TMI Tax Updates - e-Newsletter
February 19, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. The term ‘money’ in context of S.69A –means only Indian currency notes and coins.

   By: DEVKUMAR KOTHARI and CA UMA KOTHARI

2. CBIC is not obligated to issue clarifications on issues raised by way of representation or otherwise

   By: Bimal jain

3. How to GST Apply Online for E-commerce Businesses

   By: Ishita Ramani

4. GST LIABILITY OF A CHARITABLE TRUST OPERATING A MARRIAGE HALL

   By: DR.MARIAPPAN GOVINDARAJAN

5. Software Technology Park (STP) Scheme

   By: YAGAY andSUN

6. VOCAL for LOCAL - The Movement

   By: YAGAY andSUN

7. Understanding STPI and Non-STPI Registration in India

   By: Pradeep Reddy

8. Chinese Loudspeakers and Noise Pollution in India: Addressing the Menace

   By: YAGAY andSUN

9. Important Key Points about the New Income Tax Bill, 2025

   By: Bimal jain

10. Import of Unwarranted, Unnecessary Goods/Items/Articles/Products from China into India

   By: YAGAY andSUN

11. Budget 2025 - Customs Law Changes: If Implemented Well, Could Improve Ease of Doing Business!

   By: Pradeep Reddy

News

1. Advisory for Biometric-Based Aadhaar Authentication and Document Verification for GST Registration Applicants of Jharkhand and Andaman and Nicobar Islands

2. Jharkhand Speaker holds meeting with senior officials ahead of budget session

3. Rajasthan govt to present Budget on Wednesday

4. Budget session of Mizoram assembly to begin on Wednesday

5. TN Budget for 2025-26 to be presented on March 14

6. SP members protest in UP Assembly premises ahead of Budget session

7. Rajasthan Assembly leaders reach consensus to run House peacefully ahead of budget session

8. Odisha CM presents Rs 2.90-lakh crore budget for FY'26, focus on 'transformative' sectors

9. Patnaik ridicules Odisha govt, says 'double-engine' going in reverse direction

10. Sri Lanka Budget: No regret over Adani walkout, says Prez Dissanayake

11. Guj ex-CM alleges state accounts not in order, submits 'alternative' budget proposal

12. India-Qatar Joint Business Forum held to Strengthen Bilateral Economic Ties

13. APEDA showcases India’s Organic Legacy at BIOFACH 2025 with leading Organic exporters from across India

14. India Qatar future partnership to rest on the pillars of sustainability, technology and entrepreneurship and energy: Union Commerce and Industry Minister, Shri Piyush Goyal

15. 6th edition of Asia Economic Dialogue in Pune from Feb 20

16. Research is bedrock of economic supremacy, says Dhankhar

17. Temple economy valued at Rs 6 lakh crore is India's largest economic activity: Andhra CM

Notifications

GST - States

1. S.R.O. No. 171/2025 - dated 15-2-2025 - Kerala SGST

Amendment in Notification G.O.(P) No.78/2017/TAXES. dated 30th June, 2017

2. S.R.O. No. 170/2025 - dated 15-2-2025 - Kerala SGST

Amendment in Notification G.O.(P) No.74/2017/TAXES. dated 30th June, 2017

3. S.R.O. No. 169/2025 - dated 15-2-2025 - Kerala SGST

Amendment Notification G.O. (P) No.73/2017/TAXES. dated 30th June, 2017

4. S.R.O. No. 168/2025 - dated 15-2-2025 - Kerala SGST

Amendment in Notification G.O. (P) No. 72/2017/TAXES. dated 30th June, 2017

5. S.R.O. No. 166/2025 - dated 15-2-2025 - Kerala SGST

Amendment in Notification G.O.(P) No.156/2017/TAXES dated 15th November, 2017

6. S.R.O. No. 165/2025 - dated 15-2-2025 - Kerala SGST

Amendment in Notification G.O.(P) No.63/2017/TAXES dated 30th June, 2017

7. S.R.O. No. 164/2025 - dated 15-2-2025 - Kerala SGST

Amendment in Notification G.O.(P) No.62/2017/TAXES, dated the 30th June, 2017

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/20 - dated 17-2-2025

Most Important Terms and Conditions (MITC) for Research Analysts

Customs

2. Waiver of late fees on account of system down for Budget update - Reg. - dated 6-2-2025

Waiver of late fees on account of system down for Budget update - Reg.

Highlights / Catch Notes

GST

• Digital Signatures Missing on Tax Notice and Order Makes Proceedings Invalid - Fundamental Authentication Requirements Not Met

  Case-Laws - HC : HC quashed an ex parte order and related tax notifications due to absence of digital or scanned signatures on both show cause notice (SCN) and final order. Following established precedent, the court affirmed that unsigned administrative notices and orders lack legal validity. The procedural defect of missing signatures rendered the proceedings unsustainable under law, regardless of substantive merits. The bench emphasized compliance with formal authentication requirements in administrative proceedings. Order set aside and petition disposed of, underscoring the fundamental requirement for proper authentication of official documents in tax administration.
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• GST Fraud: Multiple FIRs and Ongoing Investigation Lead to Bail Denial Despite Previous Release in Similar Case

  Case-Laws - HC : HC denied bail to applicant charged with wrongful availing of Input Tax Credit. Despite applicant's willingness to repay and previous bail grant in a similar case, multiple FIRs for comparable offenses have been registered. The earlier bail was granted after three months' imprisonment where investigation was complete. In contrast, the current FIR dated 27.11.2024 remains under active investigation. Court distinguished present case from previous bail order (Criminal Misc. Application No.22792/2024) due to ongoing investigation and emergence of multiple similar offenses post-registration of initial FIR. Court declined to exercise judicial discretion, citing these material differences.
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• Tax Evasion Show Cause Notices Under Section 74(1) CGST Must Be Issued Separately For Each Financial Year

  Case-Laws - HC : HC held that show cause notices under Section 74(1) of CGST Act for alleged tax evasion must be issued separately for each financial year rather than through consolidated notices covering multiple years. The court reasoned that limitation periods vary by year, and consolidation could unfairly restrict an assessee's response time based on the earliest year's limitation. Additionally, consolidated notices leading to cumulative tax determinations across years would conflict with Section 74(9) and 74(10)'s year-specific provisions and could burden assessees with higher pre-deposit requirements for appeals. The proper officer must evaluate tax evasion independently for each assessment year. Appeal dismissed, upholding the Single Judge's ruling requiring separate notices.
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• Commissioner's Restrictive Timeline Interpretation Overturned; 30-Day Condonable Period Applies for Late Appeal Filing Under Section 128

  Case-Laws - HC : HC determined the Additional Commissioner erred in adopting an overly restrictive interpretation regarding appeal filing timelines. The petitioner's contention that the appeal was timely filed despite delayed order receipt was upheld, as the 30-day condonable period provision could have been legitimately applied to hear the appeal on merits. The court emphasized that procedural technicalities should not override substantive justice. Accordingly, the Additional Commissioner's Order-in-Appeal dated 29 December 2023 was quashed and the petition was allowed, enabling consideration of the appeal on its substantive merits.
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• GST Assessment Orders Quashed Under Section 161 Due to Lack of Reasoning and Natural Justice Violation

  Case-Laws - HC : HC set aside impugned orders related to GST assessment and rectification petition under Section 161 of GST Act due to lack of reasoned decision-making and violation of natural justice principles. The original orders failed to address petitioner's objections with proper justification. Respondent authority committed to conducting fresh assessment with due process. Court mandated issuance of speaking order after providing reasonable hearing opportunity to petitioner, considering their reply and supporting documentation. Matter remanded for reassessment in compliance with procedural fairness requirements.
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• Administrative Order Upheld as Proper Notice and Response Time Were Given to Appellant Under Natural Justice Principles

  Case-Laws - HC : HC upheld the original ruling, finding no violation of natural justice principles in the administrative proceedings. The appellant had received proper notice (Ext.P2) and submitted a response (Ext.P4), including a request for extension to provide additional clarifications. The procedural timeline allowed for reply submission by 27.12.2024 with personal hearing scheduled for 06.01.2025. The court determined that adequate opportunity for representation was provided, satisfying natural justice requirements. The appellant's contention regarding denial of hearing opportunity was rejected, and the appeal was dismissed, affirming the learned Single Judge's determination.
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Income Tax

• Penalty Under Section 271(1)(c) Invalid When Income Addition Based on Estimated Profit Rate Differences

  Case-Laws - AT : ITAT ruled that penalty under section 271(1)(c) cannot be sustained where income assessment was based on estimated net profit rate of 24.50% versus assessee's declared 22.72%. When Assessing Officer resorts to income estimation after rejecting books of accounts under Section 145(3), it does not automatically establish concealment or furnishing of inaccurate income particulars. Assessee demonstrated through comparable resort financials that declared profit margins aligned with industry standards. Since additions resulted from estimation rather than proven misrepresentation, and Revenue accepted the estimated rate basis, penalty imposition was unwarranted. Appeal allowed and penalty deleted.
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• Tax Authorities' Finding of Non-Agricultural Land Status Under Section 2(14)(iii) Upheld Despite Revenue Records Showing Otherwise

  Case-Laws - HC : HC upheld the tax authorities' determination that the disputed land was not agricultural land under Section 2(14)(iii) of the Income Tax Act, making gains from its sale taxable as capital gains. Despite 7/12 land revenue extracts showing agricultural status, three authorities consistently found no actual agricultural use by the assessee after evaluating all evidence. The court declined to reassess evidence sufficiency, noting its limited jurisdiction under Section 260A. The authorities' factual findings were deemed adequately supported by record evidence, distinguishing this case from Shri Shankar Dalal where arbitrary land classification was overturned. The appeal was dismissed, confirming the land's non-agricultural status for tax purposes.
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• Tax Authority Must Exercise Revision Powers Under Section 264 Even If Order Was Appealable But No Appeal Filed

  Case-Laws - HC : HC held that revisional authority's refusal to exercise jurisdiction under Section 264 was legally untenable. The authority's reasoning that revision was not maintainable because order was appealable and assessee had not filed appeal was contrary to law. Further, the authority's position that intimation under Section 143(1) was not amenable to revision jurisdiction was incorrect, as established in multiple precedents. The court set aside the impugned order dated February 12, 2021, finding both grounds for declining jurisdiction unsustainable. The revision petition was restored to be decided on merits by the revisional authority in accordance with law.
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• Assessment Against Merged Company Void - AO's Knowledge of Merger Makes Section 292B Relief Unavailable for Jurisdictional Error

  Case-Laws - HC : HC held assessment proceedings invalid where conducted against non-existent company post-merger. Despite AO's awareness of merger during assessment and in original order, assessment was made against merged entity. Subsequent rectification attempt after three years during pending appeal was rejected. Court distinguished this from cases of inadvertent errors under Section 292B, emphasizing fundamental jurisdictional defect. No evidence of assessee misleading or suppressing merger facts. Use of merged entity's letterhead for correspondence insufficient to validate proceedings. Assessment order nullified following Maruti Suzuki and Mahagun Realtors precedents on jurisdictional invalidity of proceedings against non-existent entities.
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• Reopening Valid When Land Purchase Deed Not Examined Under Section 147; Addition Under 56(2)(vii)(b) Sustained

  Case-Laws - AT : ITAT upheld reopening under s.147 regarding inadequate consideration for immovable property purchase. Original assessment under s.143(1) had not examined the land purchase deed, constituting valid grounds for reassessment. On merits, addition under s.56(2)(vii)(b) was sustained as assessee failed to provide evidence of sale deed cancellation. Though assessee claimed cancellation was in process and produced co-purchaser's confirmation of non-payment, absence of seller's confirmation and non-refund of stamp duty indicated continuing validity of agreement. No change of opinion by AO was found. ITAT dismissed assessee's appeal, confirming additions made by AO and upheld by CIT(A).
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• ITO's Section 148 Notice Void After Jurisdiction Transfer - Reassessment Quashed Due to Invalid Notice Issuance

  Case-Laws - AT : ITAT invalidated reassessment proceedings due to jurisdictional defects in notice issuance under s.148. ITO Ward 3(2), Bulandsahar transferred assessee's records to ITO Ward-Exemption, Ghaziabad on 08.04.2018, but improperly issued s.148 notice on 26.03.2018 after transferring jurisdiction. Revenue failed to establish valid jurisdiction of ITO Bulandsahar for notice issuance. Assessment completed by ITO Ghaziabad under s.144/147 was deemed void ab initio due to invalid initiating notice. Tribunal quashed reassessment order, holding that lack of proper jurisdiction at notice stage invalidated entire proceedings.
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• Share Premium Reassessment Under Section 147 Invalid Due To Lack Of Fresh Material And Change Of Opinion

  Case-Laws - AT : ITAT dismissed Revenue's appeal against CIT(A)'s order invalidating reassessment proceedings under s.147. AO had previously examined share premium issue during original scrutiny assessment under s.143(3) and determined s.56(2)(viib) inapplicable. Reopening was based on identical issues without fresh tangible material, constituting mere change of opinion. AO failed to consider material facts including financial statements, assessment queries, written replies, and High Court-approved amalgamation scheme. AO incorrectly stated assessee issued shares to amalgamating company when shares were issued to shareholders of amalgamating company. Reassessment invalid as initiated without new information and based solely on change of opinion.
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• Revenue's Appeal Fails: Commercial Space Price Valuation, Reimbursement Claims and Settlement Amount Additions Rejected Due to Evidence

  Case-Laws - AT : ITAT dismissed Revenue's appeal on multiple grounds. AO's adoption of Rs. 3,000/sq.ft. as commercial space sale price was rejected due to lack of concrete evidence beyond mere statements. The tribunal upheld CIT(A)'s decision on reimbursement of expenditure, following precedent that Revenue cannot take contrary positions among group assessees. Addition for out-of-court settlement amount was deleted as it would result in double taxation since Rs. 83 lakhs was already declared as income. Regarding expenditure on commercial space sale, CIT(A)'s deletion of addition was sustained as expenses were properly documented through banking channels. Revenue's objection about remand report was dismissed as available evidence was sufficient for determination.
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Customs

• Customs Bond Requirements Under Section 72 Set Legal Framework for Duty Payments and Trade Compliance

  Circulars : The document outlines provisions regarding customs bonds and bank guarantees. Key points from the legal analysis: The obligor must comply with all provisions of the Customs Act 1962, GST Acts 2017, and related regulations. They are required to: 1. Pay full duty amounts chargeable on goods along with interest, fines and penalties under Section 72 if obligations are not met 2. Pay all penalties and fines for contravention of Customs Act and GST Acts provisions 3. The bond becomes void to the extent that the obligor has: - Properly exported or cleared goods for home consumption - Satisfied all conditions regarding warehoused goods used as inputs - Properly accounted for waste/refuse from operations The document establishes legal obligations for: - Proper customs duty payments - Compliance with export/import regulations - Warehouse operations and manufacturing - Payment of applicable penalties - Meeting bond conditions for release The framework ensures customs revenue collection while facilitating legitimate trade through bonded operations, with clear consequences for non-compliance.
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• Customs Duty Refund Process Goes Digital: ICEGATE Portal to Replace Manual Filing Under 1995 Regulations

  Circulars : CBIC introduced automated processing of customs duty refund applications through ICEGATE Portal, replacing manual procedures effective March 31, 2025. Key changes include electronic filing under Customs Refunds Application Regulations 1995, elimination of concurrent audit requirements, and direct bank credit through PFMS. Applications receive Unique ARN, deficiency notifications within 10 days, and electronic communication of orders. System features include pre-filled forms post reassessment, dashboard status tracking, and MIS reporting. Manual applications permitted until March 31, 2025, with exceptions requiring Commissioner approval. Implementation aligns with broader customs digitization goals targeting mid-2026 completion, aimed at reducing cross-border trading costs and enhancing procedural efficiency.
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• DPD Registration System Gets Security Upgrade: Email and Mobile Updates Required for One-Time Default Intimation

  Circulars : JNCH Customs issued directives regarding DPD registration mobile and email updates to enhance security of One Time Default Intimation and 72-hour prior intimation systems. Following identification of multiple DPD registrations linked to single email addresses, authorities initiated suo-moto modification of contact details to match IEC registration data. Importers retain the right to request changes through documented procedures via registered email addresses. The directive aims to prevent system misuse while maintaining transparency in CFS change requests. Implementation includes OTP verification for authenticity confirmation and real-time updates to the JNCH database. Standing order applies to all JNCH officers, with grievance redressal through Additional Commissioner, DPD Cell, NS-III.
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• IGCR Rules 2022: Mobile Phone Component Manufacturers Can Claim Dual Benefits Under MOOWR and Import Concessions

  Circulars : BCom clarifies dual benefits under IGCR Rules 2022 and MOOWR scheme. MOOWR units can simultaneously avail IGCR exemption with duty deferment, provided they comply with conditions in Concessional Notification and IGCR Rules. Components imported for "manufacture of cellular mobile phones" need not be directly imported by phone manufacturers - intermediate MOOWR units can claim IGCR benefits when importing components for value addition before supplying to final mobile phone manufacturers, subject to meeting prescribed conditions. Documentation and periodic accounting requirements apply for transfers between MOOWR units.
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• Direct Movement of IT/Electronics Goods to AEO Premises Before Customs Clearance Under Sec 58/58A and 65

  Notifications : CBIC issued Customs (On-Arrival Movement for Storage and Clearance at Authorised Importer Premises) Regulations, 2025 enabling AEO Tier II/III importers to move goods directly to authorized premises before customs clearance. Eligible importers must have licensed warehouses under Sec 58/58A with Sec 65 permissions for goods under headings 8517-8548. Commissioner must verify and approve premises within 14 days. Importers must declare intent in Bill of Entry, receive automated permission, and complete clearance within 15 days. Facility can be suspended for non-compliance. Penalties apply under Sec 158(2)(ii) for violations. Board retains power to exempt certain goods from regulations.
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• Royalty Payment at 4% on Net Sales Not Includable in Import Value Under Customs Valuation Rule 10(1)(c)

  Case-Laws - AT : CESTAT ruled against inclusion of 4% running royalty in transaction value of imported goods under Rule 10(1)(c) of Customs Valuation Rules, 2007. The Tribunal found that royalty payments were not directly related to imported goods, as they were calculated on net sales value of manufactured products. The goods were not procured from the group company, and no conditions mandated royalty payment for sale. The Explanation to Rule 10(1)(c) requires royalty to be paid for a process applied to imported goods, which was not applicable here. Since royalty was neither paid nor payable specifically for imported goods, and no sale conditions existed, CESTAT held its addition to import value was incorrect. Appeal allowed with order setting aside Commissioner's decision.
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• Customs Must Pay Market Value After Improper Disposal of 1065g Gold Without Notice to Owner

  Case-Laws - HC : HC ruled customs authorities improperly disposed of 1065.10 grams of detained gold without adequate notice to petitioner. The department's undated communication lacked proof of delivery and proper authentication. Finding the disposal contrary to law, including Circular dated September 6, 2022, the court determined all subsequent actions by customs (redemption fine, penalty, duty deductions) were untenable. Petitioner entitled to full current market value of gold, payable within three weeks, with Rs. 1,00,000 penalty for late payment. The disposal process violated procedural requirements and petitioner's rights, rendering customs department's entire handling of the matter legally deficient. Court directed CBIC's OSD (Legal) for compliance.
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• E-scooter Parts Classification: Individual Bills of Entry Must Be Assessed Separately Under Customs Act Section 111(m)

  Case-Laws - AT : CESTAT ruled on classification dispute regarding e-scooter parts imported through multiple Bills of Entry. Court held each Bill of Entry must be assessed independently, rejecting combined assessment approach except for project imports under Regulation 1986. The tribunal found insufficient evidence to classify imported parts as complete e-scooters under GRI 2(a). Importantly, CESTAT determined unconditional exemption under Notification 50/2017-Cus cannot be denied merely for failure to claim it in Bill of Entry. Confiscation under Section 111(m) and penalties under Section 112 were invalidated as misclassification alone doesn't warrant confiscation. Appeal allowed, original order set aside.
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Corporate Law

• SFIO Investigation Report on Corporate Misconduct Upheld; Prosecution Under Companies Act and IPC to Proceed

  Case-Laws - HC : HC upheld SFIO investigation report into corporate misconduct, rejecting petitioners' challenge to quash findings. Court determined company affairs were conducted prejudicially to public interest, warranting prosecution under Companies Act and IPC. Petitioners' claims of arbitrary process and natural justice violations were dismissed as premature. Report's validity previously confirmed through judicial scrutiny, making current petition an abuse of process. Court noted petitioners retain right to contest findings during trial proceedings, but writ jurisdiction inappropriate for pre-emptive challenge. SFIO recommendations for prosecution maintained based on substantial evidence of financial irregularities. Petition dismissed with all grounds rejected.
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• RBI's Regulatory Oversight Duties Can Be Challenged Through Writ Under Article 226 Despite Section 430 Companies Act

  Case-Laws - HC : HC upholds maintainability of writ petition under Article 226 concerning regulatory oversight of ECL. Petitioner challenged RBI's failure to exercise statutory powers regarding fund misappropriation by ECL directors. Court affirmed that statutory powers vested in public authorities imply duties enforceable through Article 226. Rejected argument regarding NCLT/NCLAT jurisdiction bar under Section 430 of Companies Act, 2013, noting NCLT lacks authority to issue prerogative writs to RBI. Court distinguished between NCLT proceedings and writ jurisdiction, emphasizing RBI's regulatory duties. Determined writ remedy appropriate where regulatory body fails to exercise statutory functions. Petition dismissed while upholding maintainability of original writ jurisdiction.
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IBC

• Non-Registration of Charge Under Section 77 Cannot Invalidate Secured Creditor Status in Corporate Insolvency Resolution Process

  Case-Laws - AT : NCLAT reversed NCLT's decision regarding creditor classification in corporate insolvency proceedings. The appellant, initially categorized as unsecured creditor, challenged rejection based on non-registration of charge under Section 77 of Companies Act, 2013. NCLAT held that non-registration of charge does not invalidate secured creditor status during resolution process. Section 77(3) obligations apply specifically to liquidators, not Resolution Professionals. The tribunal emphasized that mortgagee rights under Transfer of Property Act remain valid despite non-registration under Companies Act. Reading Sections 3(4) and 3(31) of IBC with Section 77 of Companies Act confirms that charge registration requirement binds only liquidators. Appeal allowed, directing reclassification of appellant as secured financial creditor.
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• Security Deposit Under Property MoU Not Classified as Financial Debt Under Section 5(8) IBC Despite Interest Clause

  Case-Laws - AT : NCLAT dismissed appeal concerning classification of security deposit as financial debt under IBC. Appellant transferred Rs. 2,37,61,440/- to Corporate Debtor under MoU for premises handover. Though money was disbursed, transaction lacked essential elements of financial debt under Section 5(8). Security deposit was not disbursed for time value of money as no interest accrued from disbursement date. Interest clause in MoU was purely penal, triggered only upon breach/termination. Clause 8.5 explicitly established deposit's purpose as security rather than mobilization advance for construction. Transaction's nature being security deposit without commercial borrowing characteristics disqualified it as financial debt under Code.
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• Related Party Status Under IBC Upheld Due to Operational Interdependence Through Maintenance Agreement

  Case-Laws - AT : NCLAT upheld the classification of appellant as a related party to the Corporate Debtor based on operational and financial interdependence established through the User Operated Maintenance Agreement (UOMA). The tribunal found that the appellant's attempt to terminate the agreement with one month's notice instead of the contractually required three months was invalid, as terms could not be modified without written consent. The interdependence demonstrated through the UOMA was sufficient to establish a related party relationship under the IBC framework. Appeal dismissed due to lack of merit in challenging the original classification.
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• Sale as Going Concern in Liquidation Upheld: Clean Slate Theory Validates Freedom from Prior Unpaid Liabilities

  Case-Laws - AT : NCLAT upheld the sale of Corporate Debtor (CD) as a going concern in liquidation proceedings. The sale, conducted on 28.08.2023, complied with amended Regulation 32A(4) of IBBI Liquidation Process Regulations, requiring first-attempt sale without 90-day timeline restriction. The successful bidder's purchase price exceeded reserve price, and proceeds were distributed per Section 53 of IBC. The Tribunal's dismissal of application and adverse observations against liquidator were deemed erroneous. Applying clean slate theory, NCLAT confirmed that CD sale as going concern requires freedom from prior unpaid liabilities, with sale proceeds distributed to stakeholders. Petition allowed, validating liquidator's actions in executing compliant going-concern sale.
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Indian Laws

• Private Financial Companies Not Subject to Writ Jurisdiction Despite RBI Regulation Under Articles 226 and 12

  Case-Laws - SC : SC determined writ petition maintainability against private financial company under Article 226. Court applied "function test" to assess whether entity performs public duties warranting writ jurisdiction. Distinguished between regulatory compliance and genuine public functions. Following LIC v. Escorts precedent, held that mere compliance with RBI regulations does not transform private entity into "State" under Article 12. Emphasized that writ jurisdiction depends on nature of function rather than entity's public/private status. Key consideration is whether action involves public duty or remains in private law domain. Petitions dismissed as company's activities did not constitute public functions despite regulatory oversight.
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PMLA

• Accused in PMLA Case Gets Bail After 4.5 Years in Custody, As Detention Exceeds Half of Maximum Sentence Under 436-A CrPC

  Case-Laws - HC : HC granted bail to applicants under Section 436-A CrPC who were in pre-trial detention for 4 years 9 months, exceeding half the maximum 7-year sentence possible under PMLA and IPC charges. The court emphasized that Section 436-A's mandatory language ("shall") makes gravity of offense irrelevant and supersedes PMLA Section 45's twin conditions once detention exceeds half the maximum sentence. Given the prolonged incarceration, stalled trial progress, and Article 21 rights to fair procedure, bail was granted subject to conditions. The ruling affirmed that unreasonable trial delays impact undertrial rights and warrant bail consideration despite offense severity.
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SEBI

• New SEBI Regulations Mandate Employee Investment in MF Units, Stress Testing, and Distribution Fee Framework Under Regulations 25, 35, 52

  Notifications : SEBI amended the Mutual Funds Regulations through notification dated February 14, 2025, effective April 1, 2025. Key modifications include mandatory investment of specified employee remuneration in mutual fund units, requirement for stress testing of schemes, deployment timeline for new fund offer proceeds, and revised framework for distribution-related charges. The amendment introduces new sub-regulations 16B and 30 under Regulation 25, sub-regulation 5 under Regulation 35, and sub-regulation 4A under Regulation 52, enhancing operational governance and risk management framework for asset management companies.
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• SEBI Introduces Framework for Securities Market Rule-Making Process with 21-Day Public Comment Period

  Notifications : SEBI established new regulations outlining procedures for making, amending, and reviewing securities market regulations. The framework mandates public consultation with minimum 21-day comment period, except in exigent circumstances. Departments must publish proposals with draft regulations, statutory provisions, and regulatory objectives on SEBI's website. Post-consultation, rationale for rejected comments must be published. Regular review of regulations required based on stated objectives, enforcement experience, court orders, global practices, and business environment changes. Exemptions apply to internal organizational matters, procedural requirements, and amendments predating these regulations. Non-adherence to specified procedures does not invalidate existing or future regulations. Regulations effective upon Official Gazette publication.
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VAT

• Public Sector Undertaking Gets Stay on Tax Recovery as Section 21(7) Bar Conflicts with Rule 15(2)(b) Benefits

  Case-Laws - HC : HC addressed a dispute regarding surcharge and purchase tax recovery. The court found inherent inconsistency in the State's argument - if surcharge differs from tax, Section 21(7)'s statutory bar against stay of recovery wouldn't apply; conversely, treating surcharge as tax would entitle the petitioner to Rule 15(2)(b) benefits, making recovery challengeable. Given petitioner's status as a Public Sector Undertaking with demonstrable ability to pay if ultimately required, HC granted stay on recovery proceedings pending resolution of Reference Applications before MSTT. The tribunal was directed to expeditiously decide these applications. Balance of convenience favored the petitioner, resulting in temporary suspension of recovery actions until MSTT's final determination.
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Service Tax

• Department Can Proceed with CENVAT Credit Assessment for Free Materials Despite Quashed Show Cause Notice

  Case-Laws - HC : HC upheld the Department's right to proceed with CENVAT credit assessment despite quashed show cause notice. The initial ruling specifically permitted authorities to continue proceedings to exclude value of free materials used by Assessee, following established precedent. Both adjudicating authority and CESTAT erred in interpreting that quashed SCN precluded adjudication of other demands. The Court clarified that remaining demands require factual adjudication per law, emphasizing that original Division Bench order explicitly allowed Department to proceed with value exclusion determination under Central Excise Act provisions.
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• Service Tax on Bank Transfers: Revenue Must Verify Tax Categories Before Determining Liability on Intra-Bank Transactions

  Case-Laws - AT : CESTAT examined service tax demands on bank transfers and ledger credits. Appellant contested that Rs.11,11,34,154/- of intra-bank transfers should be deducted instead of Rs.9,45,56,790/-. Due to insufficient evidence supporting the claimed deduction amount and need for proper reconciliation, matter remanded to adjudicating authority. Tribunal agreed that Revenue cannot arbitrarily consider all receipts as taxable without identifying specific service categories. Revenue must verify tax liability based on appellant's reconciliation details. Adjudicating authority directed to re-quantify service tax liability after examining appellant's documentation and conducting proper reconciliation. Appeals disposed of through remand for fresh determination of tax liability.
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• Service Tax Liability on GTA Services Shifts to Recipients, Provider Not Responsible for Recipients' Tax Compliance

  Case-Laws - AT : CESTAT ruled in favor of appellant regarding service tax liability on GTA services during 2008-2013. The Tribunal determined service tax liability shifted to service recipients (registered companies) as per notifications, and appellant was not responsible for recipients' tax compliance. Adjudicating authority erroneously confirmed tax demand without disputing appellant's documentary evidence showing tax liability transfer to consignors/consignees. Tribunal set aside main service tax demand and canceled penalties under Sections 76 and 78. Bad debt-related demands were dropped based on chartered accountant certification. Minor penalties for late return filing (Rs.14,200) and under Section 77 (Rs.10,000) were maintained. The ruling clarified GTA service provider's obligations and liability transfer mechanisms under service tax regime.
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Case Laws:

• GST

• 2025 (2) TMI 672
  Seeking condonation of delay in filing as well as on the Special Leave Petition - HELD THAT:- In the meantime, operation of the impugned order shall remain stayed. Post along with Diary No. 28069 of 2024.

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• 2025 (2) TMI 671
  Challenge to ex parte impugned order and N/N. 56/2023-Central Tax dated 28th December, 2023 and Notification No. 56/2023-State Tax dated 11th July, 2024 - one ground that is pressed by the Petitioner is that the impugned SCN as also the impugned order are both unsigned - HELD THAT:- A perusal of the impugned SCN and the impugned order would show that there are no digital signatures or scanned signatures on the same. Clearly, the present case would be covered by the decision of the Coordinate Bench in Marg Erp Ltd. through its Authorised Representative Mr. Mehender Singh v. Commissioner of DGST Delhi Anr. [ 2023 (2) TMI 395 - DELHI HIGH COURT] wherein the Court has clearly held that an unsigned notice or order would not be sustainable in law. The impugned order is set aside - Petition disposed off.

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• 2025 (2) TMI 670
  Violation of natural justice - appellant was not given an opportunity of being heard while passing the impugned order - HELD THAT:- On a consideration of the matter, however, it is found that in response to Ext.P2 notice, the appellant had submitted Ext.P4 reply and in the said reply, he had also requested for a period of 15 days to file clarifications to one of the issues raised in the show cause notice. In Ext.P3 summary of show cause notice that was sent along with the show cause notice, the date by which the reply had to be submitted was indicated as 27.12.2024, and the personal hearing was fixed at 12.10 p.m. on 06.01.2025. There are no reason to take a different view from that taken by the learned Single Judge to find that Ext.P6 order was not passed in violation of the rules of natural justice. Appeal dismissed.

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• 2025 (2) TMI 669
  Seeking the direction to upload an Order-in-Original on an online portal under the GSTIN - pre-deposit of 10% as mandated u/s 107 of Central Goods and Service Tax Act, 2017 already made - HELD THAT:- The Writ Petition is disposed of.

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• 2025 (2) TMI 668
  Seeking grant of regular bail - applicant is ready and willing to repay the amount of Input Tax Credit, which was wrongfully availed by the present applicant, as alleged in the FIR - HELD THAT:- From the record it appears that apart from the present F.I.R., several other F.I.R. appears to have been lodged against the present applicant. The applicant has sought to rely upon the order passed by this Court dated 09.01.2025 passed in Criminal Misc. Application No.22792 of 2024 wherein this Court had exercised discretion in favour of the present applicant in the F.I.R. which was pertaining to similar offence registered against the applicant. However, in the said case, the applicant was arrested on 08.10.2024 and had undergone imprisonment for a period of three months. The said F.I.R. was registered on 07.10.2024 and investigation in the said case was virtually over. In the present case, the F.I.R. has been lodged on 27.11.2024. The investigation of the present offence is still in progress. Moreover, after registration of the F.I.R., wherein the applicant has been considered for grant of bail by this Court, several other offence of similar nature have been registered against him. This Court is not inclined to exercise its judicial discretion in favour of the applicant at this stage. The application is dismissed.

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• 2025 (2) TMI 667
  Seeking to quash the impugned orders passed by the second respondent under Section 73 of CGST Act - respondents submitted that the petitioner has an alternative remedy of appeal before the Appellate Commissioner under Section 107 of the TNGST Act, 2017 against the impugned order - HELD THAT:- The petitioner is directed to first exhaust the statutory remedy available under law before approaching this Court. The petitioner shall prefer an appeal together with necessary pre-deposit within one month from the date of receipt of a copy of this order. Upon filing of the appeal together with necessary pre-deposit, the Appellate Commissioner shall entertain the appeal without reference to the period of limitation and dispose of the same on merits and in accordance with law, within a period of two months thereafter. Petition disposed off.

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• 2025 (2) TMI 666
  Violation of principles of natural justice - Challenge to SCN on the ground of denial of opportunity to cross examine witnesses - alleged suppression of turnover during the financial years 2017-18 to 2023-24 - HELD THAT:- It is clear from the said statutory provisions that the power of the proper officer under Section 74 (1) is to determine whether any of the factors leading to tax evasion exist in relation to an assessee during any financial/assessment year and initiate proceedings under the said Section within the time frame contemplated under Section 74 (1) of the CGST Act. The said exercise is to be conducted in relation to each of the years in which such pre-conditions exist for the invocation of the power under Section 74 (1). While there may be cases where the data available with the proper officer is such that it suggests the existence of pre-conditions for more than one financial/assessment years, the proper officer should ideally issue separate show cause notices to cover the different financial/assessment years since the period available to the Department for adjudication of the show cause notices varies depending upon the due date for furnishing of annual return for that year. The proximate expiry of the limitation period under Section 74 (10) is only in relation to one of the six financial/assessment years, the contentions of the assessee and the opportunity available to an assessee for adducing evidence in relation to the other years cannot be rendered illusory by forcing upon the assessee the period of limitation prescribed under Section 74 (1) for passing the final order in relation to the earliest financial/assessment year [2017-18]. The statutory period available for an assessee to put forth its contentions against the show cause notice in an effective manner cannot be curtailed by an unnecessary act on the part of the Department in issuing a consolidated show cause notice that includes therein a financial/assessment year in relation to which the period for passing a final order expires earlier. There is yet another aspect of the matter. If a consolidated notice for various financial/assessment years is issued, the total amount of tax, penalty etc. determined as payable by the assessee may increase exponentially depending upon the number of financial/assessment years included in the consolidated notice. The determination of tax, penalty etc. would be in respect of all the financial/assessment years put together. That would go against the provisions of sub-sections (9) and (10) of Section 74 which specifically refer to the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates while stipulating the last date for passing the adjudication order. A consolidated notice would also result in a consolidated adjudication order covering several financial/assessment years and in the event of it being adverse to the assessee, the fee/pre-deposit required to be paid by an assessee for preferring a statutory appeal would also be higher. Conclusion - The power of the proper officer is to determine tax evasion for each year separately, issuing show cause notices accordingly. Issuing a consolidated notice could prejudice the assessee s rights and lead to increased tax liabilities across multiple years, contrary to the principles of fairness in taxation. There are no reason to interfere with the impugned judgment of the learned Single Judge - appeal dismissed.

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• 2025 (2) TMI 665
  Invocation of jurisdiction under Article 226 of the Constitution - petitioner argued that the appeal was filed within the prescribed time limit despite receiving the order after the date mentioned on it - HELD THAT:- The Additional Commissioner has clearly taken an extremely narrow and pedantic view since the condonable period of an additional 30 days was one which was clearly applicable and could have been invoked for the purposes of entertaining the appeal and trying the challenge on merits. The Order-in-Appeal of the Additional Commissioner dated 29 December 2023 is quashed - petition allowed.

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• 2025 (2) TMI 664
  Challenge to impugned order and also the order passed on the rectification petition under Section 161 of the GST Act - order has been passed without assigning any reason while rejecting the petitioner s objection - violation of principles of natural justice - The learned counsel for the respondent would submit that they would redo the assessment after affording a reasonable opportunity of hearing to the petitioner - HELD THAT:- The impugned orders are set aside. The respondent shall pass a speaking order after affording a reasonable opportunity of hearing to the petitioner, taking into account the reply and any document that may be filed by the petitioner. Accordingly, the writ petition is disposed of.

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• 2025 (2) TMI 663
  Maintainability of petition - availability of alternative remedy - cancellation of petitioner s GST registration - HELD THAT:- A reading of the impugned order indicates that there is no discussion to the reply dated 17.12.2021 filed by the petitioner in response to show cause notice in Form GST-REG-17/31 dated 16.12.2021. Considering the same, this writ petition is disposed by remitting the case to the respondent to pass a fresh order on merits within a period of two months. Pending such exercise, the registration of the petitioner shall continue to stand suspended. Revival of the GST registration will be subject to final order to be passed by the respondent. Such order shall be passed within a period of six weeks from the date of receipt of a copy of this order. Petition disposed off.

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• 2025 (2) TMI 662
  Violation of principles of natural justice - petitioner states that petitioner did not receive any notice of personal hearing, after the submission of his objections and the lack of such personal hearing is prejudicially affect his case - demand of service tax on the turnover reported in the income tax returns for the financial year 2015-16 and 2016-17 - HELD THAT:- The impugned order dated 26.03.2024 is set aside - The 1st respondent shall issue a fresh notice to the petitioner fixing a date of personal hearing. Petition disposed off.

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• 2025 (2) TMI 661
  Refund adjustments between VAT and GST regimes - prayer for appropriate modification of the judgment and order - HELD THAT:- It is not disputed by the respondents/revenue that there is no mechanism for refund of the amount, which was collected from the assessee during the VAT regime after coming into force of the G.S.T. regime. The judgment and order dated 18th January, 2013 is modified by directing the respondent authorities to refund the amount, which is lying with the department alongwith interest as ordered by the Hon ble Division Bench less the amount, which has already been adjusted and such refund shall be effected within 12 weeks from the date of receipt of server copy of this order. The review application is disposed of.

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• 2025 (2) TMI 660
  Maintainability of petition - availability of statutory remedy of appeal - non-constitution of the Tribunal - HELD THAT:- An amendment has been made to Section-112 of the Central Goods and Services Tax Act, 2017 substituting twenty per cent pre deposit to ten per cent for maintaining an appeal before the Goods and Services Tax Tribunal. The Tribunal has not yet been constituted and this Court had been granting orders based on the judgment in SAJ Food Products Pvt. Ltd. vs. The State of Bihar Others [ 2023 (3) TMI 1390 - PATNA HIGH COURT] , allowing the assessee to deposit twenty per cent of the disputed amount of tax, till the Tribunal is constituted and an appeal is filed also allowing stay of recovery. As of now pre-deposit has been reduced to ten per cent and the same is made effective from 01.11.2024. It is an admitted position that the GST Tribunals have not been constituted as yet. In such circumstance we direct that the assessee on payment of ten per cent of the tax amounts in dispute shall be entitled to stay of recovery till the Tribunal is constituted and an appeal is filed within such time as provided therein. Subject to deposit of a sum equal to 10 percent of the amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non-constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed. Petition disposed off.

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• Income Tax

• 2025 (2) TMI 659
  Claim of deduction @100% u/s 80IC - grant of incentives on substantial expansion of the unit - initial assessment year - fresh claim on undertaking substantial expansion from the year of completion of substantial expansion As decided by HC [ 2018 (9) TMI 2155 - PUNJAB HARYANA HIGH COURT] as per order in M/S ADMAC FORMULATIONS [ 2018 (10) TMI 1001 - PUNJAB AND HARYANA HIGH COURT] as relying on M/s Classic Binding Industries [ 2018 (8) TMI 1209 - SUPREME COURT] dealing with the issue whether the assessee who had availed deductions at the rate of 100% for first five years on the ground that they had set up a manufacturing unit as prescribed under sub section (2) of Section 80IC of the Act can start claiming deduction at the rate of 100% again for the next five years as they had undertaken substantial expansion during the period mentioned in sub section (2) thereof. The answer was given in the negative. HELD THAT:- The issue, in question, is now covered by the decisions of this Court in the case of M/s. Aarham Softronics [ 2019 (2) TMI 1285 - SUPREME COURT] wherein the Court said that the decision rendered in Classic Binding Industries [ 2018 (8) TMI 1209 - SUPREME COURT] is no longer a good law. Appeal succeeds and is hereby allowed. The impugned order passed by the High Court is set aside and those passed by the Revenue Authorities also stands set aside.

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• 2025 (2) TMI 658
  Nature of land sold - taxing surplus arising on sale of agricultural land by accepting the same as Capital Assets - a s argued said land was an agricultural land till the date of sale and which was evident from 7/12 extract of Land Revenue - Whether appellant land was a agricultural land as provided u/s. 2 (14) (iii) of the Act and therefore not a capital asset? - HELD THAT:- This is not a case where the authorities have not considered the material placed on record by the assessee. However, after considering and evaluating such material and weighing it against the other material available on record, the three authorities have concluded the property in question was not used for any agricultural purpose by the assessee. None of the three authorities has violated any legal principles regarding evaluating such material. In an appeal u/s 260A, there is no question of this Court going into the sufficiency and adequacy of evidence. This Court is not exercising powers of the First Appellate Court when dealing with appeals u/s 260A of the Income-tax Act. In this case, the findings of fact are supported by more than adequate material on record. Shri Shankar Dalal [ 2017 (4) TMI 190 - BOMBAY HIGH COURT ] was a matter where the ITAT had recorded a finding that 1/5th of the land was cultivated, and the balance 4/5th was not agricultural land. The Coordinate Bench of this Court found no basis for making such a distinction and, therefore, interfered with the ITAT s conclusion. Decided against assessee.

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• 2025 (2) TMI 657
  Stay of demand - Petitioner challenged orders granting interim reliefs staying the recovery of 80% of the demanded tax amount, subject to the deposit of 20% of the tax amount - HELD THAT:- We find that more than adequate opportunity was granted to the Petitioner to submit genuine proof of financial hardships. However, no such evidence was adduced by the Petitioner. PCIT has observed that the Petitioner is a very reputed big builder, and various projects are currently being done. Learned counsel for the Petitioner, whilst not denying this fact, did submit that loans and advances have been obtained from multiple parties and there are certain confirmations placed on record regarding the unexplained receipts. This is, with respect, neither here nor there. Learned counsel for the Petitioner submitted that financial hardships were only one of the grounds in support of the plea for an unconditional stay. He submitted that the Petitioner relied upon the decisions of this Court, which substantially enhanced the chances of success in the appeal. If the Petitioner is a very reputed big builder undertaking various projects, we find it difficult to believe that the Petitioner is unable to even pay 20% of the tax amount amounting to approximately Rs.3.2 crores to secure a stay on the recovery of the balance amount. The Petitioner has also not been candid with the authorities. Despite more than adequate opportunities, full details regarding the Petitioner s financial health were not disclosed. Based on some alleged contradictions between the orders made by the AO and PCIT, no case is made out for the grant of an unconditional stay. Petitioner does not wish to pay any amount and secure an unconditional stay. There is no response to our query about how much amount the Petitioner was willing to deposit. Considering the merits of the grounds raised and the decisions relied upon by the Petitioner, at least prima facie, we cannot subscribe to the view that the Petitioner has some cast iron case entitling it to an unconditional stay. On perusing the reasoning of the assessment order, good and adequate reasons have been given for insisting upon the Petitioner paying at least 20% demanded tax amount. There is no perversity in the reasoning, which has ultimately been confirmed by the PCIT. In this petition, we do not exercise any appellate jurisdiction. Going by the parameters of the judicial review, we are satisfied that no case is made out warranting interference.

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• 2025 (2) TMI 656
  Revision u/s 264 - revisional authority s declining to exercise revisional jurisdiction - HELD THAT:- We refer to the provisions of Section 264 in which no such limitation is to be found or based on which the commissioner could have declined to exercise its revisional jurisdiction. Coordinate Bench, in the case of Aafreen Fatima Fazal Abbas Sayed [ 2021 (4) TMI 1034 - BOMBAY HIGH COURT] in similar circumstances where the commissioner had declined to exercise revisional jurisdiction because the order was appealable and the assessee had chosen not to institute an Appeal, held that revision authority could not have refused to exercise its revision jurisdiction on such a ground. The revisional authority s reason for declining to exercise revisional jurisdiction is contrary to the law, as explained by Sayed [ 2021 (4) TMI 1034 - BOMBAY HIGH COURT] Intimation u/s 143 (1) is an order for the purposes of Section 264 - In Gopal Vazirani [ 2024 (3) TMI 1017 - BOMBAY HIGH COURT] another co-ordinate Bench, has held that an intimation u/s 143 (1) was amenable to revisional jurisdiction under Section 264 of the IT Act. In Smita Rohit Gupta [ 2023 (9) TMI 220 - BOMBAY HIGH COURT] another Co-ordinate Bench, after distinguishing the decision of the Hon ble Supreme Court in Rajesh Jhaveri Stock Brokers (P) Ltd [ 2007 (5) TMI 197 - SUPREME COURT] held that the revision would be maintainable against an intimation under Section 143 (1) of the IT Act, 1961. Accordingly, the second reason based upon which the commissioner declined to exercise the revisional jurisdiction is also not sustainable. No such universal inference can be drawn in tax matters. In any event, the revisional authorities exercising the revisional jurisdiction must look into this matter since this is a case where the revisional authority has virtually declined to exercise the jurisdiction vested in it. We have found that the two reasons the revisional authority declined to exercise its jurisdiction were untenable. Therefore, the impugned order dated 12 February 2021 is liable to be set aside and is hereby set aside. Petitioner s revision is now restored before the revisional authority, which shall decide such revision on its merits on and following law.

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• 2025 (2) TMI 655
  Reopening of assessment u/s 147 against non existent company -assessment in name of a company that has ceased to exist due to a merger - HELD THAT:- As relying on Maruti Suzuki (India) Limited [ 2019 (7) TMI 1449 - SUPREME COURT ] and Mahagun Realtors (P) Ltd. [ 2022 (4) TMI 347 - SUPREME COURT ] factum of merger had been duly brought to the attention of the AO. The merger was taken into consideration at more than one place in the order of assessment that came to be framed. Despite the above, the AO proceeded to draw the order in the name of an entity which had ceased to exist. We also bear in consideration the indubitable fact that the rectification order came to be passed three years after the framing of the original order of assessment, and that too, during the pendency of the appeal of the assessee and where a specific ground of challenge was raised in this regard. This was therefore not a case of discovery of an inadvertent error or mistake immediately after the passing of an order. We also bear in consideration Maruti Suzuki having clearly held that such a mistake would not fall within the ken of Section 292B of the Act. An exercise of rectification as undertaken in the present case, if accorded a judicial imprimatur, would in effect amount to recognising a power to amend, modify or correct in an attempt to overcome a fundamental and jurisdictional error contrary to the principles enunciated in Maruti Suzuki. We also cannot lose sight of the fact that this was not a case where the assessee had attempted to mislead or suppress material facts and which may have warranted the case of the assessee being placed in the genre which was considered in Mahagun Realtors. The mere submission of replies on the letter head of EHSSIL also fails to convince us to hold in favour of the Revenue. Decided in favour of assessee.

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• 2025 (2) TMI 654
  Validity of assessment order passed u/s 143(3) r.w.s. 144B - no opportunity of hearing through video conference - denial of principle of natural justice - HELD THAT:- It is not in dispute that there is no adherence to the principles of natural justice as there is no opportunity of personal hearing through video conference is provided to the petitioner before passing the impugned assessment order. Without entering into the merits of the matter, we quash and set aside the impugned assessment order passed u/s 143(3) r/w Section 144B of the Income Tax Act, and the matter is remanded back to the Assessing Officer to pass a fresh de novo order after providing fresh opportunity of hearing through video conference to the petitioner in accordance with law.

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• 2025 (2) TMI 653
  Disallowance of expenses - assessee has not filed the IT returns and the audit report within the due date - HELD THAT:- Reports were filed on 14.02.2021 and the due date for filing the reports u/s 139 and audit report was on 30.09.2020 and the above due dates were extended due to Covid according to TOLA Act till 31.03.2021. In the present case, the reports as well as the audit reports were filed on 14.02.2021. Therefore, the returns were filed on time in accordance with the provisions of Section 139 of the Income Tax. By citing the reasons of delay without considering the notification issued by the Central Board of Direct Taxes (CBDT) for extending time limitation for filing of report and returns before 31.03.2022, the impugned order came to be passed by disallowing the expenses and consequential demand was also made against the petitioner. Hence, the impugned order is set aside and a direction is given to the respondent to remove the consequential demand against the petitioner and open the E portal for uploading the reports, if any.

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• 2025 (2) TMI 652
  Deduction u/s 80P (2)(d) and 80P(2)(d) - interest income earned on saving accounts and fixed deposits maintained with Cooperative Banks - HELD THAT:- We find that while deciding the issue pertaining to the claim of deduction under section 80P(2)(d) of the Act with respect to the interest income earned from investment with Co-operative Bank, the coordinate bench of the Tribunal in Pathare Prabhu Co operative Housing SocietyI [ 2023 (7) TMI 1272 - ITAT MUMBAI] held that interest income is eligible for deduction under section 80P(2)(d) of the Act. Provisions of section 80P(2)(c) - The same provides for a standard deduction, inter-alia, of INR 50,000 in case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b) of section 80P(2) of the Act. In the present case, there is no dispute regarding the fact that the assessee is a co-operative housing society. Such being the facts, it is ostensible that the assessee is engaged in activities which is other than those specified in clause (a) or clause (b) of section 80P(2) of the Act. Assessee rightly claimed the deduction of INR 50,000 under section 80P(2)(c) of the Act. AO is directed to grant a deduction under section 80P(2)(c) of the Act to the assessee. As a result, the impugned order is set aside and sole ground raised by the assessee is allowed.

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• 2025 (2) TMI 651
  Reopening of assessment u/s 147 - reason to believe - addition u/s 56(2)(vii)(b) as assessee purchased immovable property during the year under consideration without adequate consideration - HELD THAT:- From the perusal of the records, it can clearly be set out that in the original assessment u/s 143(1) issue related to the deed of purchase of land was not looked into as the same is not reported in the assessee s income before the Revenue. Besides that, there is no change of opinion but all the aspects should have been taken into consideration by the Assessing Officer under proceedings related to Section 143(1) of the Act and, therefore, the Department has rightly reopened the assessee s case. Addition u/s 56(2)(vii)(b) - Cancelation has not been done but is under process, but no evidence has been filed by the assessee as regards cancellation of sale deed by the assessee. Though the assessee has produced confirmation that no payment has been made through co-purchaser but the same should have been taken from the seller as well and the stamp duty has not been refunded to either of the parties and the assessee failed to demonstrate before us that the agreement does not exist at this juncture. AO has rightly taken a view and it is not a change of opinion. On merit, it is further noticed that the assessee since not filed any evidence in respect of cancellation of sale deed nor filed any details of processing the cancellation of sale deed, the Assessing Officer and the CIT(A) rightly confirmed the addition. Appeal filed by the assessee is dismissed.

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• 2025 (2) TMI 650
  Penalty u/s 271(1)(c) - Addition made applying NP rate of 24.50% while the books of account were rejected - HELD THAT:- When the AO resorts to estimating income rather than relying on documented financial records, it cannot be inferred that the taxpayer has engaged in concealment or provided inaccurate particulars of income. Consequently, since the additions arise from estimation rather than deliberate misrepresentation penalty is unwarranted. In the present case, AO estimated the profit at 24.50% as opposed to the 22.72% declared by the assessee, pursuant to the provisions of Section 145(3) due to the rejection of the books of accounts. The assessee, however, has provided financial statements from comparable resorts, demonstrating that the net profit declared by the assessee was reasonably high in comparison to that of other taxpayers engaged in the same line of business. This evidence suggests that the profit margin declared by the assessee is not only justifiable but also aligns with industry standards, thereby undermining the AO s rationale for estimating a higher profit percentage without adequate justification. Assessee has relied upon following decisions in support of their plea that when income of the assessee is determined on an estimated basis, it follows that no penalty u/s 271(1)(c) of the Act can be imposed for concealment or furnishing inaccurate particulars of income. Thus we are of the considered view that since quantum assessment order was based on application of estimated rate of NP @ 24.50% which was found to be applicable and that same was accepted by the Revenue the charge of penalty u/s 271(1)(c) does not survive. Accordingly, impugned order is set aside and penalty is deleted. Assessee appeal allowed.

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• 2025 (2) TMI 649
  Reopening of assessment u/s 147 - transfer of jurisdiction from one Income Tax Officer to another - Validity of order of the Income Tax Officer, Exemption, Ward, Ghaziabad - HELD THAT:- We find that the Income Tax Officer, Ward 3(2), Bulandsahar, was having the records of the assessee when he received the AIR information. It appears that the ITO Bulandsahar found out that the assessee is madarsa, a registered society, so the proper jurisdiction belonged to Income Tax Officer, Ward-Exemption, Ghaziabad and consequently transferred the records of the assessee to Income Tax Officer, Ward-Exemption, Ghaziabad on 08.04.2018. We however, note that after transferring the case records to the Income Tax Officer, Ward- Exemption, Ghaziabad, the Income Tax Officer, Ward 3(2), Bulandsahar issued notice u/s 148 on 26.03.2018. Thereafter, the Income Tax Officer, Ward-Exemption, Ghaziabad completed the assessment u/s 144/147 of the Income Tax Act on 25.10.2018. There is serious lapse in following the law. We find that this is a case where the AO [ITO Ward 3(2), Bulundsahar] has transferred the case of the assessee from Bulundsahar to Ghaziabad [ITO Ward-Exemption), Ghaziabad]. Subsequent to the transfer from his office, the ITO Ward 3(2), Bulundsahar issued notice u/s 148. Furthermore, we find that the Revenue has not established that the ITO Ward 3(2), Bulundsahar had valid jurisdiction over the assessee for issuance of the notice u/s 148. Once the jurisdiction of the Income Tax Officer for issuance of notice u/s 148 is not established, the entire subsequent proceedings become invalid in the eyes of law. We accordingly hold that the re-assessment made is without jurisdiction and quash the order of the Income Tax Officer, Exemption, Ward, Ghaziabad. Grounds of the assessee are allowed.

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• 2025 (2) TMI 648
  Revision u/s 263 - taxable income in Philippines - allegation of understatement of income - Whether the income from the assessee s Philippines branch was correctly assessed and taxed in India, considering the tax paid in the Philippines? - HELD THAT:- Revenue profit earned in Philippines is included in Indian Financials and has been offered to tax as per Indian Income Tax Act. The taxable income of the company as per Philippines ITS. The assessee has considered the total income expenses of the Philippine s branch in its profit loss account prepared in India for the company as a whole and has offered the income earned in Philippine s to tax in India. As required by the Article 24 of the DTAA, the assessee has computed the taxable income of the Philippines branch as per the provisions of Indian Income Tax Act to determine the income doubly taxed in India Philippines. Such doubly taxed income worked out to Rs. 13,32,45,195/- which has been mentioned in the Form no 67. From the entire events and accounting, it is clear that the income as mentioned in the notice of Rs. 29,17,91,560/- being 100% of the tax payable in Manila of Rs. 8,75,37,468/- @ 30% is taxed in India. Accordingly, no further income needs to be taxed in India. The amount of Rs. 13,32,45,195/- is income of the Philippines as worked out under the Indian Income Tax Act. We hold that there is neither any error committed by the Assessing Officer nor any prejudice is caused to the department by the virtue of order u/s 143(3) of the Act. Appeal of the assessee is allowed.

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• 2025 (2) TMI 647
  Additions on account of excess stock - Estimation of net profit - assessee is into the business of running of poultry farm and its inventory includes raw materials, viz., eggs, chicks and birds and various items of poultry feed - CIT(A) deleted adition - HELD THAT:- As inadvertent omission to integrate the software, the difference in stock happened and hence, urged that it was wrong to allege that assessee didn t disclose the correct stock in its Tally stock register ; and moreover, having factored the alleged difference in the stock while computing the total income in its RoI, the assessee has offered the excess stock, therefore, in any case, no addition was warranted. Addition u/s. 69 of the Act which was deleted by the CIT(A) by finding that the AO erred in making addition only upon the statement recorded of MD of assessee u/s. 133A by relying on the decision of CIT vs. S. Khader Khan Sons [ 2007 (7) TMI 182 - MADRAS HIGH COURT] wherein held that a statement recorded u/s. 133A(3) of the Act does not have any evidentiary value and any admission made during such statement can t be made the basis of addition which decision has been upheld by the Hon ble Supreme Court reported [ 2013 (6) TMI 305 - SC ORDER] since assessee has shown turnover of Rs. 22,82,96,716/- and offered income of Rs. 3,77,13,008/- and has shown net profit @16.46%, the Ld CIT(A) was of the view that the net profit ratio @16.46% couldn t have been achieved by the assessee unless it has included the stock difference of Rs. 1,01,77,956/- which finding is not perverse and is a plausible view. Moreover, the assessee s books are found to be duly audited and the AO didn t reject the books alleging any infirmity, therefore, the impugned action of the Ld.CIT(A), deleting the addition on account of difference in stock, is upheld - Decided in favour of assessee.

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• 2025 (2) TMI 646
  Reopening of assessment u/s 147 - Reason to believe - issue of share premium - applicability of provision of Section 56(2)(viib) - HELD THAT:- In the case on hand, the issue of share premium has been duly examined by the AO in the original scrutiny assessment proceedings u/s 143(3) of the Act and formed his opinion about non-applicability of the provision of section 56(2)(viib). Further, the reason to believe recorded by the AO for initiating re-assessment proceedings on the identical issue does not show any fresh tangible material available with the AO after the original assessment order to change his opinion. AO didn t even consider the material facts available on record in the form of Note to account, queries and written reply filed during assessment proceedings and scrutiny assessment order including office note, etc. AO failed to establish that the Assessee did not disclosed all material facts during the original assessment order. Without considering the Note-12 of the audited financial statement, questionnaire issued by AO and the submission made and the order of the Hon ble High Court approving the Scheme of Amalgamation the impugned assessment has been framed. The facts recorded in the reason to believe is not correct, as the Assessee did not issue any shares to M/s Allure Imports Pvt. Ltd. in pursuance of the approved Scheme of amalgamation by the Hon ble High Court, but it was issued to the shareholders of the Amalgamating Company i.e. M/s Allure Imports Pvt. Ltd. CIT(A) rightly held that the AO has not done the reopening of assessment u/s 147 of the Act in accordance to the provisions of the Act. Since the re-assessment proceedings in the present case have been initiated due to change of opinion without having any fresh information/materials in hands of the AO., we find no error or infirmity in the order of the Ld. CIT(A) and find no merit in the grounds of Appeal of the Revenue.

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• 2025 (2) TMI 645
  Addition u/s 14A - assessee submitted that there was no exempt income in the hands of the assessee and therefore, there was no case for any disallowance u/s 14A - HELD THAT:- We agree with the contention of learned A.R. for the assessee that the mere fact that the payment made to the aforesaid entities by way of retainership fee did not result in commensurate business in USA in the year relevant to assessment year 2008-09 does not imply that the expenditure incurred was not for the purpose of the assessee s business. We are further persuaded to take this view considering that the retainerships were terminated by the assessee within a short time when the assessee realized that the services provided by the aforesaid entities were not satisfactory. There is no requirement in law that every expenditure incurred by the assessee must result in profit. It is sufficient if the expenditure not being in the nature of capital expenditure or personal expenses is laid out or expended wholly and exclusively for the purposes of business Credit for TDS - HELD THAT:- Assessee submitted that the Assessing Officer be directed to give credit for TDS in accordance with law. D.R. for Revenue expressed no objection to this. Accordingly, we direct the AO to give credit to the assessee for tax deducted at source in accordance with law.

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• 2025 (2) TMI 644
  Addition u/s 68 and u/s. 69C - unexplained cash credit - assessee company has received share application money with premium - AO treated the share application money as unexplained income of the assessee and also treated the commission expenses calculated at 2.5% on the above amount of as unexplained expenditure u/s. 69C - CIT(A) deleted addition - HELD THAT:- CIT[A] on verification of the MCA website as provided by the assessee company, held that neither those persons were not directors in the year under consideration nor thereafter. So when a person was not director or director for few months during the year under consideration then the specific knowledge about the investment in share capital in the assessee company could not be expected from him. So their affidavits does not have any evidentiary value against the assessee company more so when their affidavits have not been provided to the assessee company for rebuttal during the assessment proceedings. Similarly they were not presented for cross examination by the assessee in the assessment proceedings. Thus, AO has made the additions based on surmises and conjectures without making proper verification of facts with relevant materials and evidences, whereas the CIT[A] made full verification of facts, material evidences and called for a remand report from the AO and deleted the additions. Further Revenue could not dispute the above findings with relevant materials or evidences. Decided against revenue.

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• 2025 (2) TMI 643
  Adoption of sale price of commercial space - CIT(A) upheld the sale consideration taken by the assessee contending that the statement of other parties cannot be the basis for the AO to make addition, specially when the AO has not brought on record any concrete evidence to show that the assessee has actually sold the commercial space @ Rs. 3,000/- per sq. ft. - HELD THAT:- AO could not bring any material on record to show that the assessee received any consideration over and above what has been shown in the registered sale deed. AO also failed to bring on record any comparable sale instance to show that the sale price of the commercial space was more than the price recorded in the registered sale deed. We are of the considered opinion that the sale price of Rs. 3,000/- per sq. ft. taken by the AO, merely on the basis of some statements without bringing any concrete material in support of his claim, is not correct. Accordingly, we do not find any reason to interfere with the impugned order of CIT(A) qua this issue and consequently ground nos.3 4 of the Revenue stand dismissed. Disallowance of reimbursement of expenditure - assessee received sum as their share in a JV firm on account of reimbursement of expenses - Addition made as assessee failed to prove actual incurring of expenses - HELD THAT:- Similar issue was came before the co-ordinate bench of the Tribunal in case of Vinod Narappa Reddy [ 2020 (10) TMI 354 - ITAT BANGALORE ] , wherein the ITAT has held that the Revenue cannot take the contrary view, which has been taken in a group of assessees to the determinant to the assessee before us. The law abhor uncertainty and selective approach against any individual. Therefore, without going into the merits of the case, respectfully following the decision (supra), we hold that, the Revenue cannot take the contrary view, which has been taken in case of M/s. YKH, to the determinant to the assessee before us. Addition on account of out of court settlement of their dispute and offered the same as income in their books of account - AO added the same to the total income of the assessee, contending that the assessee could not produce necessary explanation / evidence in support of their claim - HELD THAT:- We have also gone through the statement of P L account placed and schedule of revenue from other sources placed referred by the AR and found that the assessee has already offered Rs. 83 lakhs as income during A.Y. 2016-17. Therefore, we are of the considered opinion that, as Rs. 83 lakhs has already taken as income by the assessee, the addition made by the Ld. AO on the same income leads to double taxation in the hands of the assessee, which is not allowable as per the Act. Therefore, we uphold the order of Ld. CIT(A) deleting the addition. Addition of expenditure incurred on account of sale of commercial space - assessee did not produce any bills / vouchers / evidence in support of the claim - HELD THAT:- After going through all the vouchers/bills/evidences in support of expenditure CIT(A) has given factual finding of his order that the expenditure incurred by the assessee are mostly by cheque / banking channel and the assessee furnished details of all these expenses and accordingly deleted the addition made by the Ld. AO. Therefore, decision CIT(A) is based on proper evaluation of evidence. As far as the objection of the Ld. DR regarding not calling of remand report is concerned, where the evidence filed are from independent source and are sufficient to decide the matter and no defect or shortcoming in the said evidence is brought on record, then we do not find any merit in the said objection of Revenue. Accordingly, we do not find any infirmity in the order of Ld. CIT(A) and therefore, we uphold the order of Ld. CIT(A). Accordingly, the appeal of the Revenue is dismissed.

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• Customs

• 2025 (2) TMI 642
  Permission for withdrawal of application - applicants-petitioners submits that the matter stands preponed from 21.12.2019 and is fixed for today vide order dated 17.12.2019 therefore, prays for withdrawal the present application - it was held by High Court that The application dismissed as withdrawn. HELD THAT:- It is not required to interfere in the matters - SLP dismissed.

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• 2025 (2) TMI 641
  Seeking release of detained goods - Smuggling of 1065.10 grams of gold - disposing of the detained gold without proper intimation to the Petitioner - HELD THAT:- Upon a query from the Court as to whether any intimation was given to the Petitioner prior to the disposal of the detained goods, an undated letter has been handed over to the Court on behalf of the Customs Department - A perusal of the said letter would show that the Petitioner s Passport number and e-mail id are mentioned therein. However, there is no clarity as to how this letter was communicated to the Petitioner. There is no copy of the e-mail communicating the said letter to the Petitioner attached to this letter handed over by the ld. Counsel for the Customs Department. It is noted that the letter also is signed by an official, whose name is not clear and along with the signatures, the date 7th November, 2022 has been mentioned. The disposal of the detained gold without intimation to the Petitioner is also contrary to law. Clause 3.1.2 of the Circular dated 6th September, 2022 would, therefore, have no application in the present case. The entire process followed by the Customs Department for the disposal of the detained gold, collecting the redemption fine and penalty as also deducting customs duty before payment of the value of the detained gold to the Petitioner would, therefore, not be tenable. This Court is of the opinion that the Petitioner is entitled to the entire value of the detained gold as on the market rate prevalent today, which would be liable to be paid by the Customs Department within a period of three weeks. If the said amount is not paid within three weeks, costs of Rs. 1,00,000/- would be liable to be paid by the Customs Department to the Petitioner - Registry is directed to communicate this order to the OSD (Legal), Central Board of Indirect Taxes Customs (CBIC) through email ([email protected]) for necessary information and compliance. Conclusion - i) The disposal of the gold was unlawful and not communicated properly to the Petitioner. ii) The Petitioner was entitled to the full value of the detained gold at the current market rate. Petition disposed off.

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• 2025 (2) TMI 640
  Valuation of Customs duty - inclusion of 4% running royalty paid on the net sales value of the manufactured products in the transaction value of the good imported as per Rule 10 (1) (c) of CVR, 2007 - HELD THAT:- As long as the Royalty is not paid or payable on the imported goods and as long as there is no condition as to sale of goods being valued, the same is not includable in the price. But it is only required to check the impact of Explanation in this context. Explanation refers, clearly, to a process for which Royalty is paid, shall be added to the price actually paid or payable for the imported goods. The emphasis again, is on the imported goods which would suffer Royalty when brought into India. Therefore, understanding is that the imported goods should undergo the process for which Royalty is paid, which is not even the case of the Revenue. The imported goods in this case are not procured from the Group Company and nor there are any condition to the effect that these goods shall be sold only upon payment of Royalty. In fact, the Agreement also provides a leverage to the appellant in case of any damage or the non--selling of goods, charging back, etc. and hence, the payment of Royalty is fixed at 4% of the Net sales. Conclusion - There was no requirement to add Royalty to the price of imported goods as done by the Commissioner in this case and hence, the impugned orders cannot sustain. Appeal allowed.

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• 2025 (2) TMI 639
  Classification of imported goods - assessment of more than one Bill of Entry together to determine the classification of the goods - e-scooter in disassembled and unassembled state - denial of benefit of the unconditional exemption Notification No. 50/2017-Cus as amended - confiscation - penalties. Assessment of several Bills of Entry together - HELD THAT:- The Customs Act does not empower any officer to compel anyone to file a Bill of Entryor to file it in any manner or forbid anyone from filing a Bill of Entry. If the importer wants to clear the imported goods through customs, he has to file a Bill of Entry. Once a Bill of Entry is filed, the proper officer can clear them for home consumption as per section 47 if he is satisfied that the imported goods are not prohibited goods and that if duty has been paid - in Customs, each Bill of Entry has to be assessed. If an importer, for instance, paid excess duty in one Bill of Entry and short paid duty in another, Revenue can raise a demand under section 28 in the Bill of Entry where the duty was short paid and the importer can claim refund of the duty paid in excess under section 27 and it will have to be processed accordingly. Two or more Bills of Entry cannot be taken together and assessed. The only exception made in the law are the project imports under the Project Import Regulations, 1986. If the importer claims and is allowed imports under these regulations, all goods imported under various Bills of Entry under the project are assessed together under a single tariff heading 98.01. All assessments are kept provisional and at the end all assessments are finalised together. If several goods are sought to be cleared in a Bill of Entry which together would constitute an incomplete or unfinished or disassembled or unassembled article, the goods so imported in the Bill of Entry should be classified, as per the GRI 2(a), as complete or finished article - However, if several Bills of Entry are filed for various goods, each Bill of Entry must be assessed individually. The goods imported under different Bills of Entry cannot be considered together to decide the classification. In the SCN in this case, all 26 Bills of Entry have been considered together to classify all the goods imported under them to be classified as e-Scooty under CTH 8711. Classification of the imported goods - HELD THAT:- In the impugned order the classification of the imported goods was changed from parts of e-Scooty to e-Scooty itself by applying GRI 2(a). However, it is not indicated as to how in each of the Bills of Entry the goods imported itself would be sufficient to consider them as e-Scooty applying GRI 2(a) - the Commissioner erred in classifying the parts of e-Scooty imported by the appellant as e-scooter as there is no evidence to established that in each of the Bills of Entry equal sets of parts were imported and that those sets of parts constitute the complete e-Scooty - the classification of the goods imported under the 26 Bills of Entry as e-Scooty in the impugned order cannot be sustained and needs to be set aside. Denial of benefit of the unconditional exemption Notification No. 50/2017-Cus as amended - whether the benefit of an unconditional exemption notification can be denied on the ground that it was not claimed in the bill of entry and if duty can be levied and collected ignoring the benefit of the notification? - HELD THAT:- Some exemption notifications issued by the Central Government in public interest under section 25 of the Customs Act are conditional, in which case it is up to the importer to either fulfil the conditions and avail the benefit of the notification or not. If the importer claims the benefit of notification, it is for him to show that he fulfilled the conditions. Other exemption notifications are unconditional. All notifications-either conditional or unconditional- are issued if the Central Government is satisfied that it is in public interest to issue them. Notification (S. No. 531A) does not come with any conditions nor does it require the importer to claim it in the Bill of Entry for it to be entitled to its benefit. Tax laws and notifications must be strictly construed and there is no scope for intendment or reading any words into them. Since neither section 25 of the Customs Act nor the notification requires an importer to claim the benefit as a pre-condition, the benefit of the notification has been wrongly denied by the Principal Commissioner in the impugned order on the ground that it was not claimed. The reason the appellant had not claimed the notification in its Bill of Entry is self-evident. It classified the goods under a different tariff heading and in the impugned order, the classification has been changed and this notification applies to the changed classification. Confiscation and penalty - HELD THAT:- There is no obligation under the law for the importer self-assessing the goods to anticipate if the proper officer or audit, would find the classification appropriate or not and if so what classification they will find to be appropriate and file the Bill of Entry. The goods will not became liable for confiscation under section 111(m) of the Customs Act merely because the importer classified the goods as it thought proper and the officers, subsequently take a different view - goods cannot be held liable for confiscation for claiming a wrong classification. Consequently, the penalty under section 112 of the Customs Act, which is dependent on the goods being held liable for confiscation under section 111 of the Customs Act also cannot be sustained. Conclusion - i) Each Bill of Entry must be assessed by itself and there is no provision in the Customs Act to combine the goods imported under more than one Bill of Entry to decide the classification and assess duty. ii) Sufficient evidence has not been provided in the SCN or the impugned order in respect of each of the 26 Bills of Entry to establish that the goods imported under them are sufficient to be classify them as e-Scooty in CKD form applying GRI 2(a). iii) The Principal Commissioner erred in denying the benefit of the exemption notification on the ground that the appellant had not claimed it in the Bill of Entry. Neither section 25 of the Customs Act nor the notification requires the importer to claim the exemption in the Bill of Entry as a pre-condition to enjoy its benefit. iv) Imported goods do not become liable to confiscation under section 111(m) of the Customs Act simply because the appellant had classified the imported goods under a CTI which is a matter of his opinion and there is no obligation on the appellant to either anticipate the views of the officers or to file Bills of Entry conforming to such views. The penalty under section 112 on the appellant cannot also be sustained. The impugned order set aside - appeal allowed.

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• Corporate Laws

• 2025 (2) TMI 638
  Seeking quashing of the investigation report submitted by the Serious Fraud Investigation Office (SFIO) to the Ministry of Corporate Affairs (MCA), on the grounds of the impugned report being unreasonable, unjustified, perverse and arbitrary - Petitioners contend that the report is arbitrary, perverse, and suffers from non-application of mind, having been prepared with a pre-conceived notion, without due consideration of the factual matrix - violation of principles of natural justice - HELD THAT:- The Court prima facie examined the impugned report and came to the conclusion that the affairs of the Petitioner company had been conducted in a manner prejudicial to public interest. Thus, in light of the findings of the SFIO, the Court was satisfied that the recommendations of the MCA in directing an investigation into the affairs of the Petitioner company was valid and the recommendations in the impugned report warranted prosecution for the offences under the relevant provisions of the Companies Act and Indian Penal Code, 1860 (IPC). The impugned SFIO report has already been subjected to judicial scrutiny and has been upheld. The present writ petition, which seeks to relitigate the same issues under the garb of a fresh challenge, is therefore misconceived and an abuse of process of law. The grounds for quashing the investigation report are in the nature of defences to the compliant case pending against them. The Petitioners will have every opportunity to challenge the report s findings during trial, where their contentions regarding the alleged misappreciation of facts can be duly tested. At this stage, however, the invocation of writ jurisdiction to pre-emptively quash the SFIO s findings is both legally untenable and premature. Moreover, the impugned report does not stand in isolation. Conclusion - i) The SFIO s investigation and report upheld, finding substantial evidence of financial misconduct and fraudulent activities. ii) The Petitioners arguments could be tested during trial, but the current petition to quash the report was premature and legally untenable. Petition dismissed.

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• 2025 (2) TMI 637
  Maintainability of writ petition filed by respondent no. 1 under Article 226 of the Constitution - siphoning and misappropriation of funds by the directors of the ECL - main grievance of the respondent no. 1 (writ petitioner) is that there is a failure to exercise the power by the RBI in relation to the affairs of ECL - HELD THAT:- A duty is implied by the vesting of statutory power upon a public authority. Further, the performance of such duty can be secured by proceedings under Article 226 of the Constitution of India - the respondent no. 1 has sought for the interference of the learned Single Judge considering the failure of RBI to act in exercise of its power under Chapter-III-B and more particularly Section 45-IE and Section 45MA of the RBI Act. Such reliefs claimed are, therefore, clearly maintainable in proceedings under Article 226 of the Constitution of India. Another plea raised by the appellant, which was not taken up during the final arguments before the learned Single Judge, is that the NCLT and NCLAT are seized of the matter and the bar of Section 430 of the Companies Act, 2013 applies. This Court does not find any force in this argument as the appellant has assailed the learned NCLT s decision dated 15th May, 2024 in relation to ECL on the basis that the RBI is looking into the matter and the learned NCLT ought not to have exercised its jurisdiction. The learned NCLT has no jurisdiction to issue prerogative writs to RBI to exercise such powers under the RBI Act. Therefore, this fact has no bearing on the merits of the dispute or such that is determinative of the outcome of these proceedings since the existence of the NCLT proceedings is duly disclosed and considered by the learned Single Judge while passing the impugned order. The respondent no. 1 (writ petitioner) cannot be left out remediless and therefore, the learned Single Judge, while exercising the jurisdiction under Article 226 of the Constitution, held that the writ is maintainable and passed several directions in paragraph no. 34 of the impugned order. Conclusion - i) The maintainability of the writ petition upheld. ii) The writ jurisdiction under Article 226 can compel public authorities to exercise statutory duties, particularly when regulatory bodies fail to act. Petition dismissed.

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• Insolvency & Bankruptcy

• 2025 (2) TMI 636
  Categorisation as an unsecured creditor instead of being a secured creditor - appellant did file an application before the Ld. NCLT to claim its status as a secured creditor for the principal amount of loan granted - rejection of claim of the appellant only on the ground the charge was not registered under Section 77 of the Companies Act, 2013 - HELD THAT:- A bare reading of Section 77 (3) of Companies Act, 2013 casts an obligation upon Liquidator . However, the present case is confined to the duty and role of Resolution Professional and admittedly company is not under liquidation. It is a settled law right of a mortgagee under the Transfer of Property Act, 1882 cannot be taken away only because of non-registration of the charge u/s 77 of the Companies Act, 2013. This is in consonance with Section 77 of the Companies Act 2013. Section 78(3) of the Companies Act, 2013 states no charge shall be created by the Company shall be taken in account by the Liquidator unless it is registered under subsection 1 and 2. Section 77 (4) of the Companies Act, 2013 clarifies nothing in subsection (c) shall prejudice any contract or obligation for repayment of money secured by charge. The obligation is only on the Liquidator. In fact, Section 3 (4) of IBC defines charge and Section 3 (31) of IBC states secured interest means and includes Charge . Thus, combine reading of all the section clarifies only a Liquidator will not consider a claim without registration, however, the RP is bound to consider a Charge and a Creditor having charge is a Secured Creditor. Conclusion - i) Non registration of charge per Section 77 of Companies Act, 2013 will not make a difference in the claim of the Applicant being treated as a Secured Creditor. ii) There exists a debt and the Corporate Debtor had secured it by creation of security interest/charge., therefore, the Appellant is a secured financial creditor. Necessary correction be thus made in the record. The appeal is allowed and the impugned order is hereby set aside.

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• 2025 (2) TMI 635
  Relationship of appellant with the Corporate Debtor - Whether the claims of the Appellant should have been treated as financial debt or as other debt as classified by the Respondent? - HELD THAT:- MoU dated 19.12.2015 was signed between the Appellant and the Corporate Debtor for handing over premise by the Corporate Debtor to the Appellant which has not happened. It is also fact that no separate lease agreement was signed or entered into between the Appellant and the Corporate Debtor, although, word like lessor and lessee have been used in the MoU. It is required to look into the intent of the transaction between both parties for determining whether the money transferred by the Appellant to the Corporate Debtor was financial debt or otherwise. It is not disputed that Rs. 2,37,61,440/- was indeed received by the Corporate Debtor from the Appellant but nature of the said money is in dispute. In the present case, it is already noted that there has been disbursal of money by the Appellant to the Corporate Debtor. However, what is to be seen is as to whether the other two conditions of Section 5(8) are satisfied by the Appellant or not i.e., whether the transaction got commercial effect of the borrowing and whether there is time value of money - in the present case the money disbursed by the Appellant is clearly security deposit given under MoU for securing the monthly rental from the Appellant. It is found from the terms of the MoU that the security deposit was not disbursed in consideration of the time value of money as no interest would accrue from the date of disbursement. A meaningful reading of Clauses 3.3 and 8.4 of the MoU reveals that the stipulation for interest was included solely to impose a penalty, should the Corporate Debtor fail to fulfil its obligations under the MoU to the satisfaction of the Appellant. The interest clause could only be involved upon a breach or termination of the agreement, indicating that the security deposit does not possess the characteristics of a financial transaction, therefore, the security deposit does not qualify as a financial debt under the Code - Clause 8.5 of the MoU explicitly states that the purpose of the security deposit was to impose penal interest in the event of the Corporate Debtor s failure to refund the security deposit to the Appellant which makes it clear that the security deposit was not intended for funding any construction activity by alleged mobilisation advance, as claimed by the Appellant. Conclusion - The claim by the Appellant did not qualify as a financial debt under the Code. There are no merit in the Appeal - appeal dismissed.

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• 2025 (2) TMI 634
  Classification of Appellant as a related party of the Corporate Debtor - relationship between the parties - HELD THAT:- The Tribunal has concluded that the Appellant is a related party on the basis of the terms and conditions of the UOMA and there are no error or infirmity in the said findings. The very fact that the parties were bound by the terms and conditions of the UOMA in which it was categorically provided that for the purpose of terminating the agreement a notice of three months has to be given and the termination of notice dated 31.12.2018 was issued for terminating the said agreement after a period of one month i.e. w.e.f 31.01.2019 instead of three months especially when it has been provided in the agreement that the terms and conditions of the agreement cannot be waived or amended without the written consent of the parties, the letter dated 31.12.2018 cannot be relied upon which is the base of the case of the Appellant. Conclusion - The existence of operational and financial interdependence, as evidenced by agreements like the UOMA, can substantiate a related party classification under the IBC. There are no merit in the present appeal for the purpose of interference and hence, the same is hereby dismissed.

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• 2025 (2) TMI 633
  Sale of the Corporate Debtor (CD) as a going concern was conducted in compliance with the amended Regulation 32A(4) of the IBBI (Liquidation Process) Regulations, 2016 - unamended provision of Regulation 32A(4) regarding the 90-day period for the sale of the CD as a going concern - applicability of clean slate theory - HELD THAT:- It is pertinent to mention that the going concern sale means selling the CD on as is where is basis and allows the liquidator to sell the business of the CD under liquidation alongwith all the rights, titles and interest in the CD including its legal entity which is transferred to the successful purchaser on the basis of which the successful purchaser is to carry on the business of the CD. Regulation 32A(4), before the amendment, required that the sale was to be concluded within a period of 90 days but after its amendment on 16.09.2022, which happened before the sale affected by the liquidator on 28.08.2023, it requires that the sale has to be conducted in first attempt. There is no dispute that the sale has been conducted in the first attempt and no second attempt has been taken. There is also no dispute that purchase price paid by the successful bidder is more than the reserve price. The law is well settled as has been held by this Court in the case of M/s Shiv Shakti Globe Exports Pvt. Ltd. [ 2022 (3) TMI 13 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] that while approving CD sale as a going concern in liquidation proceedings without its dissolution, it is essential to see that the CD is not burdened by any cost or remaining unpaid outstanding liabilities prior to the sale of the company as a going concern and after payment of the sale proceeds are distributed in accordance with Section 53 of the Code. In the present case also, as has been stated in the purshis dated 08.04.2024, which has been duly taken into consideration while passing of the order in I.A No. 950 of 2023, that not only the Regulation 32A(4) has been duly amendment on 16.09.2022 and the sale as a going concern took effect on 28.08.2023 but also the entire amount has been paid by the highest bidder and that has already been distributed to the stakeholders by the Liquidator. Conclusion - The Tribunal has clearly committed an error in dismissing the application and thus there was no occasion for the Tribunal to make an adverse observation against the liquidator as well. Petition allowed.

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• PMLA

• 2025 (2) TMI 632
  Seeking grant of bail under Section 436-A of the Code of Criminal Procedure (CrPC) - whether the Applicants, who have been in pre-trial detention for approximately 4 years and 9 months, are entitled to bail under Section 436-A of the Code of Criminal Procedure (CrPC), which allows for the release of undertrial prisoners who have served one-half of the maximum sentence for the alleged offence? - HELD THAT:- It is settled law by a plethora of cases passed by the Supreme Court that a Court while deciding a Bail Application has to keep in mind the principal rule of bail which is to ascertain whether the Accused is likely to appear before the Court for trial. Though there would be consideration for the other broad parameters like gravity of offence, likelihood of Accused repeating the offence while on bail, whether he would influence the witnesses and tamper with the evidence which will have to be considered. However juxtaposed that with the fact that almost 4 years 9 months of incarceration and trial having not commenced is required to be seen especially when trial has indeed not commenced. The Supreme Court in a plethora of judgements have discussed the rights conferred by Article 21 qua grant of bail and that such rights cannot be taken away unless the procedure is reasonable and fair and in cases where there is unreasonable delay in trial it would undoubtedly impact the rights of an undertrial. In the landmark judgement of Maneka Gandhi Vs. Union of India [ 1978 (1) TMI 161 - SUPREME COURT ], the Supreme Court held that the right to life and personal liberty under Article 21 is not limited to mere animal existence but includes the right to live with dignity. The court emphasized that the procedure established by law must be fair, just, and reasonable, and it cannot be arbitrary, oppressive, or unreasonable. In the present case it is seen that Applicants have been indicted in the predicate offence under Section 120-B read with 420 of the IPC for which the maximum sentence which can be imposed is imprisonment which may extend to 7 years alongwith fine. Even otherwise as the scheduled offence against Applicants falls under paragraph 1 of part A of the schedule to the PMLA, the maximum period for which the Applicants can be punished with imprisonment of 7 years. Applicants have been in custody in connection with the present offence since 14.05.2020 i.e. for almost 4 years and 9 months which is beyond the one-half of maximum period of imprisonment which can be imposed upon conviction. It is seen that statutory provisions of Section 436-A of CrPC if seen contain the word shall which clearly indicates that gravity of the offence is not relevant for considering bail neither it distinguishes that rigours of Section 45 of PMLA would be applicable. It is plain and simple on interpretation meaning that once the undertrial accused crosses one-half of the maximum sentence, the rigours of the twin conditions contemplated under Section 45 (1) of PMLA would not apply and applicant will be entitled to be released on bail - Considering the present status of the trial and no possibility of it being concluded in the foreseeable future coupled with the pre-trial incarceration of the Applicants beyond one-half of the maximum period of imprisonment which can be imposed on them upon conviction, Applicants are entitled to bail. Conclusion - The Applicants were entitled to bail under Section 436-A due to their prolonged pre-trial detention and the lack of progress in the trial. Both Applicants are directed to be released on bail subject to fulfilment of conditions imposed - bail application allowed.

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• Service Tax

• 2025 (2) TMI 631
  Challenge to appeal before the Delhi High Court under Section 35 G of the Central Excise Act, 1944 - CENVAT credit on inputs and input services - exclusion of value of free materials used by the Assessee - HELD THAT:- A perusal of the order dated 8th December, 2016, passed by the Coordinate Bench of this Court would show that the SCN was quashed, but the Department was permitted to proceed in accordance with the decision in Era Infra Engineering Ltd. vs. Union of India [ 2016 (10) TMI 1248 - DELHI HIGH COURT ] and exclude the value of free materials used by the Assessee. Both the adjudicating authority and the CESTAT were incorrect in holding that the SCN having been quashed, none of the other demands would also be liable to be adjudicated. Clearly, the decision of the Division Bench of this Court is not to the said effect. In fact, it permitted the Department to proceed further strictly in accordance with the judgment and exclude the value of free materials. All the other demands which are raised, accordingly, deserve to be adjudicated on facts and in accordance with law. Appeal disposed off.

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• 2025 (2) TMI 630
  Refund claim - rejection on the ground of time limitation - appellant had not submitted the necessary documents as directed within one year - HELD THAT:- It is an admitted fact that appellant had submitted refund claim within due date initially and it was partially allowed by the Adjudication Authority on merit. Aggrieved by the said order appeal was filed before the Commissioner (Appeal) and after considering the appeal, Commissioner (Appeals) had issued directions to produce the document and also remanded the matter to Adjudication Authority for verification of the document. There is no communication made by the Adjudication Authority on remand regarding de-novo adjudication. Appellant had submitted the document before issuing order in de-novo adjudication proceedings as evidence from the communication relied by the appellant. Fact being so, considering it has a second refund application and rejecting the same as time barred is prima facie unsustainable. As regarding claims on merit, the first appellate authority while considering the Refund claim against Appeal No. ST/20660/2022 has upheld the rejection of refund of Rs. 28,116/- pertains to professional fees claimed under the category telecommunications services and Rs. 39,337/- pertains to transport of passengers and Rs. 9,838/- pertains to sound recording services. Since appellant has not filed any appeal challenging the said order, said finding attained finality. Accordingly appellant is eligible for refund of balance amount only on production of the document. Conclusion - The rejection of the refund claim as a fresh claim after compliance with the appellate authority s directions to be unsustainable. Appeal allowed by way of remand.

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• 2025 (2) TMI 629
  Service tax on amount transferred between the appellant s bank accounts - Service Tax demand on amounts credited to the ledger of various debtors - HELD THAT:- The Show Cause Notice has taken into consideration the entire bank deposit and then subtracted the amount collected and reflected in the appellant s ledger while raising the demand. However, it is observed that the appellant while referring to paragraph 18 of the impugned order submits that intra-bank transfer amounting to Rs.11,11,34,154/- was required to be deducted whereas by mistake, only Rs.9,45,56,790/- has been deducted. It is found that this fact of wrong deduction of the amount of Rs.9,45,56,790/- has been accepted by the Revenue also in their grounds of appeal. The appellant s contention is Rs.9,45,56,790/- has been wrongly deducted instead of deduction of 11,11,34,154/-. There is no evidence available on record regarding deduction of Rs.11,11,34,154/-, pertaining to intra-bank transfer, as claimed by the appellant. Thus, the reconciliation of the deduction needs to be reconsidered by the adjudicating authority. Accordingly, for the purpose of re-quantification of the taxable value, the issue needs to be remanded back to the adjudicating authority. The appellant has also submitted that the Service Tax has been levied on the amount credited to the ledger of various debtors by considering the same as consideration received. The submission made by the appellant in this regard is agreed that the Revenue cannot consider all the receipts and payments towards taxable services without identifying a particular category of service under which the said amount would be taxable. In such circumstances, there are merit in the submission of the appellant that the entire duty liability needs to be reverified on the basis of the details/reconciliation submitted by the appellant. The appellant viz. M/s. Indcap Advisors Pvt. Ltd., is directed to submit all the details before the adjudicating authority and co-operate in the reconciliation for arriving at the liability to Service Tax. Conclusion - The Revenue cannot assume all receipts and payments are taxable without identifying specific taxable services. The issue is remanded back to the adjudicating authority for the purpose of re-quantification - Appeal are disposed of by way of remand.

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• 2025 (2) TMI 628
  Valuation of service tax - inclusion of expenses incurred by the appellant, which were reimbursed by the clients - Section 67 of the Finance Act, 1994, read with Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 - Pure Agent under Rule 5(2) of the Valuation Rules - Extended period of limitation - HELD THAT:- The issue is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd. [ 2018 (3) TMI 357 - SUPREME COURT ] which has considered the issue of liability to pay service tax on reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client has discharged the liability to pay service tax. The Honourable Supreme Court affirmed the decision of the Delhi High Court in Intercontinental Consultants Technocrats Pvt. Ltd. v UOI [ 2012 (12) TMI 150 - DELHI HIGH COURT ], wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections. Conclusion - The reimbursed expenses are not part of the taxable value for service tax purposes in terms of Sections 66 and 67 of the Finance Act, 1994. The impugned order is set aside - appeal allowed.

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• 2025 (2) TMI 627
  Levy of service tax for providing GTA service - period involved is from April 2008 to March 2013 - HELD THAT:- The adjudicating authority has recorded in the impugned OIO that it is the appellant s stand that they are providing services to companies who are registered under the Companies Act, 1956. It is also seen from the appellants replies to the SCNs that it is also their stand that they have clearly stated in their invoices that the service tax liability will be paid by either consignor or consignee and had enclosed sample invoices for the adjudicating authority s verification along with complete parties list and service amount for reference. While the adjudicating authority acknowledges that the documentary evidences adduced by the appellant have been perused, these contentions of the appellant have not been disputed or contested by the adjudicating authority. From the legal provisions, it is therefore evident that such companies, private or limited would get covered under the specified entities/categories stated in the notifications for the respective periods either as a company or as a body corporate. The adjudicating authority has erred in confirming the demand of service tax on GTA services made on the appellant for the reason that coastal energy private limited and fossil logistics private limited had not responded to the subsequent letters of DGCEI sent to them on 05-09-2013. It was incorrect on the part of the adjudicating authority to take up cudgels on behalf of the investigating agency DGCEI, who are amply empowered under statute to collect evidence in case they deem it so necessary, by way of issuance of summons under Section 14 of the Central Excise Act, 1944 of which they would be undoubtedly aware of - As regards the finding of the adjudicating authority on lack of details required as per Rule 4B that ought to figure in a consignment note in the invoices issued by the appellant, in the absence of stating what were the details that have been found deficient or absent, it is unable to appreciate the import of such finding, except that the invoices were lacking certain details that ought to have been there in a consignment note, which is a venial breach. In any event indisputably the appellant has been rendering the GTA services for which it is registered. The adjudicating authority grossly erred in confirming the demand of service tax on GTA services on the appellant on the ground that the appellant has not proved that the service tax has been paid by the recipients. When the position in law as emanating from the discussions above is that the onus of discharging the service tax on GTA services received itself, was on the customers of the appellant, then such a confirmation of demand as has been made in the instant case, cannot be sustained and the demand on GTA services to the extent of the amounts stated as disputed in this appeal by the counsel for the appellant, from the demand confirmed by the adjudicating authority is set aside. The appellant has produced a chartered accountant s certificate certifying that the amounts were indeed written off as bad debts and finding no valid objection raised as to the acceptance of the same or any reason to disbelieve the same, such certification by an independent professional lends credence to the appellant s contentions in this regard and consider it sufficient to drop the demand. The penalties imposed on the appellant under Section 78 and Section 76 do not sustain. There are no grounds urged in the appeal or any specific contention advanced by the counsel against the demand of Rs.14,200/- for the delay in filing of returns as well as the total penalty of Rs.10000/- under section 77 imposed on the appellant and we are therefore of the view that in the facts and circumstances of this case these need to be left without interference. HELD THAT:- i) The liability to pay service tax on GTA services can shift from the service provider to the service recipient under specified conditions, and that the service provider is not responsible for ensuring the service recipient fulfills their tax obligations. ii) The demand related to bad debts was dropped, and penalties under Sections 76 and 78 were nullified. Appeal disposed off.

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• 2025 (2) TMI 626
  Refund of unutilized CENVAT credit paid on input services used for the services exported - non-submission of relevant documents as prescribed under Notification No.05/2006 CE (NT) dated 14.03.2006 - hit by limitation of time in terms of Section 11B of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994 - violation of principles of natural justice - HELD THAT:- The original refund claim filed on 31.12.2010 continues to languish 14 years later. It is found that the Original Authority in denovo proceedings at para 5.7 of his order dated 15.05.2020, had as per the appellate directions proceeded to examine as to whether the input services are eligible for availment of CENVAT credit and found that the eligible credit worked out to Rs 18,30,182/- as against Rs 19,39,818/- claimed. He only rejected the same for non-submission of documents which he had not specified or called for and which was against the principles of natural justice. No purpose will be served in sending the matter back and the ends of justice would require that the appellant be allowed to succeed in his appeal to this extent. The impugned order is set aside and the appeal is allowed for the monetary refund of eligible credit worked out as Rs 18,30,182/- by the Original Authority.

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• 2025 (2) TMI 625
  Refund of cenvat credit based on the nexus between input services and output services - power of Commissioner (A) to remand the matter to the lower authority - HELD THAT:- On going through the finding given by the adjudicating authority as per Order-in-Original No.249/2009-ST dated 19.06.2009 wherein the entire activities and claim made by the assessee were subject to scrutiny and only thereafter, specific finding was given that these services including the Technical Consultancy Service and Manpower Recruitment and Supply Agency Services are having direct nexus with the output services and sanctioned refund of cenvat credit. Further, the assessee is a 100% Export Oriented Unit (EOU) and the inputs used for such services are having direct nexus with the output services. Fact being so, the assessee had made proper claim for cenvat credit and eligible to claim refund of Rs.82,13,666/- as sanctioned by original authority vide Order-in-Original No.249/2009-ST dated 19.06.2009. Conclusion - The assessee was eligible to claim the refund of cenvat credit as sanctioned by the original authority. Revenue dismissed.

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• Central Excise

• 2025 (2) TMI 624
  Ineligibility for input services credited in terms of the CENVAT Credit Rules, 2004 - credit cannot be denied unless and until the assessment made by the dealer is revised the credit at the recipient s end - sham transactions - it was held by High Court that The respondent filed invoices and returns before their jurisdictional offices and paid the service tax arising out of it. The Tribunal clearly held that even in the show-cause notice, there was no allegation that the services rendered under these invoices were not falling within the ambit of Rule 2(l) of the CCR 2004. HELD THAT:- There are no reason to interfere with the impugned order passed by the High Court - SLP dismissed.

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• 2025 (2) TMI 623
  Imposition of penalty on the Petitioner in his capacity as a partner, under Rule 26 of the Central Excise Rules, 2002 read with Sections 142 and 174 of the Central Goods and Services Tax Act, 2017 - non-service of SCN - SCN was never addressed to the Petitioner and was never served - violation of principles of natural justice - HELD THAT:- It is found that indeed the Show Cause Notice has only been addressed to the said Firm and not to the Petitioner. If the Show Cause Notice proposed to impose any penalty on the Petitioner, it was incumbent upon the authorities to address the Show Cause Notice to the Petitioner and also serve it upon him. A notice of the personal hearing also ought to have been given to the Petitioner in his personal capacity. This has undisputedly not been done in the present case. This itself, without anything more, would make Order dated 2nd December, 2022 vulnerable and suspectable to challenge. The Department challenging the Order of the CESTAT before the Hon ble Supreme Court would make no difference to the outcome of the present Petition. As things stands today, the Show Cause Notice has been held to be time barred by the CESTAT. There is no stay of the said order. This is apart from the fact that as far as the present Petitioner is concerned, as noted above, there has been a complete breach of the principles of natural justice before passing the impugned order qua the Petitioner. Once this is the case, even assuming for the sake of argument that the Revenue were to succeed before the Hon ble Supreme Court, the Order passed against the Petitioner herein still cannot be allowed to stand and would have to be set aside. Conclusion - The imposition of a penalty on the petitioner without serving him the Show Cause Notice and breaching principles of natural justice was not valid. Petition allowed.

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• 2025 (2) TMI 622
  CENVAT credit - eligible credits or not - credit availed by the appellants on the services availed for demolition of chimneys decommissioned in the year 1990 - credit availed based on Input Service Distributor s (ISD) invoices on services of transportation rendered by clearing and forwarding agents, the credit distributed in respect of M/s. Chettinad Logistics, Chennai and M/s. Image Public Relations P Ltd, New Delhi - Extended period of limitation - penalty. Credit availed by the appellants on the services availed for demolition of chimneys decommissioned in the year 1990 - HELD THAT:- Rule 2(t) of Cenvat Credit Rules, 2004 provides that words and expressions used in these rules and not defined but defined in the Excise Act or the Finance Act shall have the meanings respectively assigned to them in those Acts. While factory is not defined in the Cenvat Credit Rules, 2004, it is seen that Section 2(e) of the Central Excise Act, 1944 defines factory means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on. Therefore, on an evaluation of the aforesaid statutory provisions and the definition of factory, which means any premises and includes precincts thereof, wherein or in any part of which excisable goods are manufactured or any manufacturing process connected with the production of these goods is being carried on, the chimneys, even though they were decommissioned in 1990, continue to be on the premises or precincts wherein or in any part of which the appellant s activity of manufacture is being carried out - the adjudicating authority erred in denying the cenvat credit on the demolition services used by the appellant for demolition of the decommissioned chimneys. Credit availed based on Input Service Distributor s (ISD) invoices, on services of transportation rendered by clearing and forwarding agents - HELD THAT:- The findings of the adjudicating authority, namely, that the ISD credit distributed in respect of M/s. Image Public Relations P Ltd, not agreed upon and it do not have integral connection with the appellant s manufacture of final products. The appellant had contended that the services were used by the appellant for their advertisement during IPL. The definition of input services as reproduced supra includes advertisement or sales promotion and therefore the appellants are entitled to the credit availed on the services rendered by M/s. Image Public Relations P Ltd. Extended period of limitation - penalty - HELD THAT:- There are no positive act that would qualify as any of the ingredients required to invoke the extended period of limitation, has been evidenced as committed by the appellant. Therefore, invocation of extended period of limitation and imposition of penalty on this count is also unsustainable. Conclusion - i) The demolition services were directly related to manufacturing operations and thus eligible for CENVAT credit. ii) The denial of cenvat credit taken by the appellant, on Clearing and forwarding agent services based on ISD invoices issued by depots at Chennai and Cochin, is not tenable in law. Appeal allowed.

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• 2025 (2) TMI 621
  Valuation of Excise duty - inclusion of cost of specifications provided by the manufacturer in the assessable value of the final products manufactured by the appellant and cleared to the manufacturer - 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 [The Act] 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. In other words anything which is supplied by the buyer to the manufacturer even before identifying the potential manufacturer can never be treated as an additional consideration for sale. 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. Conclusion - The specifications in the nature of design/drawings provided by MSIL were merely layout or dimensions of the desired parts and components as they have to be necessarily manufactured as per the requisite dimensions so that they can be fitted in the vehicle manufactured by the Maruti. The impugned order deserves to be set aside and the appeals are, accordingly allowed.

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• 2025 (2) TMI 620
  CENVAT Credit - inputs and capital goods - admissibility of credit prior to the introduction of CGST Act on 01.07.2017 - HELD THAT:- With the introduction of CGST Act, the Excise Act ceased to apply to majority of the manufacturers, including the respondent. A provision has been made under the CGST Act to transition the Cenvat credit available in records as ITC under the CGST. The respondent had transitioned Cenvat credit of Rs. 4,64,70,985/- as input tax credit under the CGST. There is also a provision for taking input tax credit of duty paid on the goods received in the months of April, May, June 2017. In other words all the credit, which was lying in balance in the books of accounts as Cenvat credit or Cenvat credit which the respondent could have availed but for the introduction of CGST Act, could be transitioned ITC under CGST. There is no dispute that the entire disputed Cenvat credit was admissible to the respondent as it is not the case of the Revenue that the credit was not admissible. The only case of the Revenue is that excise duty paid on input and capital goods received after 01.07.2017 could have been availed as input tax credit by entering in Table 7 (b) of TRAN-1, but the respondent wrongly took it as Cenvat credit in its excise return ER-1 for the month of June and then transitioned it by entering in Table 5 (a) of TRAN-1. Apart from this allegation that it was entered in its excise returns of the respondent for June 2017 and was entered in Table 5 (a) of the TRAN-1 instead of Table 7(b), it is not the case of the department that the respondent was not entitled to Cenvat credit and convert it into input tax credit. Conclusion - The disputed Cenvat credit was admissible to the respondent, and the procedural lapse did not warrant the recovery of the credit, interest, or penalties. The impugned order is upheld and the appeal is dismissed.

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• 2025 (2) TMI 619
  Abatement of appeal - Recovery of CENVAT Credit - process amounting to manufacture or not - process of culling HR/CR Coils of iron or non-alloys steel into sheets or slitting into strips of lesser width or slitting of sheets into strips - HELD THAT:- It is found that during the pendency of this appeal before this Tribunal, one operational creditor M/s S.K. Unit Print Pvt Ltd filed an application under Section 9 of IBC, 2016 before the NCLT in order to initiate CIRP against the Corporate Debtor i.e. appellant in this case, which culminated into liquidation proceedings vide order dated 31.03.2023 passed by the NCLT, Chandigarh. It is also noted that Shri Sanjay Kumar Dewani was appointed as the liquidator who after following the due process as prescribed under Liquidation Process Regulations, 2016 and realized all the assets of the Corporate Debtor and distributed the same amongst the stakeholders in accordance with the said Regulations as mentioned in the order passed by the NCLT, Chandigarh. As the appellant has been finally liquidated by the NCLT vide its order dated 04.06.2024, therefore, in view of the Rule 22 of the CESTAT (Procedure) Rules, 1982, the present proceedings against the appellant cannot continue. Conclusion - The appeal abated due to the dissolution of the appellant by the NCLT, in accordance with Rule 22 of the CESTAT (Procedure) Rules, 1982. The present appeal abates and is, accordingly, disposed of.

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• CST, VAT & Sales Tax

• 2025 (2) TMI 618
  Deletion of amount of tax levied by the assessing authority - rejection of account of books have been confirmed - illegal shifting the burden on the department - it was held by High Court that Once the dealer has failed to prove its purchases from registered dealer, the levy of entry tax treating the same to be purchases from outside the local area and levying of entry tax on the HDEP bags is also justified. HELD THAT:- Attention drawn to the rejoinder affidavit incorporating certain documents in order to comply with his obligations to prove that the disputed quantity of wheat received by the petitioner is non-taxable under the provisions of Uttar Pradesh Value Added Tax Act, 2008. Learned counsel for the respondent seeks time to verify those documents and to revert - Hence, list the matter(s) on 19.03.2025.

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• 2025 (2) TMI 617
  Demand of surcharge, despite the absence of an assessment and recovery mechanism - demand of purchase tax, without establishing that the Petitioner has violated the condition precedent, namely, that the goods purchased have been used for purposes other than for use in manufacture or for resale - HELD THAT:- Though ordinarily it is agreed that recovery of taxes ought not to be stayed, and which is stipulated in Section 21 (7), it is found that there is an inherent inconsistency in the argument canvassed on behalf of the State. If the State contends that surcharge is different from tax, then, the statutory bar as referred to in Section 21 (7) cannot apply because the Section clearly stipulates that what should not be stayed is only the recovery of tax. On the other hand, if one were to treat surcharge as tax, then, at least prima facie, the Petitioner would be entitled to the benefits set out in Rule 15 (2) (b) and would make the recovery itself vulnerable to challenge. The Petitioner has certainly made out a case to have the recovery proceedings stayed pending the disposal of the Reference Applications filed by it before the MSTT. This is said because the Petitioner-HPCL is a Public Sector Undertaking and it is not as if the Petitioner would be unable to pay the tax, if finally decided, either by the Tribunal or by this Court. In these circumstances, it is opined that even the balance of convenience lies in favour of the Petitioner. Conclusion - The MSTT is directed to decide the Reference Applications filed by the Petitioner expeditiously and stay the recovery proceedings until a decision is reached. Petition disposed off.

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• Indian Laws

• 2025 (2) TMI 616
  Maintainability of writ petition under Article 226 of the Constitution of India - Muthoot Finance Ltd. to be considered as State or not - alleged breached statutory rules and regulations framed by the Reserve Bank of India (RBI) - whether the company could be considered a State or an entity performing public functions under Article 12 of the Constitution? - HELD THAT:- In the case of LIC of India v. Escorts Ltd. [ 1985 (12) TMI 289 - SUPREME COURT ], it was contended before this Court that the Life Insurance Corporation was an instrumentality of the State and was debarred by Article 14 from acting arbitrarily. It was also contended that it was obligatory upon the Corporation to disclose the reasons for its action complained of, namely, its requisition to call an extra-ordinary general meeting of the company for the purpose of moving a Resolution to remove some Directors and appoint others in their place. Such argument was opposed by the State, contending that the actions of the State or an instrumentality of the State, which do not properly belong to the field of public law but belong to the field of private law, were not subject to judicial review. A body, public or private, should not be categorized as amenable or not amenable to writ jurisdiction. The most important and vital consideration should be the function test as regards the maintainability of a writ application. If a public duty or public function is involved, any body, public or private, concerned or connection with that duty or function, and limited to that, would be subject to judicial scrutiny under the extraordinary writ jurisdiction of Article 226 of the Constitution of India. Conclusion - i) A writ petition under Article 226 is maintainable against entities performing public functions or duties, not merely due to regulatory compliance. ii) The distinction between public law and private law is crucial in determining the maintainability of writ applications. iii) The function test is essential in assessing whether an entity is performing a public duty. The petitions are dismissed.

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