownership agreement, and judicial precedents, it is evident that Section 26 of the Act governs the taxation of the rental income from house property in this case. In light of the provisions of Section 167B of the Act, it is essential to ascertain whether any member of the AOP is taxable at a rate higher than MMR. In the interest of justice and to ensure compliance with the Act, the orders of the CIT(A) for both A.Y. 2022-23 and A.Y. 2023-24 are set aside, and the matter is restored to the file of the AO for proper verification. AO is directed to: a) Verify the tax rates applicable to each co-owner based on their individual tax returns. b) If none of the co-owners is taxable at a rate exceeding MMR, the income shall be taxed in the hands of the AOP at normal slab rates applicable to individuals under Section 167B(2) of the Act. c) If any co-owner is taxable at a rate higher than MMR, the income of the AOP shall be taxed at MMR as per the provisions of Section 167B of the Act. Appeals of the Assessee allowed for statistical purposes.

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• 2025 (1) TMI 1407
  Validity of assessment made u/s 143(3) v/s 153C - assessee s contention is that since the assessment was made pursuant to search and based on materials found in the course of search, the assessment in the case of the Assessee being the person other than the searched person should have been made u/s 153C of the Act instead of regular assessment u/s 143(3) HELD THAT:- In this case undoubtedly the addition made in the assessment order passed u/s 143(3) for the AY 2021-22 was based on the search and seizure operations conducted on Hans Group of cases on 06.01.2021, wherein the mobile phone of Shir Vaibhav Jain was seized and based on the watts app chats on 01.12.2020 in the mobile phone of Shri Vaibhav Jain, the addition came to be made while completing the assessment u/s 143(3) of the Act. The contention of the assessee in this appeal was that when once the assessment of the Assessee was made based on the materials seized in the case of Hans Group, such assessment should have been made u/s 153C having recorded the satisfaction note u/s 153C of the Act and not u/s 143(3) as was done by the AO. On perusal of the decision of the Tribunal in the case of Mukul Rani Thakur [ 2024 (11) TMI 1031 - ITAT DELHI] we observed that on identical facts and in same search of Hans Group on 06.01.2021 the AO completed the assessment u/s 143(3) having recorded the satisfaction note u/s 153C for the assessment years 2015-16 to 2021-22. Having regard to the first proviso to section 153C, AY 2023-24 relevant to the FY 2022-23 would be the year of search and therefore the Assessing Officer was required to complete the assessment for six assessment years prior to year of search AY 2023-24 u/s 153C for assessment years 2017-18 to 2022-23. AO completed the assessment for AY 2021-22 u/s 143(3) which is not permissible under law. We hold that the regular assessment made u/s 143(3) of the Act despite recording of satisfaction note u/s 153C from Assessing Officer of searched person and also as the AO of the person other than the searched person, is not permissible in law. Thus, we hold that the assessment framed u/s 143(3) of the Act for AY 2021-22 is void ab initio and the same is hereby quashed. The additional ground raised by the assessee is allowed.

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• 2025 (1) TMI 1406
  Denial of registration u/s.12A(1)(ac)(iii) AND u/s. 80G(5)(iii) - Whether assessee society was provided with adequate opportunity to present the requisite documents? - HELD THAT:- In case the failure of the assessee society for no justifiable reason to furnish the requisite details/documents that were called for by the CIT(Exemption) for processing its application for registration is condoned, then it would become a precedent for others to not participate before the CIT(Exemption) and furnish the requisite details/documents before him, and thereafter, use the Tribunal as a forum for seeking restoration of the matter and allowing of an another innings before the CIT(Exemption), which, we are afraid cannot be allowed. We, thus, finding no infirmity in the view taken by the CIT(Exemption), Bhopal, uphold his order. CIT(Exemption), Bhopal had afforded three opportunities to the assessee society to furnish the documents/details hereinabove it had failed to avail, therefore, we find no substance in the Ld.AR s claim that the order of rejection of the assessee s application u/s. 12AB of the Act had been passed without affording of an adequate opportunity to the assessee society, and, thus, reject the same. Decided against assessee.

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• 2025 (1) TMI 1405
  Revision u/s 263 - bogus LTCG - Information received from the Investigation Wing that the assessee is one of the beneficiaries of penny scrip - AO vide order passed u/s 147 r.w.s. 144B allowed the exemption claimed by the assessee u/s 10(38) in respect of gains arising from the sale of shares and accepted the return of income filed by the assessee - HELD THAT:- Assessee in response to the notice provided a detailed explanation along with all the relevant documents regarding its transaction in shares of Ojas Asset Reconstruction Company Ltd. . However, without addressing/dealing with any of the details filed by the assessee, PCIT came to the conclusion that the transaction by the assessee in shares of Ojas Asset Reconstruction Company Ltd. is a sham transaction entered for earning bogus Long-Term Capital Gains. PCIT did not mention as to how the issue of earning bogus Long-Term Capital Gains is proved in the present case vis- -vis the details filed by the assessee during the re-assessment proceedings and also produced before the learned PCIT. It is pertinent to note that it is also not the claim of the learned PCIT that the details filed before the AO during the re-assessment proceedings were not sufficient to decide the issue of whether the Long-Term Capital Gains earned by the assessee are genuine. Thus, neither in the revisionary proceedings u/s 263 nor during the hearing before us it has been pointed out as to what inquiry was not conducted by the AO with regard to the issue of bogus Long- Term Capital Gains, which can lead to the conclusion that the assessment order is erroneous insofar it is prejudicial to the interest of the Revenue. Thus revision order passed by the learned PCIT under section 263 is set aside - Decided in favour of assessee.

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• 2025 (1) TMI 1404
  Non issue of notice u/s 143(2) - HELD THAT:- As held in the case of ACIT vs. Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] that the issue of notice u/s 143(2) is sine qua non to assume jurisdiction to proceed with the assessment in a case. If the said notice had been issued by the AO who did not have the jurisdiction over the assessee, then such notice is to be treated as non-est. The assessment carried out in such cases will be bad in law. In this case, since the concerned AO who had pecuniary jurisdiction to frame the assessment did not issue notice u/s 143(2) of the Act, therefore, the assessment framed was bad in law - Decided in favour of assessee.

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• 2025 (1) TMI 1403
  Cash deposited in bank account as unexplained cash deposit u/s 69A - AO rejecting the books of account, however, directed the AO to adopt the net profit rate at 1.33% i.e. average of 1.46% shown during last year and 1.2% shown during this year to the sales including the cash sales - HELD THAT:- Assessee has admittedly explained the nature and source of cash deposit which is out of cash sales and which has already been recorded in the books of account and the assessee has clearly explained the nature and source of such cash deposited in the bank account by producing the relevant details. Since each and every cash sale is less than Rs. 2 lakh, the assessee is not required to obtain the PAN number and other details of the customers. Since the assessee in the instant case has given all the details including the details of purchases, sales and quantitative details of stock, etc. and the deposits in the bank accounts are out of cash sales in the month of April and May, 2019, therefore, the provisions of section 69A in our opinion are not applicable to the facts of the present case. In view of the detailed reasoning given by the Ld. CIT(A)/NFAC on this issue, we do not find any infirmity in his order -Aappeal filed by the Revenue is dismissed.

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• 2025 (1) TMI 1402
  Denial of a reduced tax rate option u/s 115BAA - late submission of Form 10IC by the assessee - HELD THAT:- The company has selected the OPTION u/s 115BAA in return of income while calculating the tax as well as specified in clause 8(a) of Form 3CA which is clearly the beneficial one for the company. From tax calculated in the return and from clause 8(a)of Form 3CA, the intention and act of the assessee was very clear to opt new tax regime as per section 115BAA. There is no material objective to be achieved by the assessee in not e-filing papers before the due date of return of the same, once the intent was very well declared in Form 3CA. We also find that, there has been substantial compliance of the requirement under Section 115BAA of the Act, as evident from the fact that while filing the returns, it was declared/stated by the assessee that the option to discharge the tax was exercised under Section 115BAA of the Act and taxes were in fact paid @ 22% without claiming deductions as contemplated u/s 115BAA of the Act. Authorities below failed to appreciate that if the failure to consider the claim of option to discharge tax under Section 115BAA on the ground of failure on the fact of the petitioner to file Form 10-IC within the period stipulated u/s 115BAA would cause genuine hardship to the assessee. Rejection of the petition u/s 119(2)(b) to permit the petitioner to file Form 10-IC in support of its exercise of option under Section 115BAA of the Act would cause genuine hardship and it is desirable and expedient to permit the petitioner to file Form 10-IC in support of its claim / option under Section 115BAA of the Act and deal with such claim on merits in accordance with law. The CBDT s Circulars extending the due dates for filing such forms in earlier years indicate a recognition of such procedural difficulties. Thus, ground of appeal raised by the assessee is restored back to the file of AO with a direction to take on record the Form 10IC and consider the same in consonance with the CBDT Circular and the return of income filed by the assessee and after verifying the same, he will adjudicate the issue whether the assessee is entitled for tax rate as per Section 115BAA of the Act in Assessment Year 2020-21 or not. Appeal is allowed for statistical purposes.

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• 2025 (1) TMI 1401
  Claim of the TCS credit - income of his minor child was clubbed with his own income - HELD THAT:- Since no other mechanism has been provided to allow such TCS credit in the Act till the said amendment which took effect only from 1st day of January, 2025, therefore, such claim of the assessee cannot be entertained. In our opinion, since the income of the minor child was clubbed with the income of the assessee, the corresponding TCS collected in the hands of the minor also should be allowed and due credit should be given in the hands of the assessee. Revenue cannot be allowed to retain the tax deducted at source or tax collected at source without credit being available to anybody. In our opinion, if the credit of tax is not allowed to the assessee, then credit of TCS cannot be taken by anybody. Memorandum explaining the provisions in the Finance Bill, 2024 regarding the credit of tax collected to be given to the persons other than the collectee is applicable from 1st day of January, 2025 and since so other mechanism has been provided to allow such TCS in the Act till the amendment which took place effective only from 1st day of January, 2025 and therefore, such claim of the assessee cannot be entertained is concerned, the same, in our opinion, cannot deprive the assessee from his legitimate claim of TDS / TCS, the income of which has already been offered to tax. Therefore, such amendment in our opinion should be held as retrospective in nature and not to the detriment of the assessee against a legitimate claim. We find in the case of Allied Motors (P) Ltd. [ 1997 (3) TMI 9 - SUPREME COURT] has held that a proviso which is inserted to remedy unintended consequences and to made the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole. It has further been held that it is well settled that if a statute curative or merely declaratory of the previous law retrospective operation is generally intended. In fact the amendment would not serve its object in such a situation unless it is construed as retrospective . We hold that depriving the assessee of due credit for TCS in the hands of the minor child whose income has already been clubbed in the hands of the assessee will cause undue hardship to the assessee for non-provision of any other mechanism by the Board. We, therefore, set aside the order of the Addl./JCIT(A) and direct the AO to give due credit of TDS / TCS of the minor child in the hands of the assessee. The grounds raised by the assessee are accordingly allowed.

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• 2025 (1) TMI 1400
  Limited Scrutiny Assessment - Converting of a limited scrutiny case to an unlimited scrutiny case - Whether AO exceeded jurisdiction by converting a limited scrutiny case into a complete scrutiny case without obtaining necessary approval from the competent authority? HELD THAT:- As regards, first reason given selecting the case for scrutiny that the assessee had reported high income in the return, but not submitted information in the Schedule pertaining to the Assets and Liabilities, in the course of assessee admits that due to high income reported in the return, the assessee was required to submit assets and liabilities schedule, but the assessee did not submit the same. It is not being disputed on behalf of the assessee that such information of assets and liabilities is required to be furnished where total income of the assessee exceeds of Rs. 50, 00,000/-. Such information requires detailed enquiry. In view of this first reason, the AO was competent to scrutinize the case not by way of limited scrutiny, but as a complete scrutiny case. Second reason given in selecting the case for scrutiny, it was found that the assessee had lent huge sum by way of loans as per Form 3CD of debtors, in comparison to the gross total income shown in ITR. Accordingly, when genuineness of loan transactions and sources of loan was to be verified, it cannot be said that the case was selected for limited scrutiny. Third reason in selecting the case for scrutiny is concerned, as per tax audit report, substantial amount of loans was squared up by the assessee during the year under consideration. Accordingly, genuineness of the transactions, sources of unsecured loan, identity as well as creditworthiness of the lenders were to be verified. It was also required to be verified whether the loan amounts had been actually and genuinely returned to any such creditors and also that the provisions of Section 269SS were followed, while returning the said amount. CIT(A), NFAC fell in error in observing that the AO had passed the assessment order without following procedure i.e. without seeking approval of the competent authority, as per CBDT Circular dated 28.11.2018, which contains directions for converting of a limited scrutiny case to an unlimited scrutiny case. Having regard to the reasons recorded for selecting the case for scrutiny, it cannot be said to be a case selected for limited scrutiny or that the AO had expanded his jurisdiction. Decided in favour of assessee.

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• 2025 (1) TMI 1399
  Unexplained cash found at the residential premises during the course of search - assessee had declared Rs. 10 lacs in M/s Avinash Agro Pvt. Ltd. - HELD THAT:- We are of the view that if explanation is taken into consideration, based on cumulative circumstances, namely; (1) Rs. 10 lacs was declared to cover up such type of issues in the case of M/s Avinash Agro Pvt. Ltd.; (b) Past savings of the family members, and (c) Gift received from the brothers, then it would be established that source of cash is available with the assessee. It is difficult to establish a cash available in the family with a mathematic precision. It is to be appreciated on the normal human behaviour available in the family and if all the family members are assessable to tax, then possibility of their savings and availability of Rs. 10 lacs could never be denied. Therefore, learned Revenue Officers have erred in not appreciating the facts and circumstances in right perspective and confirming the addition of Rs. 6 lacs. We allow this appeal and delete the addition of Rs. 6 lacs. Appeal allowed.

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• 2025 (1) TMI 1398
  CPC unilaterally reducing the TDS credit granted to the assessee - CPC had previously granted full TDS credit in three separate rectification orders but unilateral reduction in TDS credit in the subsequent order - AR submitted that this rectification order has been passed by the CPC, without giving an opportunity to the assessee by way of issuance of any notice or otherwise HELD THAT:- As submitted by the Ld.AR, the CPC has given full credit of TDS in three of its orders. However, in the last order passed u/s. 154 of the Act, the TDS amount has been reduced, which resulted in raising of a demand. It is the submission of the assessee that the CPC has not issued any show cause notice to the assessee before reducing the amount of TDS credit. The said action of the CPC is not in accordance with the provisions of sec.154 of the Act and it results in violation of principle of natural justice also. Accordingly, we are of the view that the CPC was not justified in reducing the TDS credit and raising a demand upon the assessee. Accordingly, we set aside the order passed by the CIT(A) and direct the AO/CPC to allow the full credit of TDS to the assessee and accordingly nullify the corresponding demand raised. Appeal filed by the assessee is allowed.

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• 2025 (1) TMI 1397
  Rectification of mistake - Disallowance on account of non-deposit of employees contribution of PF/ESIC before the prescribed due dates - whether the previous order providing relief to the assessee regarding the disallowance of employees contribution to PF/ESIC under Section 36(1)(va) should be recalled in light of a subsequent Supreme Court judgment in the case of Checkmate Services Pvt. Ltd.[ 2022 (10) TMI 617 - SUPREME COURT] HELD THAT:- It is the settled proposition of law that in fiscal litigation, each assessment year is separate and independent. It has been affirmed in Goslino Mario Case [ 1999 (4) TMI 6 - SC ORDER] that a cardinal principle of the Tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. In Reliance Jute and Industries Ltd. V CIT [ 1979 (10) TMI 2 - SUPREME COURT] also this proposition law is recognized. We can observe that the coordinate Bench while passing the order has taken into consideration the judgments in favour of assessee. Hon ble Supreme Court in the case of CIT vs. M/s Vegetable Products Ltd[ 1973 (1) TMI 1 - SUPREME COURT] has held for that if two reasonable constructions of a taxing provision are possible, the construction which favours the assessee must be adopted. The coordinate Bench has, thus, given the assessee the benefit of the view of various Hon ble High Courts favouring the assessee. Thus, where assessee is benefited due to one favorable view then, due to subsequent judgment reversing that view, cannot be said to be a mistake apparent from record, requiring exercise of powers u/s 254(2) of the Act.Consequently the application has no merit and is dismissed.

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• 2025 (1) TMI 1396
  Reopening of assessment - information was received from the Insight portal that the assessee was a beneficiary of fake invoices - HELD THAT:- As the Ld. AR of the appellant filed a Paper Book which contains all the relevant details and the same were not filed before the AO/CIT(A), the issue is remitted back to the file of AO with a direction that he should take into consideration all these papers. Appeal of the appellant is allowed for statistical purposes.

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• 2025 (1) TMI 1395
  Addition of cash deposited in her bank account - additions made on account of source of cash deposited in bank account of the assessee/ investment in immovable property remaining unexplained - Onus to prove - HELD THAT:- When the assessee and her husband carried the amount immediately after withdrawal from South Africa to India, and deposited the same immediately thereafter in the Indian Bank NRE account of the assessee, jointly held with her husband. The assessee has also filed confirmation of the said facts from the auditors of the SPPL . The assessee, we have noted, also explained the relationship between the said company and herself by pointing out that her spouse is a director of the company, which was one director company. All these evidences have not been disputed by any of the authorities below. Thus, it is clearly evident that the assessee had explained the source of 50,000 USD and deposit as being the withdrawals made from a company in SA i.e. SPPL in which her spouse was a director. Reason for rejection by the DRP that, it is baffling and beyond one s logic as to why in this digital era any person would carry dollars physically. We agree with assessee, is absolutely a flimsy reason and of no consequence for rejecting the assessee s explanation. It is immaterial for the purpose of proving the genuineness of the transaction, we hold, as to why any person would carry dollars in cash ,as long as the fact of the assessee carrying the dollar in cash was duly evidenced with documents which is not disputed by the Department also. DRP has also noted that the assessee has failed to explain the source of 50,000 USD which we find is absolutely incorrect. All the documents filed by the assessee duly explain the source of 50,000 USD as being from withdrawals effected from SSPL. DRP has not pointed out as to how the said documents failed to prove the source of 50,000 USD. Revenue authority had no substantial reasons for rejecting the assessee s explanation of the source of deposits in cash in her bank account which we find was duly evidenced with proper supporting documents. No reason to confirm the order of the AO and the addition, therefore made of cash deposited in the bank account of the assessee is accordingly directed to be deleted. Investment made in an immovable property - only reason apparently for rejecting the assessee s explanation is that there is no explanation as to why this amount has been transferred by the said foreign company on behalf of the assessee, and also on account of proper confirmation of the said transaction not being filed by the assessee from the foreign entity - HELD THAT:- As for the reason for rejecting the assessee s explanation in the absence of any explanation furnished by the assessee, as to why the impugned investment was made by the foreign entity, we do not find any substance in the same. As long as there is no dispute about the fact of the investment being made by the said foreign entity, why the foreign entity made the investment, does not impinge in any way on the genuineness of the transaction. Revenue authorities have not given any reasons as to how this reasoning would in any way effect the genuineness of the transaction. Therefore, this reason for rejecting the assessee s explanation is dismissed by us, finding no substance in the same. No proper confirmation being filed by the assessee, we have noted that the even the DRP has noted the fact of confirmation being filed by the management of the foreign entity. Having noted so, we see no reason for doubting the genuineness of the same. We find that the addition on account of unexplained investment in the immovable property has been made by the AO for no proper reasons despite the fact that the assessee has given proper explanation of the source of the same, evidenced with proper documentary evidences, substantiating with proper documentary evidences, which have not been doubted by the authorities below. Addition deleted. Unexplained investment - amount paid for registration charges and stamp duty charges for purchase of aforementioned immovable property - HELD THAT:- This is despite the fact that DRP notes credit of 36675 USD in her ICICI Bank account which was utilized for paying stamp duty and registration fee. As noted above, the assessee had explained USD being credited in the bank account as being advanced by her son Kush Bhatt from his bank account in Investec Specialist Bank Account. Even the ITR of son was filed by the assessee. We fail to understand as to what basis the DRP had for recording finding that the assessee had failed to discharge her onus of explaining the source of investment with the supporting documents, when the fact on record are completely to the contrary reflecting that the assessee had filed all supporting evidences, explaining the source of the said investment, as coming out of the advances given by her son to the assessee from his foreign account. Addition made on account of unexplained investment is held to be untenable on the facts, and the AO is directed to delete the same. Addition made to the income of the assessee on account of cash deposited in her bank account, source of which remained unexplained - HELD THAT:- Asessee s explanation of the credit in her bank account being the reimbursement of her travelling expenses by SHTL was rejected for the reason that the assessee failed to explain the relationship between her and the said company and rationale for the said transaction. We have noted that the assessee had explained that she was promoter director of the said company, and she had visited also for the official purpose, and the company, therefore, reimbursed her travelling expenses. Therefore, the assessee, we find, had explained her relationship with SHTL and also rationale for the said transaction. The reasoning therefore by the DRP for rejecting the assessee s explanation is arbitrary and without considering the facts on record. The addition, therefore made, we hold, in her bank account is not tenable on the basis of facts on record itself, and is directed to be deleted. Cash deposit or amounts invested in immoveable property, were all carried out from her NRE account , which is an Indian Rupee savings account where foreign income earned outside India is parked - Where the transactions whose genuineness is doubted in the case of a non-resident is from NRE account and the assessee has explained the source of the said transactions as either from withdrawals made from companies, in which she/her spouse are associated, outside India or from funds advanced by her son outside India, we have no hesitation in holding that the assessee has sufficiently discharged her onus of proving the genuineness of the transactions. The Revenue, we have noted, has given no proper reason for finding the explanation not satisfactory. Decided in favour of assessee.

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• 2025 (1) TMI 1394
  Penalty levied u/s 271I - Failure to furnish Form No. 15CA/15CB in respect of overseas transactions - HELD THAT:- We find that assessee in its present appeal has raised similar ground of appeal as has been raised in case of M/s Vinay Diamond [ 2023 (7) TMI 1262 - ITAT SURAT ] wherein by considering the Notification No.G.S.R.978(E) dated 16.12.2015 issued by Central Board of Direct Taxes held that there are certain payment of specified nature mentioned in Rule 37BB which do not require submission of Form No. 15CA/15CB and one of such payment includes advance payment against import. We find that no penalty is leviable against the payment of import of goods. Decided in favour of assessee.

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• 2025 (1) TMI 1393
  Unexplained money u/s 69A - as submitted cash deposited in the bank was savings out of the profits earned from the earlier years and household savings of the family, which was deposited in the bank during the demonetization period - HELD THAT:- Admittedly the Assessee has not carried out any other business except the imitation jewellery. Even otherwise no material is available on record by which it can be construed that the Assessee has earned any other income other than from the admitted business. Thus, considering the peculiar facts and circumstances in totality, in the considered opinion of this Court , it would be appropriate, as both the parties have also agreed in the open court, to treat the amount of Rs. 16,81,802/- also as business receipts and therefore the same can be subjected to the profit @ 8 % of the said amount Rs. 16,81,802/-, which can be added as income of the Assessee, hence the AO is directed to consider/apply the profit @ 8% of Rs. 16,81,802/- add the same in the income of the Assessee. Appeal filed by the Assessee stands partly allowed.

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• 2025 (1) TMI 1392
  Exemption u/s 11 - applicability of Section 2(15) - charitable purpose - entities engaged in activities of general public utility - HELD THAT:- As following Supreme Court Judgment in assessee s own case [ 2022 (10) TMI 948 - SUPREME COURT] dismissing Revenue appeal concerning the eligibility for deduction/exemption of entities engaged in activities of general public utility, the present appeal filed by the Revenue is hereby dismissed. Charging of any amount towards consideration for such an activity (advancing general public utility), which is on cost-basis or nominally above cost, cannot be considered to be trade, commerce, or business or any services in relation thereto. It is only when the charges are markedly or significantly above the cost incurred by the assessee in question, that they would fall within the mischief of cess, or fee, or any other consideration towards trade, commerce or business . Section 11(4A) must be interpreted harmoniously with Section 2(15), with which there is no conflict. Carrying out activity in the nature of trade, commerce or business, or service in relation to such activities, should be conducted in the course of achieving the GPU object, and the income, profit or surplus or gains must, therefore, be incidental. The requirement in Section 11(4A) of maintaining separate books of account is also in line with the necessity of demonstrating that the quantitative limit prescribed in the proviso to Section 2(15), has not been breached.

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• 2025 (1) TMI 1391
  Denial of exemption claimed u/s.11- assessee didn t file the return of income (RoI) within the time limit prescribed u/s.139(1) - HELD THAT:- If the assessee has filed its RoI within the time allowed u/s.139 of the Act, [i.e. even if it is filed belatedly before the time allowed u/s.139(4A) of the Act], then the CBDT circular has directed CPC to rectify its orders passed u/s.143(1)(a) of the Act as well as demands raised be also rectified. Since CBDT Circular is binding on the Income Tax Authority, we find that the CIT(A) erred in not following it, since assessee has filed its ITR/RoI well before time allowed u/s 139(4A) of the Act. Therefore, we set aside the impugned order of the Ld.CIT(A) and restore this issue back to the file of the Ld.CIT(A) with a direction to pass rectification order as per the CBDT Circular No.173/193/2019-ITA I dated 23.04.2019. Appeal filed by the assessee is allowed for statistical purposes.

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• 2025 (1) TMI 1390
  Revision u/s 263 - reassessment order was erroneous and prejudicial to the interests of the Revenue - depreciation claimed by assessee @15% on Plant Machinery when assessee could have claimed depreciation on boiler @80% HELD THAT:- Re-assessment order u/s.147 of the Act did apply his mind to the issue [less depreciation claimed by assessee @15% on Plant Machinery when assessee could have claimed depreciation on boiler @80%] has accepted the claim of the assessee being satisfied with the explanation given by it during re-assessment proceedings as found by us. In such a scenario, the action of the AO can t be held to be a view taken without enquiry or without application of mind. According to us, the Ld. PCIT couldn t have interfered with the action of the AO without giving a finding that the view of the AO on the issue [accepting the claim made by assessee on less depreciation on boilers] as unsustainable in law. It is a well settled position of law, the Ld. PCIT can t substitute his views with that of the AO, if the AO s view on the issue is a plausible view. Since there is no finding of the Ld. PCIT that the action of the AO accepting the claim made by the assessee on the fault found by the Ld. PCIT, are unsustainable in law, we are of the considered opinion that the Ld. PCIT erred in exercising his jurisdiction u/s. 263 of the Act without fulfilling the conditions precedent for doing so. Therefore, we quash the impugned action of u/s. 263 of the Act. Appeal filed by the assessee is allowed.

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• 2025 (1) TMI 1389
  MAT applicability to electricity companies - HELD THAT:- High Court of Rajasthan, in Ajmer Vidyut Vitran Nigam Ltd. [ 2021 (11) TMI 1103 - RAJASTHAN HIGH COURT] clarified that the MAT provisions u/s 115JB did not apply to electricity companies governed by specific statutes distinct from the Companies Act, regardless of their incorporation status. Thus, CIT(A) s rejection of these judicial precedents is not sustainable. CIT(A) referenced Section 115JA of the Act, highlighting exclusions under Clause (iv) for companies engaged in power generation, but argued that this exclusion was not extended to Section 115JB. We note that the legislative history and the interpretation provided by higher judicial authorities clearly establish that companies like GSECL (the assessee company) were not intended to be covered by MAT prior to the amendment in 2012. Consequently, the CIT(A) s interpretation does not align with the legislative intent and judicial guidance. The provisions of Section 115JB did not apply to electricity companies governed by distinct statutes before the amendment effective from 1-4-2013. We allow the appeals of the assessee for both assessment years, and the additions to the book profits under Section 115JB are hereby deleted. Assessee appeal allowed.

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• 2025 (1) TMI 1388
  TDS u/s 194C - disallowance of freight, diesel and fuel expenses under Section 40(a)(ia) on non deduction of TDS - contention of the assessee is that there existed no contract between the assessee and the truck owners, since the trucks are hired from the market as per the demand at prevailing market rates - HELD THAT:- AO has not brought on record any material to show that there existed any oral or written contract between the assessee and lorry owners. Hence the provisions of sec.194C, as per the above discussed decisions, will not apply. Even if it is assumed for a moment that there existed an oral contract between the parties, it is the submission of the assessee that the payment made to each lorry on each occasion did not exceed the threshold limit prescribed for deducting tax at source u/s 194C of the Act. The above said submission has not been disproved. Accordingly, we are of the view that the AO was not justified in invoking the provisions of sec. 40(a)(ia) of the Act for disallowing the freight charges - Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the above said addition. Non deduction of TDS on Diesel Fuel expenses - The reasoning given by us for deleting the disallowance of freight charges u/s 40(a)(ia) of the Act would equally apply to this expenditure also. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the disallowance of Diesel Fuel expenses. Partial disallowance of Truck repairs and maintenance expenses - AO had initially disallowed entire expenditure and CIT(A) restricted the disallowance to 15% of the expenses in the first round of proceedings. The same has been reiterated by the AO in the second round also - HELD THAT:- We notice that the above said adhoc disallowance was made for the reason that the assessee did not produce bills and vouchers, which defect remained unrectified in the second round also. Accordingly, we confirm the disallowance of 15% of the Truck repaid and maintenance expenses. Appeal filed by the assessee is partly allowed.

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• Customs

• 2025 (1) TMI 1387
  Classification of imported goods - LG Watch W7 - classifiable under CTH 91021900 as claimed by the appellant or is classifiable under CTH 85176290 as confirmed vide the Order-in-Original? - it was held by CESTAT that The product imported is a Smart Watch which is classifiable under 8517 6290. The appellant has wrongly classified it under 9102 1900. Thus the benefit under exemption Notification No. 152/2009-Cus. was not available to products of 8517 tariff entry hence it is held that same has wrongly been claimed. HELD THAT:- The appeal is admitted for hearing. Time of six weeks granted to the appellant to pay the amount payable as per the impugned orders under protest and subject to final outcome of this appeal.

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• 2025 (1) TMI 1386
  Rejection of pending applications filed by the Petitioner for issuance of scrips under the Merchandise Exports from India Scheme (MEIS) - rejection of the MEIS benefits/scrips is done solely on the purported ground that the Petitioner did not have a valid RCMC during the period of export for which MEIS benefits were claimed by the Petitioner - HELD THAT:- Under the subsequent Foreign Trade Policy i.e. the Foreign Trade Policy 2023, all Export Oriented Units have to be registered with EPCES to avail of the benefit/scrips under the MEIS. Under the FTP 2015-20 there was no such requirement. It is for this very reason that on 12th October 2022, the Government of India, Ministry of Commerce and Industry, Seepz Special Economic Zone Authority, SEEPZ-SEZ, Andheri (E), Mumbai, issued Circular No.78 of 2022 informing all EOUs that EPCES membership is now compulsory for all the SEZ Units/SEZ Developers. In these circumstances, the benefits/scrips under the MEIS, rejected by Respondent No. 3 under the impugned order is incorrect and would have to be rectified. Conclusion - Under the FTP 2015-2020, exporters could be registered with either FIEO or EPCES to claim MEIS benefits. The requirement for exclusive registration with EPCES was introduced only in the subsequent FTP 2023. The impugned order rejecting the Petitioner s MEIS applications set aside. Petition disposed off.

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• 2025 (1) TMI 1385
  Entitlement to the benefit under the MEIS - Seeking a direction to Respondent Nos. 2 to 4 to forthwith accept the amendment made by Respondent Nos. 5 and 6 in 50 shipping bills filed by the Petitioner appearing on ICEGATE, and to use the flag Y under the head REWARD against the said 50 shipping bills and grant the Merchandise Exports from India Scheme (MEIS) Scrips - HELD THAT:- The only argument canvassed by the DGFT is that since the MEIS scheme expired on 28th February 2022 (although extended initially in March 2020, and later until January 2021, and thereafter until 28th February 2022), the DGFT is unable to process the applications filed by the Petitioner under the MEIS. This is the sole ground on which the above Petition is opposed. We find this argument to be without any merit. It is not in dispute that the Petitioner had, as far back as on 27th April 2018, made an application to the Commissioner to amend its 50 shipping bills in terms of Section 149 of the Customs Act, 1962. When the applications for amendment for shipping bills were made by the Petitioner, the MEIS was very much in existence and had not lapsed or expired. In such a situation, the benefit under the scheme cannot denied to the Petitioner. Besides, if the MEIS coming to an end in February 2022 was to lead to expiry of all benefits under the scheme, including those that had accrued during the life of the scheme, there would have been no need to issue the advisory dated 11th April 2023. The issue in the present case is covered by two decisions of this Court in the case of TECHNOCRAFT INDUSTRIES (INDIA) LIMITED [ 2023 (2) TMI 74 - BOMBAY HIGH COURT ] and in the case of LARSEN TOUBRO LIMITED [ 2024 (11) TMI 808 - BOMBAY HIGH COURT ] . Though in these matters, the issue of limitation arising out of the expiry of the MEIS was not squarely raised, the facts in this case would show that though the scheme had expired, reliefs were granted to the Petitioner. In fact, the DGFT had not even raised the issue of expiry of the MEIS being fatal to the benefits in those cases. We are of the opinion that this is a new and novel attempt to now deny the benefit under the MEIS to the Petitioner. Respondent Nos. 2 to 4 is directed to process the Petitioner s applications for release of MEIS scrips and if the Petitioner is found eligible for the issue of any such scrips, to release the same within 15 days from the date of uploading of this order on the High Court website. Conclusion - The expiration of a scheme does not negate accrued benefits if administrative delays are responsible for the inability to claim those benefits timely. Government departments must act in a timely manner to avoid prejudicing the rights of individuals. Petition disposed off.

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• 2025 (1) TMI 1384
  Seeking to set aside the impugned orders - 100% EOU - failure to to fulfill the export obligation and to achieve the value addition to the satisfaction of the Development Commissioner, Noida Export Processing zone, Noida - violation of Import Export Policy in force at that point of time - HELD THAT:- A Coordinate Bench of this Court had examined the matter briefly on 13.05.2024 and had directed the Petitioner to make a representation. As stated above, the representation has not reached the Office of the Respondent. The Petitioner and/or his authorized representative will appear for hearing with a copy of his representation before Mr. Pradyumna Sahu, Deputy Director General of Foreign Trade, PC-VI Division, Ministry of Commerce and Industry on 21.01.2025 at 3:30 PM - The Petitioner is permitted to produce any additional facts or documents in support of his contentions, at the time of the hearing before the concerned Authority. Conclusion - The proceedings shall be conducted de novo by the Respondent keeping in mind the orders passed by this Court from time to time. Petition disposed off.

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• 2025 (1) TMI 1383
  Classification of imported communication modules - classifiable under Customs Tariff Item [CTI] 8517 70 90 as parts of communication hubs or under CTI 9028 90 10/ CTI 9028 90 90 as parts of electricity meters / gas meters? - benefit of exemption N/N. 24/2005-Cus. dated 01.03.2005 (till 30.6.2017) and Notification No. 57/2017-Cus. (S. No. 5) (from 01.07.2017) - suppression of facts or not - extended period of limitation. Classification - HELD THAT:- The goods whose classification is in dispute in this case are imported communication modules. There is no dispute that their only function and purpose is as a part of communication hubs which, in turn, become part of the smart meters manufactured by the importer. Thus, communication modules have their own identity as parts of communication hubs but if they are fitted in and become part of communication hubs, they will not be classifiable separately but will become part and parcel of the communication hubs and they should be classified as such. Further, if the communication hubs are fitted in the smart meters, the communication hubs become part of the smart meters and will not be classifiable separately. The entire structure will be a smart meter and it must be classified as such and communication module will be its child part. Smart meters are composite machines of which one part records the consumption of electricity or gas and the other part (communication hub) communicates the readings. Undisputedly, the primary function of the smart meter is measuring the consumption and the communication is a secondary function which gives it additional functionality. The smart meters (including the communication hubs in them), therefore, are classifiable as smart meters. Evidently, note (2) deals with three kinds of parts and accessories- the first are parts and accessories which are goods covered in any of the headings and they should be classified as such as per note 2(a). Other parts, if suitable with a particular machine or apparatus must be classified with it as per note 2(b). If there are parts which do not fall under either of the above must be classified under 9033 as per note 2(c). The expression other parts and accessories in note 2(b) shows that it refers to those which are not covered by the previous part of the note, i.e., note 2(a). If the parts and accessories are goods which fall under any heading under Chapter 85, they are covered by note 2(a) and therefore, note 2(b) cannot apply because such parts are not other parts . - Section note 3 to Section XVI, as made applicable to Chapter 90, is also not relevant to the case because it deals with composite machines. If the communication hub is installed in the smart meter, this note would apply. But what are imported in this case are merely communication modules and not composite machines. These are parts of communication hubs and they are goods which fall under CTI 8517 70 90. The classification of communication modules under CTI 9028 90 10/CTI 9028 90 90 in the impugned order is not correct and deserves to be set aside. Consequently, the demand of duty and interest and imposition of penalty under section 114A in the impugned order also need to be set aside. Extended period of limitation - suppression of facts or not - penalties - HELD THAT:- The allegations in the SCN that the importer had suppressed facts is completely baseless. The Commissioner has, in the impugned order recorded that the importer had recorded that these glaring facts of intentional non-payment of actual duty leviable on the impugned goods, contravention of the provisions of self-assessment and the act of manipulating the classification of the goods in order to fall under the category of goods covered under the above notifications was sufficient to have a reasonable belief that there was short levy or duty on the impugned goods. - the demand for duty invoking the extended period of limitation was not justified, and penalties under sections 114A, 112, and 114AA were not applicable. Conclusion - The correct classification of the communication modules is CTI 8517 70 90. The allegations of mis-declaring and mis-classifying with an intent to evade against the importer are completely unfounded. Extended period cannot be invoked. Appeal of importer allowed.

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• 2025 (1) TMI 1382
  Misdeclaration of imported good - Goods found to be zinc ingots bearing the mark calcimin zinc contrary to the declaration that the goods were lead ingots - re-determination of declared value - demand of differential duty - confiscation - redemption fine - penalty - HELD THAT:- The proprietor of the appellant had pleaded that it was a case of a bonafide mistake on the part of the foreign supplier and there was no evasion of duty. In view thereof he requested for release of the goods on payment of fine and penalty so as to avoid the further liability of heavy demurrage charges. The admission is not of any guilt on the part of the importer. It is not a case of malafide intention to evade duty or import goods which are prohibited as both lead ingots and zinc ingots were freely importable items. Moreover, there was not much difference in the price of the two products rather as per the supplier, the lead ingots were more expensive than zinc ingots and even the rate of duty of the two items is also the same and hence the appellant would not have really gained any monetary benefit by resorting to mis-declaration. At the most the appellant can be said to have made an incorrect declaration which can be termed as a bonafide mistake on the part of the foreign supplier for which neither confiscation can be directed nor penalty can be imposed. Surprisingly, the adjudicating authority having accepted the contention of the importer that it was a bonafide mistake of the supplier that they have dispatched the goods by mistake, since the importer does not appear to gain much by way of mis-declaration of the description since rate of duty on the two items is also same, ordered for confiscation with redemption fine and penalty. In view of the peculiar facts of the present case, neither confiscation nor imposition of redemption fine and penalty is justifiable and therefore the same needs to be set aside. Conclusion - The mis-declaration was a bona fide mistake, not warranting confiscation, redemption fine, or penalty. Appeal allowed.

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• 2025 (1) TMI 1381
  Revocation of Customs Broker License - omission and commission in regard to facilitating exports by non-existent entities - contravention to Regulation 10(n) of the Customs Broker Licensing Regulation, 2018 - HELD THAT:- The basic requirement of regulation 10(n) is that the customs broker should verify the identity of the client and functioning of the client at the declared address by using reliable, independent, authentic documents, data or information. For this purpose, a detailed guideline on the list of documents to be verified and obtained from the client is has been mentioned. In the context of the present case, we note that the CB has the required KYC documents such as PAN, Aadhar, IEC and none of these have been found to be fake. It is noted that the CB had carried out due diligence at the time of filing of the documents and there is no requirement for actual physical verification to verify the correctness of the document submitted. It is not the case of the department that the documents had been obtained for forged documents as noted above. The appellant had submitted the KYC documents, and it is also on record that the importer/exporter had duly appeared for statement as in when summoned by the department. In the instant case, it is noted that the Department has not led any evidence to show that the appellant had in any manner facilitated exports by non-existent exporter for availing export incentives. From the above, it is evident that the importer/exporter was available at the time of import, as is evident from the fact that his statement was recorded on 10.02.2022 and 24.02.2022. It has been submitted by the department that the appellant did not verify the GSTIN as the same was cancelled. It has been submitted before us that the software linked to ICEGATE had automatically taken the Aadhar number of the importer instead of the GSTIN. This has not been controverted by the Department in their submissions. It is not the case of the Department that the said Aadhar number is fake or fraudulent - it is evident from the fact that this was not a case of an exporter who was non-existent or had taken undue monetary export benefits. Conclusion - There was no violation of Regulation 10(n) or the KYC guidelines, and the Department did not provide sufficient evidence to justify the revocation and penalties imposed. Appeal allowed.

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• 2025 (1) TMI 1380
  Absolute confiscation of gold seized from the - option of redemption fine - levy of penalty - town seizure - concrete evidence for confiscating the gold or not - discharge of burden of prove - HELD THAT:- Only reasonable belief is sufficient for Department side that is recovered gold smuggled goods or not. In these circumstances, when recovered gold have foreign marking and no any supporting document produced by the appellant, so it was reasonable ground for Officer concerned to believe otherwise. Therefore, in the fact and circumstances burden to prove otherwise on appellant. Hon ble Supreme Court in the case of State of Gujarat Vs Shri Mohan Lal Jitamalji Porwal and Another [ 1987 (3) TMI 111 - SUPREME COURT ] in which Hon ble Supreme Court has held The circumstances have to be viewed from the experienced eye of the officer who is well equipped to interpret the suspicious circumstances and to from a reasonable belief in the light of the said circumstances. Seized gold of 2 FG biscuits with foreign marking as VALCAMBI SUSSIE with serial no. AJ855365 AJ855366. In this regard, appellant failed to produce any documentary evidence which relates to seized gold biscuit. Appellant has stated in his statement dated 22.06.2022 that he was given Rs. 10,50,000/- by Shri P. Radha Krishna for purchase of 2 gold biscuits from Shri Ashok Kumar, Chennai. However, this part of his statement was denied by Shri P. Radha Krishna and also stated that he did not know anyone by name Shri Ashok Kumar from Chennai and also denied to given money of Rs. 10,50,000/- requested appellant to get gold biscuits. Shri Ashok Kumar from Chennai did not turn up to respond Summons. Therefore, appellant failed to prove that the seized gold biscuit is not illicit - Department has established that seized gold relates to smuggled gold, hence appellant has failed to prove otherwise. In this case, no any supporting evidence by the appellant and it is also important to mention that statement as given by the appellant denied by concerned person Shri P. Radha Krishna. Mr Ashok Kumar also has not come to support Appellant s version in spite of serving proper summons. The seized gold was tested by a recognised agency. Therefore, no any infirmity in the process of testing. The burden under the Section 123 of Customs Act, 1962 which is only of a reasonable belief is effectively discharged by the Department who initiated the action on the basis of the seizure and the recorded statements of the concerned person. Then the onus to prove that the gold was not smuggled, so as to reasonable belief entertained by the Department shifted and is squarely rested on his shoulder. But, in this case, appellant is failed to prove that seized gold is not smuggled. Conclusion - The appellant failed to prove that the seized gold is not smuggled. Impugned order based on facts and law and proper appreciation of evidence. No any interference required in the impugned order. Therefore, appeal is liable to be dismissed. Appeal dismissed.

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• 2025 (1) TMI 1379
  Classification of imported goods - Paddle Wheel Aerators - to be classified under CTH 8436 or under CTH 8479? - time limitation - HELD THAT:- Admittedly, the ld.Commissioner (Appeals) has dismissed the appeal on the sole ground that it was filed belatedly after 87 days. Since this is within the condonable period along with proper justification under Medical Certificate, in the normal course, the matter should have beed remanded to the ld.Commissioner (Appeals). The issue is squarely covered by the decision of this Tribunal in M/S. SUYOG AGRO POULTRY PRODUCTS PVT. LTD. VERSUS CC (SEA - IMP.) , CHENNAI [ 2015 (12) TMI 998 - CESTAT CHENNAI] , wherein this Tribunal has held that paddle wheel aerators are used for fisheries/aqua culture and are classifiable under chapter heading 8436 of the CTH. Conclusion - Since there is no dispute that the paddle wheel aerators used in aqua farming by aqua farmers for cultivation of fish/shrimps etc., these are rightly to be considered as other agricultural machineries and rightly classifiable under Ch. 84368090. Appeal allowed.

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• Service Tax

• 2025 (1) TMI 1378
  Declaration under the Voluntary Compliance Encouragement Scheme (VCES) - declaration was substantially false or not - Department is of the view that the appellant has not made a true and truthful declaration under VCES scheme and basic premises on which the declaration of the appellant was rejected - Classification under Works Contract Service or Commercial Construction Service - HELD THAT:- The Adjudicating Authority has not considered the work invoices issued by the appellant. While deciding the matter, the Adjudicating Authority has not decided whether the activity undertaken by the appellant falls under the category of Works Contract Service or under Construction Service . It is also opined that the Adjudicating Authority while holding the subject activity falls under commercial construction service, he has also not provided the facility of the abatement of the value as provided under N/N. 13/2012-ST dated 28.06.2012 while confirming the demand of service tax. The fact is noted that while the appellant has been claiming that activity undertaken by them falls under category of Works Contract Service while the department has considered the same is Commercial Construction Service . The Circular No.170/05/2013-ST dated 08.08.2013 clearly provides that the Commissioner would in overall facts of the case take into account the reasons he has to believe, take a judicious view as to whether a declaration is substantially false , it is not feasible to define the term substantially false in precise terms, the proceedings under Section 111 would be initiated in accordance with the principles of the Natural Justice. In view of the Board s circular, the Adjudicating Authority has to categorically determine as to how a declaration made under VCES scheme is substantially false . In this case the Adjudicating Authority has not determined whether the activity undertaken by the appellant qualified to fall under Works Contract Service as claimed by the appellant on the basis of work orders and invoices. Conclusion - The determination of whether a declaration under VCES is substantially false must be made in accordance with the principles of natural justice and relevant legal precedents. The classification of the appellant s services as Works Contract Service or Commercial Construction Service is crucial for determining the correct tax liability and entitlement to abatements. Appeal allowed by way of remand.

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• 2025 (1) TMI 1377
  Extended period of limitation - whether the demand for the period on 1 April 2010 to 30 September 2010 is barred by limitation for not? - HELD THAT:- From the provisions of Section 73 the relevant date in the case of the appellant has to be computed calculating one year from the date of issue of show cause notice. The appellant was required to file service tax returns for the period April 2010 to September 2010 by October 25, 2010 and for the period October 2010 to March 2011 by April 25, 2011, therefore, the relevant date for computing the normal period in the case of service tax liability for the period April 2010 to September 2010 is 25.10.2010 and hence the show cause notice was required to be issued by 24.10.2011. The show cause notice dated 17.10.2011, therefore, falls within the period of one year and the demand for the period April 2010 to September 2010, therefore, falls within the normal period. There are no error in the service tax liability confirmed by the authorities below on the appellant for the period involved. The calculation arrived at by the learned counsel for the appellant in the submissions placed during the course of hearing calculating the demand of Rs. 1,07,718/- for the period from 01.04.2010 to 30.09.2010 being barred by limitation is not correct. There are no reason to interfere with the impugned order and hence the appeal is dismissed.

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• 2025 (1) TMI 1376
  Classification and tax liability of services - whether there is any liability to pay Service Tax by the appellant for the period prior to 01.07.2010 as well after or not and if they are liable to pay Service Tax, then under which category their services would fall? - HELD THAT:- The appellant have canvassed that the matter regarding non-leviability of Service Tax on CRCS or for that under WCS prior to 01.07.2010 is no longer res integra as it has been held in catena of judgments passed by the Tribunals that Service Tax is not leviable. Insofar as the issue of the activity being in the nature of WCS, which is not covered by the scope of the circular, he further submits that in terms of settled law now irrespective of whether the nature of construction service is simpliciter or in the nature of WCS, no Service Tax is leviable on them for the period prior to 01.07.2010. Therefore, the dropping of demand by the Adjudicating Authority for the period prior to 01.07.2010 is correct. For the period beyond 01.07.2010, their main argument is that since the Adjudicating Authority himself has confirmed the demand under different heading than what was proposed in the SCN, the demand itself is not tenable on this ground alone. While the appellant is mainly adducing that demand is not sustainable on the ground that Adjudicating Authority has not confirmed the demand under proposed classification and on this sole ground, the demand is liable to be set aside. It is found that in the facts of the case, it is not tenable as Commissioner has classified in the impugned order as CRCS, considering it as part of WCS and by holding that this is more specific and at no point of time he has held that there is no element of WCS in the said CRCS. In other words, he has not held, in the case of appellant, that it was CRCS simpliciter rather he has held that it is CRCS, which is very much in the nature of WCS. There is some merit in the departmental appeal as well as appellant s claim. However, the best way would be to remand the matter to the Commissioner to decide the matter afresh for the demand for the period beyond 01.07.2010. While doing so, he shall go by the admitted facts and evidence on record to decide whether there is any exclusion or exemption available for the said service (WCS/CRCS) in the given set of facts and evidence on record to arrive at the demand for the period beyond 01.07.2010. Conclusion - The classification of services post 01.07.2010 requires reevaluation by the Adjudicating Authority to determine the correct category and applicable tax liability. The Adjudicating Authority, in the remand proceedings, should examine proper classification i.e., WCS or CRCS, in the facts of the case and whether any exemption or exclusion exist for not demanding Service Tax for the period beyond 01.07.2010. This appeal is allowed by way of remand.

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• 2025 (1) TMI 1375
  Time limitation - whether the Revenue was justified in invoking the extended period of limitation in fastening the service tax liability under BAS on the appellant? - HELD THAT:- It is not the case of the Revenue that in every case where the early payment incentive is received, the end--customers had in fact made payments in advance or at an early date. But there is no cross verification as to the payments made in advance by the appellant vis-- --vis the payments made by the end customers. The period of dispute is from 01.04.2007 to 31.03.2011, for which the show cause notice dated 19.10.2012 came to be issued, by invoking the larger period of limitation, for which the finding given in the OIO is that the receipt of incentive was noticed only on the scrutiny of annual financial records of the appellant. The same was therefore held to have been knowingly suppressed, to justify the issuance of the show cause notice under Section 73(1) of the Finance Act, 1994 - There is also no specific logical finding that the early payment incentive received by the appellant was liable to service tax other than mentioning that the same was liable to service tax under BAS. Hence, the Revenue has failed to make out a case for invoking the larger period of limitation and that too, to demand service tax which the appellant was not established to be liable to pay. There are no merit in the demand based against the appellant which came to be upheld in the order and hence, the impugned order deserves to be set aside - appeal allowed.

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• 2025 (1) TMI 1374
  Liability to pay service tax under the category of Commercial Coaching and Training for the period from 2006-07 to 2009-10 - benefit of exemption under N/N. 10/2003-ST dated 20.06.2003 - Extended period of limitation - suppression of facts or not - HELD THAT:- As regards the findings on merit returned by the learned Commissioner (Appeals) supported with relevant notification and the case-laws, there are no infirmity in the same; but as regards the invocation of extended period of limitation, it is found that the demand has been confirmed by invoking the extended period of limitation and the learned Commissioner (Appeals) has recorded a finding that though there was no intention to evade the payment of service tax, still suppression on their part satisfies one of the ingredients of Section 73 of the Act. The finding of the learned Commissioner (Appeals) is self-contradictory because the suppression and for that matter other ingredients in Section 73 of the Act are qualified by the phrase with intent to evade payment of tax , therefore, if there is no intention to evade payment of tax, then the charge of suppression is not sustainable in law. The issue involved in the present case was purely of interpretation of the exemption notification and therefore, suppression cannot be alleged. Further, when the extended period of limitation cannot be involved, then the demand for period, which is within the limitation, cannot be confirmed. The impugned demand is entirely barred by limitation; accordingly, on merit the demand is upheld, but on limitation, the demand is set aside - Appeal allowed.

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• 2025 (1) TMI 1373
  CENVAT Credit - whether the inputs like angles, channels, beams etc,, used to erect tower and prefabricated buildings/shelters which are used for housing / storage of generator set / equipments and hoisting the antenna etc., in respect of which the credit has been denied by the Department, would be eligible for taking credit when used for setting up of mobile towers and pre-fabricated structures etc., by treating them as immovable goods? - HELD THAT:- This matter has been dealt with in detail by the Hon ble Supreme Court in the Bharti Airtel [ 2024 (11) TMI 1042 - SUPREME COURT] , where they have gone through various judgements including that of Mumbai High Court in the case of Bharti Airtel as well as Delhi High Court in Vodafone [ 2018 (11) TMI 713 - DELHI HIGH COURT] and finally observed and held that mobile towers are not in the nature of immovable goods. Hon ble Supreme Court also examined and decided on the issue, as to whether the credit would be admissible as an input or capital goods. Relevant observation by Hon ble Supreme Court, it was, interalia, held that since tower is to be considered as capital goods and therefore all components, spares and accessories would also fall within the category of capital goods. Conclusion - The denial of credit in respect of Angles, Channels, Beams etc., used to erect towers as also on PFB etc., falling under Chapter 94 used for housing /storage of generating sets and other equipments/components, is not sustainable. Appeal allowed.

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• Central Excise

• 2025 (1) TMI 1372
  Valuation - Demand of differential central excise duty - inclusion of the notional cost of drawings and designs supplied free of cost by Maruti Suzuki India Pvt Ltd. in the assessable value of parts and components of motor vehicles manufactured by the appellant and cleared to Maruti Suzuki India Limited - HELD THAT:- The issue raised in the case of Denso India Pvt Ltd. [ 2024 (3) TMI 686 - CESTAT NEW DELHI] was whether the notional cost of specifications in the form of drawings and designs supplied free of cost by Maruti to the potential vendors should be included in the assessable value of the parts or components manufactured by the vendors and cleared to Maruti for their motor vehicles. To appreciate the said issue, the Principal Bench considered the provisions of section 4 of the Central Excise Act, 1944 and Rule 6 of the Valuation Rules and observed that anything which is supplied by the buyers to the manufacture before even identifying the potential seller/ manufacturer cannot be treated as additional consideration for sale. It was, therefore, held that something can be treated as an additional consideration for sale of goods only when there exists a contract of sale or an agreement to sale between two parties and in terms thereof the buyer pays something over and above the price agreed - The Tribunal, therefore, concluded that the drawing and designs supplied by MSIL at the time of identification and short listing of potential vendors for supply of parts and components, the provisions of section 4 1(b) of the Act read with Rule 6 of the Valuation Rules, could not have been invoked as no consideration was received by the vendors from MSIL. It is also pertinent to take note of the fact that the Principal Bench had noted the distinction between mere specification and detailed engineering drawing as considered in the earlier decision in Mangalore Refinery Petrochemicals Ltd. Vs. CC, Mangalore [ 2012 (9) TMI 712 - CESTAT, BANGALORE] , where the Tribunal has held that there is a distinction between mere specifications and detailed engineering drawing. It is only the latter which is covered under rule 9(1)(b)(iv) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (which is now rule 10(1)(b)(iv) of the 2007 Customs Valuation Rules). Conclusion - The notional cost of MSIL s specifications should not be included in the assessable value of the final products manufactured by the appellant. The impugned order is set aside - Appeal allowed.

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• 2025 (1) TMI 1371
  Demand of differential duty - difference in sales figures reflected in the assessee s ER 1 Returns filed and the sales figures reported in their Balance Sheet - invocation of extended period of limitation - suppression of facts or not - HELD THAT:- From the documents placed on record, in the reply to the SCN, it is revealed that during the visit of the officers of DGCEI in 2010 and subsequent resumption of records from JFSPL and its suppliers of raw materials, the Show Cause Notice dated 16.04.2014 relating to the period June 2009 to December 2010 came to be issued. It is also asserted that the said agency had looked into the ER 1 Returns, Books of Account including balance sheet, etc. and, at no point of time did they raise any query as regards the alleged removal of TMT bars or billets without payment of duty. From the OIO, it is found that the Authority has tried to negate the above contention on the ground that the DGCEI s case was based on specific intelligence to the effect of the assessee taking credit without actual receipt of material as against which, the present case was one of clandestine removal; and therefore, the extended time limit has been correctly invoked. It is clear that the time limit would start ticking when the Revenue came to know about the manufacturing activity of the appellant and that was the time when the show cause notice should have been issued and the Revenue having failed to do so, they cannot therefore allege suppression on the part of the appellant and invoke the extended time limit. Hence, the ratio of the said order is squarely applicable here also, in the case on hand, since from the date of visit/verification of records by DGCI in 2010 and the date of SCN, more than three years have lapsed. Hence, the same clearly is hit by the time limitation. Conclusion - The extended period for demanding duty is only applicable when there is clear evidence of fraud, collusion, or willful suppression of facts. Mere discrepancies in records, especially when previously examined by authorities, do not justify invoking the extended period. The impugned order is set aside - appeal allowed.

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• 2025 (1) TMI 1370
  Suo-moto abatement of duty for the days when the machines were sealed by the Department and not in operation - SCN demanded Central Excise duty of Pan Masala for the whole month even when the machines were remained non-operational - HELD THAT:- From the perusal of the order and facts of the appeal it emerges that demand of Central Excise duty has been confirmed on the machines for the days for which they have remained non-operational. It is also found that nowhere in the impugned order-in-original it has been mentioned by the adjudicating authority that appellant has not followed the laid-down procedure in the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. Whenever the appellant wanted to stop working of a number of machines, due intimation has been given to the Department and the machines were sealed by the jurisdictional Superintendent of the range and whenever the machines were made operational, the appellant have informed the department and they have started operating the machine only after the officers have de-sealed the machines. So, it is apparent from the reading of Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 that abatement for the period of non-working of the machines is provided in Rules with certain conditions. This Tribunal in the case of M/s. PM Products vs. CCE, Ahmedabad [ 2023 (9) TMI 1370 - CESTAT AHMEDABAD ] has held that the appellant is eligible for abatement and under no circumstance full duty can be demanded for the period when the machines were not in operation. Conclusion - The essence of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 is that the manufacturer has to pay duty for the operational days of the machines, and since the appellant has deposited the proportionate amount of duty for working days of the machines, the Central Excise duty cannot be demanded for the period when the machines remained non-operational. Appeal allowed.

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• 2025 (1) TMI 1369
  Refund of an amount deposited by the appellant during the course of an investigation - entitlement to interest on that refund - HELD THAT:- In the present case impugned order clearly observes that the amount that was deposited by the appellant at the time of visit of officers to their premises was appropriated by the Original Authority. The amount so appropriated acquired the character of duty, the moment it is appropriated against the demand made. In case of Mafatlal Industries [ 1996 (12) TMI 50 - SUPREME COURT ], Hon ble Supreme Court has observed that While the jurisdiction of the High Courts under Article 226 - and of this Court under Article 32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11B. Conclusion - The appellant was entitled to interest on the refunded amount at the rate prescribed under Section 11BB of the Central Excise Act, 1944, from the date of deposit to the date of actual refund. There are no merits in the appeal - appeal dismissed.

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• CST, VAT & Sales Tax

• 2025 (1) TMI 1368
  Exercise of revisional powers vested in him u/s. 9 (2) of the Central Sales Tax Act, 1956 r/w Section 64 of Karnataka Value Added Tax Act, 2003 - levy of penalty u/s 10A r/w Section A3 (b) of the Act, 1956 - absence of mens rea on the part of the appellant - HELD THAT:- The relevant form, namely Form-C is prescribed pursuant to Rule 12 of the CST (Registration Turnover) Rules 1957. Thus, a Registered dealer purchasing the goods is eligible to avail concessional levy of CST by issuing C-Forms against the purchases of goods which are included in its Certificate of Registration and are intended for resale, for use in the manufacture or processing of goods for sale. The legislative intent is very clear. Such a concession cannot be availed if the goods bought by the Assessee are not included in its Certificate of Registration and are not used in the manner prescribed in Section 8 (3) (b). In the current context, the purchased goods ought to have been used in the manufacture or processing of goods for sale and not utilized in the construction of building or for office interiors of the Assessee. The record does not show any effort on part of the Appellant Assessee to actually demonstrate that his purchases meet the test of integral connection to the ultimate production of goods. It is one thing to say so repeatedly and it is another to prove the integral connection. The test of integral connection is laid down by the Hon ble Supreme Court in JK COTTON [ 1964 (10) TMI 2 - SUPREME COURT ] - this judgment is placed by the Appellant Assessee himself in his compilation filed across the Bar. When the Apex Court has dealt with building material specifically in JK COTTON and held it to be ineligible for the purposes of Section 8 (3) (b) of the 1956 Act, there is very little room for the Appellant to maneuver. Conclusion - The necessity of adhering to the specific categories of goods listed in the Registration Certificate for concessional tax rates under the CST Act. The goods must be used in manufacturing or resale to qualify for concessional rates. The impugned order is justifiably structured and rightly has set aside the order of the Joint Commissioner of Commercial Taxes - appeal dismissed.

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• Indian Laws

• 2025 (1) TMI 1367
  Dismissal of application filed by NHAI under Section 34 of Arbitration and Conciliation Act, 1996 for setting aside the award passed by the Arbitral Tribunal - execution of a contract awarded by NHAI to the appellant regarding the work of four laning and strengthening of the existing two lane section - HELD THAT:- Division Bench of the High Court exercising jurisdiction under Section 37 of the 1996 Act acknowledged that primarily it was for the Arbitral Tribunal to interpret the contractual terms and if the interpretation given by the Arbitral Tribunal is a plausible one, then the court would not interfere with the award merely because according to the court, another interpretation is preferable. Having said that, Division Bench examined Clauses 51 and 52 of the contract. Instead of interpreting the aforesaid clauses in the contractual context, Division Bench went into the dictionary meaning of the expression variation and opined that variation would mean the difference between what is provided for or contemplated in relation to the work under the contract and what is the final effect or outcome. Such variation or outcome may be or may not be the result of an instruction given by the Engineer. Division Bench disagreed with the observations of the Arbitral Tribunal as upheld by the learned Single Judge that even if there was error in estimating the quantity of geogrid while preparing the BOQ, that by itself would not lead to the conclusion that NHAI cannot seek renegotiation of the rates even if the actual quantity exceeds by over 300 percent. The contract does not provide that NHAI should suffer on account of the estimated quantities mentioned in the BOQ turning out to be way off the mark when the contract is executed - Division Bench held that there is no reason as to why variation in quantity beyond the limits set out in the contract, whether instructed or not instructed, should not lead to renegotiation of the rates at the instance of either party. That would be the only fair, reasonable and equitable way to work the contract. In so far Clause 51.1 is concerned, the variation contemplated thereunder relates to the form, quality or quantity of the works which in the opinion of the Engineer is necessary. In the present case, there is a clear finding of fact by two authorities i.e. DRB and the Arbitral Tribunal, both comprised of technical experts, that there is no variation either in the form or quality or quantity of the works. What actually happened is that at the time of execution of the contract pertaining to the RE wall, the geogrid required turned out to be much more than the estimated figure given in item No. 7.7 of the contract. It is in this backdrop that both the fact finding authorities held that there was no variation in terms of Clause 51.1 and that the Engineer did not have the competence to renegotiate the price or rate of the geogrid for the excess quantity of geogrid required. It is the correct interpretation of Clause 51 made by the DRB and the Arbitral Tribunal. As such, learned Single Judge rightly declined to interfere with the award under Section 34 of the 1996 Act. If that be the position, there was no justification at all for the Division Bench of the High Court to set aside the award under Section 37 of the 1996 Act. In Reliance Infrastructure Ltd. [ 2023 (5) TMI 1319 - SUPREME COURT] , this Court referring to one of its earlier decisions in UHL Power Company Ltd. Vs. State of Himachal Pradesh [ 2022 (1) TMI 307 - SUPREME COURT] , held that scope of interference under Section 37 is all the more circumscribed keeping in view the limited scope of interference with an arbitral award under Section 34 of the 1996 Act. As it is, the jurisdiction conferred on courts under Section 34 of the 1996 Act is fairly narrow. Therefore, when it comes to scope of an appeal under Section 37 of the 1996 Act, jurisdiction of the appellate court in examining an order passed under Section 34, either setting aside or refusing to set aside an arbitral award, is all the more circumscribed. Again in M/s Larsen Air Conditioning and Refrigeration Company [ 2023 (8) TMI 985 - SUPREME COURT] , this Court reiterated the position that Section 37 of the 1996 Act grants narrower scope to the appellate court to review the findings in an arbitral award if it has been upheld or substantially upheld under Section 34. Conclusion - The Arbitral Tribunal had interpreted Clause 51 in a reasonable manner based on the evidence on record. This interpretation was affirmed by the learned Single Judge exercising jurisdiction under Section 34 of the 1996 Act. Therefore, Division Bench of the High Court was not at all justified in setting aside the arbitral award exercising extremely limited jurisdiction under Section 37 of the 1996 Act by merely using expressions like opposed to the public policy of India , patent illegality and shocking the conscience of the court . As reiterated by this Court in Reliance Infrastructure Ltd, it is necessary to remind the courts that a great deal of restraint is required to be shown while examining the validity of an arbitral award when such an award has been upheld, wholly or substantially, under Section 34 of the 1996 Act. Frequent interference with arbitral awards would defeat the very purpose of the 1996 Act. The impugned order cannot be sustained. Accordingly, judgment and order dated 17.11.2009 passed by the Division Bench of the High Court is hereby set aside and the arbitral award dated 03.06.2005 is restored - Appeal allowed.

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• 2025 (1) TMI 1366
  Seeking grant of regular bail - reasonable grounds to believe that the accused is not guilty of the alleged offence - Section 439 of the Code of Criminal Procedure, 1973, in connection with charges under the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act) - HELD THAT:- During the investigation conducted by CBI, based on information received from Interpol, the Applicant was apprehended while attempting to collect parcels containing psychotropic substances. The Applicant s contention that he was not in possession of the parcels and had no knowledge of their contents is, prima facie, unsustainable. The Applicant s conduct, as revealed during investigation, establishes prima facie evidence of conscious possession. The Applicant went to the Post Office in person, enquired about the parcels and attempted to collect them. Despite not being the consignee, he attempted to claim parcels under names that were not his own one addressed to Rohit Yadev and the other to his driver, Anil Kumar. Moreover, the Applicant s act of concealing his identity while going to collect the parcels, by covering his face, inquiring about the parcels beforehand, and attempting to flee on sensing the presence of the CBI team, indicates that he was aware of the illicit nature of the parcels. In the case of MOHAN LAL VERSUS STATE OF RAJASTHAN [ 2015 (4) TMI 688 - SUPREME COURT] the Supreme Court has clarified that conscious possession does not require physical custody alone but also an awareness of the presence of the contraband and control over it. In this case, the Applicant s actions and admissions establish a strong prima facie case of knowledge and intent, sufficient to satisfy the threshold of conscious possession under the Act. On a prima facie assessment of the facts and circumstances of the case, in the opinion of this Court, the Applicant has not met the twin conditions under Section 37 of the NDPS Act for grant of bail. The allegations against him are grave and serious in nature and there is prima facie credible evidence which links him to a larger conspiracy. Thus, the Court does not deem it fit to grant bail to the Applicant at the present stage. Conclusion - i) There were no reasonable grounds to believe that the Applicant was not guilty of the alleged offenses under the NDPS Act. ii) The Applicant s conduct indicated a likelihood of committing further offenses if released on bail, given his involvement in an international drug trafficking network. Application dismissed.

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