TMI Tax Updates - e-Newsletter
February 20, 2025

Case Laws in this Newsletter:

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

Articles

1. AEO 2.0: Redefining Trade Facilitation in India

   By: DrJoshua Ebenezer

2. ITC Eligibility on Telecom Towers: Legal Insights from Bharti Airtel Judgment

   By: Sabyasachi Chakraborty

3. PENALTY FOR UNDISCLOSED INCOME

   By: DR.MARIAPPAN GOVINDARAJAN

4. Impact of GSTR 2A on Input Tax Credit (ITC) Claims

   By: Ishita Ramani

5. LEGAL TERMINOLOGY IN GST LAW (PART -9)

   By: Dr. Sanjiv Agarwal

6. How to Check Buyers’ Credentials, Financial Worthiness and Solvency to mitigate Credit risk in International Trade?

   By: YAGAY andSUN

7. Tax collected at the stage of detention can be claimed as GST refund if excess tax is paid in regular returns

   By: Bimal jain

8. How to tackle export rejections - Detail Analysis?

   By: YAGAY andSUN

9. How the Foreign Exchange (FOREX) Market Works?

   By: YAGAY andSUN

10. Forward Contracts: Regulatory Framework & Detailed Analysis

   By: YAGAY andSUN

News

1. Trump threatening existence of GST; will his 'good friend in New Delhi' stand up: Cong

2. Punjab's GST base expands with targeted drives; over 79k taxpayers added in 2 years

3. CM says Rajasthan Budget fulfils promises; Cong calls it 'illusion of figures'

4. Rajasthan Budget focuses on jobs, water supply; commits to make state USD 350-bn economy by 2030

5. Rajasthan govt committed to make state USD 350 billion economy by 2030: Dy CM Diya Kumari

6. Rajasthan govt committed to make state USD 350 billion economy: Diya Kumari

7. Senate GOP pushes ahead with budget bill that funds Trump's mass deportations and border wall

8. Budget Session of Himachal Assembly to commence on March 10

9. Uttarakhand Budget Session: Governor highlights startup growth, UCC implementation during address

10. Budget session of Guj assembly from Feb 19, budget on Thursday

11. Google agrees to pay Italy USD 340 million to settle tax evasion investigation

12. 9th edition of Asia Economic Dialogue to be held in Pune from Feb 20-22

13. India formulating strategies to ensure that interests of exporters are protected: Minister Jitin Prasada

14. India-UAE Comprehensive Economic Partnership Agreement completes 3 years of signing

15. Competition Commission of India (CCI) approves the acquisition of certain interest in Blackwater Coal Mine by NS Blackwater Pty Limited and JFE Steel Australia (BW) Pty Ltd

16. CCI approves amalgamations of Chaitanya India Fin Credit Private Limited and Svatantra Holdings Private Limited into Svatantra Microfin Private Limited

17. Civil society groups urge finance commission to push for climate damage tax, adaptation fund

Circulars / Instructions / Orders

Income Tax

1. 02/2025 - dated 18-2-2025

Extension of due date for filing of Form No. 56F under the Income-tax Act, 1961

Highlights / Catch Notes

GST

• GST Recovery Order Stayed: Petitioner Must Pay 10% Tax Under Section 107(6) For Extended Protection

  Case-Laws - HC : HC granted interim stay on appellate GST demand order for two weeks, considering absence of constituted Appellate Tribunal and prima facie case established by petitioner. Stay extension contingent on petitioner paying 10% of disputed tax balance within two weeks, in addition to deposits under Sec 107(6). Extended stay would remain effective until writ petition disposal or further orders. Court directed filing of affidavit-in-opposition within six weeks with one week for reply. Matter pertains to recovery guidelines under Finance Ministry Circular concerning outstanding dues post first appeal disposal.
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• Show Cause Notice under Section 73 CGST Act quashed for failing to address assessee's explanations on GSTR-9 and GSTR-1 mismatch

  Case-Laws - HC : HC held that the SCN issued under Section 73 of CGST Act was procedurally deficient as it failed to adequately address the assessee's reply to the final audit report regarding GSTR-9 and GSTR-1 mismatch. The Court emphasized that a valid SCN must specifically detail the authority's prima facie findings and reasoning for rejecting the assessee's explanations. Since the adjudicating authority merely acknowledged but did not analyze the assessee's submissions, the notice was deemed vague and prejudicial to the assessee's right of defense. Matter remanded for issuance of fresh SCN with proper reasoning addressing the assessee's October 21, 2024 reply and supporting documentation.
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• GST Registration Cancellation Invalid: Show Cause Notice Lacked Authority Details and Proper Reasoning Under Section 29

  Case-Laws - HC : HC held that cancellation of petitioner's GST registration was invalid due to procedural defects and non-application of mind. The initial SCN lacked essential details including name, designation, and signature of the issuing authority. The rejection of revocation application was mechanical, without proper reasoning. Court emphasized that GST registration cancellation, being a drastic measure affecting business operations, requires thorough consideration and cogent reasons. The SCN, cancellation order, and revocation rejection order were set aside as unsustainable. Court restored petitioner's GST registration, noting that such cancellations cannot be executed in a casual manner and must follow principles of natural justice.
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• GST Appeal Filed After 7 Months Dismissed: Section 107(4) Limits Delay Condonation to 30 Days Only

  Case-Laws - HC : HC affirmed dismissal of GST appeal filed after 7-month delay. Section 107(4) of GST Act explicitly limits appellate authority's power to condone delay to 30 days only. The Act being a complete code, provisions of Limitation Act Section 5 are inapplicable. Petitioner failed to demonstrate any legal basis for condonation beyond the statutory 30-day period. Since appeal exceeded permissible delay by over 3 months and appellate authority lacked jurisdiction to condone extended delays, dismissal of appeal on grounds of limitation was legally sound. Petition challenging the dismissal rejected.
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• GST Registration Cancellation Cannot Be Retrospective Without Prior Notice and Proper Reasoning in Show Cause Notice

  Case-Laws - HC : HC invalidated retrospective GST registration cancellation due to procedural deficiencies in the show cause notice (SCN). The notice failed to indicate any intention of retrospective cancellation or provide supporting reasons, violating principles of natural justice. The Court determined that the absence of prior notice regarding retrospective action and lack of justification rendered the cancellation order legally unsustainable. Consequently, the Court modified the cancellation to take effect prospectively from the SCN date (28 March 2023) rather than retrospectively. The ruling emphasizes the requirement for proper disclosure and reasoning in administrative orders affecting taxpayer rights under GST framework.
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• Tax Assessment Orders Invalidated Due to Authority's Failure to Consider Complete Financial Records and Natural Justice Violations

  Case-Laws - HC : HC set aside assessment orders due to procedural deficiencies in tax evaluation. Authority failed to consider complete financial details, particularly regarding tax payments on scrap sales and battery sales, violating natural justice principles. Petitioner presented detailed break-up of tax payments for the first time before HC, which was not previously examined during assessment. Court determined petitioner deserved opportunity to present case with new materials. Matter remanded to original authority for fresh consideration, ensuring proper evaluation of all financial documentation and compliance with procedural fairness requirements.
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• Tailing Dam for Mining Waste Storage Not Eligible for Input Tax Credit Under Section 17(5)(c)(d)

  Case-Laws - AAR : AAR ruled ITC unavailable for goods and services used in increasing height of Tailing Dam for mining waste disposal. The dam, classified as immovable property and civil structure stretching several kilometers on natural foundation, does not qualify as "plant and machinery" under CGST Act Section 17(5)(c) and (d). The dam, serving merely as storage for mining waste, does not directly contribute to mineral extraction or processing. Being constructed on taxpayer's own account for business operations setting, it falls within ITC restriction. The structure's passive storage function, without impact on mineral quality or quantity, prevents it from being considered essential to core business activities, thus disqualifying ITC claims.
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• Member Services by Clubs Now Taxable Under GST: Section 7(1)(aa) Makes Club-Member Transactions Supply from July 2017

  Case-Laws - AAR : Services provided by clubs to members are subject to GST following the retrospective amendment via Finance Act 2021, which inserted Section 7(1)(aa) into CGST Act effective July 1, 2017. This amendment explicitly includes transactions between clubs/associations and their members within the scope of taxable supply, overriding the principle of mutuality established in WB v. Calcutta Club Ltd. The amendment deems clubs and their members as distinct persons, nullifying the previous SC ruling's applicability. The deletion of Para 7 from Schedule II and addition of an explanation clause gives this amendment precedence over any contrary judicial interpretations. Consequently, all club services to members are GST-liable from July 2017 onwards.
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• Hand-held Vehicle Battery Replacement Multitools with Voltage Indicators Classified Under Chapter Heading 8204 for GST

  Case-Laws - AAR : The AAR ruled on classification of hand-held multitools designed for battery replacement in vehicles. The tools primarily consist of integrated spanners with additional components like screwdrivers, hex keys, and battery voltage indicators showing charge levels (25%, 50%, 75%, 100%). While the tools incorporate electrical components (battery indicators) under Chapter 85, their primary function remains mechanical battery replacement. The Authority determined that since spanners constitute the major component, the multitools should be classified under Chapter Heading 8204 despite having integrated electrical features. The additional battery indicator functionality does not alter the tool's core purpose. Consequently, these multitools attract GST at 18% rate under Chapter Heading 8204.
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• Transport Vehicle Rental Services Without Consignment Notes Not Exempt Under Entry 18 Notification 12/2017-CT(Rate)

  Case-Laws - AAR : AAR ruled that transportation services provided by subcontractor X to principal GTA are not exempt under Entry 18 of Notification 12/2017-CT(Rate). Since X does not issue consignment notes, a key requirement to qualify as GTA, their services constitute vehicle rental rather than goods transportation. The principal GTA maintains the direct transportation contract with consignors/consignees and issues consignment notes, while X merely provides vehicles. The services fall under Notification 11/2017-CT(Rate) as transport vehicle rental services and are therefore taxable. The exemption sought was denied as X's activities fall outside the scope of transportation services by a GTA.
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Income Tax

• Revenue Cannot Use Same Advisory Letter as Both Non-Statutory and Binding to Deny BCCI's Tax Exemptions Under Section 11

  Case-Laws - HC : HC determined that Revenue's contradictory stance regarding BCCI's registration status was legally untenable. While Revenue argued the communication dated 28 December 2009 was merely advisory and non-statutory to challenge appeal maintainability before ITAT, it simultaneously used the same communication to effectively cancel BCCI's registration and deny tax exemptions under Section 11 of IT Act. Court held that Revenue cannot treat the communication as non-statutory to defeat appeal rights while using it to adversely affect assessee's substantive rights. The decision emphasizes that vital matters like registration cancellation or exemption denial must be based on proper statutory orders, not mere advisory communications.
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• Salesforce.com secures nil tax withholding certificate as Indian affiliate fails permanent establishment test under Section 197(1)

  Case-Laws - HC : HC set aside AO's order and directed issuance of nil withholding tax certificate under Section 197(1). Court found insufficient evidence to establish that SFDC India constituted petitioner's Permanent Establishment (PE) in India. The Reseller Agreement explicitly denied SFDC India authority to bind petitioner contractually. AO's conclusions regarding SFDC India's role in price determination and contract execution lacked substantial foundation. While SFDC India operated as petitioner's affiliate, transactions would be benchmarked at arm's length. Court emphasized order's scope limited to Section 197(1) certificate issuance, preserving AO's right to conduct future assessment uninfluenced by this ruling.
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• Global Account Management Fees Classified as Technical Services Under Section 9(1)(vii), Leaseline Charges as Royalty Under 9(1)(vi)

  Case-Laws - HC : Global Account Management charges and Leaseline charges received by assessee were reviewed for tax classification. HC held that management charges qualify as Fees for Technical Services/Included Services (FTS/FIS) under Section 9(1)(vii), while Leaseline charges constitute Royalty under Section 9(1)(vi). Regarding Freight Logistic Support services, HC determined these do not qualify as FTS/FIS since customs clearance rules are publicly available information, not specialized knowledge. The court emphasized that FTS requires both specialized expertise and "make available" conditions where recipient gains independent capability. Creation of global workforce standards also did not meet FTS criteria. Software development aspects were addressed per Engineering Analysis Centre precedent. Appeal dismissed against revenue.
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• Insurance Company's IBNR Provisions Based on Actuarial Valuation Allowed as Deduction Under Income Tax Act

  Case-Laws - HC : HC upheld ITAT's decision regarding insurance company's provision for uncertain liabilities. The court determined that IBNR (incurred but not reported) provisioning cannot be treated as contingent liability when based on IRDA-mandated actuarial valuation methods. Following precedents from Rotork Controls, Metal Box Company, and Bharat Earth Movers cases, the court established that provisions based on actuarial valuation constitute legitimate present obligations arising from past events. The court rejected Revenue's argument of unascertained liability, emphasizing that IRDA-compliant accounting methods and consistent treatment in past assessments support the allowance of such provisions. Appeal was partially admitted only on the question of justification under Section 14A read with Rule 8D(2)(ii).
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• Assessment Reopening Notice Under Section 147 Quashed As Officer Failed To Specify Non-Disclosed Material Facts

  Case-Laws - HC : HC quashed notice for reopening assessment under s.147 due to AO's failure to specify which material facts were not fully disclosed by petitioner. Court emphasized that reasons for reopening must establish clear link between grounds and evidence, which cannot be supplemented later through affidavits or oral submissions. Since reopening was attempted beyond four-year limitation period, AO needed to demonstrate petitioner's failure to disclose material facts fully and truly. Following precedent, Court held that reopening restrictions must be evaluated solely based on recorded reasons, without subsequent additions or modifications. Notice invalidated as AO failed to meet statutory requirements for assessment reopening beyond limitation period.
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• Pharmacy Division Income of Hospital Exempt Under Section 11(1) as Essential Part of Charitable Healthcare Services

  Case-Laws - AT : ITAT ruled that pharmacy division income of appellant hospital qualifies for exemption under Section 11(1) of Income Tax Act. The tribunal determined pharmacy operations were integral to hospital's dominant charitable purpose, not a separate business activity requiring distinct accounting under Section 11(4A). Following precedent in Jaslok Hospital case, ITAT found pharmacy services essential for both inpatient care and OPD treatment, directly supporting hospital's philanthropic objectives. The surplus from pharmacy operations was utilized for trust's charitable purposes. Accordingly, ITAT directed deletion of AO's addition, maintaining hospital's tax-exempt status for pharmacy division income.
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• Black Money Act Assessment Orders Invalid As Notice Year Mismatched With Assessment Year Under Section 10(1)

  Case-Laws - AT : ITAT quashed assessment orders under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 due to jurisdictional defects in notice issuance. The AO issued multiple notices under Section 10(1) for AY 2018-19, but per Section 72(c)'s deeming provisions, undisclosed foreign assets are deemed acquired in the year of notice issuance. Since notices were issued in 2018, assessments should have been for AY 2019-20, not AY 2018-19. The Tribunal held that without proper jurisdiction through valid notice, the AO couldn't pass assessment orders. The protective assessments of 50% amounts were invalidated due to this fundamental jurisdictional error.
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• Assessments Nullified After Tax Authority Issues Combined Approval Without Proper Review Under Section 153D

  Case-Laws - AT : ITAT invalidated assessments due to improper approval under Section 153D. The Additional CIT failed to exercise proper supervisory authority by issuing a symbolic combined approval memo without considering factual positions, legal aspects, or incriminating search materials for individual assessment years. The approval was deemed a mere formality, lacking substantive review of assessment orders. CIT(A)'s dismissal of objections on grounds that approval powers were administrative was rejected as legally untenable. The Tribunal held that such perfunctory approval violated statutory requirements, rendering the assessments legally unsustainable. The matter was resolved in the assessee's favor, with the assessment orders being nullified due to procedural impropriety.
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• Income Tax Assessments Under Section 153C Quashed Due to Invalid Satisfaction Note and Jurisdictional Time Limits

  Case-Laws - AT : ITAT invalidated assessments under s.153C read with s.153A for AYs 2011-12 and 2012-13. The AO recorded satisfaction note on 25.09.2018, making AY 2019-20 the relevant search assessment year. The years under dispute fell outside jurisdictional scope of revision proceedings. The satisfaction note for block period AYs 2011-12 to 2017-18 failed to establish document-wise correlation with assessment years in question, lacking essential elements required under s.153C. The Tribunal quashed assessment orders made under s.153A(1)(b) and allowed assessee's appeal, finding fundamental jurisdictional defect in proceedings initiated based on inadequate satisfaction note.
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• Credit Card Payments Need Detailed Bank Statement Analysis Before Rejecting Taxpayer's Source of Funds Under Section 292C

  Case-Laws - AT : ITAT remanded credit card payment assessment back to AO for detailed examination of salaried assessee's sources of funds. Tribunal emphasized necessity for thorough verification of bank statements and salary records before rejecting taxpayer's explanations regarding HDFC and ICICI credit card payments ranging from Rs.415 to Rs.35,000. On seized documents, ITAT deleted additions made under Section 292C, holding that AO failed to discharge onus of linking documents to assessee's undisclosed income. Tribunal noted that presumption under Section 292C is rebuttable, requiring corroborative evidence especially when assessee denies document knowledge. Notice under Section 143(2) was deemed unnecessary for Section 153A assessment following established precedent.
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• Taxpayer Eligible for Section 115BAA Benefits Despite Previous Year's Late Form 10-IC Filing

  Case-Laws - AT : ITAT ruled in favor of taxpayer regarding eligibility under Section 115BAA for AY 2022-23, despite late filing of Form 10-IC for AY 2021-22. While benefits may be denied for AY 2021-22 due to delayed submission after March 15, 2022 deadline, the Form 10-IC filed on March 29, 2022, remains valid for subsequent years including AY 2022-23. The Tribunal emphasized that Section 115BAA is beneficial legislation aimed at providing reduced taxation for domestic companies, and its application for future years cannot be restricted due to technical delays in earlier periods. The provision's clear statutory language supports continuous application once the option is exercised, regardless of initial filing timing.
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• License Agreement for Music Rights: Minimum Guarantee Fees Not Royalty, Costs to be Amortized Over 6-Year Period

  Case-Laws - AT : ITAT determined that payments made under a license agreement for audio and audiovisual rights between the assessee and Hungama for commercial exploitation of music content constituted minimum guarantee license fees rather than royalty payments. The agreement stipulated a guaranteed fee of Rs. 11,73,62,500/- for 6 years. The Tribunal rejected AO's classification of expenses as prior period expenses, noting dates in music titles reflected commercial exploitation start dates, not license acquisition. ITAT directed AO to conduct denovo assessment, treating payments as deferred revenue expenditure amortizable over six-year license period. The Tribunal emphasized proper allocation of costs during license duration while maintaining assessee's right to be heard during reassessment.
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• Additions for Property Deals and Cash Receipts Deleted; Section 50C Valuation Referred to DVO for Fresh Assessment

  Case-Laws - AT : ITAT overturned multiple additions made by AO regarding property transactions and unexplained cash receipts. On capital gains computation under s.50C, ITAT directed matter to DVO for fair market value determination, as circle rate adoption was disputed. Addition for alleged cash receipt was deleted due to lack of evidence and timing of property registration falling in subsequent assessment year. Regarding construction costs, cash flow statement requires AO's factual examination. Additions based on loose slips were deleted as documents lacked dates and definitive connection to assessment year. For s.68 addition concerning loan transaction, matter restored to AO for de novo adjudication considering assessee's explanation about generator sale. ITAT emphasized need for proper verification and evidence before making additions.
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• Assessing Officer's Pecuniary Jurisdiction Under Section 120(3) Valid Despite Territorial Reassignment; Enhancement Under 41(1) Remanded

  Case-Laws - AT : AO's jurisdiction was challenged regarding notice u/s 143(2) after territorial reassignment. ITAT determined that jurisdictional challenges fall under Part B, Chapter XIII, requiring administrative consideration first. Neither ITO nor ACIT lacked territorial jurisdiction; the change merely reflected pecuniary jurisdiction under s.120(3). Following precedents from Kalinga Institute and Mantoo Sarkar cases, ITAT ruled pecuniary jurisdiction challenge as untimely and curable. Regarding sundry creditors, CIT(A)'s enhancement under s.41(1) was found procedurally flawed. Matter remanded to AO for determining creditors' genuineness and appropriate year-wise additions, subject to statutory limitations. Assessee directed to furnish complete documentation for accurate assessment.
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Customs

• Customs Waives Late Fees for Bills of Entry Due to ICEGATE System Downtime During Budget 2025-26 Implementation

  Circulars : Customs authorities granted waiver of late fees for Bills of Entry at INTUT1 port due to ICEGATE system unavailability during Budget 2025-26 updates. The system downtime occurred on 01.02.2025 from 11:00 hrs and was restored on 02.02.2025. The waiver applies specifically to vessels granted entry inward on 02.02.2025 and corresponding Bills of Entry filed by that date. This administrative relief modifies the application of Bill of Entry (Forms) Amendment Regulations, 2017, which normally imposes late fees. The decision was formalized through Public Notice 04/2025 and serves as a Standing Order for departmental implementation.
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• Double Payment of Customs Duty Eligible for Refund When Financial Burden Not Passed and Error Proven

  Case-Laws - AT : CESTAT allowed refund of customs duty paid twice through customs broker for same import consignment. Appellant demonstrated through Bill of Entry, payment challans, and chartered accountant certificate that duplicate duty payment occurred and financial burden was not passed to others. Original authority verified facts supporting refund claim. Tribunal rejected lower authority's finding that appellant failed to prove duty payment and burden bearing. Following Gujarat HC precedent in similar double payment scenarios, CESTAT held refund permissible when duty paid twice due to error without passing burden. Impugned order denying refund set aside as contrary to established facts and legal position. Appeal allowed with direction to process refund.
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• Vehicle Door Handle Components Classified Under CTH 87082900 Despite Incomplete State Due to Principal Use and Identity

  Case-Laws - AT : CESTAT ruled on classification dispute regarding imported Cap Sub Assembly for Door Outside Handle. Appellant's goods, declared as door handles in Bills of Entry, were determined classifiable under CTH 87082900 (parts and accessories of bodies) rather than CTH 87089900. Following commercial identity test and HSN guidelines, tribunal found these components were specifically identifiable as door handles, integral to vehicle body per Section XVII Note 3 and HSN Explanatory Note B. Addition of plastic material for affixation did not alter principal use. Rule 2(a) of GIR supported classification as finished door handles despite incomplete state. Differential duty upheld with interest, following Supreme Court's compensatory interest principle in Pratibha Processors case. Appeal dismissed.
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FEMA

• Foreign Exchange Management Act penalty waived after insufficient evidence linking appellant to alleged Hawala transactions under Section 3(c)

  Case-Laws - AT : AT overturned penalty imposed under FEMA Section 3(c) related to alleged Hawala transactions. Initially, Punjab Police seized funds and ED initiated investigation. While statements were recorded, the respondent retracted testimony at first opportunity. Investigation revealed incomplete car purchase transaction and appellant provided CA-certified cash book documenting fund source. AT found Adjudicating Officer failed to establish clear chain of events, trace key witness Rocky Singh, or document money trail. Given insufficient evidence and procedural gaps, AT directed waiver of penalty and release of confiscated amount within 30 days, highlighting importance of thorough investigation and documentary proof in FEMA cases.
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Corporate Law

• RBI's Failure to Exercise Statutory Powers Under Sections 45-IE and 45MA Leads to Mandamus Issuance

  Case-Laws - HC : HC affirmed issuance of mandamus under Article 226 where RBI failed to exercise statutory powers regarding ECL's regulatory violations. Court established that vesting of statutory power upon public authority implies duty, enforceable through writ jurisdiction. Parallel NCLT proceedings did not bar HC's constitutional jurisdiction to direct RBI's exercise of powers under RBI Act, specifically Sections 45-IE and 45MA. HC maintained its authority to issue protective interim orders based on RBI's findings of ECL's regulatory breaches. Court emphasized that NCLT lacks jurisdiction to issue prerogative writs directing RBI's statutory functions. Appeal challenging writ maintainability dismissed, upholding HC's constitutional mandate to ensure statutory authorities fulfill prescribed duties.
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• Company Winding-up Petition Moves to NCLT After 7-Year Stagnation Following Respondent's Request Under IBC

  Case-Laws - HC : HC transferred pending winding-up petition to NCLT following respondent's explicit request. No substantive progress had occurred in seven years, with neither provisional nor official liquidator appointed. Court treated respondent's written submissions as transfer application, noting formal application unnecessary per Action Ispat precedent. Decision aligned with Supreme Court directive that pending winding-up proceedings not in advanced stages should transfer to NCLT. Matter scheduled for NCLT Delhi Bench hearing on 10.03.2025. Court emphasized transfer appropriate given absence of substantive liquidation proceedings and respondent's clear transfer intent.
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Benami Property

• Gold Purchase Transaction of Rs. 1 Crore Deemed Benami Under PBPTA Due to Indirect Delivery and Suspicious Fund Transfers

  Case-Laws - AT : AT determined that a gold purchase transaction of Rs. 1 Crore constituted a benami transaction under PBPTA. The transaction involved RTGS transfer from A's account to firm H, but gold delivery was made to M instead of A. Despite having A's signed invoice received through M, the appellant failed to establish direct delivery to A. Several suspicious elements emerged: cash deposit by non-account holder A, involvement of M who was partner in appellant's other firm B, subsequent closure of H's bank account with proceeds transferred to B where M was also partner. The appellant's claim of good faith was rejected due to irregular business practices and unexplained circumstances surrounding the transaction. The pattern of fund transfer, delivery arrangements, and business relationships indicated deliberate circumvention of normal procedures. Appeal dismissed.
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IBC

• NCLT Cannot Modify Resolution Plans or Challenge CoC's Commercial Decisions When IBC Section 53(1) Requirements Are Met

  Case-Laws - AT : NCLAT ruled on NCLT's authority to modify resolution plans under IBC. Court held NCLT's powers do not extend to examining CoC's commercial wisdom or conducting quantitative analysis for specific creditors when mandatory requirements are met. Resolution plan approved with 79.10% voting share was deemed valid. NCLT lacks jurisdiction to direct distribution of recoverable amounts among creditors while approving plans. Regarding dissenting financial creditor's standing, NCLAT followed SC precedent that such creditors cannot challenge CoC-approved plans unless proceeds fall below Section 53(1) entitlements. Appeals by dissenting creditor dismissed as afterthought, noting their prior participation in CoC meetings and negotiations. Original modifications to resolution plan set aside in related appeals.
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Indian Laws

• Non-Executive Director Not Liable Under Section 141 NI Act for Cheques Dishonored After Resignation Without Active Involvement

  Case-Laws - SC : SC held that a non-executive director cannot be held vicariously liable under Section 141 of NI Act for dishonored cheques where he had resigned prior to the offense and was not actively involved in company operations. Court emphasized that mere directorship designation is insufficient to establish liability - specific allegations of active involvement in company affairs are required. Evidence showed appellant was neither a cheque signatory nor involved in financial decisions, having resigned as independent non-executive director with proper ROC notifications. Given his limited role without financial or operational responsibilities, the complaints failed to meet legal requirements for vicarious liability. Appeal allowed, setting aside HC's judgment.
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• Conviction Under Section 138 NI Act Set Aside After Parties Reach Settlement Through Court-Approved Compromise

  Case-Laws - HC : HC exercised inherent powers to allow compounding of offense under Section 138 of Negotiable Instruments Act based on compromise between parties, despite conviction being upheld at appellate stage. While acknowledging that inherent powers must be used sparingly, HC determined intervention was justified to prevent miscarriage of justice and honor parties' settlement. Court addressed the challenge of late-stage compounding requests and lack of explicit guidance in Section 147 NI Act regarding timing and procedure for compounding. Criminal revision case disposed of per compromise terms, effectively nullifying earlier conviction and sentence. Decision emphasized courts' discretionary power to permit compounding when serving interests of justice, even post-conviction.
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SEBI

• Research Analysts Must Follow New Fee Caps and Disclosure Rules Under Section 11(1) of SEBI Act

  Circulars : SEBI issued circular mandating standardized Most Important Terms and Conditions (MITC) for Research Analysts (RAs), effective immediately. RAs must disclose these terms to clients and obtain consent. Key provisions include: maximum annual fee cap of Rs 1,51,000 for individual/HUF clients, prohibition of cash payments, advance fees limited to one quarter, mandatory disclosure of conflicts of interest, and prohibition of guaranteed return schemes. RAs cannot execute trades for clients or guarantee investment returns. Existing clients must be informed via verifiable communication by June 30, 2025. The circular establishes a three-step grievance redressal mechanism through RA, SEBI SCORES, and Smart ODR portal. Implementation enforced under Section 11(1) of SEBI Act, 1992 and Regulation 24(6) of RA Regulations.
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• Investment Advisers Must Follow New Fee Caps and Client Agreement Terms Under SEBI Guidelines

  Circulars : SEBI mandates Investment Advisers (IAs) to incorporate standardized Most Important Terms and Conditions (MITC) into client agreements. IAs must accept only advisory fees, cannot guarantee returns, and are prohibited from offering assured return schemes. Fee caps apply: Rs 1,51,000 annually (fixed fee) or 2.5% of Assets under Advice for individual/HUF clients. Advance fees limited to two quarters with proportionate refund on early termination. IAs must conduct risk profiling, provide direct plans, and avoid conflicts of interest. Group entities cannot offer distribution services. Clients retain trading authority - IAs cannot execute trades without explicit consent. Implementation required by June 30, 2025 for existing clients, immediate for new agreements. Grievance resolution follows three-tier mechanism: IA, SEBI SCORES, and Smart ODR portal.
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• Research Analysts Must Obtain NISM-Series-XV Certification and Renew Through Series-XV-B Exam Under RA Regulations 2014

  Notifications : SEBI mandates that research analysts, principal officers of non-individual analysts, and associated persons providing research services must obtain NISM-Series-XV certification through examination. The notification introduces a renewal requirement through NISM-Series-XV-B examination before existing certification expiry. Effective March 1, 2025, this supersedes previous notification SEBI/LAD-NRO/GN/2014-15/26/540. The requirement applies to individual research analysts registered under RA Regulations 2014, partnership firm partners engaged in research services, and individuals employed as research analysts. This regulatory framework ensures continuous professional competency in securities market research through mandatory initial certification and renewal processes.
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VAT

• Input Tax Credit Cannot Be Reduced Retroactively Under Rule 21(8) For Pre-Amendment Stock Purchases

  Case-Laws - SC : Dispute centered on Rule 21(8) of Punjab VAT Rules regarding input tax credit (ITC) calculations following tax rate reduction on iron and steel goods. SC upheld HC's ruling that Rule 21(8), introduced from 01.02.2014, could not be applied retroactively to reduce ITC on existing stock purchased at higher tax rates before the enabling provision in Punjab VAT Act came into effect on 01.04.2014. Following Eicher Motors precedent, SC affirmed that right to ITC accrues when tax is paid on inputs and cannot be diminished retroactively. Court emphasized that allowing retroactive application would cause prejudice to taxpayers who had legitimately claimed ITC at higher rates and could lead to revenue loss. Appeal dismissed, confirming that Rule 21(8) applies only to transactions from 01.04.2014 onwards.
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Service Tax

• Service Tax Refund Granted for Double Payment as Section 11B Time Limitation Not Applicable to Mistaken Payments

  Case-Laws - AT : CESTAT allowed refund of service tax paid twice for April-June 2017 period, ruling that limitation under Section 11B of Central Excise Act 1944 does not apply. The Tribunal held that when service tax is paid twice - first legally and second inadvertently - the second payment lacks legal basis as there is no taxable event. Following precedents from Gujarat HC and earlier CESTAT rulings, it was determined that time-bar provisions are inapplicable for amounts paid under mistaken notion where no tax liability existed. The impugned order was set aside and refund claim allowed, as duplicate payment cannot be considered as tax/duty under Section 11B.
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• Service Tax Excess Payment Can Be Adjusted Across Multiple Months Under Rule 6(4A), Following General Clauses Act

  Case-Laws - AT : CESTAT ruled on interpretation of "month" under Rule 6(4A) of Service Tax Rules, 1994 regarding adjustment of excess service tax payments. Applying Section 13 of General Clauses Act 1897, the Tribunal held that singular words include plural meaning, allowing adjustment of excess tax in multiple subsequent months/quarters. The strict interpretation limiting adjustment to single month would unfairly cause unused excess amounts to lapse. Following established judicial precedents including SC rulings on statutory interpretation, CESTAT concluded appellant's adjustments across different months were valid and compliant with Rule 6(4A). Appeal allowed and impugned order set aside.
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Central Excise

• SEZ Manufactured Goods Exempt from Special Additional Excise Duty and Additional Duty Under Section 3(1)

  Case-Laws - SC : Goods manufactured within Special Economic Zone (SEZ) were challenged regarding applicability of Special Additional Excise Duty (SAED) and Additional Duty of Excise (AED). SC upheld that Section 3(1) of the Central Excise Act, 1944 does not extend to goods manufactured in SEZ. The principal ruling established that since the primary excise duty charge is not applicable to SEZ-manufactured goods, consequential additional duties including SAED (surcharge) and AED (cess) cannot be imposed. The territorial jurisdiction for excise duty purposes excludes SEZ areas, treating them distinct from domestic tariff territory. Appeal dismissed, confirming SEZ's exemption from these duties.
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• Manufacturer Wins Relief Against Rs. 2.3 Crore Duty Demands Based on Theoretical Input-Output Ratios Under Section 36B

  Case-Laws - AT : CESTAT set aside multiple duty demands totaling over Rs. 2.3 crores against appellant manufacturer of LABSA. Primary allegations of clandestine manufacture and removal based on theoretical input-output ratios (1:1.475 vs 1:1.45) were rejected due to lack of chemical examination. Demands based on batch charges, computer printouts, and diary entries were dropped for insufficient evidence and non-compliance with Section 36B requirements. Claims regarding spent acid clearance and CENVAT credit denial were invalidated. Only the matter of Rs. 3,27,046/- regarding consignment agent sales was remanded for verification. Associated penalties on appellant and co-appellants were set aside, as demands were primarily based on assumptions without corroborative evidence of unauthorized raw material procurement.
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Case Laws:

• GST

• 2025 (2) TMI 735
  Challenge to impugned appellate order - reliance placed on Circular No. 224/18/2024-GST dated 11th July, 2024 issued by the Ministry of Finance debarring the guidelines for recovery of outstanding dues in cases wherein first appeal has been disposed of - HELD THAT:- Having considered the materials on record as also taking note of the fact that the Appellate Tribunal is yet to be constituted, it is opined that the petition should be heard. Since, the petitioner has been able to make out a prima facie case, there shall be an unconditional stay of the demand of the Appellate order dated 19th March, 2024, for a period of two weeks from date - In the event, the petitioner makes payment of 10% of the balance amount of tax in dispute, in addition to the amount already deposited in terms of Section 107 (6) of the said Act, within two weeks from date, the interim order passed herein, shall continue till the disposal of the writ petition or until further order, whichever is earlier. Let affidavit-in-opposition to the present writ petition be filed within a period of six weeks from date, reply, if any, be filed within one week thereafter.

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• 2025 (2) TMI 734
  Challenge to SCN issued u/s 73 of the CGST Act - mismatch between GSTR-9 and GSTR-1 - requirement on the part of appellant to submit to the jurisdiction, furnish their reply and participate in the adjudication process - HELD THAT:- On a reading of the relevant portion of the show-cause notice, which is confined only to one issue i.e. mismatch between GSTR-9 and GSTR-1, one gets an impression as if the authority has considered the reply given by the assessee to the final audit report and thereafter has drawn the show-cause notice. However, on a closer reading, it is seen that the adjudicating authority has extracted the reply given and in a single line stated that The decision by the undersigned on the above discrepancy stands and hence the liability remains as: What is required to be seen is whether this would tantamount to a proper show-cause notice. It is settled legal proposition that a show-cause notice should be specific as to the role of the assessee and as to what passes in the mind of the adjudicating authority, which, in its prima facie view is against the assessee. If the show-cause notice does not satisfy these conditions, the notice will be termed as unspecific and vague thereby denying opportunity to the assessee to put forth an effective reply. It will be incumbent upon the adjudicating authority, while issuing show-cause notice to record reasons for its finding. Undoubtedly, this will be a prima facie finding. However, in the instant case, the adjudicating authority, though referred to the reply submitted by the assessee dated October 21, 2024 to the final audit report drawn under section 65 (6) in GST ADT-02, the same has not been dealt with. Conclusion - The assessee is put in a disadvantageous position in not being able to give an appropriate reply since the adjudicating authority has not disclosed its prima facie view qua the reply submitted by the assessee to the final audit report. Therefore, it is inclined to interfere with the show-cause notice, which is impugned in the writ petition only to that extent and remand the matter to the adjudicating authority to issue a fresh show-cause notice recording reasons as to why in his/her prima facie view, the reply dated October 21, 2024 or the other documents, which are enclosed in the reply or which were submitted earlier, are not to the satisfaction of the adjudicating authority. Appeal disposed off by way of remand.

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• 2025 (2) TMI 733
  Dismissal of statutory appeal - time limitation - failure on the part of the petitioner to formally seek condonation of delay - HELD THAT:- Undisputedly the appeal would fall within the larger period of limitation which stands constructed in terms of Section 107 (4) of the Central Goods and Services Tax Act, 2017 [CGST Act]. The only issue which thus survives is whether despite the explanation which was proffered in the course of hearing of the appeal, the same was liable to be dismissed solely on the ground that the petitioner had not moved a formal application for condonation of delay. In Urbkra Bearing Pvt. Ltd. vs. Commissioner of Central Goods and Services Tax and Others [ 2025 (2) TMI 665 - DELHI HIGH COURT] it was held that In our considered opinion 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 dated 31 December 2024 is quashed - petition allowed.

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• 2025 (2) TMI 732
  Challenge to SCN and subsequent orders - Cancellation of GST registration of petitioner - petitioner had failed to furnish returns for a continuous period of six months - non-application of mind - violation of principles of natural justice - HELD THAT:- SCN requires the petitioner to appear before the undersigned on 16.03.2024 at 11:45 am. The show cause notice does not even bear the name, designation, office or signature of any individual and is completely blank. Further the reason for rejection of the revocation application is a direction to the petitioner to file the return from April 2023 to date. Clearly, the show cause notice for rejection of the application for revocation is also defective and not sustainable. The consequent order to the application for revocation dated 02.04.2024 also does not contain any reason it merely states that reply has not been filed to the notice dated 12.03.2024 and the application is accordingly rejected. There is complete non application of mind. The entire proceedings initiated by the respondent are flawed and the error commenced from the issuance of the the very show cause notice dated 11.10.2023 as noticed hereinabove. Since the very show cause notice i.e. the seed of the proceedings was defected, all proceedings emanating there from are thus unsustainable. There is also complete non application of mind and the show cause notices and orders have been passed in a mechanical manner. Cancellation of GST registration has a serious impact on the registrant and its ability to carry on business. Such a cancellation cannot be in a mechanical or casual manner as has been done in the present case. There has to be a complete application of mind and cogent reasons for such a drastic step of cancellation of GST registration. Conclusion - i) Cancellation cannot be in a mechanical or casual manner as has been done in the present case. There has to be a complete application of mind and cogent reasons for such a drastic step of cancellation of GST registration. ii) The SCN and order cancelling the registration of the petitioner; and the order dated 02.04.2024 rejecting the application for revocation for cancellation are set aside. The GST registration of the petitioner is restored. Petition allowed.

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• 2025 (2) TMI 731
  Condonation of delay in filing appeal - Dismissal of appeal filed by the petitioner as time barred - HELD THAT:- In the considered opinion of this Court, the appellate authority in rejecting the application for condonation of delay and as a consequence rejecting the appeal vide impugned order dated 30/05/2024 on the ground of delay, does not seem to be proper, legal and justified. The appellate authority ought to have given a fair consideration to the contentions of the petitioner and ought to have got it verified whether the order was duly served either physically or electronically to the petitioner and only then should have taken a decision. In the absence of any such exercise and deciding the application for condonation of delay only on the basis of pleadings, the impugned order, in the considered opinion of this Court, is not sustainable and deserves to be and is accordingly set aside. In consequence thereof, delay, if any in filing the appeal by the petitioner before the appellate Court is hereby condoned. The matter stands remitted back to the appellate authority i.e. respondent No.1 to consider and decide the appeal filed by the petitioner on its own merits after due verification of the facts - Petition disposed off by way of remand.

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• 2025 (2) TMI 730
  Condonation of delay in filing appeal - Dismissal of appeal on the ground of delay - appeal filed after more than 7 months of passing of the impugned order - whether in view of specific provision under Section 107(4) of GST Act, that only delay of 30 days can be condoned, whether other provisions of Limitation Act would apply to the appeal filed under Section 107 of GST Act or not? - HELD THAT:- It is clear from Section 107(4) of GST Act that the Appellate Authority has jurisdiction to condone the delay of 30 days only. Admittedly, in the present case, the appeal was barred by more than 3 months. Accordingly, the Appellate Authority has rightly held that since it has jurisdiction to condone delay of 30 days only, and the appeal is barred by more than 3 months, therefore, the delay cannot be condoned. Section 107 of GST Act is a complete code in itself. Since Section 107(4) of GST Act provides for condonation of delay of 30 days only, therefore the provision of Section 5 of Limitation Act would not apply. Counsel for petitioner could not point out any provision, order, or judgment which empowers the Appellate Authority to condone the delay of more than one month. As appellate authority had no jurisdiction to condone the delay of more than one month, no illegality was committed by the Appellate Authority by dismissing the appeal as barred by time. Conclusion - Since the Appellate Authority could only condone a delay of 30 days as per Section 107(4) of the GST Act, and no other provision empowered it to condone a delay of more than one month, the dismissal of the appeal due to delay was justified. Petition dismissed.

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• 2025 (2) TMI 729
  Challenge to assessment order - the proceeding does not contain the signature of the assessing officer and also DIN number, on the impugned assessment order - HELD THAT:- The effect of the absence of the signature, on an assessment order was earlier considered by this Court, in the case of A.V. Bhanoji Row Vs. The Assistant Commissioner (ST), [ 2023 (2) TMI 1224 - ANDHRA PRADESH HIGH COURT] . A Division Bench of this Court, had held that the signature, on the assessment order, cannot be dispensed with and that the provisions of Sections160 169 of the Central Goods and Service Tax Act, 2017, would not rectify such a defect. Following this Judgment, another Division Bench of this Court, in the case of M/s. SRK Enterprises Vs. Assistant Commissioner, [ 2023 (12) TMI 156 - ANDHRA PRADESH HIGH COURT] , had set aside the impugned assessment order. A Division Bench of this Court in the case of M/s. Cluster Enterprises Vs. The Deputy Assistant Commissioner (ST)-2, Kadapa [ 2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT] , on the basis of the circular, dated 23.12.2019, bearing No.128/47/2019-GST, issued by the C.B.I.C., had held that non-mention of a DIN number would mitigate against the validity of such proceedings. Another Division Bench of this Court in the case of Sai Manikanta Electrical Contractors Vs. The Deputy Commissioner, Special Circle, Visakhapatnam [ 2024 (6) TMI 1158 - ANDHRA PRADESH HIGH COURT] , had also held that non-mention of a DIN number would require the order to be set aside. In view of the aforesaid judgments and the circular issued by the C.B.I.C., the non-mention of a DIN number and absence of the signature of the assessing officer, in the impugned assessment order would have to be set aside. Conclusion - i) The non-mention of a DIN number and absence of the signature of the assessing officer will make the assessment order invalid. ii) This Writ Petition is disposed of setting aside the impugned assessment order in Form GST DRC-07, dated 06.10.2023, issued by the 1st respondent, with liberty to the 1st respondent to conduct fresh assessment, after giving notice and by assigning a signature to the said order. Petition disposed off.

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• 2025 (2) TMI 728
  Violation of principles of natural justice - petitioner was issued with the SCN under the Goods and Service Tax Act, 2017 by the respondent no.2 but no opportunity of hearing was given to the petitioner - HELD THAT:- As it is apparent that the show-cause notice issued in the form of GST MOV 07 dated 25th July, 2019 is pending and no notice of hearing was given by the respondent no.2, this Court directs the respondent no.2 to complete the adjudication after giving opportunity of hearing to the petitioner within two months from date. Let this order be communicated to the respondent no.2, not only by the petitioner but also by the learned counsel appearing for the respondent authorities - Petition disposed off.

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• 2025 (2) TMI 727
  Validity of the final order in terms of which its Goods and Services Tax (GST) registration came to be cancelled with retrospective effect - SCN embodied no intent or disclosure of the respondents contemplating cancellation from a retrospective date - violation of principles of natural justice - HELD THAT:- When the impugned order is tested on the various precepts, it becomes apparent that absence of reasons in the original SCN in support of a proposed retrospective cancellation as well as a failure to place the petitioner on prior notice of such an intent clearly invalidates the impugned action. The writ petition is entitled to succeed on this short ground alone. The cancellation of the petitioner s GST registration shall come into effect from the date of the SCN i.e. 28 March 2023 - petition allowed.

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• 2025 (2) TMI 726
  Cancellation of GST registration of the petitioner - firm was not functional because the petitioner was not present at the office during an inspection - HELD THAT:- In Gupta Enterprises [ 2024 (1) TMI 954 - PUNJAB AND HARYANA HIGH COURT ], after noticing the provisions of Rule 21(a) and 25 of the CGST Rules, 2017, and after considering that the revocation of registration has resulted in financial loss caused to the concerned businessman, the Court restored the registration of the concerned petitioner. In the present case, it is found that merely on one inspection, if the person is not found to be available at his place of office, a presumption cannot be drawn that the firm is not functional, more so when there have been transactions and the firm has been regularly filing its returns - the action taken by the respondents is in haste, and the same is not sustainable in law. The impugned order is set aside - petition allowed.

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• 2025 (2) TMI 725
  Mismatch of the figures set-out in the profit and loss account and GSTR-3B - first respondent has not considered various aspects while passing the impugned assessment orders, inspite of providing the entire details - violation of principles of natural justice - HELD THAT:- The break-up of the amount paid towards tax for the sale of scrap and tax paid on the amount realized from the sale of the batteries has been placed for the first time before this Court and the same was not been considered by the first respondent before passing the assessment orders. The said fact is not disputed by the learned Government Advocate for the respondents. This Court is, therefore, of the view that an opportunity should be afforded to the petitioner to put-forth its case based on the materials now produced. The impugned orders are set-aside and the matter is remanded to the first respondent for fresh consideration - petition disposed off by way of remand.

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• 2025 (2) TMI 724
  Withdrawal of Advance Ruling application - GST Search can be conducted other than the place specified in the Search warrant or not - cash or valuables can be seized by the department from the place other than specified and authenticated in the search warrant or not - cash and goods pertaining to the person other than the assessee can be seized by the Department or not - confiscation of cash seized - HELD THAT:- The applicant has not raised any questions which are found to be covered under any of the clauses of sub-section (2) of section 97 of the GST Act. It is satisfied that the applicant has been provided reasonable opportunity to counter the aforesaid observations. Therefore, there are no reason to accept the instant application made by the applicant for pronouncement of ruling. The application is, therefore, rejected on this ground alone. In terms of first proviso of sub section (2) of section 98 of the GST Act the authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act . Here, found that as the matter has already been decided by Assistant Commissioner, CGST division-J, Ajmer vide Order in Original No. 14/GCM/GST/DIV-I/2024-25/AC dated 11.06.2024. Therefore, the application filled by the applicant is not fit to accept for pronouncement of ruling. The application is liable to be rejected, hence, rejected. Since the ruling authority has not found any reason to accept the application for pronouncement of ruling as above and the applicant has also requested for withdrawal of the application, therefore, their request to withdraw the application is considered.

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• 2025 (2) TMI 723
  Input tax credit - Whether input tax credit is available in relation to goods and services received for increasing the height of Tailing Dam used to disposal and treatment of hazardous waste of mining operations, known as tailings in terms of Section 17 (5) (c) and 17 (5) (d) of the Central Goods and Service Tax Act, 2017? - HELD THAT:- Ongoing through the submissions of the taxpayer, it is found that Tailing dams are constructed solely using the by-products generated during the second phase of conversion of ore into concentrates at the milling plant. During the second phase of conversion of ore into concentrates at milling plant, hazardous waste, known as tailings, a form of slurry is generated at the tail end of the benefication process. These tailings in the form of slurry consist of crushed rock, water, and chemicals left over after the extraction of minerals. The provisions of section 17 (5) (c) and 17 (5) (d) of CGST Act, 2017 clarifies that GST paid on works contract, goods and services received by a taxpayer for construction of immovable property is not eligible for ITC. There are two exceptions in clause (d) to the exclusion from ITC provided in the first part of Clause (d). The first exception is where goods or services or both are received by a taxable person to construct an immovable property consisting of a plant or machinery . The second exception is where goods and services or both are received by a taxable person for the construction of an immovable property made not on his own account. Construction is said to be on a taxable person s own account when (i) it is made for his personal use and not for service or (ii) it is to be used by the person constructing as a setting in which business is carried out. However, construction cannot said to be on a taxable person s own account if it is intended to be sold or given on lease or license. When the immovable property is in the nature of plant and machinery, then the works contract, goods and services received for construction of plant and machinery will be eligible for ITC and will not be hit by the restriction under the said clause (c) or (d) of Section 17 (5) of the CGST Act, 2017. Since tailing dams are resting on foundation of natural rock or soil with the help of cement and is stretch over several kilometers, it is clear that they are immovable and are thus covered under definition of immovable property . We find that the term civil structure has also not been defined in the GST law. A general understanding of the term can be derived from the definition of civil engineering given as: The profession of designing and executing structural works that serve the general public, such as dams, bridges, aqueducts, canals, highways, power plants, sewerage systems and other infrastructure - the tailing dam is a civil structure and qualifies in the definition of immovable property. Therefore, the submission of the applicant that it is covered under Plant and Machinery is not tenable. The tailing dams can be simply termed as a structure providing storage facility for waste products of mining operations. These storage facilities does not play any role in the quantity as well as quality of the minerals extracted processed and metals manufactured by the taxpayer. Thus, the tailing dams can not be qualified to be used for carrying on the core business activities. Conclusion - Input tax credit is not available in relation to goods and services received for increasing the height of Tailing Dam used to disposal and treatment of hazardous waste of mining operations, known as tailings in terms of Section 17 (5) (c) and 17 (5) (d) of the Central Goods and Service Tax Act, 2017.

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• 2025 (2) TMI 722
  Levy of GST - services provided by clubs to its members - mutuality of interest - reliance placed on Supreme Court s decision in the case of State of West Bengal others vs Calcutta Club Limited [ 2019 (10) TMI 160 - SUPREME COURT ], which addressed service tax applicability in the erstwhile regime - violation of principles of natural justice - HELD THAT:- Hon ble Apex Court in the case of State of West Bengal V/s Calcutta Club Limited, ordered that service tax was not leviable on the services provided by a club to its member under erstwhile Service tax regime. Consequent to the said judgment, to bring the services provided by the clubs to its members in the net of GST, 39th GST council in their meeting dated 14.03.2020 recommended retrospective amendment in the GST Act, so as to explicitly include the transactions and activities involving goods and services or both, by, to its members, for cash, deferred payment or other valuable consideration along with an explanation stating that for the purpose of this section, an association or a body of persons, whether incorporated or not as taxable supply w.e.f 01.07.2017. It is also proposed that such an association or a body of persons, whether incorporated or not and member thereof shall be treated as distinct persons under section 7 (1) of the CGST Act. Consequently, para 7 of Schedule II of the CGST Act is proposed to be deleted. GST laws expanded the scope of supply to tax supplies between the club/association and its members, to overcome the principle of mutuality. The scope of supply clearly ascertains that supply made by a person registered under GST is exigible to GST if it falls under section 7(1) of GST Act - A retrospective amendment (w.e.f. July01,2017) has been made vide Finance Act, 2021 by inserting a new clause (aa) after clause (a), in Section 7 (1) of the CGST Act to widen the scope of term supply by including therein activities or transactions of supply of goods or services or both between any person (other than individual) to its members or constituents or vice versa for cash, deferred payment or other valuable consideration. Consequently, Para 7 of Schedule II of the CGST Act has been deleted retrospectively (w.e.f. July 1, 2017) which was related to supply of goods by unincorporated associations or body of persons to a member thereof for cash, deferred payment or other valuable consideration being activity/ transaction treated as supply of goods. Further, an explanation is added to say that the person and its members or constituents shall be deemed to be two separate persons and overriding effect has been given to the said explanation over anything contained in any other law for the time being in force and even to the judgements of any Court, Tribunal or any other authority. Thus, the decision given by the Hon ble Supreme Court in State of West Bengal Ors.v. Calcutta Club Limited for erstwhile Service tax regime, is no more applicable on account of specific overriding effect over judgments. Conclusion - The clause 7 (1) (aa) have been inserted and deemed to have been inserted w.e.f. 01.07.2017 by Finance Act, 2021. Thus, the Services provided by the Club to its members is taxable as per clause (aa) of sub-section (1) of Section 7 of the CGST Act, 2017 w.e.f. July 01, 2017.

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• 2025 (2) TMI 721
  Classification and applicable GST rates - A hand-held multitool to replace battery in two-wheeler vehicles - A hand-held multitool for replacing automotive batteries - A hand-held multitool for replacing high-capacity batteries - Whether the classification of the multi-tool under the respective HSN Code with applicable tax rates is ascertainable? Classification and applicable GST rates - A hand-held multitool to replace battery in two-wheeler vehicles - A hand-held multitool for replacing automotive batteries - A hand-held multitool for replacing high-capacity batteries - HELD THAT:- The multi-tools in which major component is spanner of different sizes integrated with some other tools viz. screwdriver, hex key etc. Further, 2 tools also have battery indicator (battery voltage level indicator) which provides real-time information about the condition and performance of batteries. As evident from the images of the tools submitted by the applicant, there are four light indicators on the tools indicting battery percentages viz. 25%, 50%, 75% 100%. It is found that hand-operated spanners are classified under chapter heading 8204. Further, screw drivers are classified under chapter heading 8205 and battery indicator (battery voltage level indicator), being an electrical equipment is classified under chapter heading 85. We find that the above tools are hand-operated multi-tools intended to be used for replacing two-wheeler, automotive and high capacity batteries having spanners as the major component integrated with battery indicator, screwdrivers, hex key to provide additional benefits viz. convenience, time and effort savings to their users. The integration of battery indicator in these tools provides an additional feature only and does not alter the key functionality of the tools. Accordingly, the above tools are classifiable under chapter heading 8204 and attract GST @ 18%. Whether GST under ascertain the nature of the products Classification Multi-tool under of Hand Held respective HSN Code with applicable tax rates on the products comes? - HELD THAT:- The question is not clear and beyond the scope of sub-section (2) of the section 97 of the CGST Act, 2017, hence not answered. Conclusion - The tools in question are classified under chapter heading 8204 and attract GST @ 18%.

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• 2025 (2) TMI 720
  Exemption from GST - Whether the activity of the transportation of goods by the Applicant will be exempted under entry no. 18 of Notification no.12/2017-Central Tax (Rate) dated 28.06.2017? - HELD THAT:- On perusal of the meaning of the GTA, it is clearly seen that issuance of the consignment note is an essential condition for any person to act as GTA. If such a consignment note is not issued by the transporter, the service provider will not come within the ambit of GTA. If a consignment note is issued, it indicates that the lien on the goods has been transferred (to the transporter) and the transporter becomes responsible for the goods till it s safe delivery to the consignee. Interpretation of meaning of term consignment note - HELD THAT:- On perusal of the meaning of the term consignment note, it is conspicuous that the goods are received by the goods transport agency either from the consignor or the consignee of the goods, the details of which are mentioned in the consignment note along with the description of the goods being transported. The service of transportation of goods is sub-contracted to the applicant by the Principal GTA. Effectively it appears that, the contract to undertake transportation of goods is given by the consignee/consignor to Principal GTA and not to the applicant. The consignee/consignor may not be aware that the transportation will be done by the applicant. It is also possible that such sub-contract may/can also be given to some other party by the Principal GTA - the applicant is giving only vehicles to Principal GTA and thus it is Principal GTA which has the transportation contract with the consignee/consignor. Thus the transaction in this case would be one of renting of vehicles and not that of a Goods Transport Operator. In the transportation industry, as in the subject case, there are situations where one transporter takes the help of another transporter by way of sub-contracting the work. The other person bills the first transporter for sub-contracting service and the main transporter is the actual service receiver. It is generally seen that sub-contractor person is actually providing transportation service on behalf of the first transporter. As per the definition of GTA in the GST Laws, it is very clear that person who issues consignment note will be treated as goods transport agency. In the subject case, Principal GTA issues consignment note, which is further stamped by its consignee, on delivery of the goods and is therefore a GTA for this transaction. Any services by way of transportation of Goods by road other than through GTA would be exempt supply as per the entry of notification as quoted in the above paragraph. Hence, the activity of the transportation of goods by the Applicant is not eligible for exemption under entry no. 18 of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017. Conclusion - The applicant is desirous of opting the exemption available under entry no. 18 of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017, but this is merely by stretch of imagination on part of the applicant, as the activity or service purported to be rendered is wholly outside the scope of this notification, as the applicant s business activity is only rental services of transport vehicles. Rental services of transport vehicles is notified under notification no.11/2017-Central Tax (Rate) dated 28.06.2017. The activity of the transportation of goods by the Applicant will not be exempted under entry no. 18 of Notification no.12/2017-Central Tax (Rate) dated 28.06.2017.

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• Income Tax

• 2025 (2) TMI 719
  Income accrued in India - Benefit of DTAA between India and USA - rightful owner of the remittances - fees for technical service (FTS) - Payment for certification of Diamonds - as per HC [ 2023 (8) TMI 296 - GUJARAT HIGH COURT] based on factual appreciation especially the condition in the customer service agreement, the bank invoice and the Bank remittance advice a finding of fact has been arrived at that the assessee s case was protected under the India-USA DTAA and that mere rendering of services cannot be roped into FTS unless the person utilising the services is able to make use of the technical knowledge etc. Simple rendering of services as in the present case is not sufficient to qualify as FTS . HELD THAT:- Having heard the learned Additional Solicitor General appearing for the petitioner and having gone through the materials on record, it appears that the tax effect of the subject matter of the Special Leave Petition is falling below the threshold contained in the circular dated 22nd August 2019 of the Central Board of Indirect Taxes and Customs. Special Leave Petition is disposed of.

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• 2025 (2) TMI 718
  Scrutiny assessment - Validity of notice u/s 143(2) - period of limitation - defects in return of income removed - as decided by HC [ 2019 (10) TMI 1583 - GUJARAT HIGH COURT] it is an admitted position that the impugned notice u/ss (2) of section 143 of the Act has been issued on 11.08.2018, which is much beyond the period of limitation for issuance of such notice as envisaged under that subsection. The impugned notice, therefore, is clearly barred by limitation and cannot be sustained. HELD THAT:- We are not inclined to interfere in the matter having regard to the facts of the present case. Hence, the Special Leave Petition is dismissed. However, the question of law, if any, is left open to be agitated in any other appropriate case.

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• 2025 (2) TMI 717
  Disallowance u/s 35(2AB) - clinical trial expenses incurred outside the approved facility - HELD THAT:- We set aside the impugned order only insofar as the issue of disallowance under Section 35(2AB) for clinical trial expenses incurred outside the approved facility is concerned. To this limited extent Appeal [ 2020 (3) TMI 345 - GUJARAT HIGH COURT] is remanded to the High Court of Gujarat at Ahmedabad.

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• 2025 (2) TMI 716
  Denial of registration u/s 12AA - proof to indicate that the Trust was undertaking any charitable activities - HELD THAT:- We may agree to a certain extent with the learned ASG that the very purpose for any assessee to seek registration under Section 12AA is to claim exemption u/s 10 and 11 respectively of the Act, as the case may be. Therefore, before seeking registration, it is essential that the Trust should adduce cogent material to the satisfaction of the Commissioner that the activities are genuinely charitable in nature. To the aforesaid extent there is no problem. We may only say that mere registration under Section 12-AA automatically does not entitle any charitable trust to claim exemption u/s 10 and 11 respectively of the Act, 1961. When a return is filed by any trust claiming exemption it is for the assessing officer to look into all the materials and satisfy itself whether the exemption has been claimed genuinely or not. If the assessing officer is not convinced it is always open for him to decline grant of exemption.

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• 2025 (2) TMI 715
  Appeal maintainable against the communication/order amounting to a cancellation of BCCI s registration under Section 12A - Denial of benefit of registration granted u/s 12A available to the amended objects - Petitioner/BCCI is a society established under the Tamil Nadu Societies Registration Act with the aim of promoting sports, particularly cricket - HELD THAT:- Based on the contention that the impugned communication/order dated 28 December 2009 was not statutory and that it was only an advisory or further, that the impugned communication/order dated 28 September 2012 was not an order cancelling or withdrawing the BCCI s registration, the Revenue even persuaded the ITAT in holding that the BCCI s Appeal against the impugned communication/order was not maintainable. At the same time, based on such advisory/non-statutory exercise, the Revenue cannot proceed on the premise that the BCCI s registration stands cancelled or that the BCCI is not entitled to any exemption under Section 11 of the IT Act, 1961. The impugned communication/order dated 28 December 2009 cannot be non-statutory or an advisory to defeat an assessee s right of appeal. Still, based upon the same non-statutory order or advisory, the assessee s rights cannot be affected, or a situation created in which the assessee cannot claim an exemption or is liable to have its registration cancelled. The revenue cannot adopt such contradictory stances or blow hot and cold in the same breath. Again, we emphasise that these matters could be independently considered whilst deciding the issue of exemption or even the issue of cancellation of registration. However, decisions on such vital matters cannot be solely based on some advisory or non-statutory communication, such as the impugned communication/order dated 28 December 2009. Revenue could not have issued the impugned communication/order, which it agrees, was only an advisory or a non-statutory exercise.

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• 2025 (2) TMI 714
  Adjustment of the refundable amount which was adjusted towards the penalty order - writ of mandamus to direct the first respondent to issue a refund due along with interest u/s 244A (1) till the date of grant of refund - HELD THAT:- We agree with Petitioner, that based upon an order which was digitally signed on 22 May 2024, the Respondents were not entitled to issue the order dated 16 February 2024 adjusting an amount of Rs. 16,81,893/- against the alleged dues arising out of this order which was digitally signed only thereafter i.e. on 22 May 2024. As of 16 February 2024, we cannot reasonably hold that any amount was due and payable by the Petitioner which could have been adjusted from out of the refunds that had to be made to the Petitioner. On this short ground, we set aside the order and direct the Respondents to refund to the Petitioner within four weeks from today. If the amount is not refunded within four weeks from today, it will carry interest as provided under the law. This shall be without prejudice to any action under the Contempt of Courts Act, 1971. If so advised, the petitioner is free to challenge the penalty order digitally signed on 22 May 2024 and communicated to the Petitioner in these proceedings following law. All parties contentions in this regard are kept open to be decided by the appellate authority in the first instance.

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• 2025 (2) TMI 713
  Order passed by section 197 - payment after withholding Tax Deducted at Source (TDS) at the rate of 2% (excluding cess and surcharges) - whether the impugned order and the impugned certificate are liable to interfered with AO rejecting the petitioner s request for allowing SFDC India to make payments at Nil rate of withholding tax? - petitioner claimed that its income was not chargeable to tax as fees for technical services or royalty HELD THAT:- In the present case, there is no prima facie finding by the AO that SFDC India habitually exercises authority to conclude contracts in the name of the petitioner. There is also no finding that SDFC India without authority habitually maintains a state of stock of goods or merchandise and regularly delivers the same on behalf of the petitioner or habitually secures orders. As apparent from above, it is not necessary for the AO to finally determine the tax chargeable. As essential for the AO to form an opinion regarding the taxability of the income on a prima facie basis before rejecting the assessee s application u/s 197 (1) of the Act. The impugned order proceeded on the basis that the petitioner had empowered SFDC India to enter into contracts with customer on its behalf within the territory of India. AO had also noted that although the petitioner had appointed SFDC India as a non-exclusive reseller, the petitioner had not appointed any other entity as the reseller of its products. But SFDC India had appointed sub-resellers. Additionally, the AO had found that SFDC India had a role to play in the process of determining the price of the SFDC Products. Petitioner denies that it has empowered SFDC India to enter into any contract on its behalf. The Reseller Agreement, which governs the relationship between the petitioner and SFDC India, explains the relationship between the parties and expressly provides that neither party would have the power to bind the other party to any contract or the performance of any other obligation. Neither party can represent to a third party that it has the right to enter into any binding obligation on behalf of the other party. Given the unambiguous terms of the Reseller Agreement, the conclusion that SFDC India is empowered to bind the petitioner or enter into contracts on its behalf cannot, absent any other definitive material establishing to the contrary, be sustained. Contention that SFDC India has a role in price determination of the SFDC Products also appears to be without sufficient foundation. The petitioner emphasises that SFDC Products are standardized products and SFDC India does not determine the said prices. AO had reasoned that the involvement of SFDC India in price determination points towards the dependency of SFDC India over the petitioner. This observation is also unsustainable as even if SFDC India is involved in providing any inputs for determination of pricing, the same would not render SFDC India as a dependent PE. Undisputedly, SFDC India is an affiliate of the petitioner, its transaction would be benchmarked on arm s length basis. In the present case, we do not find that there is any material or a finding, which would justify denial of the petitioner s application on the ground that its income is chargeable to tax in India. We are unable to sustain the impugned order as in the given facts, there is little indication at least at this stage, that amounts paid by SFDC India to the petitioner as consideration for sale of SFDC Products are chargeable to tax under the Act. It is also important to note that the AO has not returned any findings, which indicate to the contrary. There is no express finding on a prima facie basis that the petitioner has a PE in India. And, the impugned order does not disclose sufficient grounds, which would substantiate this assumption. We set aside the impugned order and direct the AO to issue the certificate u/s 197 (1) of the Act for nil withholding tax, bearing in mind the observations made in this order. The observations made in the present order are confined to the question of issuance of a certificate u/s 197 (1) of the Act. This order will not preclude the AO from examining and framing an assessment in accordance with law, uninfluenced by this order.

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• 2025 (2) TMI 712
  Reimbursement of Global Account Management charges received by assessee taxable as FTS/FIS and reimbursement of Leaseline charges received by assessee is taxable as Royalty u/s 9 (l) (vi) - HELD THAT:- Insofar as questions B and C are concerned, it could not be disputed before us that those also formed the subject matter of [ 2009 (8) TMI 1258 - DELHI HIGH COURT] ITA 475/2009 and the decision on which came to be followed in [ 2010 (7) TMI 1218 - DELHI HIGH COURT] ITA 751/2010 wherein appellant could not dispute that question of law proposed to be raised is covered by the judgment in Woodward Governor India Pvt. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] and judgment of this Court in Skycell Communications Ltd. [ 2001 (2) TMI 57 - MADRAS HIGH COURT] which has been followed in Bharti Celluar Ltd. [ 2008 (10) TMI 321 - DELHI HIGH COURT] The appeal is accordingly dismissed. Income deemed to accrue or arise in India - Freight Logistic Support services provided by the assessee is in the nature of Fee for Technical Services/Fee for Included Services as per Section 9 (1) (vii) of the Income Tax Act, 1961 and Article 12(5) of the India-US Double Taxation Avoidance Treaty - HELD THAT:- As we had explained in International Management Group, FTS is firstly concerned with rendition of specialized knowledge, skill, expertise and know-how. It is principally concerned with a transfer of knowledge, skill and expertise. Those three attributes must be those which are possessed by the service provider and are distinctive and special qualities that it possesses. The second facet of FTS is the make available condition and which envisions an enablement or transfer of specialized knowledge and skill. As was explained in International Management Group, the mere furnishing of service would not be sufficient to categorise the service as FTS. It would have to be necessarily accompanied by a transfer of expertise and which would consequently enable the recipient of service becoming skilled in its own right and empowered to perform those functions independently. When tested on those precepts we firstly find that rules and regulations pertaining to clearance of customs frontiers was clearly not specialized skill or knowledge acquired or possessed by the assessee. These rules are in the public domain and have been framed by competent authorities operating in different jurisdictions. A fortiori, imparting instructions in respect of those statutory regulations would also not qualify FTS. Similarly, we fail to appreciate how the creation of a global ethos or a workforce which is expected to follow a common code could be said to constitute FTS. Insofar as the question of the development of software is concerned, we need not render any independent observations except to remind the appellant of the principles which the Supreme Court had come to authoritatively lay down in Engineering Analysis Centre of Excellence (P) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] - Decided against revenue .

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• 2025 (2) TMI 711
  Validity of Reopening of assessment u/s 147 - reasons to believe - what income as escaped assessment for the relevant year - transaction pertaining to immovable property - HELD THAT:- Reasons for the formation of opinion cannot be of changing hues. We find ourselves unable to sustain the commencement of reassessment action for AY 2019-20 in light of the abject failure on the part of the AO, even at this stage and before us, to have placed any material which may have even remotely indicated or sustained the formation of belief that income pertaining to AY 2019-20 had escaped assessment. While the AO does appear to have also doubted the acquisition of various other assets in the previous years, that surely would not sustain or commend to us as constituting material that would be pertinent or relevant to AY 2019-20. While the other material which has now come or fallen into the hands of the AO may, hypothetically speaking, constitute information which may warrant examination as to whether a concluded assessment for any previous AY is liable to be reopened, surely that material which was wholly unconnected with AY 2019-20, would not sustain the invocation of Section 148 for that year. Thus, allow the instant writ petition and quash the order u/s 148A (d) as well as the notice under Section 148 of the Act.

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• 2025 (2) TMI 710
  Treating liabilities as unascertained or contingent - ITAT justification in deleting the addition made by the AO on account of provision for uncertain liability of an insurance company other than Life Insurance Company - HELD THAT:- Liability is a present obligation arising from past events, the settlement of which is expected to result in an outflow of resources and in respect of which a reliable estimate of the amount of obligation is possible. The fact that Rotork Controls [ 2009 (5) TMI 16 - SUPREME COURT] concerned an army of items of sophisticated goods manufactured and sold by the assessee or Metal Box Company [ 1968 (8) TMI 53 - SUPREME COURT] pertained to an army of employees due to retire in future or Bharat Earth Movers [ 2000 (8) TMI 4 - SUPREME COURT] was concerned with the provision made by the Assessee for meeting the liability incurred under Leave Encashment Scheme, are no grounds not to follow the principle laid down in such binding presidents. Provisions based upon actuarial valuation are well accepted in several decisions. Hon ble Supreme Court has explained the difference between accrued and contingent liabilities in the above decisions. Merely because these decisions may have dealt with the issue of leave encashment for employees or payment of bonus to the employees or warranties provided by the assessee, we cannot agree with Mr Chhotaray s contention that these decisions are entirely irrelevant or do not apply to the facts of this case. The ratio decidendi of the above precedents is not much coloured by the factual aspects of how those decisions were delivered. However, the principle involved is important, and this principle has been followed to reject the Revenue s contention that the provisions or expenditures were toward some unascertained liability or contingent liability. Besides, in the present case, since the assessee is obliged to maintain its accounts in terms of the IRDA directives or to adopt the actuarial method of valuation, there was no error in the first appellate authority and the ITAT holding that no additions could have been made in respect of the provisions made by the assessee entirely consistent with the IRDA directives and the methods of valuation prescribed by IRDA. The approach of the AO in this case was contrary to the law laid down in General Insurance Corporation [ 1999 (9) TMI 3 - SUPREME COURT] As far as in the precise factual context which obtains in the present case, the Division Bench of the Delhi High Court concluded that it would be wholly incorrect to treat the IBNR (incurred but not reported) provisioning to be a contingent liability. The Court noted that the IRDA regulations, which provided for adopting the actuarial method of valuation, was a scientific method that the assessee involved in the insurance business was mandated to apply. We are satisfied that this Appeal is not required to be admitted on question (A) as same, cannot be regarded as any substantial question of law. This is a mixed question of law and fact. The first appellate authority and the ITAT, have, both on facts and law, correctly decided the matter. No case of perversity is made out. The ITAT has also referred to circumstances, such as how consistently the revenue has assessed identical provisioning made by the assessee for the past assessment years. ITAT has also noted that though principles of res-judicata may not apply to the tax proceedings, in the absence of any change circumstances, the AO was not justified in treating liabilities as unascertained or contingent. Accordingly, this Appeal is admitted only on substantial question of law at (B) above - ITAT justification in allowing u/s 14A r.w. Rule 8D (2) (ii)

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• 2025 (2) TMI 709
  Reopening of assessment u/s 147 - failure of the petitioner to disclose fully and truly all material facts necessary for assessment - HELD THAT:- As Hindustan Lever Ltd. [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] thus holds that the AO must disclose all the reasons for reopening the assessment. This would include a reference to the facts or materials which were allegedly not disclosed by the assessee for the relevant assessment year. The Court held that the AO in case of a challenge to the reasons, must be able to justify the same based on the material on record. The AO must disclose the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessing that assessment year to establish a vital link between the reasons and the evidence. Court emphasised that this vital link safeguards against the arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavits or making oral submissions. Otherwise, the reasons lacking in material particulars would get supplemented by the time the matter reaches the Court on the strength of the affidavit or oral submissions advanced. Thus, relying on the issue in Hindustan Lever Ltd. [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] and applying it to the facts in the present case, including the fact that the Assessing Officer, in the reasons furnished to the petitioner, has not bothered to disclose which material facts, according to the Assessing Officer, were not fully and truly disclosed by the Petitioner for the relevant assessment year, we quash the impugned notice. In any event, this is a case of reopening beyond the prescribed period of four years. Therefore, unless a case of failure to disclose fully and truly all the material facts by the assessee was made out, there is no question of overcoming the statutory bar in seeking to reopen the assessment beyond four years. In Shrenik Kumar Baldota [ 2025 (1) TMI 1067 - BOMBAY HIGH COURT] we had to reject a similar objection because the reasons furnished to the assessee in the Petition did not mention the audit objections as one of the reasons for reopening. Accordingly, we held it was the settled position that the reopening restrictions must be tested on the touchstone of the reasons as recorded. Nothing could be added or subtracted there. Since neither the reasons recorded nor the order deciding the objections stated that the reopening was done based on the audit objections, the reopening notice could not be sustained.

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• 2025 (2) TMI 708
  Reassessment proceedings in the name of a non-existing entity - Notice in the name of company as already amalgamated - HELD THAT:- Although we have granted the Rule in this petition, we are not inclined to stay the assessment proceedings. This is because though the Section 148A (b) notice dated 11 March 2023 was issued in the name of DDB Marketing Services Private Limited, the final order u/s 148A (d) dated 10 April 2023 was issued in the name of the petitioner, into which the earlier company had amalgamated. The impact of citing the wrong PAN number can always be considered at the final hearing stage. The affidavit filed on behalf of the respondents explains why this was required. In the petition, we also did not find any serious averments regarding prejudice on account of the issue of preliminary notices under the name of DDB Marketing Services Private Limited. Petitioner did rely upon the decision of the co-ordinate bench in UBER India Systems (P.) Ltd. [ 2024 (10) TMI 1001 - BOMBAY HIGH COURT] However, we find that in the said case, both the notices u/s 148A (b) and the order under Section 148A (d) were issued in the name of the non-existent amalgamating company. To that extent, we will have to decide whether the decision in UBER India Systems (P) Ltd. (supra) is distinguishable. While we decline interim relief, we clarify that the reassessment proceedings will abide by the final orders in this petition.

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• 2025 (2) TMI 707
  Section 115JA Applicability to Banking company - HELD THAT:- The issue raised in the appeal is covered by the decision of this court in the case of Union Bank of India [ 2019 (5) TMI 355 - BOMBAY HIGH COURT ] against which the leave is granted by the Supreme Court [ 2020 (3) TMI 58 - SC ORDER ]. There is no dispute that the issue is covered by the decision of this Court in the case of Union Bank of India (supra). Therefore, looked from any angle, the appeal filed by the Revenue is not maintainable. Book profit has been computed u/s 115JA in the assessment order. In the grounds of appeal before this Court, there is a reference of Section 115JA/115JB which in our view is incorrect, since the section which was involved in the assessment order is 115JA and not 115JB.

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• 2025 (2) TMI 706
  Addition u/s 69A - unexplained money - Nature of the banking transactions and cheques deposited by the appellant - HELD THAT:- The assessee has submitted due evidences to explain that the transaction in the bank statement reflect post dated cheque issued and cross barer cheque against the cheques received. The cheques received were deposited on the same day. On the due date the post dated cheques were being credited. It is a system of obtaining loans by issuing post dated cheques which are encashed within 90 to 110 days for availing credit. With regard to finance obtained from Radhe Corporation, Shankar Corporation and Krishna Enterprise, the Ld.AR submitted all details such as PAN, Bank Statement extract reflecting the finance received substantiating the Genuineness of the said Party, ITR Acknowledgement of the return filed by the said Party for AY 2013-14 substantiating the Creditworthiness of the said Party, Ledger Confirmation of the said party substantiating the Identity, PAN, Sample copy of cheques issued to the said Party which are obtained from Bank. The three kay ingredients being Identity, Genuineness and Creditworthiness of the said parties being proven, the said transactions cannot be said to be bogus. All the documents prove that the assessee have received short term finances and also repaid the amounts. Hence, we hold that no addition in this is called for. Appeals of the assessee are allowed.

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• 2025 (2) TMI 705
  Exemption u/s 11 - Whether the Pharmacy Division of the assessee hospital is an integral part of the dominant purpose of hospital itself ? - HELD THAT:- We have noticed that the case of the Ld.AO as well as the CIT(A) hinges around the belief that the provisions of section 11(4A) were attracted in case of the assessee and since the separate books of account are not maintained, the assessee is not entitled for benefit of exemption u/s 11(1) because the the pharmacy business is not integral and dominant part of philanthropic activity of the hospital. DR has made a submission that the assessee has not brought on record any documents/material to show that the surplus of the pharmacy business income has been spent for the philanthropic purpose of the trust. For this, once again, AR submitted that the assessee hospital had always been spending this surplus income from the pharmacy division for the philanthropic purpose of the trust. Moreover, in case there is any violation of registration u/s 12A by the Trust, the revenue authorities are always at liberty to take action as permitted by law in case it is found that the assessee is not spending the surplus funds for philanthropic purpose of the trust/hospital. We are of the considered opinion that the case of the assessee hospital is very well covered by the judgement of the co-ordinate bench in the case of M/s Jaslok Hospital Research Centre [ 2016 (6) TMI 1486 - ITAT MUMBAI] . Income from the Chemist division for A.Y. 2017-18 wherein similar issue for income from pharmacy division has been dealt with and decided in favour of the assessee. It is not in dispute that the assessee is running a hospital and is also having in-house patients. Medicines are essential for the treatment of the patients. Assessee is also giving treatment to the OPD patients, who are at liberty to purchase the medicines from the chemist shop of hospital. It has been vehemently argued on behalf of the assessee by the Ld.AR that for saving the life and proper treatment of the in-house patients, running of pharmacy division is the most essential requirement for running the assessee hospital and for fulfillment of the dominant purpose of the assessee trust. We, therefore, are of the considered opinion that the facts and circumstances of the assessee s case are fully covered by the judgement of the co-ordinate benches cited supra. We find that the appellant/assessee fulfills all the requirements which necessitates the running of pharmacy and chemist division in the hospital to achieve the dominant purpose of the trust for which the revenue authority have given approval u/s 12A to the assessee hospital and, therefore, the assessee hospital is entitled for the benefit u/s 11(1) of the Act and the income from the pharmacy and chemist division of the assessee cannot be treated as business income from a separate and independent activity carried out by the assessee. Thus, on the basis of summarized grounds the points of determination enumerated in the beginning of the order are accordingly decided in the affirmative and in favour of the assessee. We accordingly direct the AO to delete the addition.

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• 2025 (2) TMI 704
  Black Money - notice issued under section 10(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMIT Act) - Adopting the conversion rate AO determined the value of undisclosed foreign income and asset accordingly - AO assessed 50% of the above said amount on substantive basis and remaining 50% on protective basis in the hands of both the assessee s in AY 2018-19 - assessee contending that the assessment order has been passed without a valid notice - HELD THAT:- We have noticed earlier that the assessing officer has issued more than one notice u/s 10(1) of the Act. The contention of the assessee is that the AO has not issued a valid notice for initiating assessment proceedings for assessment for AY 2018-19 and hence the assessment order passed by him for that year is not valid. In respect of undisclosed foreign assets acquired or made prior to the commencement of the Act and if no declaration has been made under Chapter VI, such asset shall be deemed to have been acquired or made in the year in which a notice under sec.10 is issued by the assessing officer. This deeming fiction would show that it is mandatory to issue notice u/s 10(1) of the Act in respect of undisclosed assets acquired prior to the commencement of the Act and which was not voluntarily declared, since the date of acquisition of that asset shall be deemed to be the year in which notice u/s 10 was issued. Deeming provisions mentioned in sec.72(c) of BMIT Act - In the instant cases, the impugned foreign assets have been acquired by both the assessee s prior to the commencement of the BMIT Act and further they have also not filed any declaration u/s 59 of the Act voluntarily. Hence the deeming provisions mentioned in sec.72(c) of BMIT Act shall apply to the facts of the present cases. Accordingly, the assessment year for assessing those foreign assets would have to be determined on the basis of date of notice issued by the AO u/s 10(1) of the Act. We noticed earlier that the proviso to sec.3(1) of the BMIT Act stated that the undisclosed asset located outside India shall be charged to tax on its value in the previous year in which asset comes to the notice of the Assessing officer . There should not be any dispute that a notice u/s 10(1) of the Act is issued in order to acquire jurisdiction for making assessment in the hands of the assessee u/s 10(3). In the instant case, we have held that the provisions of sec.10(1) have to be read along with of sec.72(c) also. Accordingly, we have held that, in the facts of the present cases, issuing of notice u/s 10(1) is mandatory. Hence, the AO has to acquire jurisdiction to assess the undisclosed asset by issuing a valid notice. Accordingly, without acquiring proper jurisdiction, the AO cannot acquire jurisdiction and pass any assessment order. The question that arises is whether the AO can modify the assessment year in the notice issued u/s 10(1) in order to acquire jurisdiction. It was contended by the Ld DR that the provisions of sec.81 of BMIT Act, which is akin to sec.292B of the Income tax Act, will protect the validity of notice, since mentioning of wrong previous year and assessment year was a mistake, defect or omission in the notice, which could be. The next notice issued by the AO u/s 10(1) of the Act is the notice dated 27-04-2018 issued for AY 2018-19. The Ld CIT(A) has also held that this is the notice, which has given jurisdiction to the AO to assess the undisclosed assets for AY 2018-19. In this notice, the AO has clearly stated that the earlier notice dated 07-08-2017 was issued incorrectly for AY 2017-18 and hence he is issuing the fresh notice dated 27-04-2018 for AY 2018-19. We notice that the notice dated 27-04-2018 is issued for AY 2018-19 and the same is contrary to the provisions of sec.72(c) of the BMIT Act. We noticed that section 72(c) is a deeming provision as per which the undisclosed assets are deemed to have been acquired during the previous year in which such notice is issued. Since the second notice is issued on 27-04-2019, the impugned undisclosed assets are deemed to have been acquired during the previous year 2018-19 and accordingly they have to be assessed in assessment year AY 2019-20 only. Hence the AO could not have passed the assessment order for AY 2018-19 on the strength of notice dated 27-04-2018. Accordingly, the said notice would not also validate the assessment order passed for AY 2018-19. AO has also issued two more notices u/s 10(1) of the Act, viz., on 10-07-2018 and 09-11-2018. On the strength of those notices, the AO could have framed assessment order for AY 2019-20 only in view of the deeming fiction enshrined in sec.72(c) of the Act and not for AY 2018-19. The foregoing discussions would show that the assessing officer did not acquire jurisdiction in accordance with law for assessing the undisclosed assets and income in Assessment year 2018-19 by issuing a valid notice. In the absence of a valid notice issued for the impugned assessment year, we have to quash the orders passed by the tax authorities in the hands of both the assessee s herein. We order accordingly. Since we have quashed the orders on the legal issue relating to jurisdiction, there is no necessity to adjudicate other grounds urged by the assessee and accordingly, they are left open.

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• 2025 (2) TMI 703
  Assessment u/s 153A - propriety of approval u/s 153D to the respective draft assessment orders placed before him by the AO - HELD THAT:- As discernible from the combined approval memo, the sanctioning authority (Addl. CIT) has, in fact, relegated his statutory duty to the subordinate AO, whose action the Addl. CIT, was supposed to supervise as per the scheme of the Act. Manifestly, the Addl. CIT, without any consideration of factual and legal position in proposed additions and without the availability of incriminating material collected in search etc. has buckled under statutory compulsion and proceeded to grant a symbolic approval to meet the statutory requirement. This approach of the Addl. CIT has ipso facto rendered the impugned approval to be a mere ritual or an empty formality to meet the statutory requirement and is thus incapable of being sustainable in law. Assessee has also demonstrated glaring lapses in the respective assessment orders which could easily be detected on a bare reading of such orders. Impliedly, the Addl. CIT has not even cared to read the assessment orders while entrusted with the task of approval of such orders. A common approval for all assessment years in complex matters of search without identifying or discussing any issue in relation to any assessment year further shows no semblance of any application of mind to any aspect of any assessment years. CIT(A) has brushed aside the legal objection summarily merely on an inept indifferent premise that the assessment order makes mention of the approval from Addl. CIT under 153D of the Act and such powers are in the nature of administrative powers and a purely internal matter. The cryptic conclusion drawn by the CIT(A) is bereft of any plausible reasons whatsoever and thus cannot be reckoned to be a judicial finding on the point. The observations so made are not tenable in law. We are unhesitatingly disposed to hold that the integrity and propriety of impugned assessments under captioned appeals based on such combined approval memo u/s 153D in question cannot be countenanced in law. Decided in favour of assessee.

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• 2025 (2) TMI 702
  Disallowance of a commission paid to parties u/s 37(1) - HELD THAT:- Assessee has produced the confirmation of all the parties for having received the commission and some of the parties have also confirmed to have rendered the services to the Assessee for which they have earned commission. If some of the parties have not been produced by the Assessee, the A.O. cannot be make the addition as it is the duty of the A.O. to summon such parties u/s 131 of the Act and the A.O. made no such efforts. Though the above referred order of the Tribunal in Assessee s own case for Assessment Year 2011-12 [ 2018 (3) TMI 2051 - ITAT DELHI] is of the SMC Bench, ongoing through the merit of the case, we agree with the ratio laid down there on. Appeal of the Assessee is allowed.

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• 2025 (2) TMI 701
  Assessment framed u/s 153C r.w.s. 153A - relevant assessment years - HELD THAT:- AO of the assessee has recorded the satisfaction note on 25.09.2018. As per the provisions of section 153C r.w.s. 153A, relevant search assessment year for the other person is the assessment year in which this satisfaction note is recorded. Accordingly, the relevant search assessment year for the assessee is AY 2019-20. Accordingly, the assessment years under consideration i.e. AYs 2011-12 2012-13 are outside the jurisdiction of revision proceedings u/s 153A r.w.s. 153C of the Act. Accordingly, assessment orders based u/s 153A(1)(b) of the Act is accordingly quashed. Validity of the satisfaction note recorded by the AO for initiating proceedings u/s 153C - HELD THAT:- Satisfaction recorded by the AO for the block period for AYs 2011-12 to 2017-18 to initiate the proceedings u/s 153C of the Act through which it was sought to be reopened which could ultimately be said to be unexplained addition thereon could be made. We also hold that it is undisputed fact that these documents did not establish correlation document-wise with these assessment years under consideration. The very essential element for invoking the provisions of section 153C is, therefore, found to be not present in the impugned satisfaction note prepared by the AO. Accordingly, ground raised by the assessee is allowed.

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• 2025 (2) TMI 700
  Assessment u/s 153A - variation between the returned income and assessed income as made up of credit card payment - as alleged AO did not bother to even cross check the information so gathered from the AIR whether they were a revenue receipt in the form of profit/income fit to be added as income or there were only transactions happened during the course of time - HELD THAT:- Assessee is a salaried employee who has income from salary, capital gain and other sources. Being a salaried employee, he does not have a books of account or a fund flow statement to explain the source of payments made. We also note that the payments for HDFC Credit card are small ranging from Rs 415/- to Rs 30,000/-. The source explained are borrowings, salary, cash in hand, recovery of loan etc. In such a situation, we are of the opinion that the CIT(A) should have examined the bank account and salary statement before rejecting the assessee s explanation completely. Therefore, we are of the considered view that the AO/CIT(A) have not properly examined the assessee explanation for the source of payment for the HDFC and ICICI credit card. Payment for ICICI credit card, we find that the payments ranges from Rs 1000/- to Rs 35,000/- the source of which is explained as payments out of cash in AY 2013. For AY 2014- 15, he has explained as borrowings, salary, cash in hand, recovery of loan etc. Considering the assessee being a salaried employee, without any books of account or fund flow statement, it was incumbent upon the AO as well as the CIT(A) to examine the explanation of the assessee thoroughly. Thus, we find it expedient to remit the issue back to the file of the AO to examine the assessee explanation for the credit cards payments, with reference to his bank statement, regarding source being borrowings, salary, cash in hand, recovery of loan. Non issue of notice u/s 143(2) - As decided in the case of Ashok Chadda [ 2011 (7) TMI 252 - DELHI HIGH COURT ] has held that there is no requirement of issuing notice u/s 143(2) for finalization of assessment u/s 153A. Addition as undisclosed income under the provision of section 292C, on the basis of seized material found during the course of search - HELD THAT:- The presumption u/s 292C of the Act is rebuttable presumption and when the assessee denies knowledge of the contents of the document, the onus shifts to the AO to corroborate the documents with evidence. As held in Godwin Construction Pvt. Ltd. [ 2023 (1) TMI 415 - ITAT DELHI ] case that provisions of section 292C of the Income Tax Act is only a deeming provision and the deeming provision cannot be applied mechanically, ignoring the facts of the case and surrounding circumstances. In the facts of the instant case, we find that there is no whisper of any examination/investigation by the AO to show that amount mentioned in the document is undisclosed income of the assessee especially considering the fact that the assessee was only a salaried employee of SVIL having income from salary, interest and capital gain. Thus, we hold that there is failure on the part of the Assessing Officer in discharging the onus that was shifted towards him by the assessee, of conducting further investigation into the seized documents and link it with the assessee. No addition of the impugned amount is called for and we direct the deletion of the additions made by AO and upheld by CIT(A).

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• 2025 (2) TMI 699
  Denial of Foreign Tax Credit ( FTC ) in the intimation issued u/s.143(1) - belated filling of Form 67, i.e. after the due date of filing the return - HELD THAT:- The Hon ble Madras High Court in the case of Duraiswamy Kumaraswamy [ 2023 (11) TMI 1000 - MADRAS HIGH COURT] had held that filing of Form 67 is directory in nature and it is not a mandatory requirement. It was further held by the Hon ble High Court that as long as Form 67 is available at the time of processing of return u/s.143(1) of the Act, the CPC needs to allow the FTC. Filing of Form No.67 within the due date of filing the return of income u/s.139(1) of the Act is not mandatory requirement but directory. Hence, we direct the Revenue to grant the FTC as per Form No.67. It is ordered accordingly. Decided in favour of assessee.

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• 2025 (2) TMI 698
  Denial of claim of calculating tax liability u/s 115BAA - failure of the assessee to file form 10-IC within the time provided for filing the return of income u/s 139(1) - as submitted by the CIT-DR that the last date for filing the return of income for A.Y. 20021-22 was 15.03.2022 and the assessee has filed the return of income belatedly on 29.03.2022, along with Form 10-IC - HELD THAT:- Provisions of Section 115BAA are beneficial legislation, aiming to extend certain benefits to domestic companies with a reduced rate of taxation. This essential provision was designed to boost the industries and reduce unnecessary litigation, and it should not be denied on account of some technical reasons. In the present case, admittedly, the assessee has exercised his option for the previous year 2020-21 and thereafter, based on the same declaration, the assessee has filed the return of income for A.Y. 2022-23. However, the CPC, Bangalore, has rejected the claim of the assessee to opt for the regime u/s 115BAA of the Act on the pretext that the same was filed belatedly for the earlier year. Law is fairly settled when the language used in the statute is clear and simple, then literal meaning is required to be given to the words used in the Statute while interpreting the Statute. In the present case, sub-section (5) of Section 115BAA of the Act has not restricted the application for one year alone, even if it has filed belatedly, however, it has been extended and applicable for the subsequent assessment years. If the application has been filed belatedly for the earlier year, as canvassed by the Revenue, on 29.03.2022 i.e., after the due date of filing of return of income on 15.03.2022, then the Revenue can withhold or deny the benefit of Section 115BAA for A.Y. 2021-22. But for the purpose of giving benefit for A.Y. 2022-23, the Revenue cannot raise this issue of filing of Form 10-IC belatedly for A.Y. 2022-23. Needless to say the Frm 10-IC on 29.03.2022 for A.Y. 2021-22, will also be treated as filed for A.Y. 2022-23 and subsequent years. Therefore, in our considered opinion, the assessee is eligible for the benefit provided u/s 115BAA for the A.Y. 2022-23. Decided against revenue.

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• 2025 (2) TMI 697
  Royalty expenses - assessee has acquired license of Audio Audio visual rights of the non- Bollywood regional music content for exclusive commercial exploitation on mobiles digital platform and for physical distribution public performance - HELD THAT:- Assessee company was established to commercially exploit the music albums of various tracks available with Hungama and Zee Music. Assessee and Hungama entered into license agreement on 20.12.2015 and the license holder, Hangama granted permission to the assessee to use the above license held by it, which was previously acquired by another agreement entered by Hungama with Zee Music. As per the terms of license agreement, the assessee has agreed pay the licensor i.e., Hangama a minimum guarantee fee of Rs. 11,73,62,500/- for 6 years. Therefore, it is only a minimum guarantee license fee not a Royalty payment towards transfer of property. The property right was only with licensor. Technically, the assessee has given only a guarantee of revenue for 6 years that means the assessee has given guarantee of license fee. It is only a guaranteed amount and the assessee has to meet out the above license fees otherwise, it has to recompensate the same to the licensor. In the agreement, there is no mention of any commitment that guarantee is for every year or to be compensated at the end of the 6th year. Therefore, it is closely linked to the earning of revenue. It is relevant to point out that the Hangama also entered into similar agreement with Zee Music and the same chart of music albums and date of commencement of dates are mentioned. Licensor has taken similar license from Zee and sublet the same to the assessee. It cannot be treated as license fees paid and claimed as expenditure. The dates mentioned in the start date of each album are the starting date of commercial utilization of respective album not the payment of license fees. Whether the license fees paid are to be considered as prior period expenses? - We observed that the AO has not understood the transaction and disallowed the part of royalty expenses as prior period expenses by observing the dates mentioned in the individual music titles, which is not date of acquiring the license but it is the date of start date of commercial exploitation of relevant tracks. In our considered view, the method adopted by the assessee as well as the disallowance made by the AO is not appropriate. Therefore, we direct the Assessing Officer to redo the assessment denovo and consider the above observation and allow the relevant expenditure as per law. At this stage, we cannot change the Balance Sheet even though followed the wrong method of recognition of income expenditure. AO has to determine the actual income and expenses by treating the license fees paid as deferred revenue expenditure and allow the relevant cost during the license period of six years. Needless to add that assessee may be given proper opportunity of being heard.

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• 2025 (2) TMI 696
  Capital gain computation - Addition u/s.50C - accepting higher circle rate/stamp duty value as against the actual sales consideration on sale of flats - AO observed that the sale consideration reported by the assessee was less than the circle rate determined in terms of Section 50C - HELD THAT:- CIT(A) ought to have referred the matter to the file of DVO for determination of fair market value of the property in terms of Section 50C(2) of the Act which was not done in the instant case. In fact even if the assessee does not request for referring the matter to DVO, still the ld CIT(A) or the ld AO ought to have referred the matter to the DVO once the adoption of circle rate has been disputed by the assessee. Admittedly, the adoption of circle rate has indeed been objected by the assessee which is evident from various points addressed by the assessee before the ld CIT(A) which are already mentioned herein above as to why the circle rate should not be adopted. See Sunil Kumar Agarwal [ 2014 (6) TMI 13 - CALCUTTA HIGH COURT ] wherein, it was held that when the agreed consideration as per conveyance deed and circle rates are different and assessee objects to the adoption of such circle rate, then the ld AO should refer the matter to valuation officer as contemplated in Section 50C(2) - direct the ld AO to refer the matter to ld DVO and determine/ recompute the capital gains in accordance with the provision of Section 50C(2) - Ground raised by the assessee is allowed for statistical purposes. Unexplained cash receipt - HELD THAT:- There is absolutely no evidence brought on record by the AO or by CIT(A) to prove the fact that the assessee had indeed received a sum in cash on account of alleged excess sale consideration. No cross verification whatsoever was made by the lower authorities with the buyer of the property i.e. Shri Krishan Kumar. Hence, there is no scope for making any addition on the ground of suspicion that assessee had received in cash on sale of property. Sale deed was ultimately registered by the assessee only on 05.04.2011, which falls in AY 2012-13. Hence, in any event, the alleged differential sale consideration figure cannot be brought to tax in the hands of the assessee for the year under consideration. Accordingly, ground Nos. 2 and 3 raised by the assessee are allowed. Addition of cash paid towards construction cost - AO observed that the assessee failed to explain the source of payment - HELD THAT:- The assessee placed on record the cash flow statement also giving the daily cash balance available with him. This cash flow statement cannot be ignored to be of general in nature. We find that this cash flow statement requires factual examination of the ld AO to ascertain on a holistic basis as to whether the said statement would provide sufficient cash source to the assessee to explain the payment of Rs. 40 lakhs on 23.02.2011. To the extent of available cash source, the assessee certainly is entitled for relief. With these directions, we restore ground No. 4 to the file of the ld AO and allow for statistical purposes. Unexplained cash credit and unaccounted expenditure - loose slip found - HELD THAT:- On perusal of the impounded documents, crucially we find that no date or year is mentioned. Hence, there is no cogent material brought on record by the revenue to justify the fact as to whether the said loose slip even pertains to the year under consideration. The said loose slip nowhere states that Rs. 10 lakhs was either received by the assessee or paid by the assessee. Hence, it could be safely concluded that the said loose slip is nothing but a mere dumb document based on which no addition could be made in the hands of the assessee. AO relates this loose slip and interest payment for May and June to be relating to May and June 2009. If that be so , then it only pertains to AY 2010-11 and hence, no addition could be made for the year under consideration. The addition deserves to be deleted even on this count. Addition u/s 68 - impounded document during the survey which consists of Kacha Khata of Vipin Sharma to whom the assessee had given loan - HELD THAT:- Before us, the assessee who was present in person confirmed the fact that he had sold old generator to his cousin Vipin Sharma and since the cheque given by Vipin got bounced, the assessee received in cash towards sale of old generator. We find only the date and figure and name of Vipin are mentioned in the said loose sheet. The nature of payment or receipt is not even mentioned thereon. Hence, the explanation given by the assessee could be considered as a plausible explanation in the facts and circumstances of the case. However, this matter, in our considered opinion, requires factual verification. Hence, we deem it fit and appropriate in the interest of justice and fairplay, to restore this issue to the file of ld AO for de novo adjudication in accordance with law and also in the light of explanation given by the assessee before us. Accordingly, ground No. 6 raised by the assessee is allowed for statistical purposes.

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• 2025 (2) TMI 695
  Challenging the notice u/s 143(2) issued by the ACIT, Corporate Circle-1(2), Bhubaneshwar, as being without jurisdiction - notice issued u/s 143(2) on the ground that the jurisdictional officer had not adjudicated upon returns as jurisdiction has been changed after returns had been filed - HELD THAT:- Plain language of the sections determining jurisdiction (both territorial and pecuniary) reveals that the mechanism for challenging the jurisdiction of an AO is contained in Part B of Chapter XIII of the Act and it is clearly within the administrative domain. Since, in this case, the assessee never challenged the jurisdiction of the AO therefore, there was no occasion to administratively consider that issue. The facts do not indicate that either of the two AOs: ITO and ACIT, did not have territorial jurisdiction, the absence of which might have brought in a legal fatality. It is just that a division of work was affected on account of division on the basis of returned income limits of an assessee, in other words the third limb of the categories of jurisdiction contained in section 120(3) of the Act, indicating pecuniary jurisdiction. Catena of judgments relied upon in the earlier part of the discussion, especially in the case of Kalinga Institute of Industrial Technology [ 2023 (6) TMI 1076 - SC ORDER] and Mantoo Sarkar [ 2008 (12) TMI 719 - SUPREME COURT] it is held that the pecuniary jurisdiction challenged at this stage is unjustified and is at best, a curable defect, if at all it can be called a defect, considering the facts of the case. Ground No.3 and 4 of the assessee s appeal are accordingly dismissed. CIT(A) treated the entire quantum of sundry creditors as on 31.03.2015 as a discharged liability and used the provisions of section 41(1) of the Act to enhance the income - It is felt that there is an inherent error in this action, in as much as the credits added contain entries belonging to earlier years and in case it can be shown that the impugned sums represent bogus entries, then also they have to be added back in the appropriate year. Therefore, we deem it fit to remand the matter back to the file of the AO to determine the genuineness, or otherwise, of the sundry creditors and in case of any adverse findings then additions, if any, need to be made in any appropriate previous year, if the law permits reopening, considering the limitations involved as per the relevant statute. The assessee would do well to present all the facts before the AO to enable him to assess his income correctly.

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• Benami Property

• 2025 (2) TMI 694
  Prohibition of Benami Property Transaction - Initiating Officer (IO) had provisionally attached property - purchase of gold for which the amount was transferred through RTGS - Whether the transaction involving the transfer of Rs. 1 Crore for the purchase of gold constitutes a benami transaction under PBPTA? HELD THAT:- Appellant has admitted in his statement that the gold was not delivered directly to Smt. Suman Dua, from whose account RTGS transfer of Rs. 1 Crore was received in the account of M/s Harsh Bullion, wherein he was a partner with Shri Anoop Kumar Agrawal. The copy of the identification documents of Smt. Suman Dua was received by the Appellant through Shri Mahendra Pal Malhotra to whom gold was admittedly delivered along with the invoice thereof. Appellant believes that having received copy of the invoice signed by Smt. Suman Dua from Shri Mahendra Pal Malhotra was sufficient as proof of his delivery of gold worth Rs.1 Crore to Smt. Suman Dua. We observe that such belief is neither corroborated by normal business practice nor supported by the fact that the transaction involved gold sale of Rs.1 Crore. While it established that the funds were transferred from the account of Smt. Suman Dua, the Appellant failed to establish the delivery to the person from whose account the amount of Rs.1 Crore was transferred to his firm M/s Harsh Bullion. Appellant has claimed that M/s Harsh Bullion is a bonafide business entity yet no convincing argument has been made as to why it closed the Punjab Sind Bank account Janakpuri, Bareilly on 20.06.2017 and transfer the closure proceeds to M/s Bankey Bihari Bullion, another firm of the Appellant wherein Shri Mahendra Pal Malhotra is also a partner. The argument of the Appellant that M/s Harsh Bullion had conducted a number of transactions of Rs.10 Lakh and more in the FY 2016-17 is good enough ground as not to regard transfer of Rs.1 Crore by Smt. Suman Dua as strange is not acceptable. The transfer is not strange because of its high value but because of the circumstances in which it occurred. The initiation of the transfer of funds in the name of Smt. Suman Dua, in the presence of Shri Mahendra Pal Malhotra from the branch in which Shri Malhotra had an account appears suspicious. It is all the more strange that Smt. Suman Dua did not have an account in the same branch. She is supposedly to have deposited Rs.1 Crore in cash which was accepted by the Chief Manager of the said branch in spite of her not being an account holder in the same branch. Appellant went on to deliver gold to Shri Malhotra. The Appellant was sure of having delivered it to Smt. Suman Dua because the invoice was signed by Smt. Dua, that too, in the absence of the Appellant and to accept the signed invoice received from Shri Malhotra as a token of receipt of gold worth Rs.1 Crore make the transaction strange and inexplicable. Appellant cannot maintain that he acted in good faith. Shri Mahendra Pal Malhotra is also a partner in his other firm of M/s Bankey Bihari Bullion to which the closure proceeds of the account of M/s Harsh Bullion were transferred on 20.06.2017. The inconsistencies pointed out by the Appellant in the statements of Smt. Suman Dua cannot wipe out the circumstances under which the said transaction occurred. Appeal dismissed.

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• Customs

• 2025 (2) TMI 693
  Imposition of duty and penalty on the appellant on the pilfered goods in terms of Section 45 of the Customs Act, 1962 read with Regulation 6 of Handling of Cargo in Customs Area Regulations - principal contention of the appellant is that the appellant was not a party to the Panchnama and security of the container was the prime responsibility of the CISF deployed at ICD Tughlaqabad - it was held by High Court that In terms of Section 45 of the Act and the HCCAR , being the custodian of imported goods, appellant was burdened with the responsibility of safe custody of the imported goods. Appellant cannot escape such burden by shifting its responsibility upon the CISF and has therefore been rightly held liable to pay customs duty and penalty as prescribed under Section 45 (3) of the Act and Regulation 6 (1) (j) of HCCAR, 2009. HELD THAT:- The appeal is admitted - Issue notice on the application for grant of interim relief returnable on 28th March, 2025.

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• 2025 (2) TMI 692
  Refund claim - amount paid by the appellants twice through their customs broker towards import duty liability for the imports - HELD THAT:- All the relevant issues relating to grant of refund has been examined by the original authority, to ascertain the fact whether the import duty has been twice on the very same consignment of imported goods. However, it is found that the learned Commissioner (Appeals) had held that the appellant importer have neither paid impugned duty not they submitted any documentary evidence that the said duty, for which they are claiming refund has been borne by them. Further, on careful perusal of the records of the case, it is amply clear that in respect of imports through courier mode, the importer has to file the Bill of Entry through authorised customs broker. Such customs broker besides providing assistance for clearance of goods from customs control, may also provide services such as logistics, payment of duty on behalf of the importer as their agent, which charges are reimbursed by the importer on actual basis - The documents such as Bill of Entry for which the import duty has been assessed under the Customs statute and the challans in which the customs duty have been paid twice for the same amount and for the very same Bill of Entry are sufficiently evidence that the customs duty has been paid twice for one import. Further, the chartered accountant certificate dated 23.08.2019 produced by the importer -appellants also demonstrates that the burden of duty have been borne by them on being had to pay the customs duty twice, and they had not passed on such burden to any other person. On the above basis, a clear case has been made out by the appellants and the original authority had verified the facts, before grant of refund to the importer-appellants in this case. Therefore, the impugned order is contrary to the factual position of the case as discussed herein and on this ground alone it is liable to be set aside. The issue of refund arising on account of payment of duty/tax twice has been dealt with in detail by the by the Hon ble High Court of Gujarat in the case of Swastik Sanitary wares Limited [ 2012 (11) TMI 149 - GUJARAT HIGH COURT] , upon taking into account the judgement of the Hon ble Supreme Court in Mafatlal Industries and it was held the assessee is eligible for refund of the amount paid for the second time. Conclusion - i) A refund of customs duty is permissible when it is shown that the duty was paid twice due to an error, and the burden of the duty was not passed on to another party. ii) The impugned order is liable to be set aside, as it had denied refund to the appellants, which has been paid twice towards one single import activity on which customs duty applicable has already been paid at the first time, as per law. The impugned order is set aside - appeal allowed.

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• 2025 (2) TMI 691
  Classification of imported Cap Sub Assembly for Door Outside Handle - classifiable under CTH 87089900 as claimed by the appellant or 8708 2900 as alleged by the Department? - demand of differential duty with interest - HELD THAT:- The appellant had himself described the product as door handles in the Bills of Entry. The goods so imported were described as RR door outside handle or FR door handle or outside door handle, clearly specifying the placement of each such door handle. It has been argued before us that the door handle cannot be affixed as such and the plastic base material has to be affixed around its base in order to manufacture door handle. The true test for classification is the test of commercial identity. It has to be ascertained as to how the goods in question are referred to in the market by those who deal with them. In the instant case, the imported goods are door handles for the front door, rear door and in commercially identifiable as such, forming part of the body of the car. The Supreme Court in M/s Thermax Ltd Vs Commissioner of Central Excise, Pune [ 2022 (10) TMI 468 - SUPREME COURT] has reiterated the view that the HSN code is the bedrock of custom controls and procedures. It has also been held that as per the HSN, classification is done by placing the goods under the most apt and fitting sub-heading. The Appellant had declared goods as RR door outside handle or FR door handle or outside door handle . The CTH 87082900-other parts and accessories of bodies-is a specific description for the imported goods. The door handles are part of door as per Section note 3 of section XVII and HSN Explanatory note B of CTH 87.08 and Rule 3(a) of the GIR. When the appellant has specifically given the description of the goods as door handles at the time of import, mere addition of a plastic material to affix the imported goods on doors does not change its principal use. As per rule 2(a) of GIR, the incomplete/ unfinished door handles has the essential character of the complete or finished door handles. Therefore, the same can be considered as finished door handle and accordingly is liable to be classified under CTH 87082900. Since, the imported goods are for specific use, therefore, considering Rule 3(a) of the GIR, the goods are classifiable under CTH 87082900. The appellant is liable for the differential duty Demand of interest - HELD THAT:- In the instance case, the customs duty had already been deposited at the time of import, hence, interest is not liable to be paid. As regards interest, Supreme Court in the case of Pratibha Processors Ors vs Union of India Ors [ 1996 (10) TMI 88 - SUPREME COURT] has held that Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. As the differential duty is liable to be paid, hence, the demand for interest is also upheld. Conclusion - The imported goods are correctly classifiable under CTH 87082900, and the appellant is liable for the differential duty and interest. Appeal dismissed.

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• Corporate Laws

• 2025 (2) TMI 690
  Maintainability of writ petition filed by respondent no. 1 under Article 226 of the Constitution - directions issued by the learned Single Judge were beyond the scope of the writ petition - 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:- It is an elementary principle that when a public authority is vested with specific powers, it is duty bound to act accordingly. Therefore, any failure to exercise statutory powers gives rise to a cause of action to secure performance of such duty by way of issuance of writ of mandamus under Article 226 of the Constitution of India. In the case of CAG vs. K. S. Jagannathan Anr. [ 1986 (4) TMI 344 - SUPREME COURT ], the Hon ble Supreme Court held that a writ of mandamus can be issued where there is a failure to exercise power vested with a public authority. 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. 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 impugned order dated 23rd October, 2024, has been passed by the learned Single Judge on the basis of clear findings of the RBI that there have indeed been violations of mandatory regulations by the ECL. These findings recorded by an apex expert body like the RBI, certainly warrant for issuance of protective ad-interim orders. Conclusion - i) The High Court has the power to issue a writ of mandamus when a statutory authority fails to exercise its powers. ii) Proceedings before the NCLT and NCLAT do not preclude the High Court s jurisdiction under Article 226 to address issues related to the RBI s statutory duties. iii) The principles of natural justice are upheld when parties are given the opportunity to argue on both maintainability and merits. Appeal dismissed.

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• 2025 (2) TMI 689
  Seeking winding up of company - Sections 433(e)/434(1)(a)/439 of the Companies Act, 1956 - HELD THAT:- Upon an examination of the record, it is evident that the present winding-up petition is a non-starter. The proceedings remain at a preliminary stage, with neither a provisional liquidator nor an official liquidator having been appointed to assume control over the assets and affairs of the respondent company. Consequently, no substantive orders have been passed in this petition for seven years. Hon ble Apex Court in the case of Action Ispat and Power P. Ltd. v. Shyam Metalics and Energy Ltd. [ 2020 (12) TMI 535 - SUPREME COURT] held that those winding up proceedings pending before the High Courts, which have not progressed to an advanced stage, ought to be transferred to the NCLT. In the present case, the respondent has submitted written submissions explicitly requesting the transfer of the winding-up petition to the NCLT. In view of the respondent s express request for transfer and the legal precedents affirming that a formal application is not indispensable, this Court finds no impediment in treating the written submissions as an application for transfer of the present petition to the NCLT. The Court is not bound to insist on a separate application when the intent of the party seeking transfer is evident from the record. Considering the express request by the respondent, the fact that no substantive proceedings have been undertaken towards winding up of the company, the present petition cannot be allowed to be continued before this Court. Hence, the instant petition is transferred to the NCLT, Delhi Bench, for further proceedings. Conclusion - The petition should be transferred based on the respondent s request and the lack of substantive progress towards liquidation. List before the NCLT on 10.03.2025 - Petition disposed off.

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• Insolvency & Bankruptcy

• 2025 (2) TMI 688
  Section 95 IBC Petition barred by limitation or not - service of Demand Notice at the wrong address - correctness of amount sought in the Demand Notice and the Section 95 IBC Petition - foundation of the loan amount of SBBJ Bank. Whether the Demand Notice under Rule 7(1) of the IBC Rules, 2019, dated 28.06.2021 was sent to the wrong address by the Financial Creditor? - HELD THAT:- It is claimed that Rule 7 Notice cannot be substituted with Section 13(2) SARFAESI Notice. The nature of both the Notices are entirely different and one cannot substitute the other. The Appellant has given an example of a cheque bouncing notice under Section 138 of NI Act which cannot substitute a winding up Notice under Section 433 of the Companies Act. Similarly, a winding up notice under Section 433 cannot substitute a Section 13 (2) SARFAESI Notice. There are merit in the arguments of the Appellant but in the facts of the case sufficient time was available to the Appellant to provide repayment plan. Even though there have been claims and counter claims with respect to the service of the Demand Notice and also Section 95 Application, it is found that it was the duty of the Appellant to have notified the current address to appropriate authorities, including banks and passport office when they had moved to Chennai. The RP was in touch with him later on even on WhatsApp and the Appellant had also filed his objections on the Report of the RP. In the circumstances of the case, there are no infirmity on the findings of the Adjudicating Authority on this count. Further, the purported non-service of Demand Notice under Rule 7(1) will not have any material impact on the main issue, which is being examined in subsequent paragraphs. Whether the Section 95 IBC Petition was barred by limitation or not? - HELD THAT:- The Appellant has been able to demonstrate that the said amount of Rs 315 crores as in Section 95 application is an approximate total of SBI s A/c No. 30451182299 [pg 535 APB] i.e. Rs 264 crores and A/c No. 61029643854 [pg 539 APB at the bottom] i.e. Rs 51.23 crores totalling to Rs 315 crores. And the later account [A/c No. 61029643854] has nothing to do with SBBJ as the account numbers mentioned in the Demand Notice under Rule 7(1) for SBBJ are 61253087296 and 61074975160 [pg 542/5 APB]. Thus, in both the Rule 7(1) Demand Notice and Section 95(1) of IBC Application, the Respondent No.1-SBI through RP has given a total claim without giving the details in the particulars. And the Appellant has been able to explain that this amount pertains to SBI only and rest amount pertains to some unrelated account of SBBJ. Calculation of period of limitation which would start running from the date of NPA of 13.06.2012 - HELD THAT:- At best the limitation would start from Section 13(2) Notice dated 26.12.2013, when demand was made from the Appellant. Since Demand Notice under Rule 7(1) was issued on 28.06.2021, and the Application under Section 95 was filed on 03.12.2022, it is found that the said Application is prima facie beyond three years and is time barred. Without giving the details of each account, the Respondent No.1-SBI cannot overcome the limitation - the notices for debt and default under Rule 7(1) and Rule 7(2) are issued much beyond three years from the date of default and are therefore barred to be proceeded under the Limitation Act. Section 95 application doesn t satisfy the requirements of details and documents relating to debts owed by the debtor to the creditor or creditors as provided under Section 95 (4) of the Code. It is also found that all objections relating to Section 95 proceedings have not been disposed of, particularly relating to sufficient details and documents with respect to individual accounts in default. The total amount of default as claimed in the Section 95 application has to be individually substantiated with the details of separate accounts, particularly in the facts of the case, where two separate Banks merged and when earlier separate accounts were being maintained in different Banks and separate recovery proceedings were being pursued by both SBI SBBJ separately. Be that as it may, in the interests of natural justice it is found appropriate to remand this case back to the Adjudicating Authority to examine all the objections relating to the details of individual accounts and their dates of default and whether debt is time barred - in full or in part amount - due to RC under SARFAESI Act 2002 and arrive at a conclusion. Conclusion - i) Section 95 IBC Petition was time-barred, as it was filed beyond the three-year limitation period, even after excluding the COVID-19 period. ii) Section 95 application doesn t satisfy the requirements of details and documents relating to debts owed by the debtor to the creditor or creditors as provided under Section 95 (4) of the Code. The personal insolvency proceedings are remanded back to the Adjudicating Authority to determine afresh the limited question of whether on the basis of the materials on record the debt is barred by limitation or not and whether in full or in part amount and accordingly determine the issue of personal insolvency against the Appellant - Appeal allowed by way of remand.

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• 2025 (2) TMI 687
  Power of NCLT to modify the resolution plan - HELD THAT:- The powers of the Ld NCLT with respect to the approval of the Resolution Plan does not extend to examine the commercial wisdom of the CoC and once it is found all the mandatory requirements have been duly complied with and taken care of by the Resolution Applicant, the process of judicial review under Section 31 of the Code cannot be stretched to carry out quantitative analysis concerning a particular creditor. Admittedly, the Resolution Plan has been approved by the CoC with 79.10% voting share after taking into account the feasibility and viability of the Resolution Plan. The Ld. NCLT also does not have any jurisdiction to specifically direct and/or impose a condition for the distribution of an amount that may be received and/or recoverable by Corporate Debtor amongst the creditors while approving the Resolution Plan - The modification made to the resolution plan are set aside, and hence these three appeals are thus allowed. Locus of Appellant, being the dissenting financial creditor of the Corporate Debtor to challenge the Resolution Plan - HELD THAT:- The Appellant, being the dissenting financial creditor of the Corporate Debtor, does not have the requisite locus to challenge the Resolution Plan as duly approved by the members of the CoC. In DBS Bank Ltd. v. Ruchi Soya Industries Ltd. [ 2024 (1) TMI 186 - SUPREME COURT ], wherein the Hon ble Supreme Court categorically held a dissenting financial creditor does not have any say when the Resolution Plan has been approved by a two-third majority of the CoC and a dissenting financial creditor can only object to the distribution of the proceeds under the Resolution Plan, when the proceeds are less than what the dissenting financial creditor would be entitled to in terms of Section 53(1) of the Code. It is not the case of the Appellant that it has been paid less than it is entitled to under Section 53(1) of the Code under the Resolution Plan. As such, the Appellant is precluded from raising objections to the Resolution Plan. The Appellant has failed to raise any cogent ground that may warrant the setting aside of the Resolution Plan. Admittedly the Appellant has duly participated in all the CoC Meetings till the approval of the Resolution Plan and has indulged in extensive deliberations and negotiations with regards to the terms of the Resolution Plan. Therefore, it is clear the Appellant has preferred these Appeals as an afterthought. Thus there is no merit in these two appeals and thus are dismissed.

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• FEMA

• 2025 (2) TMI 686
  Penalty imposed on the Respondent for contravention of Section 3(c) of FEMA - Order passed on the facts that the officials of Police Station Rahon, Distt. Shaheed Bhagat Singh Nagar, Punjab intimated the ED Office that they had seized an amount involved in Hawala transaction from two persons - Investigation was initiated by the Enforcement Directorate under the provisions of FEMA - Special Director (Appeals) has held that the statement was retracted by the Respondent at the first possible opportunity. HELD THAT:- In response to the notice under Section 17(4) of the FEMA Act, Sh. S.L. Chopra Sh. Ravi Chopra, Advocate and Shri Pankaj Yadav, Legal Consultant of Enforcement Directorate appeared for hearing. The appellant s AR referred to the fact that the statement was retracted by the appellant at first possible opportunity. Also, it is seen from the records and submission of the appellant that the purchase of the car could not be completed, hence, no documentary evidence could be submitted. Further, for the source of money, the Appellant has filed CA certified copy of Cash book, which explains the source of cash. Also, it is seen from the order that no proper investigation has been made by the Adjudicating Officer to establish clear chain of events or link between persons involved and no effort has been made to trace or record a statement of Shri Rocky Singh or trace the trail of money. In the absence of any proof or sound basis for levy of penalty or clear chain of events, allowing the appeal and directing the respondent to waive off the penalty and release the confiscated amount within 30 days of this order.

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• Service Tax

• 2025 (2) TMI 685
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Seeking direction to Petitioner to make the payment as per Form SVLDRS-3 and to issue discharge certificate in Form SVLDRS -4 under sub-section (8) of Section 127 of the scheme - recovery of CENVAT Credit on the ground of wrongful availment of Input Cenvat Credit and wrong utilization for the payment of duties - it was held by High Court that The Scheme being prerogative of the Government and since the petitioner had not abided by the terms and conditions of the Scheme -2019, there are no reason to interfere. HELD THAT:- No case for interference is made out in exercise of jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is accordingly dismissed.

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• 2025 (2) TMI 684
  CENVAT Credit - capital goods or inputs - towers, shelters and accessories used by the appellant for providing business support services are immovable property or not - emergence of immovable structure at intermediate stage (assuming without admitting) is a criterion for denial of Cenvat Credit or not - suppression of facts or not - invocation of extended period of limitation. HELD THAT:- The Hon ble Supreme Court in M/s. Bharti Airtel Ltd. Vs. The Commissioner of Central Excise, Pune [ 2024 (11) TMI 1042 - SUPREME COURT] has held that Mobile Service Providers (MSPs) could avail the benefit of Central Value Added Tax/CENVAT Credit over excise duties paid on items such as mobile towers and prefabricated buildings (PFBs). The Hon ble Supreme Court has further observed that the towers and PFBs, though themselves are not electrical equipments, are essential for proper functioning of antenna. Thus, tower being essential for rendering of the output service of mobile telephony, these items certainly can be considered to be inputs akin to antenna. It is further observed that without the towers and the pre-fabricated buildings (PFBs), there cannot be proper service of mobile telecommunication. Hence, these certainly would come within the definition of input under Rule 2 (k)(ii) of CENVAT Rules. Conclusion - Towers and shelters are not immovable property and qualify as inputs and capital goods under the Cenvat Credit Rules, 2004. Appeal allowed.

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• 2025 (2) TMI 683
  Refund of amount paid twice towards service tax liability for the period April 2017 to June 2017 - time-barred refund claim under Section 11B of the Central Excise Act, 1944, as applied to service tax by Section 83 of the Finance Act, 1994 - HELD THAT:- Plain reading of Section 11B of the Central Excise Act, 1944 make the position very clear that the scope of Section 11B ibid, deals with refund of duty/tax and duty/tax refers to the duty/tax leviable as per the provisions of the Central Excise/ Service Tax statute. If there are certain taxable services provided over a period for which the service tax payable is X and when the same has been paid firstly as per law, and secondly by mistake inadvertently, it is obvious that the amount paid in the context of service tax for the second time has no legal basis, either for levy or for payment as service tax, inasmuch as there is no taxable event for which the levy and payment would apply. The above issue has been dealt with in detail by the Co-ordinate Bench of the Tribunal in the case of Bansal Biscuits P Ltd. [ 2023 (11) TMI 615 - CESTAT KOLKATA] , wherein it was held that the limitation of time prescribed under Section 11B ibid is not applicable. The issue of payment of duty/tax for second time, has also been examined by the Hon ble High Court of Gujarat in the case of Swastik Sanitary wares Limited [ 2012 (11) TMI 149 - GUJARAT HIGH COURT] , upon taking into account the judgement of the Hon ble Supreme Court in Mafatlal Industries and it was held the assessee is eligible for refund of the amount paid for the second time. Conclusion - i) The limitation prescribed under section 11B of the Excise Act would not be applicable if an amount is paid under a mistaken notion as it was not required to be paid towards any duty/tax. ii) The amount paid in the context of service tax for the second time has no legal basis, either for levy or for payment as service tax, inasmuch as there is no taxable event for which the levy and payment would apply. The impugned order is set aside - refund allowed - appeal allowed.

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• 2025 (2) TMI 682
  Refund claim - input services - whether denial of refund of CENVAT credit on the aforesaid disputed services by holding the same as ineligible input service in terms of Rule 2(l) of the CENVAT Credit Rules, 2004 is legally sustainable or not? - Invocation of Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. HELD THAT:- Plain reading of the definition of input service indicate that there are three categories of input services viz., the first category services given under the means part; second category, under the inclusion part and the third category of services which are given under the exclusion part. Therefore, in order to ensure that a particular input service is eligible for availing CENVAT credit, it should be covered either under first or second category and should not be covered under the third category of excluded items. Hotel Short term accommodation service - HELD THAT:- The above services are to be considered as eligible for refund as the learned Commissioner (Appeals-II) himself had held so, and that different stand cannot be taken on the admissibility of input services for allowing refund, and that too for the same assessee-appellants again during the same period, in the absence of any substantial changes in the statute. Event management service - Management Business consultancy service - HELD THAT:- Since these have been used for enhancing the skills of the employees on duty involved in the company s projects in order to provide desired results in respect of output services, these fall under the category of means part as eligible services under the definition of Rule 2(i) ibid. Therefore, the refund of CENVAT benefit on the above services allowed. Refund of service tax paid on outdoor catering services / outdoor services and Health Check-up service claimed during the period of April, 2015 to December, 2015 - HELD THAT:- The issue is no more res integra in view of the decision of the Larger Bench of the Tribunal in the case of Wipro Ltd. [ 2018 (4) TMI 149 - CESTAT BANGALORE - LB] , wherein it has been held that the definition of input service has been amended w.e.f. 01.04.2011 providing the exclusion clause, wherein the definition of input service under Rule 2(l) ibid, specifically excludes outdoor catering services and health services . It has been concluded in the said order that the outdoor catering service is not eligible for input service credit post amendment dated 01.04.2011 vide Notification No. 3/2011-CE (NT) dated 01.03.2011 - the appellants are not eligible to refund of CENVAT credit on such input services. Invocation of Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 in rejection of refunds after providing sufficient opportunity for the appellants to demonstrate that the availment of CENVAT credit is in compliance with the CENVAT Credit Rules, 2004 - HELD THAT:- In such circumstances, it cannot be said that what is clearly excluded from the scope of eligible input service in terms of Rule 2(l) ibid, can be treated as eligible, since the appellants have already taken CENVAT credit on the same, on the sole ground that it was not objected to earlier by the department. Therefore, sufficient compliance of requirement of Rule 14 of Cenvat Credit Rules,2004 has been adhered to in this case. Conclusion - The services explicitly excluded under Rule 2(l) of the CENVAT Credit Rules, such as Outdoor catering and Health Check-up services, are not eligible for CENVAT credit, stating that denial of refund of CENVAT credit in respect of outdoor catering services / outdoor services and Health Checkup service is proper and justified, being not in conformity with the statutory provisions. Appeal allowed in part.

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• 2025 (2) TMI 681
  Adjustments of excess Service tax against Service Tax liability - interpretation of the term month in terms of Rule 6(4A) of the Service Tax Rules, 1994 - HELD THAT:- Going by the provisions of Rule 6(4A) of the Service Tax Rules, 1994, it appears that such excess amount paid by the Appellant against its Service Tax liability can be adjusted in the succeeding month or quarter but at this juncture it is also required to reproduce section 13 of General Clauses Act 1897, to give meaning to the use of words month or quarter , as provided in the Service Tax Rules, which is a statutory provision incorporated by the Central Government. Going by sub-clause 2 of section 13 that is applicable to all Central Government Acts and Regulations, it is crystal clear that words used in singular would also mean its plural and vice-versa and therefore, adjustments of excess Service Tax paid in subsequent months/quarters can be held to be valid otherwise if, after adjustment in a quarter any balance amount would still be available, that was permitted to be adjusted against excess payment, would lapse to the detriment of the assesse. Apart from the statutory provision also, judicial pronouncements even at the Apex Court level are consistent in giving findings that in construing a statutory provisions words in the singular are to include also its plurals. Conclusion - Such adjustment of service tax made by the Appellant in different months after such excess payment come to its knowledge, is appropriate and in conformity to Rule-6(4A) of the Service Tax Rules. The impugned order is set aside - appeal allowed.

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• 2025 (2) TMI 680
  Relevant date for calculation of interest on refund claim - Interest on the refund amount has not been granted from the date of the application for refund - seeking grant of interest for the remaining period from 11.11.2016 to 13.06.2022 - HELD THAT:- Reference made to the earlier two orders of the Commissionerate, Jaipur and Gautam Budh Nagar has interpreted the order of the Tribunal transferring the refund claims to the concerned jurisdictional Commissionerate to mean that the date of filing of the original refund application shall be the date of transfer of refund and, therefore, the interest has to be calculated from the said date. The application for refund has now been considered on being transferred to the Jurisdictional Commissionerate. Accordingly, the appellant has been granted interest on the refund amount from the date of the original filing of the refund claim, after a period of three months. In view of the above two orders, which seems to have been accepted by the Revenue, it is felt that they have rightly interpreted the order of the Tribunal as referred above. The Revenue cannot pick and choose to grant relief in one case and deny the same in the other case. Once the original date of filing of the application has to be considered, the necessary implication is that the grant of interest shall also relate back to the said date after the expiry of three months. Reference made to the decision of the Supreme Court in the case of Ranbaxy Laboratories Ltd. Vs. Union of India [ 2011 (10) TMI 16 - SUPREME COURT] , wherein it has been held that interest under Section 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for refund, the amount claimed is still not refunded. Conclusion - The appellant is entitled to interest after the expiry of three months from the date of original filing of the refund application i.e. 11.11.2016 till the date of payment of refund amount i.e. on 13.06.2022. Appeal allowed.

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• Central Excise

• 2025 (2) TMI 679
  Levy of Special Additional Excise Duty (SAED) and Additional Duty of Excise (AED) - goods cleared from the SEZ can be considered as goods manufactured within India for the purpose of tax and duties or not - HELD THAT:- The Tribunal committed no error in holding that the charge under the Principal Act, i.e., Section 3(1) of the Act, 1944 does not extend to goods manufactured in SEZ consequently the Additional duties, i.e., SAED (Surcharge) AED (Cess) also cannot extend to goods manufactured in SEZ. The appeal fails and is hereby dismissed.

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• 2025 (2) TMI 678
  Levy of penalty u/r 26(2) of the Central Excise Rules, 2002 - Clandestine removal - sale invoices supplied by the appellants without actual despatch/receipt of goods - HELD THAT:- The adjudged demands against the duty evasion having been confirmed against the main noticee SPPL, the issue in respect of duty evasion and consequent confirmation of demands in this case has become final. In this context, it is found that legal provisions under Rule 26(2) of Central Excise Rules, 2002 clearly provide that any person, who issues an excise duty invoice without delivery of the goods, on the basis of which the main noticee SPPL had taken ineligible CENVAT credit, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater. On careful reading of the documents on record, it is noticed that the appellants have admitted that they had issued the documents extending CENVAT credit to the manufacturer without supply of inputs, in a few cases. Considering the overall duty evasion involved in the present case, the penalty imposed on the appellants in the present case is in accordance with the provisions of the Rule 26(2) ibid. The gravity of the offence involved in issue of such invoice or abetting, does not gets diluted as the adjudged demands against duty evasion has become final. Conclusion - The penalty imposed on the appellants for issuing excise duty invoices without delivering goods was justified based on their admission and the gravity of the offense. Appeal dismissed.

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• 2025 (2) TMI 677
  Rejection of appeal as being time barred, ignoring the date of filing of the cross objections by the appellant in computing the limitation - whether the date of filing the cross objections (which is not the correct Form) has to be taken into account while considering the issue of limitation, in preferring the appeal before the Commissioner? - HELD THAT:- There is absolutely no difference in the prayers made either in the cross objections or in the appeal filed. Considering the decisions cited by the learned counsel for the appellant, the principle laid down is that it is only a procedural error, which can be rectified and does not warrant dismissal of the appeal. Secondly, in such cases, the limitation would relate back to the date when the original memorandum (though not in the correct form) was filed before the Commissioner (Appeals). The decision of the Single Member in CCE Vs. Nisha Chemicals, Bombay [ 1986 (4) TMI 172 - CEGAT, BOMBAY] has dealt with the appeal in Form-C.A.-3, which was not the valid form as it was meant for an appeal under Section 129A(1), whereas the appeal was filed under Section 129A(2) and it was observed that the forms are meant for helping the authorities in the disposal of the appeals and the applications and they cannot be interpreted to act as a hindrance to such disposals. In other words, the use of a non-prescribed form will not make the appeal invalid. Apart from the decisions of the Tribunal, the learned counsel for the appellant has relied on the decision of the Madras High Court in Planet POP Foods Pvt. Ltd. Vs. AC, Customs [ 2017 (2) TMI 422 - MADRAS HIGH COURT] and the issue considered was whether to treat the representation made by the petitioner seeking withdrawal of the order-in-original as an appeal to assail the order-in-original. In the said case, the appellant was informed vide letter dated 21.04.2016 that an appeal could be preferred before the Commissioner of Customs and, therefore, the appellant preferred the appeal in the appropriate format on 15.12.2016, however, the appeal was dismissed, as being time barred. In the circumstances, the Court considered, whether the party aggrieved by the order-in-original has lodged its grievance before the appropriate forum within the prescribed time limit. The Court considering the representations sent by the petitioner found that they had sought withdrawal of the order i.e. the order-in-original and, therefore, the representation dated 27.04.2016 was within time, though not in the manner prescribed under the Rules. The Court categorically noted that this was more than an error which pertained to the form than the substance of the matter. Conclusion - The cross objections filed by the appellant, though initially incorrect, were within the limitation period, and the rectified form related back to the original filing date. Therefore, the appeal was not time-barred. Matter remanded back to the Commissioner (Appeals), to consider the appeal on merits in accordance with law. The appeal is, therefore, allowed by way of remand.

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• 2025 (2) TMI 676
  Clandestine manufacture and removal - input-output ratio - demand alleging that for production of LABSA, the ratio is to be 1:1.475 whereas the appellant has shown 1:1.45 - suppression of facts or not. Allegation made out on the basis of theoretical method - HELD THAT:- The allegation has been made out on the basis of theoretical method as stated by Shri K.S. Parasuram, but no chemical examination was done to know how much LAB is required to manufacture LABSA - In that circumstances, the said demand is not sustainable as held by this Tribunal in the case of Shree Durga Cables Pvt. Ltd. vs. Commissioner of Central Excise Customs, Bhubaneswar-I, [ 2020 (1) TMI 542 - CESTAT KOLKATA] , wherein the Tribunal has held In any case, since we have already noted hereinabove, that the whole basis of allegation of clandestine removal is the production pattern of other assessees, which has no legal or scientific basis, the impugned duty demand cannot be sustained. - Demand not sustained. Demand of Rs.19,36,934/- was sought to be confirmed against the appellant on the basis of suppression of batch charges for production - HELD THAT:- The mixed quantity required further operation for separation and temporarily stored in the dedicated storage tank and subsequently processing take place, the re-processed batch again placed in a separator like normal batches recovered LABSA and Spent Acid as per norms. The explanation given by the appellant has not been verified or has not been taken up at the time of investigation, same had to be done to know how the batch charge has taken placed then it will be clear. Without any concrete evidence the charge of clandestine removal on the basis of batch charges cannot be confirmed held by this Tribunal in the case of Commr. of Cus., C.E. S.T., Ghaziabad vs. Auto Gollon Industries P.Ltd. [ 2018 (1) TMI 307 - ALLAHABAD HIGH COURT] - The adjudicating authority sought to allege clandestine removal on arithmetical calculation of the number of batches charges which is not sustainable under law. Accordingly, the demand of Rs.19,36,934/- is dropped. Demand of Rs.14,03,998/- sought to be confirmed alleging suppression of production and clandestine removal as evidenced from computer print outs - HELD THAT:- The data in the computer print outs are nothing but movement chart of the respective hired tanker. On the basis of this, the Revenue sought to allege that there is clandestine removal of goods. The computer print outs as explained by the appellant have not been verified by the adjudicating authority from M/s. A.R. Stenchem (P) Ltd. also and it is only on the basis of these print outs, it is alleged that there is a clandestine manufacture and removal of goods. But the said computer print outs are not admissible evidence without following the provisions of Section 36B of the Central Excise Act, 1944, therefore, the said computer print outs cannot be relied upon - the demand of Rs.14,03,998/- is not sustainable, hence dropped. Demand of Rs.1,93,90,293/- was sought to be confirmed on the basis of diary notes recovered from a diary seized during the course of investigation - HELD THAT:- As Revenue has failed to produce any corroborative evidence to allege clandestine removal of goods and same has been alleged only on the basis of diary notes made by their employee Shri Debasis Ghosh, therefore, the said demand is not sustainable in the eyes of law. Demand of Rs.2,27,850.62 has been confirmed on account of clandestine removal of Spent Acid - HELD THAT:- The said allegation is made on the basis that Spent Acid is generated during the course of production of LABSA, therefore, appellant has suppressed the clearance of Spent Acid. The reply made by the appellant is that the said clearance of Spent Acid depends on production of LABSA and there is no evidence in the show cause notice to support the said allegation and there is no evidence in respect of disproportionate procurement of LAB/Sulphuric Acid illegally by the appellant and no corroborative evidence has been produced - As no such effort has been made by the Revenue and brought in any evidence in support of their allegation and the demand is raised on assumption and presumption only, therefore, demand of Rs.2,27,850.62 is not sustainable. Accordingly the same is set aside. Cenvat credit of Rs.1,38,040/- was denied on irregular availment of credit on the goods on the basis of some invoices which were not received in their factory - HELD THAT:- The contention of the Ld.Counsel for the appellant is that the appellant has received the goods containing those invoices which has been used in the manufacture of the final product which ultimately suffered the duty. The said fact has not been denied by the Revenue, in that circumstances, the demand of Rs.1,38,040/- is also not sustainable for denial of Cenvat credit and dropped. Demand on account of shortage of Acid Slurry of Rs.79,675.20 found on 22.11.2001 - HELD THAT:- The measurement of the said Acid Slurry was done only on eye estimation basis. No actual stock taking was taken, in that circumstances, the shortage cannot be alleged against the appellant on the basis of eye estimation, therefore, the said demand of Rs.79,675.20 is also not sustainable hence dropped. Demand of Rs.3,27,046/- has been alleged as short payment of Central excise on account of sale through consignment agent, on the value at which the goods were sold from the consignment agent s place - HELD THAT:- To find out how much is short payment on account of Central Excise duty on account of sale through consignment agent is required to be verified. For that purpose we remand the matter back to the adjudicating authority only to verify how much duty is payable by the appellant on account of sale through consignment agent. If the appellant has paid duty correctly of Rs.40,707/-, no demand is sustainable against the appellant - the case made against the appellant by the Revenue is only on the basis of assumption and presumption, therefore, in such cases without bringing any evidence on record of procurement of raw material from other sources demands are not sustainable. Penalties - HELD THAT:- In the facts and circumstances of the case no penalty is imposable on the appellants. Accordingly, penalties imposed on the appellant and co-appellants are set aside. Conclusion - i) Demands based on theoretical calculations without corroborative evidence are unsustainable. ii) Admissibility of evidence such as computer printouts requires compliance with statutory provisions. iii) Extended periods of limitation require evidence of deliberate withholding of information. iv) Penalties cannot be imposed without substantiated demands. Appeal disposed off.

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• CST, VAT & Sales Tax

• 2025 (2) TMI 675
  Interpretation of statute - New conditions for allowing ITC - Whether Rule 21(8) of the Punjab Value Added Tax Rules, 2005 (Punjab VAT Rules) could have been introduced during the period between 25.01.2014 to 01.04.2014 when there was no enabling provision in the parent statute i.e. the Punjab Value Added Tax Act, 2005 (Punjab VAT Act)? - HELD THAT:- Punjab VAT Act was amended the second time by the Punjab Value Added Tax (Second Amendment) Act, 2013 (Punjab Act No. 38 of 2013). Though as per Section 1(2) of the Second Amendment Act, the same was to come into force at once, the proviso thereto mentioned that amendment of sub-section (1) of Section 13 shall come into force on and with effect from the first day of April, 2014 i.e. from 01.04.2014. Section 5 of the Second Amendment Act deals with amendment to Section 13 of the Punjab VAT Act. A taxable person who had stock in trade as on 25.01.2014 or as on 01.02.2014 had already paid the tax while making the purchase of such goods. In this case, the purchase was made by paying higher rate of tax on iron and steel goods to be used as input for the purpose of manufacture etc. of taxable goods. The taxable person who is otherwise entitled to avail input tax credit on the goods already purchased and lying in stock would suffer serious prejudice and loss if his entitlement to input tax credit are reduced by virtue of lowering of the rate of tax on such goods on a subsequent date. High Court has noted that the enabling provision in the statute came into effect on and from 01.04.2014 and, therefore, Rule 21(8) of the Punjab VAT Rules which permits application of the reduced rate of tax cannot be given effect to transactions which already stood concluded prior thereto. It could only be applied to transactions on and from 01.04.2014. In Eicher Motors Limited Vs. Union of India [ 1999 (1) TMI 34 - SUPREME COURT ] , a three- Judge Bench of this Court examined the challenge to the validity and application of the scheme as modified by way of introduction to Rule 57(F) of the Central Excise Rules, 1944 under which credit which was lying unutilised as on 16.03.1995 with the manufacturers stood lapsed in the manner set out therein. While examining the above issue, this Court held that if on the inputs, the assessee had already paid the taxes on the basis that when the goods are utilised in the manufacture of further products as inputs thereto then the tax on these goods gets adjusted which are sold subsequently. Thus, a right accrued to the assessee on the date when he paid the tax on the raw material or the input would continue until the facility available thereto gets worked out or until those goods existed. The impugned rule cannot be applied to the goods manufactured prior to the date it came into force i.e. 16.03.1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods. The respondent had earned input tax credit on purchase of iron and steel goods which it kept as its stock in trade to be used as inputs or raw materials in the manufacture etc. of taxable goods. State lowered the rate of tax with effect from 01.02.2014 on those goods. The related amendments in the rules i.e. Rule 21(8) of the Punjab VAT Rules were notified on 25.01.2014 to come into effect from 01.02.2014. There was however no corresponding provision in the parent statute i.e. Punjab VAT Act which permitted availing of input tax credit at the lower rate of tax on the existing stock in trade though the purchase of such input was already made at a higher rate of tax thereby reducing the quantum of credit. The enabling provision in the statute i.e. first proviso to Section 13(1) of the Punjab VAT Act came into force with effect from 01.04.2014. Under sub-section (9) of section 13, a person is under a mandate to reverse input tax credit availed by him on goods which could not be used for the purposes specified in subsection (1) of Section 13 of the Punjab VAT Act or which remained in stock at the time of closure of business. If the interpretation sought to be given to Rule 21(8) of the Punjab VAT Rules by the State is accepted, the natural corollary would be that reversal of input tax credit would be at the lower rate of tax on the goods in question when those goods could not be used for the purposes specified in Section 13(1) or which remained as part of the stock in trade at the time of closure of business. Such an interpretation besides being fallacious, would also lead to revenue loss for the State exchequer. Conclusion - The interpretation given by the High Court to the applicability of Rule 21(8) of the Punjab VAT Rules read with the amended first proviso to sub-section (1) of Section 13 of the Punjab VAT Act is legally sound and warrants no interference. There are no merit in the appeal which is accordingly dismissed.

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• Indian Laws

• 2025 (2) TMI 674
  Dishonour of Cheque - vicarious liability of non-executive director - case of appellant is that Appellant had resigned from the company well before the offence occurred - Section 141 of the NI Act - HELD THAT:- This Court has consistently held that a mere designation as a director does not conclusively establish liability under section 138 read with section 141 of the NI Act. Liability is contingent upon specific allegations demonstrating the director s active involvement in the company s affairs at the relevant time. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another, [ 2005 (9) TMI 304 - SUPREME COURT] , this Court laid down that mere designation as a director is not sufficient; specific role and responsibility must be established in the complaint. Upon perusal of the record and submissions of the parties, it is evident that the Appellant was neither a signatory to the dishonoured cheques nor was he actively involved in the financial decision-making of the company. Moreover, he resigned from the post of independent non-executive director on 03.05.2017, duly notified through Form DIR-11 and DIR-12 to the Registrar of Companies - Petitioner s role in the accused company was limited to that of an independent non-executive director, with no financial responsibilities or involvement in the day-to-day operations of the company. Furthermore, he was not responsible for the conduct of its business. Conclusion - The Appellant cannot be held vicariously liable under section 141 of the NI Act. The complaints do not meet the mandatory legal requirements to implicate him. The Impugned Judgment and Order dated 06.08.2019 of the High Court is set aside - Appeal allowed.

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• 2025 (2) TMI 673
  Dishonour of Cheque - nullification of conviction and sentence under Section 138 of the Negotiable Instruments Act by High Court based on a compromise reached between the parties after the appellate court has confirmed the conviction - HELD THAT:- It is well settled that inherent power of the Court can be exercised only when no other remedy is available to the litigants and nor a specific remedy as provided by the statute. It is also well settled that if an effective, alternative remedy is available, the High Court will not exercise its inherent power, especially when the Revision Petitioner may not have availed of that remedy. The power can be exercised by the High Court to secure the ends of justice, prevent abuse of the process of any court and to make such orders as may be necessary to give effect to any order under this Code or Act, depending upon the facts of the given case. This Court can always take note of any miscarriage of justice and prevent the same by exercising its power. These powers are neither limited, nor curtailed by any other provision of the Code or Act. However, such inherent powers are to be exercised sparingly and with caution. In the instant case, it is true that the appeal was dismissed and the conviction and sentence was upheld by the appellate court, but it cannot be lost sight of the fact that this Court has power to intervene in exercise of its power only with a view to do the substantial justice or to avoid a miscarriage and the spirit of compromise arrived at between the parties. This is perfectly justified and legal too. In the case of Krishan Vs. Krishnaveni, [ 1997 (1) TMI 529 - SUPREME COURT] , Hon ble the Apex Court has held that though the inherent power of the High Court is very wide, yet the same must be exercised sparingly and cautiously particularly in a case where the applicant is shown to have already invoked the revisional jurisdiction under section 397 of the Code. Only in cases where the High Court finds that there has been failure of justice or misuse of judicial mechanism or procedure, sentence or order was not correct, the High Court may in its discretion prevent the abuse of process or miscarriage of justice by exercising its power. Merely because the litigation has reached to a revisional stage or that even beyond that stage, the nature and character of the offence would not change automatically and it would be wrong to hold that at revisional stage, the nature of offence punishable under Section 138 of the N.I. Act should be treated as if the same is falling under table-II of Section 320 IPC. In the instant case, the problem herein is with the tendency of litigants to belatedly choose compounding as a means to resolve their dispute, furthermore, the arguments on behalf of the Govt. Advocate (crl.side) on the fact that unlike Section 320 Cr.P.C., Section 147 of the Negotiable Instruments Act provides no explicit guidance as to what stage compounding can or cannot be done and whether compounding can be done at the instance of the complainant or with the leave of the court. Conclusion - Taking into account the fact that the parties have settled the dispute amicably by way of compromise, this Court is of the view that the compounding of the offence as required to be permitted. The present Criminal Revision Case is disposed of in terms of Memorandum of Compromise arrived at between the parties to this litigation out of Court.

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