TMI Tax Updates - e-Newsletter
February 22, 2025

Case Laws in this Newsletter:

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

TMI Short Notes

1. Effective Date of Amendment in GST: Analyzing the Conflict Between Circular No. 247/04/2025 and Notification No. 03/2023

  GST:

Articles

1. GSTAT IS THE NEED OF THE HOUR

   By: K Balasubramanian

2. International Standards for Adding Additives in Processed Food Items/Products.

   By: YAGAY andSUN

3. 5% or 12% GST: A Strategic Choice for Rent-a-Cab Service Providers

   By: Pradeep Reddy

4. Challenging GST Authorities' Inconsistent Approach in First Appeals Using the Approbate and Reprobate Doctrine

   By: Sabyasachi Chakraborty

5. CUSTOMS (ON-ARRIVAL MOVEMENT FOR STORAGE AND CLEARANCE AT AUTHORISED IMPORTER PREMISES) REGULATIONS, 2025

   By: DR.MARIAPPAN GOVINDARAJAN

6. A Guide on How to Register an LLP Online

   By: Ishita Ramani

7. Additives in Processed Food Items/Products - How Safe Are They to Consume?(A Detailed Analysis with Legal Framework as per FSSAI)

   By: YAGAY andSUN

8. Why You Should Read a Label Meticulously of Any Processed Food Item/Product You Buy to Consume?

   By: YAGAY andSUN

9. 20 most Critically Polluted Areas in India and Action Plan by Municipal Corporations, SPCBs, CPCB and MOEFCC to clean it up.

   By: YAGAY andSUN

News

1. 6 Rajasthan Cong MLAs, including Dotasra, suspended from Assembly's Budget Session

2. Senate staying up all night to push GOP budget over objections from Democrats

3. Bengal Assembly Speaker, minister slam BJP over absence of MLAs during budget debate reply

4. Gujarat slashes stamp duty on mortgage deeds, tax on EVs in Rs 3.7 lakh cr budget for FY26

5. J-K CM concludes pre-budget consultations with public representatives

6. Gujarat cuts stamp duty on mortgage deeds, tax on EVs in Rs 3.7 lakh cr budget for FY26

7. Gujarat budget reflects commitment to make state developed, people prosperous: CM Patel

8. DPIIT Secretary chairs PMG Review of Mega Infrastructure Projects ofArunachalPradesh, Sikkim, Delhi, and Jharkhand

9. India Japan partnership rooted in brotherhood, democracy,culture and economic cooperation: Union Commerce and Industry Minister Piyush Goyal

10. In its drive against facilities engaged in printing of Fake Indian Currency Notes (FICN), DRI busts seven more modules in Maharashtra (4), Haryana (1), Bihar (1) and Andhra Pradesh (1); nine arrested

11. MPC minutes: Rate cut appropriate monetary policy response, opined RBI Guv

12. India's forex reserves drop USD 2.54 billion to USD 635.721 billion

13. Launch of the RBIDATA Mobile App by RBI

14. Centre working in tandem with states for economic growth: Piyush Goyal

15. Union Minister Of Commerce & Industry Shri Piyush Goyal interacts with Industry Stakeholders and Associations at Auric, Chhatrapati Sambhaji Nagar, Maharashtra

16. Pak has lost ‘credibility’ as it struggles to achieve economic stability: Finance Minister Aurangzeb

17. ED attaches assets of Telangana pharma firm for 'illegal' export of drugs to Pakistan

Notifications

Customs

1. 15/2025 - dated 20-2-2025 - Cus

Seeks to amend Notification No. 50/2017-Customs, dated the 30th June, 2017 - Effective rates of customs duty and IGST for goods imported into India - Exclusion of condition no. 84 for All goods (excluding vessels and other floating structures as are imported for breaking up)

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2025/22 - dated 21-2-2025

Investor Charter for Stock Brokers

Income Tax

2. 03/2025 - dated 20-2-2025

INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2024-25 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961

Customs

3. PUBLIC NOTICE No. 11/2025 - dated 3-2-2025

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

Highlights / Catch Notes

GST

• GST Registration Cancellation Order Quashed: Lack of Mandatory Reasoning Violates Administrative Law and Constitutional Rights

  Case-Laws - HC : HC quashed the GST registration cancellation order dated 06.04.2021 issued by Asst Commissioner. The order lacked mandatory reasoning for cancellation, violating fundamental principles of administrative law and Art 14 of Constitution. Though petitioner's appeal was dismissed for limitation under s.107(4) UPGST Act, doctrine of merger was found inapplicable. Court emphasized that reasons constitute the essence of judicial and administrative orders, without which such orders cannot be legally sustained. The registration cancellation, being a severe action, required clear justification. The impugned order was set aside for lack of application of mind and absence of reasoning.
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• Electronic Service of Notices Under Central Excise Act Valid Through CGST Act Sections 142(8)(a) and 169(1)(c)

  Case-Laws - HC : HC held that electronic service of notices under Central Excise Act 1944 is permissible through application of CGST Act provisions. Reading Sections 142(8)(a) and 169(1)(c) of CGST Act together enables electronic service modes for existing laws including 1944 Act, despite Section 37C being silent on email service. Court rejected petitioner's argument against electronic notice validity and distinguished prior CESTAT precedent as inapplicable. Directed petitioner to pursue statutory appeal remedy with delay condonation application, excluding court proceedings duration from limitation period. Time spent before court would not count towards appeal limitation. Petition disposed of with directions to appellate authority to consider appeal per law.
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• Officer's CGST Act Arrest Invalidated After Driver Signs Memo Instead of Family Member, Violating D.K. Basu Guidelines

  Case-Laws - HC : HC invalidated an arrest under CGST Act 2017 due to procedural violations. While proper documentation including arrest memo, medical records and grounds for arrest were maintained, the arrest memo was improperly attested by a driver rather than a family member or local resident as required by official instructions and D.K. Basu guidelines. The arresting officer provided no explanation for this non-compliance. The court determined this was not a mere irregularity but a substantive violation that vitiated the entire arrest. Given the illegal nature of the arrest, the court granted bail to the petitioner.
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• GST Registration Cancelled Under Section 29(2)(e) After Business Failed to Prove Actual Premises Occupancy

  Case-Laws - HC : HC upheld cancellation of petitioner's registration under Section 29(2)(e) due to fraudulent misrepresentation of business premises. Despite presenting electricity bills and leave/license agreement, petitioner failed to substantiate actual occupancy through proof of license fee payments or utility charges. Petitioner's inaction in responding to show cause notice, non-appearance before appellate authority, and failure to challenge Bureau of Investigation's spot visit findings proved detrimental. Court found proper officer's inference plausible based on available evidence. The registration cancellation order was deemed neither perverse nor unsupported by evidence, leading to dismissal of writ petition challenging the cancellation order.
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• Input Tax Credit Order Under Section 16(4) CGST Act Set Aside Due To Procedural Non-Compliance And Lack Of Fair Hearing

  Case-Laws - HC : HC set aside respondent's order concerning input tax credit under Section 16(4) of CGST Act, 2017. The matter was remanded back to respondent No.7 for fresh consideration in accordance with amended Section 16 provisions. The authority must provide petitioner opportunity for hearing and issue new determination within two months from certified order copy production. Court's intervention focused on procedural compliance and fair hearing requirements under GST framework, particularly regarding time extension for passing orders under Section 73 and proper adjudication of input tax credit claims.
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• GST Appeal Delay of 142 Days Condoned After Late Physical Service of Notice Despite Portal Upload

  Case-Laws - HC : HC condoned 142-day delay in filing GST appeal where appellant demonstrated reasonable cause due to belated service of demand notice. While notice was uploaded on GST portal, physical copy was only served on 16.04.2024. Court determined delayed physical service constituted sufficient grounds for condonation, setting aside appellate authority's original order rejecting appeal. Delay condoned under principles of reasonable cause and procedural fairness, acknowledging distinction between portal upload and actual service of notice. Original appellate order vacated, allowing appellant to proceed with substantive appeal on merits.
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• Taxpayers Can Claim GST Input Tax Credit for 2017-21 if GSTR-3B Filed by November 2021 Under Section 16(5)

  Case-Laws - HC : HC allowed petition regarding Input Tax Credit (ITC) claims under GST regime. Following precedent in Sri Ganapathi Pandi Industries case, court held that retrospective amendment to Section 16 of CGST Act by insertion of sub-section (5) enables taxpayers to claim ITC for FYs 2017-18 to 2020-21 if GSTR-3B returns were filed by November 30, 2021. Department's order dated February 26, 2021 denying ITC based on Section 16(4) limitation was quashed. Court restrained authorities from initiating proceedings against petitioner on limitation grounds, recognizing extended timeline under Section 16(5). Decision affirms legislative intent to provide relief through retrospective amendment effective from July 1, 2017.
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Income Tax

• Tax Deduction Under Section 80IC Allowed Without Government Agreement; HC Clarifies Distinction from Section 80IA Requirements

  Case-Laws - HC : HC reversed Tribunal's ruling on Section 80IC deduction eligibility. Unlike Section 80IA, Section 80IC(2)(b)(ii) does not mandate agreement with Central/State Government or local authority as prerequisite for tax benefits. Court distinguished between Section 80IC(2)(a), requiring compliance with Central Government schemes, and 80IC(2)(b), which only necessitates manufacturing specified items in designated states within prescribed periods. Tribunal erroneously applied Rule 18BBB and Form 10CCB requirements, which cover multiple provisions (80I, 80IA, 80IB, 80IC). Additionally, Tribunal's examination of abnormal profits under Section 80IA(8) and 80IA(10) was procedurally improper as these issues weren't previously raised before AO or CIT(A). Appeal allowed in favor of assessee.
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• Directors Can Be Prosecuted Under Section 276B Without Specific Notice When Show Cause Notice Names Them As Officers

  Case-Laws - HC : HC set aside trial court's discharge of accused No. 2 (director) in prosecution under s276B of Income Tax Act. Court held specific notice under s2(35) unnecessary when show cause notice indicated directors would be considered principal officers. Company's reply acknowledged prosecution notices against principal officers regarding TDS remittance delays. Trial court erred in concluding directors were not in charge of company affairs despite specific complaint allegations and documentary evidence (Exs.P5-P9). Defense arguments about notice and management role cannot be considered at discharge stage. Following Madhumilan Syntex precedent, separate notice unnecessary when show cause notice identifies directors as principal officers. Matter remanded for trial per law.
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• Section 147 Reassessment Invalid: Notice to Non-Existent Partnership Firm and Lack of Reasons Voids Tax Proceedings

  Case-Laws - AT : ITAT held reassessment proceedings under s.147 invalid where notice was issued to non-existent partnership firm. The tribunal emphasized that serving notice to defunct entity wasn't merely procedural defect but rendered proceedings void ab initio. Additionally, failure to provide reassessment reasons to assessee violated procedural safeguards, prejudicing taxpayer's right to file objections. Regarding s.68 additions for penny stock transactions, ITAT noted actual business losses incurred through listed securities via registered brokers resulted in fund depletion. Such debit transactions cannot constitute unexplained cash credits. Tribunal concluded s.68 inapplicable to genuine business losses, quashed reassessment order, and allowed assessee's appeal.
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• Tax Appeal Rejected: Penny Stock Long-Term Capital Gains and Commission Expenses Valid Under Sections 68 and 69C

  Case-Laws - AT : ITAT dismissed tax authority's appeal regarding additions under sections 68 and 69C. Primary dispute concerned alleged bogus long-term capital gains (LTCG) from penny stock transactions and related commission expenditure. Following precedent from assessee's previous year case, ITAT upheld CIT(A)'s deletion of section 68 addition, noting assessee had discharged primary onus. Despite SEBI's suspension of scrip trading, tribunal applied doctrine of judicial discipline emphasizing consistency in decisions. Consequently, related addition under section 69C for unexplained commission to alleged entry operators was also dismissed as it was consequential to main section 68 dispute. Tribunal maintained consistent approach with earlier rulings on similar penny stock cases.
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• CIT's Revision Powers Upheld: Section 263 Applied for Unverified Interest-Free Loans and Questionable Lender Creditworthiness

  Case-Laws - AT : ITAT upheld revision under s.263 finding assessment order erroneous and prejudicial to revenue interests. Assessee failed to establish loan genuineness and lenders' creditworthiness during initial assessment. Key factors: lenders lacked financial capacity for large interest-free loans, absence of loan confirmations, non-filing/minimal income shown in tax returns by lenders, and loans remaining unpaid without interest for extended period. Tribunal determined transactions fell outside reasonable probability, confirming their non-genuine nature. CIT's intervention justified as AO failed to conduct proper inquiry during assessment regarding loan authenticity and lenders' creditworthiness. Additional documentation provided during s.263 proceedings also failed to establish transaction legitimacy.
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• Cash and Jewelry Found During Search Deemed Explained as Family Assets When No Contrary Evidence Exists

  Case-Laws - AT : ITAT allowed taxpayer's appeal against additions made for unexplained cash and jewelry found during search proceedings. The Tribunal held that mere possession of cash withdrawn from business cannot be treated as unexplained when no contrary evidence exists showing its utilization elsewhere. Regarding jewelry, ITAT ruled that items found in Nidhi Data's bedroom and locker, supported by evidence and affidavits, cannot be treated as unexplained assets in assessee's hands. Similarly, silver articles discovered in Nidhi Data's possession were deemed justified given the family's status and absence of any purchase evidence during search. The Tribunal directed deletion of additions totaling Rs. 27,15,544 for gold jewelry and reversed the finding on unexplained silver articles.
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Customs

• Customs Duty Amendment: Condition 84 Removed for Vessel Import and Breaking Up Under Section 25(1)

  Notifications : Central Government amended Notification No. 50/2017-Customs by removing condition no. 84 for entries under S.No. 551 and 555 in exercise of powers under Section 25(1) of Customs Act, 1962 and Section 3(12) of Customs Tariff Act, 1975. The amendment affects customs duty and IGST rates for imported goods, specifically excluding vessels and floating structures imported for breaking up. The modification replaces the entry "84" with "-" in column (6) for the specified serial numbers. The notification takes immediate effect as per Ministry of Finance's directive through Notification No. 15/2025-Customs dated February 20, 2025.
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• Export Obligation Under EPCG Scheme: NRE Remittances From Cable Subscriptions Valid for 30% Fulfillment Claim

  Case-Laws - HC : HC partially allowed appeal regarding EPCG scheme export obligations. Appellant claimed 30% fulfillment through NRE account remittances for cable subscriptions, supported by certificates from three banks. Court found previous assessment of 14% fulfillment incorrect as it excluded valid remittances up to December 1999. Matter remanded to Settlement Commission to determine actual export obligation achievement based on NRE account remittances. Commission directed to complete verification within 3 months and calculate proportionate duty for unfulfilled obligations. Bank guarantee to remain active pending final determination. Previous orders regarding 14% fulfillment set aside for reassessment.
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• Customs Must Return Seized Goods if Show Cause Notice Not Served Within 6 Months Under Section 124(a)

  Case-Laws - HC : HC held that failure to serve Show Cause Notice within six months under Section 124(a) read with Section 110 of Customs Act 1962 entitled the respondent to return of seized goods. While subsequent confiscation order was valid, it operated independently of the original seizure dispute. The court ruled that immediate possession must be restored to respondent despite confiscation order, maintaining status quo ante until enforcement. The interpretation of "given" in the statute requires actual service, not mere issuance of notice. Authorities were directed to return seized gold within four weeks, though confiscation rights remained preserved for separate enforcement.
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• Customs Duty Drawback Fraud: Penalties Under Sections 114 & 114AA Upheld for Deliberate Suppression and Misdeclaration

  Case-Laws - HC : HC upheld penalties under sections 114 and 114AA of Customs Act 1962 against appellants for fraudulent duty drawback claims through deliberate suppression and misdeclaration. Court found no infirmity in Tribunal's order requiring pre-deposit for appeal. Despite appellants' argument regarding change in law, HC emphasized that 2019 taxation regime applies without retrospective effect. Court noted appellants benefited from 8-year appeal pendency without pre-deposit payment. Appeals dismissed with directive to deposit specified amount within six weeks to pursue appeals, failing which Department authorized to proceed legally. Penalties and joint liability sustained, pre-deposit requirement affirmed as reasonable.
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• Drawback Claim Rejected After 5.5-Year Delay in Filing Export Documents Under Rule 13 of Drawback Rules

  Case-Laws - HC : HC dismissed petition challenging rejection of drawback claim. Petitioner failed to file claim for 5.5 years after export clearance in 2005-06 under Rule 13 of Customs, Central Excise Duties, and Service Tax Drawback Rules, 1995. Original triplicate shipping bills, essential for drawback claims, were allegedly lost in 2011. Court upheld concurrent findings of Commissioner (Appeals) and Revisional Authority that petitioner's explanation regarding employee departure was insufficient to justify delay. No plausible explanation provided for non-submission between 2006-2011 when documents were in possession. Court found no grounds to interfere under Article 227, noting clear laches in claim submission.
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F. Acts / Amendment Acts

• Income Tax correction statements pertaining to Financial Year 2007-08 to 2018-19 shall be accepted only up-to 31st March 2025

  Act-Rules : The amendment introduces a temporal limitation on filing correction statements under section 200(3) of the Income-tax Act. Effective April 1, 2025, taxpayers must submit any correction statements within six years from the end of the financial year in which the original statement was due. Accordingly, correction statements pertaining to Financial Year 2007-08 to 2018-19 shall be accepted only up-to 31st March 2025.
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IBC

• Liquidator's Rejection of Belated Interest Claims Upheld as Time-Barred Under IBC Sections 42 and 60(5)

  Case-Laws - AT : NCLAT upheld rejection of appellant's belated claim for interest payments in liquidation proceedings. Appellant failed to file claims within prescribed timeline and later attempted to add interest component after two years from supply date. Court found interest claim was an afterthought, not included in original documentation. Appellant's attempt to circumvent Section 42 of IBC by filing under Section 60(5) was rejected. Liquidator's actions in seeking NOC for settling sub-contractor claims were deemed appropriate within scope of duties. Key principles established: claims must be filed within timeline, interest claims must be part of original submission, and Liquidator's decisions are final if not challenged within 14 days under Section 42. Appeal dismissed with no grounds for interference with impugned order.
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• Late Resolution Plan Rejected as CoC Already Initiated Voting Process Under IBC Section 61(3)

  Case-Laws - AT : NCLAT upheld CoC's decision to reject appellant's late resolution plan submission in CIRP proceedings. CoC had already initiated voting on three existing plans when appellant submitted request on 13.07.2023 followed by plan on 23.07.2023. CoC's deliberation revealed appellant's non-binding bid of Rs.23 crores through Phoenix ARC had expired, raising doubts about resolution integrity. Pinax's resolution plan secured 97% vote share during 19.07.2023-11.08.2023 voting period. NCLAT found no grounds to interfere with CoC's commercial wisdom under Section 61(3) of IBC, affirming Adjudicating Authority's approval dated 20.12.2024. Appeal dismissed as appellant failed to demonstrate procedural violations or legal infirmity in CoC's decision-making process.
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• Timeline Extension in CIRP Valid Without Fresh Form G Under Regulation 36B as CoC Approves Resolution Plan

  Case-Laws - AT : NCLAT dismissed appeal challenging extension of timeline for submission of Expression of Interest (EoI) and Resolution Plan during Corporate Insolvency Resolution Process (CIRP). CoC's decision to extend timeline without issuing fresh Form G was upheld as it aligned with original EoI's Clause 6. Regulation 36B distinguishes between modification and timeline extension, with only modifications requiring fresh Form G publication. Resolution Plan by Pinax Paper Mills Private Limited secured 96.05% voting share. Appellant's objection was rejected as they participated in process post-extension without prior objection, submitting revised plan after removing non-compliant partner. No material irregularity found in Resolution Professional's conduct warranting CIRP process invalidation.
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Indian Laws

• Unregistered Sale Deeds Cannot Transfer Property Rights Even With Payment and Possession Under Section 54

  Case-Laws - SC : SC held that unregistered sale deeds cannot transfer property ownership under Section 54 of Transfer of Property Act, even with possession transfer and payment. The case involved multiple unregistered transfers of a secured asset, including basement portions. The court emphasized that conveyance occurs only upon deed registration per Section 17 of Registration Act. Additionally, the court reaffirmed that public auctions cannot be invalidated without proof of material irregularity, illegality, fraud, or collusion. The SC overturned the HC's order, confirming that ownership remains with the original holder until proper registration, regardless of attempted transfers through unregistered documents. The appeal was allowed, upholding the validity of the bank's auction process.
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• Accused Successfully Rebuts Presumption in Section 138 NI Act Case as Complainant Fails to Prove Debt

  Case-Laws - HC : HC dismissed appeals concerning dishonored cheques under Section 138 of NI Act. Trial court's acquittal was upheld as complainant failed to establish foundational facts and legally enforceable debt beyond reasonable doubt. Respondents successfully rebutted statutory presumptions under Sections 118(a) and 139 through preponderance of probabilities. Complainant provided no evidence of transactions, supply materials, or bills against which cheques were issued. Witnesses lacked credibility, and documentation showed inconsistencies. Court affirmed that while NI Act creates presumptions favoring holder, accused can rebut through material circumstances and isn't required to prove innocence beyond reasonable doubt.
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VAT

• Industrial Units Win Battle Over Eligibility Certificates as Government Must Honor Policy Promises Made Under 2008 Scheme

  Case-Laws - HC : HC held that rejection of eligibility certificates under Industrial Policy 2008 was unjustified. The conflicting assessments between Industries Department (claiming units non-functioning) and Finance Department (assessing operational turnover) demonstrated administrative inconsistency. Court applied doctrine of promissory estoppel, ruling government must honor policy promises relied upon by industrial units. The State Level Committee must reconsider eligibility applications since tax assessments proved units were operational. Finance Department's assessments during pending eligibility applications were procedurally improper. Court directed issuance of eligibility certificates and corresponding tax benefits, including necessary refunds and adjustments, to qualifying units that commenced production within policy period.
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Service Tax

• Service Tax Extended Period Not Applicable When Cenvat Credit Disclosed in ST3 Returns Under Section 73(1)

  Case-Laws - AT : CESTAT ruled that extended limitation period under Section 73(1) of Finance Act was not applicable as appellant disclosed Cenvat credit in ST3 returns, showing no willful suppression of facts. Revenue failed to establish fraud, collusion, or intent to evade service tax payment. While appellant erred in credit availment, the error was inadvertent as registration occurred only in September 2013. Mandatory penalties were not sustainable absent extended period invocation. Court distinguished from GAIL case where deliberate misclassification constituted tax evasion strategy. Entire demand being beyond normal limitation period was set aside, leaving merits unexamined. Appeal allowed due to lack of deliberate evasion intent.
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• Service Tax and CENVAT Credit Denied on Unregistered Premises; Training Kit and Software Sales Under Fresh Scrutiny

  Case-Laws - AT : CESTAT ruled on multiple service tax and CENVAT credit issues. CENVAT credit was denied on invoices from unregistered premises as they failed to demonstrate output service activities. Credit claims on architect, event management, and other services were remanded for nexus verification. Training kit sales tax demand was remanded to examine VAT payments. Software sales tax demand required further scrutiny of agreements and VAT documentation. SEZ services exemption under Notification 4/2004 needed verification of authorized operations. Extended limitation period was rejected as no suppression was proven given timely return filing and document submissions. Penalties under Section 78 of Finance Act were set aside. Appeal partially allowed with specific issues remanded for fresh examination.
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• Manpower Recruitment Services Under Time and Material Projects Subject to Service Tax - Penalties Modified

  Case-Laws - AT : CESTAT determined services provided under "Time and Material Projects" constituted Manpower Recruitment and Supply Agency Service, not Consulting Engineer Service, following precedent established in similar Philips Electronics India agreements. Service tax demand upheld as manpower supply service. The appellant's ST-3 returns declared services as exempt under Consulting Engineer Service until 16.05.2008, reflecting bona fide interpretation rather than willful suppression. Extended limitation period found inapplicable. Tribunal modified order confirming demand for normal period, maintained penalties under Sections 76 and 77, but set aside Section 78 penalty due to absence of deliberate mis-declaration. Appeal partially allowed.
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• Service Tax Exemption Upheld for Government-Funded Road Construction Under Notification 25/2012; Penalties Under 78(1) Quashed

  Case-Laws - AT : CESTAT set aside service tax demand of Rs.33,04,058 on road construction services, finding them exempt under Notification No.25/2012 for public infrastructure projects funded by government bodies. The Tribunal rejected invocation of extended limitation period, following precedent in G.D. Goenka case, as regular filing of returns indicated no willful suppression. The demand for service tax on legal and manpower supply services (Rs.8,259) was also invalidated due to limitation issues. Consequently, penalties under Sections 78(1) and 77(2) were quashed. The ruling affirmed that road construction for public use, when funded through government channels like DRDA or MP/MLA funds, qualifies for service tax exemption under Entry 13(a) of the notification.
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Central Excise

• Refund Granted for Double Payment of Excise Duty on SKO Import After Clear Evidence Through PLA Records

  Case-Laws - AT : CESTAT allowed appeal regarding refund of erroneously paid excise duty on imported SKO. Appellant substantiated claim through PLA records, TR-6 challans, invoices, and chartered accountant certification demonstrating double payment. Evidence confirmed no excise-bonded SKO was pumped by refineries during 1999-2000, establishing erroneous duty payment. Following precedents in Shree Balaji Warehouse and Grand Prix Engineering cases, CESTAT held refund claims maintainable without challenging initial assessment when erroneous payment is proven. Tribunal rejected Revenue's preliminary objections and Commissioner (Appeals)'s findings, directing refund of excise duty paid by mistake. Appeal allowed with order for duty refund.
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Case Laws:

• GST

• 2025 (2) TMI 847
  Delay in conclusion of proceedings under the Finance Act, 1994 - requirement of completion of proceedings within one year - it was held by High Court that No steps were taken in the entire one year period, which results in the frustration of the goal of expediency as required statutorily. The proceedings cannot be continued. HELD THAT:- Looking at the quantum of the tax involved, it is not required to interfere with the impugned judgment; hence, the present special leave petition is dismissed.

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• 2025 (2) TMI 846
  Cancellation of registration of the petitioner - appeal preferred by the petitioner has been dismissed by the respondent no.2 as barred by limitation as provided u/s 107(4) of the UPGST Act - applicability of doctrine of merger - HELD THAT:- Admittedly from the perusal of the order dated 06.04.2021 it transpires that no reason has been assigned for cancellation of the registration of the petitioner. The order of cancellation is in the teeth of various judgments of this Court as also referred to above. The reasons are heart and soul of any judicial and administrative order. In absence of the same the order cannot be justified in the eye of law. Further since the appeal of the petitioner was dismissed on the ground of delay, this Court finds that the doctrine of merger will have no application considering the facts and circumstances of the present case. In M/s Chandra Sain [ 2022 (9) TMI 1047 - ALLAHABAD HIGH COURT] this Court has held that In the present case from the perusal of the order dated 13.02.2020, clearly there is no reason ascribed to take such a harsh action of cancellation of registration. In view of the order being without any application of mind, the same does not satisfy the test of Article 14 of the Constitution of India, as such, the impugned order dated 13.02.2020 (Annexure - 2) is set aside. The order dated 06.04.2021 passed by the Assistant Commissioner, respondent no.3 is hereby quashed - Petition allowed.

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• 2025 (2) TMI 845
  Non-service of order - impugned order is appealable or not - petitioner came to know about the impugned Order-in-Original only through bank and notices at no point of time were served on the petitioner - Section 37C of the Central Excise Act, 1944 - HELD THAT:- A conjoint reading of Sections 142(8)(a) and 169(1)(c) of the CGST Act shows that the argument of the learned Senior Standing Counsel for CBIC has substantial force. The provision relating to service of notice provided under the CGST Act can be applied in view of Section 142(8)(a) of the CGST Act in relation to any other existing law, which includes the 1944 Act. Thus, we are unable to persuade ourselves with the line of argument of the learned counsel for the petitioner that since Section 37C of the 1944 Act is silent about the electronic mode of service through e-mail etc., the said mode is impermissible or not acceptable. So far the order of the CESTAT, Allahabad, in M/s. Samsung India Electronics Private Limited [ 2019 (11) TMI 1204 - CESTAT ALLAHABAD] is concerned, the said order only gives a reference to the order of the High Court of Madras in OSA Shipping Pvt. Ltd. [ 2015 (10) TMI 982 - MADRAS HIGH COURT] . But, the said paragraph does not deal with the aspect of the validity of service of notice through e-mail mode. Apart from that, in the said case, the notices etc., were issued before the CGST Act came into being. Thus, that order is, even otherwise, of no assistance. The petitioner has a statutory remedy of preferring an appeal. The petitioner can avail the said remedy. Conclusion - The petitioner is directed to file an appeal with an application for condonation of delay, with the appellate authority considering it in accordance with the law. The time spent before the Court would not count towards the limitation period for the appeal. Petition disposed off.

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• 2025 (2) TMI 844
  Challenge to order u/s 73 of the G.S.T. Act - no opportunity of hearing was granted to the petitioner as is prescribed under Section 75(4) of the G.S.T. Act - violation of principles of natural justice - HELD THAT:- The copy of instructions has been produced by the learned Standing Counsel wherein notice was sent to the petitioner however in the column of date of personal hearing N.A. was mentioned. The impugned order also does not record that any opportunity was afforded to the petitioner. The issue with regard to non-grant of hearing was considered by the Division Bench of this Court in the case of M/S Atlas Cycles Haryana Limited Versus State of U.P. and another [ 2024 (2) TMI 942 - ALLAHABAD HIGH COURT] and held that the provisions of Section 75(4) of the GST Act are mandatory. Considering the submission on the ground of non-grant of opportunity of hearing, the present petition is allowed. The impugned order is quashed and the matter is remanded to pass a fresh order in accordance with law after affording an opportunity of hearing to the petitioner.

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• 2025 (2) TMI 843
  Legality of arrest of the petitioner under the CGST Act, 2017 - arrest of the petitioner is in violation of section 36 of the BNSS as well as the instruction dated 17th August, 2022 as amended on 13th January, 2025 or not - HELD THAT:- In the present case, the opposite party has submitted a copy of the office order dated 1st February, 2025 authorizing arrest of the petitioner, the arrest memo, grounds of arrest, arrestee s profile, thumb impression of the arrestee, information of arrest to the nearest relative, handing over of personal belongings, documents showing medical checkup of the petitioner and the inspection memo. It is crystal clear from the arrest memo that such memo is attested by a driver who is neither a member of the petitioner s family, nor a person of the locality from where the arrest is made. Therefore the arrest is in violation of the instruction issued by the authority as well as the mandate laid down by the Hon ble Supreme Court in the authority in D.K. Basu [ 1996 (12) TMI 350 - SUPREME COURT] . Conclusion - Since the arrest of the petitioner is in violation of the instruction issued by the authority as well as the mandate of the Hon ble Supreme Court in D.K. Basu, such lapse on the part of the opposite party cannot be termed as a mere irregularity and in fact vitiates the arrest, moreso, since no explanation has been given by the arresting officer for not complying with the said direction. This Court of the view that since the arrest itself is bad in law, the petitioner deserves an order in his favour - the prayer for bail is allowed.

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• 2025 (2) TMI 842
  Cancellation of registration of the petitioner - registration had been obtained by fraud/willful misstatement or suppression of material facts as enumerated in Section 29(2)(e) of the Act - non-consideration of the documents relied upon by the petitioner - violation of principles of natural justice - HELD THAT:- It is true that the petitioner had relied upon the electricity bills issued in the name of Tarak Nath Pandey as also the leave and licence agreement. It is noted that the leave and licence agreement dated 12th October, 2018 was valid for a period of 11 months. No attempt has been made by the petitioner to establish the factum payment of licence fee of Rs. One thousand per month to the said Tarak Nath Pandey. No attempt has also been made to demonstrate that the petitioner had been making payment of electricity charges to the said Tarak Nath Pandey for occupying the room in question in terms of the leave and licence agreement. The certificate of enlistment issued in favour of the petitioner for the assessment year 2018-2019 and 2019-2020, though cannot be doubted which was available upto 31th March, 2020, however, at the same time, one cannot lose sight of the fact that the petitioner had not challenged the observations as regards the spot visit by the Bureau of Investigation. No attempt was made by the petitioner to respond to the show cause or to appear before the appellate authority. Having regard thereto, the inference drawn by the Proper Officer in the facts of the case appears to be plausible one. The above order does not appear to be one which is based on no evidence or can be said to be perverse. As such no interference is called for. Conclusion - The petitioner s failure to provide sufficient evidence to refute the allegations of fraud and misrepresentation led to the dismissal of the writ petition. Petition dismissed.

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• 2025 (2) TMI 841
  Validity of Section 16(4) of the Central Goods and Services Tax Act, 2017 - extension of time limit for passing the orders under Section 73 of the CGST Act - availment of input tax credit - HELD THAT:- The impugned order dated 27.12.2023 passed by the respondent No.7 is set aside. The matter is remitted to the respondent No.7 to decide the matter afresh in accordance with the provisions of Section 16 of the CGST Act, as amended, after providing an opportunity of hearing to the petitioner, within a period of 2(two) months from the date of production of a certified copy of this order. Petition disposed off by way of remand.

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• 2025 (2) TMI 840
  Condonation of delay in filing appeal - main grievance of the petitioner is that since the impugned demand notice was uploaded in the GST portal and the hardcopy of the notice was served only on 16.04.2024, the petitioner was constrained to file the appeal with a delay of 142 days - HELD THAT:- Considering the arguments made by the learned counsel for the petitioner and the learned Special Government Pleader for the respondents, as well as the fact that the notices, which were uploaded in the portal were served to the petitioner belatedly, this Court is of the view that the petitioner has demonstrated reasonable cause for the delay. Therefore, the Court is inclined to condone the delay of 142 days in filing the appeal. The delay of 142 days in filing the appeal before the first respondent is condoned and the order of the appellate authority/first respondent is hereby set aside - Petition allowed.

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• 2025 (2) TMI 839
  Reversal of ITC claimed - timeliness of filing GSTR-3B returns for availing ITC due to various difficulties faced by the taxpayers - HELD THAT:- The issue involved in the present Writ Petition, has been squarely covered by the common order of this Court, SRI GANAPATHI PANDI INDUSTRIES [ 2024 (10) TMI 1631 - MADRAS HIGH COURT] , batch, wherein, this Court has categorically held this Court considering the fact that the issue involved in all these Writ Petitions is only with regard to the availment of ITC, which is barred by limitation in terms of Section 16 (4) of the CGST Act, and in the light of the subsequent developments took place, whereby, Section 16 of the CGST Act was amended and sub-section (5) was inserted to Section 16, which came into force with retrospective effect from 01.07.2017, the petitioners are entitled to avail ITC in respect of GSTR-3B filed in respect of FYs 2017-18, 2018-19, 2019-20 and 2020-21 as the case may be, on or before 30.11.2021, is inclined to quash the impugned orders. Conclusion - The impugned order dated 26.02.2021 is quashed insofar as it relates to the claim made by the petitioner for ITC which is barred by limitation in terms of Section 16 (4) of the CGST Act, 2017 but, within the period prescribed in terms of Section 16 (5) of the said Act - the respondent-Department is restrained from initiating any proceedings against the petitioners by virtue of the impugned order based on the issue of limitation. Petition allowed.

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• 2025 (2) TMI 838
  Seeking permission to withdraw this writ application with liberty to seek remedy before the Competent Authority - HELD THAT:- This writ application is permitted to be withdrawn with liberty as prayed for. All contentions are left open to the parties.

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• 2025 (2) TMI 837
  Cancellation of the registration of the petitioner on the premise that the statutory returns have not been filed for a continuous period of six months - HELD THAT:- This Court has been consistently following the directions issued in Tvl. Suguna Cutpiece Center s case [ 2022 (2) TMI 933 - MADRAS HIGH COURT] wherein, under identical circumstances, this Court has directed the revocation of registration subject to conditions. The benefit extended by this Court vide its earlier order in Suguna Cut-piece Centre s case, may be extended to the petitioner. Petition disposed off.

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• Income Tax

• 2025 (2) TMI 836
  Rectification application u/s 254 - pendency of the application filed by the assessee before the Settlement Commission as per the provision of Section 245F(2) - assessee filed an appeal before the ITAT challenging the order passed by the CIT(Appeal) with an application to condone the delay in preferring the appeal - ITAT by order condoned the delay of 4379 days and remitted the matter back to the CIT(Appeal) for fresh consideration on merits. As decided by HC [ 2024 (4) TMI 1230 - GUJARAT HIGH COURT] No infirmity in the impugned order passed by the Tribunal to come to the conclusion that there is no mistake apparent on record in the order of the Tribunal wherein after following the decision of the Coordinate Bench, the Tribunal condoned the delay and as the CIT(Appeal) did not adjudicate the issue on merits and dismissed the appeals of the respondent-assessee as not maintainable in view of the order passed by the Settlement Commission on the ground that the matters have abated, the Tribunal has rightly remanded the matter back to the CIT(Appeal) HELD THAT:- As stated at the Bar that the application before the Settlement Commission has not been decided, and an order under Section 245D(4) on the application is to be passed. It is only if the application for settlement is rejected without providing for terms of settlement that Section 245HA of the 1961 Act will be applicable and the appellate proceedings will stand revived. The stand of the Revenue that the assessee must give up his right to contest the assessment order on merits, if the settlement application is rejected without providing for terms of settlement, is misconceived and must be rejected. In the peculiar facts of the case the Income Tax Appellate Tribunal was justified in condoning the delay, as well as setting aside the order of the Commissioner of Income Tax (Appeals) and restoring the first appeal. Recording the aforesaid, we dismiss the present special leave petition. Keep the appellate proceedings in abeyance till the disposal of the application by the Settlement Commission in terms of the 1961 Act

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• 2025 (2) TMI 835
  Maintainability of appeal on low tax effect - assessee submits that the tax effect in these appeals is less than Rs. 2 Crores; therefore, these appeals should be disposed of - HELD THAT:- As held in V.M. Salgaonkar and Brothers (P.) Ltd [ 2024 (12) TMI 717 - BOMBAY HIGH COURT] concerning M/s IPL Loan Trust and connected matters [ 2025 (2) TMI 453 - BOMBAY HIGH COURT] and Axis AD Print Media (India) Ltd.) [ 2025 (2) TMI 770 - BOMBAY HIGH COURT] and connected appeals hold that the monetary limits prescribed in CBDT circulars would apply to pending appeals. Still, the exceptions carved out by the CBDT circulars would apply only prospectively i.e. from the date of the introduction of such exception. Admittedly, before 20 August 2018, these appeals were not covered by any exceptions. However, these appeals were filed because they were beyond the monetary limits prescribed then. The monetary limits have now been revised. These revised monetary limits would also apply to the pending appeals as held in the above precedents. By applying the revised monetary limits to the pending appeals and noting that the exception upon which the Revenue relies was unavailable before 20 August 2018, we uphold the objection on behalf of the assessee and dispose of these two appeals without any cost orders. These appeals are disposed of because the tax effect is within the monetary limits set out by the CBDT.

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• 2025 (2) TMI 834
  Deduction u/s 80IC - appellant/assessee must demonstrate compliance with the conditions set forth in Rule 18BBB(4) - Form 10CCB, associated with Rule 18BBB, requires specific information, including approvals from local/state authorities - evident failure on the part of the appellant to place on the record an agreement or approval that may have been granted to it by either a local or state authority - HELD THAT:- Stipulation of an agreement with the Central/State government or local authority would have to necessarily accompany Form 10CCB, that it has proceeded to remit the matter for examination of AO. We find that it has while framing that direction for remit clearly lost sight of the principal distinction between Sections 80IA and 80IC. As we view Section 80IC it becomes apparent that there is clearly no requirement of an entity which claims coverage under Section 80IC (2) (b) (ii) to have in place an agreement with either the Central or State Government or for that matter any local authority. While Section 80IC (2) (a) does refer to the Central Government, the same is confined to the aspect of the manufactory having been set up pursuant to a scheme notified by that government. However, sub-clause (b) clearly avoids reference to any of those species of authorities. All that sub-clause (b) requires is for the undertaking to be engaged in the manufacture or production of any article or things specified in the Fourteenth Schedule and having commenced operations in the periods prescribed therein and in States of the Union mentioned therein. This must necessarily be contrasted with what obtains under Section 80IA (4) (i) (b) and where an agreement with the Central or State Government has been recognized as being a precondition for the purposes of claiming benefits under that provision itself. The Tribunal also appears to have clearly overlooked the fact that Rule 18BBB as well as Form 10CCB straddles more than one provision in the Act. As is evident from the title of that rule, it is intended to cater to varied enterprises and eligible businesses as envisaged in Sections 80I, 80IA, 80IB or 80IC. We are of the considered opinion that in the absence of Section 80IC requiring an agreement between the assessee and the Central/State Government or local authority or mandating such an agreement as being a mandatory precondition for claiming benefits, the Tribunal has clearly erred in reading such a requirement in respect of an assessee which may have been claiming benefits under Section 80IC. Tribunal thereafter has further proceeded to examine the case of the assessee from the stand point of Section 80IA (8) and 80IA (10). This exercise undertaken by it for purposes of discerning abnormal profits and whether the assessee had allegedly shifted profit or expenditure to an eligible business is an issue which was neither canvassed, raised nor urged either before the AO or the CIT (A). It also does not appear to have constituted a ground of appeal that was urged by the Revenue for the consideration of the Tribunal. Decided against revenue.

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• 2025 (2) TMI 833
  Computation of deduction u/s 80IA - quantum of deduction which the assessee would be entitled to claim u/s 80IA - HELD THAT:- The above appeal filed by the revenue being covered by the decision of this Hon ble Court in [ 2025 (2) TMI 766 - CALCUTTA HIGH COURT] in the assessee s case has to be dismissed. Apart from the fact, there is inordinate unexplained delay in filing the appeal [supra]. We noted that the order impugned in this appeal was relied upon and followed in the assessee s case for the assessment year 2018-19. When the Tribunal passed the said order, the revenue had not preferred any appeal for the assessment year 2016-17 and that has been recorded by the Tribunal in the order impugned in Tribunal had rightly computed the market value of electricity supplied by the captive power plants of the assessee to its industrial units after comparing it with the rate of power available in the open market, i.e., the price charged by the State Electricity Board while supplying electricity to the industrial consumers. Therefore, this is also another ground to dismiss the revenue s appeal.

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• 2025 (2) TMI 832
  Offence punishable u/s 276B - Liability of the Directors in-charge for offence is shown to have been committed by the Company - respondent was being treated as the Principal Officer of the Company - Whether there are sufficient materials to frame the charge against the accused No. 1 Company for the offence punishable under section 276B of the Act? - accused No. 2 to 6 shown that they are not in charge of day to day affairs of accused No. 1 Company HELD THAT:- No such independent and separate notice is necessary when in the show cause notice, it was stated that Directors were to be considered. In the case on hand, there is no dispute with regard to the fact that before launching of the prosecution, a notice was issued on 30.07.2024 and counsel of the petitioner also brought to the notice of this Court the reply given by the Company wherein it also categorically acknowledged while giving reply that with reference to the above facts and subject with regard to the launching of prosecution when notice was issued under Section 276B r/w Section 278B of the Act that notice was given to the Company and Principal Officers of the Company and have received notices from the complainant and also categorically mentioned that notice was acknowledged with regard to the proposal to launching of prosecution against the Principal Officers of the Company for delaying remittance of TDS and in the reply also, they admitted reasons for delay in remittance of the amount. When such material is available before this Court and when specific averment is made in the complaint itself that this respondent and others are in the helm of affairs of the Company and they are the Directors, they are the Principal Officers and notices were also given and marked documents - Exs.P5 to P9 and the very contention that no notice was served and they are not in charge of the affairs of the Company, the Trial Court committed an error in making such an observation that no notice was served as contemplated under Section 2 (35) of the Act and also that they have not been in charge of the Company is nothing but perversity and it requires interference by this Court. The impugned order suffers from legal infirmity and also Court can exercise its revisional jurisdiction when the order suffers from illegality and incorrectness and the trial Court committed an error in coming to such a conclusion that this respondent and others were not in charge of the affairs of the Company when specific allegation is made in the complaint itself for making an averment and even the same has been extracted by the Trial Court in paragraph No. 11 of the impugned order in the beginning itself with regard to the specific averments made in the complaint and also marking of documents Exs.P5 to P9, the attested copies of the notices issued under Section 2 (35) of the Act and the defence cannot be raised at the time of considering the discharge application. Only the Court has to look into the material available on record and the same is a matter of trial. The Court has to look into the principles laid down in the case of Madhumilan Syntex Ltd. [ 2007 (3) TMI 205 - SUPREME COURT] particularly referring the provisions of Sections 276B and 278B of the Act discussed in paragraph Nos.13, 14, 15, 26 and 28 and also comes to the conclusion that there is no need of issuance of independent and separate notice if in the show cause notice it was stated that Directors were to be considered as Principal Officers under the Act. Order - The impugned order dated 01.10.2019 passed by the Special Court for Economic Offences, Bengaluru in so far as it relates to discharging accused No. 2 is set aside and Trial Court is directed to proceed in accordance with law.

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• 2025 (2) TMI 831
  Addition u/s.68 - funds received by assessee from SPPL have been added by doubting the genuineness of the transaction - HELD THAT:- Assessee has duly explained the nature of transaction and has also gone to the extent of explaining the source of source with corroborative documentary evidence including assessment order passed in the case of SPPL whereby Department accepted the share application money received by SPPL from its promoter, i.e., the Malaysian company. In respect of part of funds as received in the subsequent year, assessee has explained it by way of bank reconciliation statement duly corroborated by entries in the bank statement, both of the assessee and that of SPPL. All the stated documentary evidences are placed on record in the paper book. As SPPL itself assessed by the Department for the transaction having a direct bearing on the addition made in the hands of the assessee, we unhesitatingly, delete the addition in the hands of assessee u/s.68. Appeal of the assessee is allowed.

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• 2025 (2) TMI 830
  Penalty u/s 271(1)(c) - estimation of income on bogus purchases - AO added the entire bogus purchases whereas the Tribunal restricted the addition to 12.5% of the bogus purchases being the profit element imbibed in such bogus purchases HELD THAT:- The undisputed fact is that the additions were made on account of bogus purchases and the quarrel travelled up to the Tribunal and the Tribunal restricted the quantum addition at 12.5% of the bogus purchases. No merit in the contention of the ld. Counsel that the profit has been estimated and the penalty has been levied on estimated profit. Facts on record show that there were bogus purchases and only the profit element has been added which means that the assessee has concealed the income to this extent in the garb of purchases which turned out to be bogus. No hesitation in confirming the penalty so levied u/s 271(1)(c) - Decided against assessee.

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• 2025 (2) TMI 829
  Reopening of assessment u/s 147 in the name of Partnership Firm as not in existence - penny stocks treated as undisclosed income u/s 68 - HELD THAT:- The law is well-settled in this regard. The re-assessment notice u/s 148 of the Act in the name of a non-existing entity despite unequivocal knowledge of its non-existence, is clearly vitiated and rendered nonest in law. The notice issued on a non-existent firm is not a mere technical glitch. The notice issued under s. 148 to the non-existent firm which was a distinct taxable entity is thus liable to be quashed at the threshold without anything more. This view is supported by the judgement rendered in the case of Maruti Suzuki India Ltd [ 2019 (7) TMI 1449 - SUPREME COURT] , Uber India Systems (P.) Ltd. [ 2024 (10) TMI 1001 - BOMBAY HIGH COURT] and Alok Knit Exports Ltd [ 2021 (8) TMI 777 - BOMBAY HIGH COURT] . Reasons for re-opening were not provided to the assessee - Noticeably, in the instant case, reasons are neither provided at the time of initiation of proceedings nor such reasons have been spelt out in the re-assessment order. Apparently, the vested right of the assessee to file objection to any unlawful assumption of jurisdiction has been completely done away causing serious prejudice to the assessee and embroiled him in protracted litigation. For assumption of lawful jurisdiction under the Act, all jurisdictional conditions and procedural requirements need to be satisfied. In the absence of copy of reasons made available in spite of specific request, presumption would arise adverse to the Revenue on compliance of pre-requisites of s.147 151 of the Act. The re-assessment order framed under s. 147/143(3) is thus, liable to be quashed as rightly contended on behalf of the assessee. Addition u/s 68 - The assessee has actually incurred business losses on the transactions in Banas Finance Ltd., a stock which is otherwise duly listed on the platform of the exchanges and transactions registered have been routed through SEBI registered stock brokers. The loss claimed has actually resulted in an outgo and depletion of funds. Hence the business loss by no stretch of imagination could fall within the expression unexplained cash credits . The outgo/loss has resulted in a debit transaction rather than credit transaction. Hence, the additions made under s. 68 is impermissible in law at the threshold. We find apparent rationally in the plea of the assessee for inapplicability of s. 68 of the Act to deny a business loss claimed to have occurred to the assessee. The assessee thus succeeds on this aspect as well. Appeal of the assessee is allowed.

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• 2025 (2) TMI 828
  Denial of Foreign Tax Credit claimed under article 25(2)(a) of the India USA DTAA r.w.s. 90 of the I.T. Act - late filing of Form 67 - assessee filed revised return and claimed Foreign Tax Credit and also filed Form 67 - HELD THAT:- Identical issue came up in the case of Neha Kapoor [ 2023 (9) TMI 31 - ITAT DELHI] wherein the Tribunal directed the Assessing Officer to allow credit of Foreign Tax Credit as held Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. Thus we hereby direct the AO to allow the impugned credit of FTC to the assessee. Decided in favour of assessee.

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• 2025 (2) TMI 827
  Revision order u/s 263 on a deceased person - HELD THAT:- Following the judgment in the case of Dharamraj [ 2022 (1) TMI 844 - DELHI HIGH COURT] notice issued u/s 148 of the Act on a dead person was held to be null and void and all consequent proceedings/orders, including the assessment order and the subsequent notices are equally tented and liable to be set aside. Similar view has been taken in the case of Mrs. Sripathi Subbaraya Manohara L/H Late Sripathi Subbaraya Gupta [ 2021 (7) TMI 695 - DELHI HIGH COURT] wherein the High Court quashed the assessment and penalty orders passed on the deceased person. Since in the case on hand an order u/s 263 was passed by the Pr. CIT on the assessee who deceased on 28.03.2020 such an order is null and void and the same is hereby quashed. Appeal of assessee allowed.

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• 2025 (2) TMI 826
  Addition u/s 68 - treating agricultural income as unexplained income of the assessee - During the course of assessment proceedings, details of agricultural income were not filed - HELD THAT:- CIT(A) while confirming the additions, has observed that the assessee has not been able to clarify as to how the agricultural operations were claimed to have been carried out on commercial land. Before us also, the assessee could not be able to justify whether the agricultural income earned, were from the agricultural land and no commercial land was used for the same. Moreover, Form J submitted contained the name of the Director of the assessee company. All these facts need proper verification. Therefore, in the interest of justice, this issue is set aside to the file of the AO for making proper verification of the fact whether agricultural income is declared from the agricultural purposes carried out by the assessee on agricultural land or any commercial land is involved. The AO is further directed to verify whether Form J issued in the name of Director are related to the sale of agriculture produce by the assessee or not. The AO is also directed to allow proper opportunity and assessee is directed to make proper compliance of the notice issued by the AO. Addition on account of gain from the compulsory acquisition of land by holding the same as unexplained income of the assessee - assessee is not entitled for exemption on the compensation received of the said land acquired by NHAI. He further observed that the assessee is not entitled for exemption u/s 10(37) of the Act as the same is not available to companies as well as in case of non-agricultural land - HELD THAT:- As per amended sub-section 3 of section 105, the provisions of the RFCTLARR Act, 2013 relating to the determination of compensation in accordance with First schedule shall apply to all cases of land acquisition under the enactments specified in Fourth schedule of the said Act. Since NHAI Act is already included in Fourth schedule of the RFCTLARR Act, 2013 thus exemption as provided in section 96 of the said act is available in cases where land is compulsory acquired by under NHAI Act for public purposes and the precondition of issue of notification to this effect has already been withdrawn through amendment in sub-section (3) of section 105 of the said Act. CBDT vide circular No. 36 of 2016 dated 25.10.2016 after considering the exemption provided u/s 96 of the RFCTLARR Act, 2013 towards the compensation award under this Act as tax free under the Income Tax Act, 1961 clarified that award granted under the RFCTLARR Act, 2013 both for agricultural and non-agricultural land is tax free. Therefore, the compensation received by the assessee on compulsory acquisition of its land, both commercial and agricultural land, by NHAI is eligible for exemption from income tax as per the provisions of section 96 of the RFCTLARR Act, 2013 which is a special Act and prevail over the Income Tax Act, 1961. This view gets support from the judgement of V.S. Promotors Ltd.[ 2023 (2) TMI 1388 - ITAT LUCKNOW] Since the land owned by the assessee were acquired by NHAI as compulsory acquisition u/s 3A of NHAI Act, 1956 and compensation was awarded by the competent authorities. The entire amount compensation so awarded was received by the assessee during the FY 2015-16 relevant to the assessment year under appeal, which is after the amendment made in section 105(3) w.e.f. 01.01.2015. Therefore, for claiming the exemption of the compensation under the RFCTLARR Act, 2013 awarded by NHAI, there is no requirement of issue of any notification. Moreover, we have already expressed the view that exemption from the income tax on the compensation received upon compulsory acquisition of land by NHAI is available as per section 96 of the RFCTLARR Act, 2013, therefore, addition made by disallowing the exemptions available to assessee is directed to be deleted. Decided in favour of assessee.

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• 2025 (2) TMI 825
  Revision u/s 263 - Short Term and Long Term Capital Gains earned during the year - HELD THAT:- Assessee produced the details of share trading statement of broker, Demat statement with re-conciliation, sale/purchase bills of share trading and financial ledger of the broker and after going through those documents the AO made no addition. In the present case, the AO raised specific query on the issue of Short Term and Long Term Capital Gains earned during the year and the Assessee has produced the cogent documents and after verifying the documents, the A.O. came to a conclusion that no addition requires to be made and while doing so, AO has also called for books of accounts and examined on test check basis to examine the genuineness of the transaction. PCIT committed error in invoking the provision of Section 263 accordingly, findings merits in the Grounds of appeal of the Assessee, we hereby quash the order impugned passed by the PCIT. Decided in favour of assessee.

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• 2025 (2) TMI 824
  Denial of deduction u/s. 80P - return of income was filed belatedly - HELD THAT:- CBDT vide instruction dated 27.02.2019 issued u/s. 119(2)(b) of the Act directed that all the return of income and reports of audit which are filed till 02.08.2019 are deemed to have been filed by 31.10.2018 in case of tax payers of Kerala following the devastating floods in the month of August, 2018. Therefore return of income cannot be considered as belatedly filed. Therefore, the matter may be set aside to the AO to pass appropriate order rectifying the order passed u/s. 154 of the Act. DR did not express any objection to the above submission. We, remit the matter back to the file of the CPC to amend the rectification considering the instruction issued by the CBDT treating all the returns of income filed by 02.08.2014 were treated as filed by 31.10.2018. Appeal filed by the assessee stands partly allowed.

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• 2025 (2) TMI 823
  Disallowance u/s 40A(3) - amount paid in cash to the Kerala State Electricity Board (KSEB) towards electricity charges - HELD THAT:- The provisions of section 40A(3) is not absolute. Provisions of section 40 A(3) cannot be read in isolation but should be read with the provisions of rule 6DD of the I.T. Rules. Provisions of rule 6DD enumerates certain exceptions for invoking provisions of section 40A(3). Clause (b) of rule 6DD provides that where the payment is made to the government no disallowance u/s. 40A(3) is to be made. In the present case, the payment is made to state government undertaking, i.e. KSEB, which is considered to be a state within the meaning of Article 12 of the Constitution of India and the cash payment made to the state government undertaking cannot be disallowed. See SRC Aviation P. Ltd. [ 2012 (9) TMI 296 - DELHI HIGH COURT ] and Arvind Mills Ltd. [ 2014 (11) TMI 591 - GUJARAT HIGH COURT ] Since the payment in question falls under the exceptions enumerated under rule 6DD, we delete the addition. Assessee appeal allowed.

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• 2025 (2) TMI 822
  Reopening of assessment - non issuing and serving the notice u/s 143(2) - on the basis of AIR information, case of the assessee was reopened by AO u/s 147 -HELD THAT:- Keeping in view the legal position as emerging from the several judicial precedents which have taken the consistent stand that issue of notice u/s 143(2) is mandatory even in reassessment proceedings, hence the reassessment order framed by the AO u/s 147 of the Act is not sustainable in the eye of law and is liable to be quashed. Decided in favour of assessee.

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• 2025 (2) TMI 821
  Late fee levied u/s. 234E - TDS statements filled belatedly - as contented in the absence of enabling provisions u/s. 200A or the Act late fee cannot be levied placing reliance on the decision of Shri Fatheraj Singhvi vs. Union of India [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] - HELD THAT:- Admittedly, the quarterly statement of TDS was filed belatedly. No doubt, the late fee was levied for the period prior to the amendment to section 200A of the Act, which came into effect on 01.06.2015 enabling levy of late fee by the CPC. No doubt, it is true that the in the case of Shri Fatheraj Singhvi (supra) took a view that in the absence of charging provision, late fee u/s. 234E of the Act cannot be levied for the period prior to 01.06.2015. However in the case Sree Narayana Guru Smaraka Sangam Upper Primary School [ 2017 (1) TMI 1105 - KERALA HIGH COURT] and subsequent decision in the case of Alampally Pressure Testing C. (P) Ltd. [ 2023 (12) TMI 551 - KERALA HIGH COURT] took a view that late fee as envisaged u/s. 234E of the Act can be levied even for the period prior to 2015 by holding that the law on the date when the impugned notices were issued provided for levy of late fee u/s. 234E, which had been inserted by Finance Act, 2012 w.e.f. 01.07.2012. We confirm the levy of late u/s. 234E of the Act - Decided in favour of revenue.

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• 2025 (2) TMI 820
  Revision u/s 263 - AO allowed excess deduction u/s 54F - HELD THAT:- The main fact that the assessee has invested upto Rs.89,10,000/- in the properties which is threshold under Section 54F of the Act and there is no doubt created by the PCIT in the said transfer. Once the AO has looked into all the aspects when the assessee is claiming deduction u/s 54 which was rightly disallowed by the Assessing Officer and the deduction claimed u/s 54 which was looked into after checking/verifying all the conditions of Section 54F of the Act and thereafter granting the same is not at all erroneous or prejudicial to the interest of the Revenue. Invoking Section 263 of the Act by the PCIT thus is that of review of the Assessment Order which is beyond the scope of Section 263 - Appeal of the assessee is allowed.

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• 2025 (2) TMI 819
  Addition u/s 68 - bogus LTCG - AO concluded that penny stock frauds concluded by assessee - HELD THAT:- The assessee has provided all necessary documentary evidence to substantiate the purchase and sale of shares, including purchase agreements, Demat account statements, broker confirmations, bank transaction records, and STT payment proof. The broker, Shaswat Stockbrokers Pvt. Ltd., confirmed the transactions in response to a notice under Section 133(6) of the Act. The shares were purchased off-market but subsequently dematerialized and sold through BSE, demonstrating the transparency of the transaction. AO s addition under Section 68 is not based on any direct evidence showing that the transactions were accommodation entries. The AO has relied only on general observations regarding penny stock manipulation, without establishing any link between the assessee and such activities. Mere stock price fluctuations, without direct evidence of price rigging or collusion, cannot justify an addition under Section 68 of the Act. Hon ble Gujarat High Court, in the case(s) of Pr. CIT v. Himani M. Vakil [ 2012 (9) TMI 1099 - GUJARAT HIGH COURT ] and Maheshchandra G. Vakil [ 2012 (9) TMI 1098 - GUJARAT HIGH COURT ] has held that mere reliance on the Investigation Wing s report and abnormal price fluctuations cannot justify an addition under Section 68 unless there is specific material to prove that the transaction is a sham. We find that the assessee has fully discharged the burden of proof by providing all necessary evidence, whereas the Revenue has failed to rebut it with substantive material. AO has neither examined the counterparty nor produced any evidence of collusion or price manipulation. Decided in favour of assessee.

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• 2025 (2) TMI 818
  Addition u/s 68 - booking accommodation entry of bogus LTCG/STCG in the garb of sale proceeds on sale of shares - assessee failed to discharge the burden cast upon him to prove the LTCG claim and taking note that the SEBI had suspended the sale of this scrip - CIT HELD THAT:- As in assessee s own case in the previous assessment year, hon ble Bench has affirmed the decision of the CIT(A) taking into account the contents of the assessment order, the investigation report, the findings of the appellate order and a catena of judicial decisions involving the same penny stock wherein similar additions made by resorting to section 68 of the Act, have been deleted on the ground that the assessee s discharged the primary onus. No reason for drawing any divergent view of the matter and in the light of the doctrine of judicial discipline requiring that benches of judicial and quasi-judicial bodies operate on principles of consistency, continuity, and certainty, hold that the addition was rightly deleted by the ld.CIT(A). Addition u/s 69C - unexplained commission expenditure - AO alleged that the assessee might have incurred unaccounted expenditure on account of payment of commission to the entry operators and accommodation entry providers alleging them to have assisted him to claim bogus Short Term Capital Gain - HELD THAT:- As this ground of appeal is consequential to the main ground of the appeal regarding addition u/s 68 of the Act in respect of exempt LTCG claim. Since ground relating to the addition made u/s 68 of the Act has already been decided in favour of the assessee, this ground is also dismissed.

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• 2025 (2) TMI 817
  Reopening of assessment u/s 147 - addition of entire credits on account of undisclosed and unexplained income - appellant failed to satisfactorily explain the nature and source of the cash deposit, due to which the assessment order was upheld by the CIT(A) - HELD THAT:- It is an undisputed fact that the date of hearing in respect of the last notice was on 14.08.2024 and on the same day the order u/s 250 of the Act was passed at 15.17 IST. Therefore, the CIT(A) has passed the order without waiting for the reply on the date hearing on 14.08.2024. Be that as it may, the ld. AR has also not filed any evidence to show that the assessee had in fact filed reply on or before 14.08.2024. Considering all these facts, we are of the view that though the assessee was negligent and non-cooperative before the lower authorities, the CIT(A) should have waited for the reply of the assessee till 14.08.2024. The ld. AR requested that another opportunity may be granted to the assessee to submit all the required explanations and details and plead his case on merit. Principles of natural justice would call for giving another opportunity of hearing to the assessee. Accordingly, we hold that the interests of justice would be met in case the AO re-examines the entire issue afresh subject to payment of cost of Rs. 10,000/- (Rupees ten thousand only) by the assessee to the credit of the District Legal Services Authority, Surat within three weeks from receipt of this order. Grounds of appeal raised by the assessee are allowed for statistical purposes. Levy of penalty u/s 271(1)(c) and u/s 271F - Since the matter has been restored to the AO for fresh adjudication, there is no basis at all for levy of penalty u/s 271(1)(c) of the Act. As the penalty order does not survive, the resultant order of CIT(A) is quashed. AO may initiate proceedings u/s 271(1)(c) of the Act during the fresh assessment proceedings, if required conditions are fulfilled. Accordingly, the ground is allowed for statistical purpose. Levy of penalty u/s 271(1)(b) as assessee did not comply with the notices issued u/s 148, 142(1), 129 - CIT(A) observed that the AO has taken a lenient view by levying penalty for one default, though there were multiple non-compliances by the assessee. The appellant has not proved that there was reasonable cause for the said failures within the meaning of section 273B of the Act. We also find that the AO has been very fair and reasonable in levying penalty of Rs. 10,000/- for one default only in spite of failure of assessee on four occasions to comply with the notices issued by him. It may be mentioned that section 271(1)(b) requires penalty of Rs. 10,000/- for each such failure. Therefore, instead of Rs. 40,0000/-, the AO has levied penalty of Rs. 10,000/-. Hence, we find no reason to differ from the findings of the lower authorities. Accordingly, grounds are dismissed.

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• 2025 (2) TMI 816
  Revision u/s 263 - CIT on examination of records noted that during the assessment proceedings the Assessee had not proved Genuineness of Loans and Creditworthiness of the Lenders - HELD THAT:- When we apply the provisions of the Section 263 to the Assessment Order it is observed that admittedly the AO during assessment proceedings had not carried out necessary inquiries to prove Creditworthiness of the Lenders, Genuineness of the transaction. Also admittedly, during the Assessment Proceedings the assessee had not filed any Loan confirmation from Lenders, admittedly one of the Lender had not filed any Return of Income for A.Y.2018-19, and another Lender had shown meager Income in the Return. Admittedly, the Lenders had no sufficient resources to lend such huge amounts to the assessee without any Interest. During the hearing before this Tribunal, we asked the Ld.AR has the Loan been Repaid? The Ld.AR submitted that the Loan has not yet been repaid. Thus admittedly even after so many years the so called Loan is outstanding and the Lender has not received any Interest. This itself is outside the human probability and explains that the entire transaction is non-genuine. Thus, we are of the opinion that the Assessment Order was erroneous and prejudicial to the interest of revenue hence we uphold the Order u/s 263. CIT was right in holding that the assessment order is erroneous and prejudicial as at the time of Assessment AO had not carried out inquiries to prove Genuineness of loan and creditworthiness of lender. Also, we have perused the so called details filed by the Assessee after the Assessment Proceedings, we are of the opinion that even after the Assessment Proceedings, during 263 proceedings, the Assessee has failed to prove the genuineness of the transaction. - Decided against assessee.

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• 2025 (2) TMI 815
  Addition on account of cash found during the course of search as unexplained cash - whether the CIT(A) is justified in not allowing set off of cash considered unexplained by him against the cash withdrawal ? - HELD THAT:- We note that no document is found in search to come to a conclusion that the amount withdrawn by the assessee from M/s Vijay Industries has been utilized elsewhere. There is no law which prohibits an assessee to keep cash in hand and therefore only because assessee has not given explanation as to why the cash was withdrawn, when he has withdrawn the cash earlier also cannot be a ground to reject the explanation of assessee. In various cases referred above, it has been held that where no evidence is brought on record that cash withdrawal has been utilized elsewhere, such cash should be considered as available with the assessee. Considering all these facts, we direct the AO to delete the addition made by him. Unexplained gold and silver jewellery - Once the jewellery and silver articles are considered as belonging to the family as a whole, there does not remain any unexplained gold jewellery. When the jewellery was found from the bedroom and locker of Nidhi Data, the addition made by Ld. CIT(A) in the hands of assessee is otherwise unjustified. We also found that in respect of the jewellery found from the room locker of Nidhi Data, assessee has furnished the evidences as to the source of same but without controverting the evidences and the affidavits filed it was not correct to consider any part of gold jewellery found from the bedroom and locker of Nidhi Data as unexplained. Hence the addition of Rs. 27,15,544/- (9,81,744 + 17,33,800) confirmed by the Ld. CIT(A) is deleted. Silver utensils/ ornaments - We note that from the bedroom and the common room, 12,322.80 gms (3188.800 + 9134) of silver article was found from Nidhi Data. It comprises of 8000 gms owned by Nidhi Data, 1170 gms owned by assessee and 3152.80 gms belonging to the children. Out of it, 8000 gms is considered as explained by AO leaving the remaining silver items at 4322.800 gms but addition has been made for 29,960.05 gms. Thus the addition made is prima facie incorrect. Otherwise also, when the silver article was found in the possession of Nidhi Data, addition made in the hands of assessee is unjustified. We also note that in search no evidence of purchase of silver item was found in search. Therefore, considering the status of family and other material evidences, we direct deletion on account of unexplained silver articles in the hands of assessee. Aappeal of the assessee is allowed.

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• 2025 (2) TMI 814
  Rejecting the application for registration u/s. 12AB - no compliance from the assessee on notice issued by CIT(E) - self-certified copies of annual accounts and note on activities of the applicant had not been furnished by the assessee, thus CIT(E) could not verify the objects as well as activities of the assessee-trust HELD THAT:- AR has contended before us that the assessee is ready to submit all details and evidences needed by the CIT(E) and one more opportunity may be given to the assessee. We find that assessee could not pursue his case before the CIT(E) by filing necessary evidences and documents. Hence, we are of the view that one more opportunity should be given to the assessee to file relevant documents/evidences and to plead his case before the CIT(E). It is settled law that principles of natural justice requires that the affected party is granted sufficient opportunity of being heard to contest his case. Thus we restore the matter back to the file of CIT(E) for de novo adjudication and to pass a speaking order - Grounds of appeal are allowed for statistical purposes. Rejecting the application u/s 80G(5) due to late filing - As decided in FI FOUNDATION [ 2024 (9) TMI 424 - ITAT CHANDIGARH] application of the assessee deserves to be examined on merits and cannot be dismissed as barred by limitation. There is no reason as to why the above decision would not be applicable to the facts of the instant appeal, which are similar. Hence, following the above decision, the matter is remitted to the file of CIT(E) to admit the application of the assessee-trust as filed within the stipulated period and examine the same on merits as per law after granting reasonable opportunity of being heard to the assessee

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• Customs

• 2025 (2) TMI 813
  Non-fulfilment of export obligation under the EPCG Scheme as per the EXIM policy 1992-97 - entitlement to concessional duty based on the export obligation achieved - HELD THAT:- When the DGFT had particularly sought for the details of export earnings upto the period 22.12.1999 along with the bank certificates and Appendix 10C attested by the Chartered Accountant and the same has also been furnished by the appellant with all particulars, there had been no further development and when these details were also filed before the Commission, the same had not been considered by the Commission only on the ground that the request for extension made by the appellant had been rejected. Before this Court, the appellant had filed a consolidated statement of exports and the receipts in foreign currency for the period from 01.04.1993 to 20.12.1999. On perusal it could be seen that it is only a self serving document prepared by the appellant and we are not inclined to rely on this self serving document to appreciate the contentions made by the appellant. However, copies of 3 Bank certificates all dated 25.09.2000 issued by Federal Bank Limited, Indian Overseas Bank and State Bank of Travancore, pertaining to the remittances received for the period upto 22.12.1999 has been filed. The certificate issued by the State Bank of Travancore precisely states that the remittances had been received from various NRE accounts into the account of the appellant. But the certificate of Indian Overseas Bank states that they have collected and credited Rs. 1,63,84,165/- from various NRE customers for the period from 03.06.1999 to 20.12.1999 which is equivalent to US$ 3,56,170. The certificate issued by Federal Bank also certifies that for the period upto 20.12.1999 they have credited an amount of Rs. 4,21,550/- which is approximately equivalent to US$ 10,036.90. When admittedly the EPCG licence has been extended for the period upto 20.12.1999 and also the appellant had received remittances from the NRE customers for cable subscriptions and when the export achieved upto 1998 had alone been taken into account, necessarily the remittances received by the appellant towards export obligation which according to the appellant has been achieved 30% has to be considered, as their obligation towards the payment of duty will proportionately reduce. As both the Commission as well as the writ court had not considered this aspect and had simply concluded the issue holding that there has not been any extension after 1998 which is factually incorrect, the portion of the order insofar as fixing the export obligation to have been achieved at 14% alone is set aside and the matter is remanded back to the file of the first respondent Settlement Commission only for the limited purpose of ascertaining the actual export obligation achieved by the appellant by the remittances received by them from the NRE accounts towards cable subscription charges in the 3 banks. Based on the ultimate decision to be arrived at by the Commission, fixing the export obligation achieved, the proportionate duty for the unfulfilled export obligation shall be paid by the appellant as directed by the Commission, failing which the DGFT will be entitled to realise the bank guarantee. The bank guarantee shall be kept alive till the proceedings are concluded before the first respondent Settlement Commission and ultimately acted upon. In view of the pendency of the issues for a considerable length of time, the entire exercise shall be completed within a period of 3 months from the date of receipt of copy of this order. Conclusion - The court remanded the matter to the Settlement Commission to verify the actual export obligation achieved through NRE account remittances. The Writ Appeal stands partly allowed.

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• 2025 (2) TMI 812
  Service of SCN - SCN not given within the stipulated time - Section 124(a) read with Section 110 (1) and (2) of the Customs Act, 1962 - interpretation of the word given in relation to the issuance and service of the show cause notice within the statutory timeframe - simple argument made by learned counsel for the respondent is that since show cause notice was not served on the respondent within six months, he was entitled to return of the goods - HELD THAT:- The respondent became entitled to return of the seized goods on 4th October, 2023. The appellant authorities did not release the goods. Now, if as a subsequent event a confiscation order was passed that order would operate on the goods wherever they were situated. This subsequent confiscation order has got nothing to do with the cause of action involved in the writ petition and appeal. It is an independent right acquired by the appellant authorities to be exercised independently. The appellants are obliged to immediately return the goods to the respondent subject to the confiscation order. In other words, even if it is assumed that by virtue of confiscation, the ownership of the goods has been transferred to the appellants, still its possession status quo ante which was to be with the respondent has to be restored until the confiscation order is enforced. Conclusion - The failure to serve a notice within the stipulated time requires the return of seized goods to the owner. The appellants are directed to return the seized gold to the respondent within four weeks of communication of this order - appeal disposed off.

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• 2025 (2) TMI 811
  Order against a dead person - HELD THAT:- Since the impugned order in original dated 20.12.2023 and the consequential order dated 12.12.2024 have been passed against a dead person, the impugned orders have to be necessarily quashed by this Court and this writ petition will have to be allowed. Accordingly, the impugned order in original passed by the first respondent dated 20.12.2023 and the consequential order dated 12.12.2024 passed by the second respondent are hereby quashed and this writ petition is allowed. However, liberty is granted to the respondents to initiate legal action against the appropriate persons in accordance with law.

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• 2025 (2) TMI 810
  Levy of penalties u/s 114 and 114AA of the Customs Act, 1962 - Cheating Customs Department in respect of duty drawback evasion - deliberate suppression of transaction and misdeclaration by the appellants to avail duty drawback fraudulently - HELD THAT:- The appellate Tribunal, having found gravity of the offence, granted leave to prefer appeal on condition to make a pre-deposit as stated above and there is no infirmity or excessive jurisdiction in the order impugned. The Commissioner of Customs, having found that there was an evasion of duty drawback, has imposed penalty as stated above. If at all there is any ground to challenge the said Order-in-Original, statue provides right of appeal on condition to make a pre-deposit of drawback and penalty deemed fit by the Tribunal. The decision of the Tribunal is now put to challenge in these appeals. Though there is a change in law as alleged by the learned counsel for the appellants, this Court is very conscious of the fact that the taxation regime as prevailing in the year 2019 to be applied in the case in hand. Any change of law shall not give retrospective application, when the issue relates to the revenue of the State. It is to be noted that the appellants had at privileged by keeping these appeals pending for more than 8 years without pursing the appeals and without paying pre-deposit fixed by the Tribunal. The said concession itself is more than what the law provides for a tax evader. Hence, these Civil Miscellaneous Appeals are dismissed as devoid of merits. The amount of pre-deposit mentioned in the impugned order to be deposited within a period of six weeks from the date of receipt of a copy of this order, if the appellants are really interested in pursing the appeals. Failing which, the Department is at liberty to proceed against them in accordance with law. Conclusion - i) The penalties imposed on the appellants were upheld. ii) The joint and several liability was deemed valid. iii) The pre-deposit requirement for appealing was found reasonable. Petition disposed off.

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• 2025 (2) TMI 809
  Sanction of the drawback claim of the petitioner set aside - rejection on the ground that the drawback claim was filed afer a delay of five and half years - no explanation for not submitting the original triplicate copy of the shipping bill available with the petitioner - Rule 13 of the Customs, Central Excise Duties, and Service Tax Drawback Rules, 1995 - HELD THAT:- On perusal of Rule 13 of the Rules, 1995, it appears that the same provides for the manner and time for claiming drawback on goods exported other than by post and that the triplicate copy of the shipping bill for export of goods is deemed to be a claim for the drawback filed on the date on which the proper Officer of the Customs makes an order permitting clearance and loading of goods for exportation under Section 51 of the Customs Act, 1962 and said claim of drawback is required to be retained by the proper Officer making such order - Sub-section (2) of Rule 13 of the Rules, 1995 provides that the claim for drawback should be accompanied by the copy of the export contract or letter of credit, copy of packing list, copy of ARE-I, wherever applicable, insurance certificate, wherever necessary and copy of communication regarding the rate of drawback where a drawback claim is for a rate determined under the Rule 6 or Rule 7 of the Rules, 1995 by the Commissioner of Central Excise as the case may be relating to the cases where either the amount of rate of drawback has not been determined or to be determined at a lower rate. Therefore, essentially there has to be a claim to be made for claiming drawback for the goods exported other than by post on the basis of the triplicate copy of the shipping bill detained by the proper Officer to be accompanied by the relevant documents as specified in Sub-rule (2) of Rule 13 of the Rules, 1995. On perusal of the facts considered by the Appellate and the Revisional Authority, it appears that at the relevant time in the year 2005-06, the goods were manually cleared for export by the appellant vide ten shipping bills and therefore the petitioner was required to be provided with the triplicate copy of the shipping bills for lodging the drawback claim. The petitioner was also provided with the triplicate copy at the relevant time which was reported to be lost in the year 2011. Therefore, there is no explanation for not submitting the original triplicate copy of the shipping bill available with the petitioner. Both the Appellate Authority as well as the Revisional Authority have rightly come to the conclusion that when the documents were lost on or around 14.05.2011, the petitioner was having the same documents in its possession and in absence of any specific dates made available for loss of such original documents, for the specific cause that prevented the petitioner from filing the drawback claim immediately on receipt of the triplicate copy of the shipping bills from the Customs after export or some reasonable time thereafter, the only reason given by the petitioner is that the person handling the affairs of drawback claim had left the employment - such vague excuse on part of the petitioner cannot be accepted as there is clear delay and latches on the part of the petitioner to lodge the claim and the contention raised on behalf of the petitioner that the duty was cast upon the respondent-Authority to sanction the claim is also not acceptable in view of the fact that the original triplicate copy of the shipping bill was with the petitioner at the relevant time which was lost in the year 2011 and there is no plausible explanation coming forth from the petitioner to explain the delay and laches from the year 2006 to 2011. Conclusion - The drawback claim could not be considered valid due to the significant delay and the absence of the required triplicate copy of the shipping bill. It is not required to interfere in the concurrent findings of fact arrived at by the Commissioner of Customs (Appeals) as well as the Revisional Authority while exercising the extra-ordinary jurisdiction under Article 227 of the Constitution of India - petition dismissed.

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• 2025 (2) TMI 808
  Requirement of pre-deposit - appeal dismissed on the ground that pre-deposit condition was not fulfilled - importation of Peas, Yellow Peas - confiscation - redemption fine - penalty - HELD THAT:- Since the appellant has provided Security Deposit of Rs.91,30,121, this would meet the requirement of the pre-deposit when the penalty of Rs.60,00,000 crores is litigated. There are no provision to call for pre-deposit when the litigation is towards the Redemption Fine. Hence, being satisfied with the fact the pre-deposit condition has been met, we take up the case for disposal at Tribunal level itself, since on identical case the issue stands decided by this Bench. It is found that against the DGFT Notifications, the appellants have contested the amendment of import policy by way of a Writ Petition vide WP No. 17962w/2018 before the Hon ble High Court, Calcutta, wherein Commissioner of Customs, Kolkata was also respondent, on the ground that such an amendment in Foreign Trade policy is the sole prerogative of the Central Government as set out in section 3, 5 and 6 of the FTDR Act and the trade notice did not indicate that it was issued either with the concurrence or the approval of the Central Government. As the goods were perishable in nature, the appellants moved a Misc. Application MAT No. 1405 of 2018 with CAN No. 8761 of 2018 before the Hon ble Division Bench of the High Court, Calcutta. After considering the factual position of the case the Honourable High Court vide their Interim Order dated 26.11.2018 granted stay on the DGFT Notifications. Accordingly, goods were allowed clearance provisionally subject to the appellants keeping security deposit of 10% of the assessable value towards probable fine and 10% of duty towards penalty. For the Assessable Value component of Rs.6,08,67,460, they have given security deposit of Rs.60,86,747 and for the Duty component of Rs.3,04,33,731, they have given security of Rs.30,43,374. In the present case, the appellant has challenged the Notifications before the Calcutta High Court. On going through that Final Order passed by the Kolkata Tribunal in the case of Rahul Agro Industries, it is found that the Assessable value there was to the tune of Rs.96.65 crores and Duty was to the tune of Rs.44.83 crores. For these imports the Adjudicating authority had imposed penalty of Rs.4 crores and redemption fine of 2.10 crores. On appeal by the Revenue, this Bench has considered the factual details and implication of the DGFT Notifications, the Supreme Court s judgement and has taken a sympathetic view and reduced the same to Rs.25 lakhs of penalty and Rs.25 lakhs of redemption fine. In the present case, the Assessable value is Rs.6.08 crores and Duty component is Rs.3.04 crores. The appellant is before the Tribunal, being aggrieved with the penalty of Rs.60,00,000 of penalty and Rs.60,00,000 of redemption fine. Since the facts are identical in the present case, following the same lines taken by the Tribunal in the case of Rahul Agro, the ends of justice would be met if the these amounts are modified to Rs.8 lakhs of penalty and Rs.8 lakhs of Redemption fine. Conclusion - i) The pre-deposit condition was met by the appellant s security deposit, allowing the appeal to proceed. ii) The confiscation of goods under section 111(d) was justified as the imports were contrary to the DGFT notifications. iii) The penalty and redemption fine reduced to Rs. 8,00,000 each. Appeal allowed in part.

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• Insolvency & Bankruptcy

• 2025 (2) TMI 807
  Rejection of claim submitted by the Appellant before the Liquidator - waterfall mechanism - entitlement to payment of dues in accordance with Section 53(1)(a) of the IBC - acceptance of belated claim of the Appellant by including interest - interest amount was claimed by the Appellant or not - remedy embodied in Section 42 of the IBC - Tenability of the contention of the Appellant that it was being forced by the Liquidator to modify/withdraw their claim Etitlement to payment of dues in accordance with Section 53(1)(a) of the IBC - HELD THAT:- The receipt of the supplies had been acknowledged by the RP along with an assurance that the dues would be paid once funds became available. The Liquidator cannot be allowed to go back from the mutually agreed terms and conditions for provision of services particularly when the services had been accepted without any demur or objections. Acceptance of belated claim of the Appellant by including interest - HELD THAT:- The Appellant for the first time claimed interest component on 25.06.2019 much after the date of supply of goods. All the correspondences exchanged before this date between the Appellant and Respondent show that no demand was made with regard to interest component. The claim for interest is an afterthought. Submission was pressed that reliance on invoices for interest is nothing but a unilateral document that has no binding effect on the Respondent. Having not added interest at the time of filing belated claim which claim stood already crystallised and admitted, the Appellant cannot suddenly spring a surprise by adding an interest amount as part of claims after a lapse of more than two years from the date of supply - The Adjudicating Authority was not satisfied that the claim of interest had been adequately substantiated and validated by the Appellant before the Liquidator at the time of liquidation commencement. Whether at the time of filing of their claims, any interest amount was claimed by the Appellant and how the Respondent had treated the claim filed by the Appellant? - HELD THAT:- In the present facts of the case, the Public Announcement seeking claims was issued by the Liquidator on 21.01.2019. The Appellant failed to file their claims on time. The Appellant then requested 14 days time on 22.01.2019 to file their claim. This request was not allowed by the Liquidator. Neither did the Appellant file their claims even during the extended period sought by them. Instead, the Appellant filed their belated claim on 23.03.2019 which claim was rejected by the Liquidator on 30.03.2019. There are credence in the contention of the Respondent-Liquidator that failure to file claims during the liquidation process resulted in crystallization of the claims as per the invoice No. 11239/17, 11240/17 and 11241/17 of 07.08.2017 aggregating to USD 173,182.97. The impugned order agreed upon that the Appellant having once filed their claim amount without interest by their own volition, they cannot question the non-inclusion of interest after efflux of such a long period of time. Whether the present application of the Appellant is an attempt to circumvent the specific remedy embodied in Section 42 of the IBC which provides that in case any claimant is aggrieved by the decision of the Liquidator in respect of admission of their claim the matter is to be brought to the notice of the Adjudicating Authority for seeking relief? - HELD THAT:- The law is well settled that when a statute provides a particular remedy or that if a thing is to be done in a particular manner, then it has to be done in that manner only. Having failed to challenge the rejection of their claims within the 14 days timeline prescribed under Section 42 of the IBC, the Appellant has indirectly sought to revive their claim by filing a petition under Section 60(5) of the IBC. There are no reasons to disagree with the Adjudicating Authority that this issue cannot be re-agitated at this stage now by invoking Section 60(5) of the IBC. The Adjudicating Authority has therefore correctly held that there is merit in the submission of the Respondent that the Appellant was trying to circumvent the specific remedy under Section 42 of the IBC having failed to avail of it at the appropriate point of time. Tenability of the contention of the Appellant that it was being forced by the Liquidator to modify/withdraw their claim - HELD THAT:- The Liquidator has an important role to play in the timely conduct of the liquidation process and it is required of him to complete the process within one year from the date of commencement of liquidation proceedings. In the present case, we find that Liquidator has not committed any error in trying to complete the liquidation process on time which commenced way back in 2018. However, since the Appellant was unwilling to give their NOC, the progress of liquidation proceedings was facing a road-block on account of their non-responsive behaviour. Given the conspectus of facts, the Adjudicating Authority is agreed upon that seeking of NOC from the Appellant by the Liquidator in respect of the dues of suppliers of the sub-contractors was within the scope of his duties to protect the assets of the Corporate Debtor and do not find any cogent grounds which show that the Liquidator was found wanting in his conduct in expeditiously settling the ongoing liquidation of the Corporate Debtor. Conclusion - i) The claims must be filed within the prescribed timeline, and failure to do so results in the finality of the Liquidator s decision. ii) The interest claims must be substantiated and included in the original claim filed with the Liquidator, and cannot be introduced later. iii) The Liquidator s request for an NOC to settle sub-contractors claims was justified and within the scope of his duties. No error has been committed by the Adjudicating Authority in rejecting the application. There are no cogent grounds to interfere with the impugned order. There is no merit in the appeal - appeal dismissed.

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• 2025 (2) TMI 806
  Extension of timeline for submission of Expressions of Interest (EoI) and Resolution Plans by the Committee of Creditors (CoC) - violation of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - approval of Resolution Plan - HELD THAT:- The present is a case where after issuance of Form-G on 23.10.2022, it was noticed by the CoC that after submission of EoI, some person who had not submitted EoI, whether fresh Form-G be issued or timeline be extended, which was deliberated in the 11th CoC Meeting held on 30.01.2023. The discussion in the Meeting of the CoC clearly indicate that the proposal submitted by Appellant was discussed and considered on merits. It was noticed that a letter from Phoenix ARC is provided, which indicate that they are offering non-binding bid of Rs.23 crores for the acquisition of debt which has already expired on 15.03.2023. The CoC was also of the view that the action of Appellant was with the intention to distract the resolution in progress and raises enough doubt on his integrity and intentions of submitting a plan. Thus, the offer of the Appellant was not agreed to proceed with further. The Appellant s submission that his Plan was not considered is not correct and against the records. The present is a case where CIRP period came to an end and the RP has taken extension in the CIRP and the decision was already taken by the CoC to vote on the three Resolution Plans in its Meeting dated 11.07.2023. The request by the Appellant was made on 13.07.2023 and thereafter the Plan was submitted on 23.07.2023. The CoC had deliberated and discussed the Resolution Plan of the Appellant and did not accept the request to proceed any further with the Plan of the Appellant. The submission of the Appellant that Plan submitted by the Appellant was not considered by the CoC, cannot be accepted. The CoC had already decided to vote on the Plans, which Plans were voted from 19.07.2023 to 11.08.2023 and Plan of Pinax having been approved with the majority of 97% vote share, there are no good ground to interfere with the commercial wisdom of the CoC approving the Resolution Plan. Conclusion - The Adjudicating Authority having noticed entire submissions and has found that there is no infirmity in the decision of the CoC in not accepting the Resolution Plan of the Appellant and deciding to vote on the Resolution Plans, there are no error in the order of the Adjudicating Authority rejecting IA No.1325/KB/2023. The Resolution Plan of Pinax, which was approved with 97% vote share of the CoC has been rightly approved by the Adjudicating Authority by order dated 20.12.2024, which order need no interference, since no ground has been made out within meaning of Section 61(3) of the IBC. Appeal dismissed.

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• 2025 (2) TMI 805
  Rejection of application filed by the Appellant objecting to the Resolution Plan - objection against the extension of timeline or invitation to submit revised Resolution Plan - inclusion of Pinax Paper Mills Private Limited in the list of Prospective Resolution Applicants (PRAs) after the timeline extension - HELD THAT:- The voting period for the voting of the plan was allocated from 19.07.2023 to 11.08.2023 and as per e-voting result on 11.08.2023, the plan of Pinax Paper Mills Private Limited was approved with 96.05% voting share. Present is a case where CoC in its meeting held on 09.02.2023 decided to extend the timeline for submission of EoI and Resolution Plan. It is noticed that Invitation for Expression of Interest itself contemplated extension of timeline by the CoC which is reflected in Clause 6 of the EoI. Thus, all Resolution Applicants were well aware that time for submission of the EoI and submission of the Resolution Plan can be extended by the Resolution Professional with approval of the CoC. Whether extension of timeline which is contemplated in the EoI itself require a publication of fresh Form G? - HELD THAT:- Present is not a case that there was any modification in the Invitation for EoI rather only extension of timeline on same criteria and conditions as was initially provided have been made. Timeline as noticed above was already permitted to be extended by Clause 6 of the same Invitation for EoI dated 23.10.2022 by which process for receiving of EoI commenced. Clause 6 only provided for extension of last date for submission of EoI and when we read Clause 6, it does not indicate that for extension of last date of EoI revised fresh Form G was required to be issued. It is noticed that in Regulation 36 B of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 which is request for resolution plans both expressions i.e. modification and extension of timeline have been used. As per sub-regulation (5), any modification in the request for resolution plan has to be treated as fresh issue whereas extension of timeline with the approval of the committee has been separately dealt. Thus, modification of request for resolution plan and extension of timeline has been separately dealt in Regulation 36B. Applying the aforesaid analogy in Regulation 36A, it is clear that although any modification in the Invitation for Expression of Interest require publication of fresh Form G but Regulation 36A on its term does not contemplate publication of fresh Form G when timeline has been extended. In any view of the matter, the present is a case where Appellant who has aggrieved by the approval of the Resolution Plan and rejection of his IA was very much part of the CIRP process, he having expressed its interest in pursuance of the issuance of Form G and after extension of timeline, it was communicated by e-mail dated 13.02.2023 and after publication of list of Prospective Resolution Applicants on 23.02.2023, neither any objection was filed by Appellant rather it participated in the process by filing a resolution plan by deleting Nippon Ispat Pvt. Ltd. from its resolution plan with whom it has earlier submitted resolution plan which was non-compliant. Applicant, thus, participated in the process and took chance to succeed without raising any objection to the extension of timeline. In the present case also, the ground taken by the Appellant is under Section 61(3)(ii) i.e. material irregularity in exercise of the powers by the Resolution Professional during the CIRP. Whether in the present case by non-publication of Form G after extension of timeline by the CoC in its 12th CoC meeting can be said to be material irregularity leading to scrapping of the entire CIRP process subsequent to the extension of timeline is the question to be considered. Conclusion - i) The CoC s decision to extend the timeline for EoI and Resolution Plan submission upheld without issuing a fresh Form G, as it was in line with the original EoI and approved by the CoC. ii) The inclusion of Pinax Paper Mills in the final list of PRAs was proper, and no objections were raised by the Appellant, who participated in the process. There is no merit in the Appeal. The Appeal is dismissed.

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• Service Tax

• 2025 (2) TMI 804
  Invocation of extended period of limitation under proviso to section 73 (1) of the Finance Act - levy of mandatory penalty - suppression of facts or not - wrongful availment of Cenvat credit amount before discharging the service tax liability - eligible document to claim Cenvat credit under reverse charge mechanism as per rule 9(1) of CCR - HELD THAT:- The appellant having disclosed the availment of the Cenvat Credit for the month of October and November in the ST3 returns cannot be held liable for concealment of suppression of facts and therefore the extended period of limitation cannot be invoked. In view thereof it is wrong on the part of the revenue to say that the appellant had wilfully suppressed the material facts from the department with intent to wrongly avail Cenvat credit. As per the provisions of the Finance Act, the liability of the appellant was to file the STRs within the stipulated time disclosing the true facts and it is not the case of the revenue that they had not filed the STRs or had not disclosed the availment of Cenvat Credit. Hence, it is not a case of wilful suppression of material facts. There is no averment in the show cause notice with reference to the factual matrix of the instant case, satisfying the presence of the ingredients of fraud, collusion, wilful misstatement, suppression of facts, or contravention of any of the provisions of this chapter or of the rules made thereunder with intent to evade payment of service tax. The burden is on the revenue which they have failed to discharge. The allegation of the revenue that the appellant had availed the Cenvat credit in contravention of the provisions of rule 4(7) is not sufficient to invoke the extended period as the violation has to be with reference to the intent to evade payment of duty. Reliance is placed on the decision in Tamil Nadu Housing Board versus Collector of Central Excise [ 1994 (9) TMI 69 - SUPREME COURT] , where the Apex Court held that extended period is invocable only if both the situations, suppression, fraud, collusion, etc. and intent to evade payment of duty is proved. Initial burden is on the department. Even if it is held that there was an error on the part of the appellant in availing the credit, however the error was inadvertent as they were registered only in the month of September 2013 and therefore, the extended period invoked by the department is not justified. The principle enunciated in various decisions is that the proviso to section 73 (1) would be applicable on account of misstatement or suppression of facts only if the same was deliberate and for the purpose of evading payment of duty. Levy of mandatory penalty - HELD THAT:- Revenue relied on the decision of the Tribunal in the case of Commissioner of C EX ST LTU, Delhi versus Gas Authority of India Ltd [ 2018 (12) TMI 91 - CESTAT NEW DELHI] , to emphasise the plea that merely because the appellant is a public sector undertaking does not mean that mandatory penalty cannot be imposed once the invocation of the extended time limit has been upheld. Since it is already held that extended period of limitation cannot be invoked in the present case in the absence of the ingredients specified under section 73 of the Act, consequently, the penalty also cannot be imposed. Moreover, the facts in the said case are distinguishable from the present one, where the findings were to the effect that the appellant mis-classified the product as Naptha, on which much lesser excise duty was payable and therefore mis-declaration was held to be a strategy for tax evasion, and further the exemption claimed on the mis-declared product was held to be a positive act of misrepresentation of the facts. It was, therefore held that merely because the assessee is PSU is not sufficient to set aside the show cause notice as being barred by time. Since the entire demand is beyond the normal period of limitation and it is held that the extended period is not invocable, the entire demand needs to be set aside on this ground alone. It is, therefore not necessary to further go into the merits of the matter. The question on merits is left open. Conclusion - Due to the absence of deliberate intent to evade payment, the extended period and consequent penalties were deemed inapplicable. Appeal allowed.

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• 2025 (2) TMI 803
  Rejection of declaration under Voluntary Compliance Encouragement Scheme (VCES), 2013 - alleged tax liability on remuneration paid to part-time directors of the company - rule 2(1)(d)(i)(EE) of Service Tax Rules, 1994 - HELD THAT:- It is evident that the adjudicating authority has neither perused the terms of employment of the said directors nor examined the scope for appointment of whole-time employees as directors in the statutory framework governing companies. It is also not the case of the adjudicating authority that the whole-time directors were being remunerated with sitting fees in addition to contractual compensation. The additional tax liability has been fastened after the negative list regime was made operational and influenced, unduly so, by the definition of person liable for paying the service tax in Service Tax Rules, 1994 which is nothing but a machinery provision stemming from statutory delegation under section 68 of Finance Act, 1994. Such machinery provision is of significance to the tax scheme only upon determination of tax liability. The tax liability in the present instance could not have been determined unless with, and except by, reference to the contract of employment. In the absence of such enquiry, and further finding thereof in the impugned order, the determination that the claim under the Voluntary Compliance Encouragement Scheme (VCES), 2013 is false, and, thereby, warranting discard is not tenable. Such casual and peremptory discard of relevant aspects of compensation detracts from the validity of the findings. It falls to the adjudicating authority to consider this aspect and upon determination that the said amount should have been included in the taxable service with section 2(1)(d)(ii)(EE) of Service Tax Rules, 1994 to be invoked for fastening tax liability attendant upon discard of claim for privilege under the scheme to enable which the proceedings will have to be restored to the original authority. Conclusion - There is a need for a thorough examination of the terms of employment and contractual arrangements to establish the tax liability accurately. The impugned order is set aside and the matter remanded to back to the original authority.

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• 2025 (2) TMI 802
  CENVAT Credit - nexus of input services with the manufacture of final products/output services - Management Consultancy Service - Maintenance or Repair Service - Clearing Forwarding Agent Services - Insurance Auxiliary Services - GTA-Outward Transportation Service - Courier services - Mandatory and Additional Inspection Service - business support services - Casting Error - recovery agent services - warranty handling service - Insurance Services for the plant, machinery and insurance for employees - subscription fees - Works Contract Service. Management Consultancy Service - denial of credit on the ground that these services are related to gratuity valuation, superannuation valuation, leave encashment valuation, post-retirement valuation, etc., which are part of welfare measures for the employees - HELD THAT:- The services which are related to R D facility, finance accounting and taxation etc., have been subsequently allowed in Order-in-Original No.10/2017-18 dated 29.01.2018. It is also stated that the services related to salary profile in terms of welfare measures was only denied for the later period. In view of the above, the matter is remanded for verification of the documents submitted by the appellant to examine whether the management consultant service is related to R D, finance, trading, legal services, production management etc. Management Consultancy Services - services on gratuity and superannuation funds - HELD THAT:- The Commissioner has allowed cenvat credit on most of the Management Consultancy Services except for service tax credit relating to services on gratuity and superannuation funds, which are basically related to the salary profile of the employees. The same is rightly denied since these services are not related to the manufacturing activities of the appellant; hence, it is disallowed. Maintenance or Repair Service - HELD THAT:- This service is related to the services rendered by the dealers to the clients of the appellant and the dealers get reimbursement of the cost of these services. The services are of mandatory free services and maintenance services. Since, these services were actually provided by the dealers after the removal of final products at the customer s premises, the service was an input service for the customers of the appellant. Hence, the Commissioner held that it cannot be said to be a service which was used by the appellant and therefore, the service tax paid on such services cannot be availed as cenvat credit - credit allowed. Clearing Forwarding Agent Services - HELD THAT:- These services are related to packing of spare parts outside the factory premises used for repairs of excavators, which have been already cleared from the factory. Since the transaction value for the machine includes the cost of such repair and maintenance services on which excise duty has already been discharged and since it is within the warranty period, cenvat credit cannot be denied - credit allowed. Insurance Auxiliary Services - HELD THAT:- These are the services which are related to medical insurance of employees, insurance of warehouse/branch office, transit insurance for space and car insurance used for sales promotion. Since, all these services are related to and add value to the manufacturing activities of the appellant and since the above services are also statutory requirement, they are eligible for the cenvat credit, hence allowed. GTA-Outward Transportation Service - HELD THAT:- Transportation of goods from warehouse to customer s site, the Commissioner has already allowed the credit for transportation of goods from factory to depot and denied only to the extent of transportation of goods from factory to the customers premises. The goods transported from warehouse to customer s site from multiple centres at different places in India for maintenance or repair services have also been denied of cenvat credit since the services are rendered beyond the place of removal - It would be pertinent to place reliance on the decision rendered by the Larger Bench of the Tribunal in M/s. The Ramco Cements Ltd. vs. The Commissioner of Central Excise [ 2023 (12) TMI 1332 - CESTAT CHENNAI-LB] , wherein the Tribunal had discussed in detail with regard to the issue on whether the cenvat credit on GTA services for outward transportation of goods from the factory to the buyer s premises be denied in cases where the goods are sold on FOR (buyer s premises or should such matters be remanded to the lower authorities for determining what is the place of removal - In view of the above Larger Bench decision, this issue is remanded to determine the admissibility of CENVAT credit on the GTA Service up to the place of removal. Courier Services - HELD THAT:- The Commissioner has denied the cenvat credit on the ground that the courier service is used for transportation of materials from central warehouse to feeder warehouse and branches for replacement of materials under warranty or for providing maintenance or repair services. It is pertinent to refer to decision rendered in the case of CCE vs. CCL Products (India) Ltd [ 2009 (3) TMI 136 - CESTAT, BANGALORE] , wherein it was held that various services including courtier services were rendered in respect to business activity. Hence, credit is allowed. Mandatory and Additional Inspection Service - HELD THAT:- The appellant submitted that the cost of mandatory service inspection during the warranty period is part of their cost on which excise duty has already been paid. It is also stated that these mandatory services are provided to their customers to ensure that the consumable and critical items like filter and oil are replaced on the machine, the dealer raises a bill with service tax on which credit has been availed, hence submitted that for these mandatory services, cenvat credit cannot be denied. So also, the additional services are provided after the warranty period for which bills are raised along with service tax payment on which credit has been availed. Since, these services are rendered after clearance of the final products, on which Excise duty has been already paid and also, they are registered under Maintenance and Repair Service , hence, credit on this is allowed. Business Support Service - HELD THAT:- These are services rendered by the dealers of the appellant after sale of goods and covered under the warranty service. Since the cost of warranty is included in the invoice value, on which tax has been discharged, the credit on this cannot be denied. Hence, it is allowed. Casting Error - HELD THAT:- Since, no documents have been produced as to the services rendered under this category is either before the Commissioner nor heres, the same is denied for want of documents to prove the nature of service. On reimbursement of service tax, an amount of Rs.48705/- has been denied only on the ground that no documentary evidences have been provided having paid the tax. Since, nothing is also placed, the same is upheld. Recovery Agent Service - HELD THAT:- These services have nothing to do with the manufacturing activities but relates to recovery of amounts unpaid by their customers, hence rightly denied. Warranty Handling Service - HELD THAT:- These post-manufacturing services being part of the warrant period hence credit allowed. Club membership fees (Rs.3,240/-) is rightly denied in view of the fact that the membership fees and service tax paid on the club membership has nothing to do with the manufacturing activities of the appellant. The packing services (Rs.39,270/-) are meant for packing of parts locally procured which are used for maintenance and repair, which forms part of sale process and relates to packing of final products manufactured by them, which has nexus with the manufacturing activities, hence allowed. Insurance Services for the plant, machinery and insurance for employees - HELD THAT:- Insurance Services for the plant, machinery and insurance for employees have all been allowed and what is disallowed is only those insurance policies that cover the family members of the employee that is to the extent of Rs.5,42,966/-. Since, the policies are related to the family members, this has been rightly denied. Subscription Fees - HELD THAT:- This is the fees paid on taking membership of Indian Construction Equipment Manufacturer Association in order to participate in their exhibitions, in order to promote their products. The cost of which is included in the manufactured final product; hence, it is allowed. Works Contract Service - HELD THAT:- The service tax credit has been denied only on the imported services related to civil works which are excluded from the definition of input services , the same is upheld. Conclusion - Services directly or indirectly related to manufacturing activities and statutory requirements were generally eligible for credit. Appeal allowed in aprt.

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• 2025 (2) TMI 801
  CENVAT Credit - denial on the ground that the invoices were issued from an unregistered premises - various input services such as Architect services, Event Management services, etc. - Demand of service tax on training kits sales and whether these constitute commercial training or coaching - Demand of service tax on the sale of software declared as exempt in their books of account - Demand of service tax on services supplied to SEZ units and the applicability of exemption under N/N. 4/2004-S.T. - Limitation period for invoking extended period for demand and imposition of penalties under Section 78 of the Finance Act, 1994. Whether the appellant is eligible for cenvat credit on the invoices issued from a premises which is not registered under their Centralized Registration Certificate? - HELD THAT:- There is no dispute that these premises were not registered under the Centralized Registration Certificate. The appellant s claim is that the invoices from Mumbai Unit were addressed to their registered premises at Bangalore, hence the same cannot be denied. The cenvat credit is related to the invoice where the rent was paid for the premises at Mumbai (Bandra) which was claimed to be used for marketing activities. There is no dispute of the fact that the appellant was well aware that all the premises that are used for the manufacturing/marketing purposes are to be registered under centralized registration procedures. Hence, the rent paid on the premises which is not registered cannot be availed as cenvat credit for the simple reason that there is no evidence as such that the above premises was used for marketing or providing any output services, except for stating that the premises used to facilitate business meetings with existing and prospective customers. In view of the specified procedures laid down under Centralized Registration Procedures read with Rule 4 (5) of Service Tax Rules, 1994 and in accordance with the Cenvat Credit Rules, the cenvat credit cannot be extended on rent paid on unregistered premises in both the premises of Mumbai. Similarly, the premises at Bangalore were rented for training purpose, space for support team, space provided for telecommunication service and for support activity. From the description of the activities, it is clear that in these premises also no output service activities undertaken except for renting them for various other purposes as mentioned above. Since, these premises have nothing to do with manufacturing/output services of the appellant the question of extending cenvat credit for these premises does not arise, hence rightly denied. Eligibility of cenvat credit on services - Architect service - Authorized Service Station Service - Event Management Service - denial of cenvat credit on the above services only on the ground that there is no nexus between the input service and the output service rendered by the appellant - HELD THAT:- The convention services are also used for day-to-day business operations/meetings. Similarly, design services, event management services, etc., are all services in relation to the activities undertaken by the appellant. Since, individual invoices have not been verified to examine whether these were in relation to the operations rendered by the appellant, the matter remanded to the Commissioner only to examine whether these services were rendered in connection with the operations of the appellant, without questioning the one-to-one corelation. However, all invoices issued from the 6 premises not registered under Centralized Registration are to be denied. Demand of service tax on training kits sales - HELD THAT:- From the observations of the Commissioner in the impugned order, there are no evidence or discussion on payment of VAT on the above participation fees, hence the same is remanded for deciding the issue afresh after considering the fact that VAT is discharged on the value collected as participation fees, taking into consideration the decisions relied upon by the appellant. Demand of service tax on sale of software where the turnover is declared as exempt in their books of account - HELD THAT:- The appellant claims that this software was subject to VAT/CST and the recipient issues Form-C and based on the agreements the appellant carries out the replication of the software in a CD/DVD the same needs to be considered as exempted service. Since the agreements were not placed before the Commissioner to prove that they are exempted services, and the Commissioner observes that the assessee failed to produce the entire documents during the audit in spite of several opportunities provided to them and always argued that they have claimed exemption in the ST-3 returns filed by them as the same is liable for VAT and not taxable under the Finance Act, 1994 - the matter is remanded to the Commissioner for further examination based on the documents placed on record by the appellant to prove that VAT has been discharged on the above software. Demand of service tax on services supplied to SEZ units - HELD THAT:- The period of dispute is from October 2008 to March 2009 and as rightly stated by the appellant they are eligible for the benefit of the exemption for the services rendered to the SEZ unit as per the Notification No. 4/2004 dated 31.03.2004. Since no documents were placed before the authorities that these services were used within the SEZ premises for the authorised operations, the same is being remanded for this limited purpose of verification. Time Limitation - HELD THAT:- Unless any positive allegation of misdeclaration or suppression with intention to evade is brought on record the question of suppression cannot be alleged. In the instant case audit visited the unit in December 2011 and January 2012, the show cause notice was issued in 2014. The show-cause notice clearly mentions that a letter dated 08.02.2013 was issued to the appellant followed by letter dated 25.02.2013. The appellant in his reply to show-cause notice submitted that vide letter dated 04.02.2013 a list of documents was submitted which was already placed before the audit team and again vide letter dated 22.02.2013 further documents such as Software Distribution Agreement, Rental Agreement and sample purchase orders were filed. In response to the audit enquiry note dated 06.03.2013 a detailed reconciliation of expenses was filed vide their letters dated 09.05.2013 and 16.05.2013. In view of the above, since there is no allegation that regular returns have not been filed alleging suppression of any of the specific documents, the question of mis-declaration or suppression cannot be sustained. Conclusion - i) Cenvat credit is disallowed for invoices from unregistered premises. ii) Other issues were remanded for further examination. iii) Since there is no allegation that regular returns have not been filed alleging suppression of any of the specific documents, the question of mis-declaration or suppression cannot be sustained. Appeal disposed off.

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• 2025 (2) TMI 800
  100% EOU / STPI - Classification of service - Manpower Recruitment and Supply Agency service or Consulting Engineer Service - time and material project - suppression of facts or not - invocation of extended period of limitation penalty. Classification of service - HELD THAT:- The issue is no more res integra in as much as the agreements with M/s. Philips Electronics India Ltd. in the present case was similar to the agreement entered by M/s. Aztecsoft Ltd. with M/s. Philips Electronics India Ltd. in [ 2024 (7) TMI 312 - CESTAT BANGALORE] and this Tribunal on examination of these agreements had clearly held that the services rendered by the appellant is nothing but a Manpower Recruitment and Supply Agency service . There are no reason to disagree with the decision and therefore, the demand of service tax as manpower supply service is upheld. Extended period of limitation - suppression of facts or not - penalty - HELD THAT:- Since the ST-3 returns placed on record categorically show that they had declared the services rendered by them as exempted services under Consulting Engineer Service and in view of the fact that the services were exempted till 16.05.2008 under consulting Engineer Service, the same cannot be considered as mis-declaration or suppression of facts. Hence, the impugned order is modified to the extent of confirming the demand for normal period and the penalties imposed under Section 76 and 77 are upheld and penalty imposed under Section 78 is set aside. Conclusion - i) Time and Material Projects provided by the appellant constituted Manpower Recruitment and Supply Agency Service , subject to service tax. ii) The appellant s classification of services as Consulting Engineer Service was based on a bona fide interpretation of the law, and there was no willful suppression or mis-declaration. The extended period of limitation was not applicable due to the absence of willful suppression. iii) The penalties under Sections 76 and 77 were upheld, but the penalty under Section 78 was set aside. Appeal allowed in part.

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• 2025 (2) TMI 799
  Short payment of service tax - amount received for construction of roads - Manpower Supply Service (on reverse charge basis) - Extended period of limitation. Whether the demand of service tax amounting to Rs.33,04,058/- on the amount received for construction of roads is valid under the applicable service tax exemption provisions? - HELD THAT:- There are several entries wherein amounts have been received towards construction of road. These funds have been received either from DRDA, Gorakhpur or Gorakhpur Development Authority, out of MP/MLA funds. It is found that entry 13(a) of Notification No.25/2012 dated 20.06.2012 grants exemption from payment of service tax on construction of road, bridge, tunnels or terminals for road transportation for use by general public. The said amount of Rs.2.20 crore having been received towards construction of road was exempted from payment of service tax. Therefore, the demand of Rs.33,04,058/- is liable to be set aside. Demand of service tax on availing Legal and Manpower Supply service - Extended period of limitation - HELD THAT:- A similar matter of limitation had come up for consideration before the Division Bench of this Tribunal in the case of G. D. Goenka Pvt. Ltd. [ 2023 (8) TMI 995 - CESTAT NEW DELHI] . In the said case, the demand had been raised consequent to audit. The extended period of limitation was invoked on the ground that under self assessment, the Appellant assessee was required to assess its own tax due on the services provided by it and file returns under Section 70. By claiming the wrong Cenvat credit, the Appellant willfully and deliberately suppressed the facts from the Department. The Division Bench referred to the decision of the Hon ble Supreme Court in the case of Pushpam Pharmaceuticals Company Vs. CCE, Mumbai [ 1995 (3) TMI 100 - SUPREME COURT] and made detailed observation for holding that extended period of limitation could not have been invoked. Thus, the Appellant s case on limitation is squarely covered by aforesaid order of the Division Bench of the Tribunal. Respectfully following the aforesaid order, it is held that the demand of service tax (Rs.33,04,058/- as well as Rs.8,259/-) could not have been raised by invoking of extended period of limitation. As the demands itself are being set aside, penalties under Section 78(1) as well as Section 77(2) are also liable to be set aside. Conclusion - i) Exemption under Notification No.25/2012 is applicable to road construction projects funded by government bodies, negating the service tax demand. ii) Regular filing of service tax returns precludes the invocation of the extended period of limitation absent evidence of willful suppression. iii) Penalties cannot be imposed when the underlying tax demand is invalidated. Appeal allowed.

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• Central Excise

• 2025 (2) TMI 798
  Refund claim of Excise Duty paid wrongly - alleged mistake in classification and payment - absence of a challenge to the assessment or self-assessment - maintainability of refund claims filed without challenging the initial assessment - HELD THAT:- The appellant has produced on record number of documents cited supra viz. copy of PLA for the months of July 1999 to December 1999 evidencing payment of Excise Duty for the clearance affected from 15.07.1999 to 31.12.1999, photocopies of TR-6 Challans No.71 dated 01.07.1999 to No.198 dated 13.12.1999 vide which the Excise Duty was originally deposited during July 1999 to December 1999, list of invoices issued during July 1999 to December 1999 showing clearance of above consignment of imported SKO - The appellant has also produced certificate of Chartered Accountant who certified on the basis of books of accounts of the appellants duly certifying total payment of duty on same SKO Customs Duty cargo. In view of the plethora of judgments, the learned Commissioner (Appeals) has not considered the same and has come to the finding that the appellant has not been able to establish that double payment has been made. Once it has come on record that no Excise bonded SKO was pumped by any refinery during the year 1999 to 2000 in the pipeline which clearly shows that the Excise Duty paid by the appellant is by mistake which is liable to be refunded to the appellant. As regards the preliminary objections raised by the Revenue, it is to be noted that this Tribunal in the case of M/s Shree Balaji Warehouse etc. has held that refund of service tax is maintainable in the absence of any challenge to assessment or self-assessment. As regards the preliminary objections raised by the Revenue, it is to be noted that this Tribunal in the case of M/s Shree Balaji Warehouse etc. [ 2023 (9) TMI 1478 - CESTAT CHANDIGARH (LB) ] has held that refund of service tax is maintainable in the absence of any challenge to assessment or self-assessment. The said decision was followed by the Tribunal in the case of M/s Grand Prix Engineering Pvt. Ltd. [ 2023 (10) TMI 731 - CESTAT CHANDIGARH ], which was a case of refund under the Excise Act and it was held that refund claim would be maintainable in the absence of any challenge to assessment or self-assessment in appeal. Conclusion - i) Once it has come on record that no Excise bonded SKO was pumped by any refinery during the year 1999 to 2000, the excise duty paid was clearly a mistake. ii) Refund claims can be maintained without challenging the assessment if it is demonstrated that duties were paid erroneously. iii) Refund of the excise duty paid erroneously by the appellant is allowed. The impugned order is not sustainable in law - Appeal allowed.

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• CST, VAT & Sales Tax

• 2025 (2) TMI 797
  Doctrine of promissery estoppel - Rejection of the respective eligibility certificates applied under the relevant provisions of the Industrial Policy of 2008 - rejection of eligibility certificates without due and proper appreciation of the facts and materials available before the respondent-Department of Industries - industrial unit was non-functioning or not - validity of assessments made by the Department of Finance and Taxation, during the pendency of eligibility certificate applications. Whether the rejection of eligibility certificates by the Department of Industries and Commerce under the Industrial Policy of Assam, 2008, on the grounds of being non-functioning, was justified? - HELD THAT:- The period of validity of the Industrial Policy of 2008 was for a period of five years with effect from 01.10.2008 till 30.09.2013. The eligibility criteria as per the said Policy was all new units as well as existing units which go in for substantial expansion and which had commenced commercial production within the period of validity will be eligible for the incentives from the date of commencement of commercial production for the period applicable for each incentive. In the said Industrial Policy of 2008, various fiscal incentives such as interest subsidy on term loan, power subsidy, subsidy of quality certification/technical knowhow and subsidy on drawal of power line were given. The respondents were permitted to place before the Court the materials on the basis of which the General Manager, DICC submitted its report of non-functioning unit. The Court considered it apposite to permit the respondent authorities to place such materials to show the relevant date(s) when the physical inspection was made and the said unit was found to be non-functioning. On the other hand, the Sales Tax Department completed the assessments and raised the demand on the petitioner and other similarly situated petitioners. The assessment order clearly reveals that the assessment and the consequential demand was made after due examination of the books of accounts. The assessment of tax was made on the turnover of the unit/industry. Consequently, there appears to be a contrary stand reflected by the two departments of the Government namely, the Industries and the Finance Department. It is trite to mention here that in the State Level Committee constituted to examine and issue eligibility certificates, representatives of both the industries as well as the Finance and Taxation Department are members and which fact is not disputed by the respondents. Under such circumstances, it cannot be understood as to how a unit which was found to be non-functioning by the industries department could have reflected the turnover of goods manufacture and on the basis of which the assessments were carried out and demands were raised by the Finance and Taxation Department. In Duroply Industries Limited Vs. The Union of India 5 Ors [ 2023 (11) TMI 1353 - GAUHATI HIGH COURT] , the Co-ordinate Bench of this Court held that the Petitioner s unit was duly functioning at the time when the claims for Transport Subsidy were made, and the said unit has to be closed down subsequently due to the financial crisis and shortage of raw material and thereby the State Level Committee ought not to have rejected the claims of the Petitioner on the ground that with effect from January, 2018 the Petitioner unit was not functioning. In Sukhamoy Paul Vs. State of Tripura Ors. [ 2021 (5) TMI 1077 - TRIPURA HIGH COURT] while dealing with a similar situation with regard to the Transport Subsidy Scheme, the Tripura High Court held that the eligibility period for claiming subsidy may be 5 years, the scheme nowhere provides that only if a new industrial unit continues such manufacturing activity for a period of 5 years that it can claim the transport subsidy. Therefore, even if, as pointed out by the respondents, the petitioner at some later point of time after commencing its production got engaged into the same activity as a job worker, this would not amount to breach of any of the eligibility conditions of the scheme. The aforesaid two judgments of this Hon ble Court and that of Tripura High Court are squarely applicable in the present case. Whether the doctrine of promissory estoppel applies to prevent the government from denying benefits promised under the Industrial Policy of Assam, 2008, after the petitioners had altered their position based on those promises? - HELD THAT:- Under the doctrine of promissory estoppels where the Government has made a promise and the prose relying on the promise has altered it s position to its detriment the Government is not exempt from it s liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex-parte appraisement of the circumstances in which the obligation has arisen - The Apex Court in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. [ 1978 (12) TMI 45 - SUPREME COURT] observed that that the doctrine was not limited only to cases where there was some contractual relationship or other pre-existing legal relationship between the parties. The principle would be applied even when the promise is intended to create legal relations or affect a legal relationship which would arise in future. The Government was held to be equally susceptible to the operation of the doctrine in whatever area or field the promise is made contractual, administrative or statutory. The Doctrine of Promissory Estoppel has been repeatedly applied by the Apex Court in statutory notifications. In Pournami Oil Mills v. State of Kerala [ 2020 (12) TMI 1241 - SUPREME COURT] the Government of Kerala by an order dated 11-4-1979 invited small-scale units to set up their industries in the State of Kerala and with a view to boost industrialization, exemption from sales tax and purchase tax was extended as a concession for a period of five years, which was to run from the date of commencement of production. By a subsequent notification dated 29-9-1980, published in the gazette on 21-10-1980, the State of Kerala withdrew the exemption relating to the purchase tax and confined the exemption from sales tax to the limit specified in the proviso of the said notification. After elaborate discussions of the law on Promissory Estoppel as laid down by the Apex Court, it is seen that the State authorities as well as its limbs covered under the sweep of Article 12 of the Constitution of India being treated as State within the meaning of the said article, can be made subject to the equitable doctrine of promissory estoppel in cases where because of their representation the party claiming estoppel has changed its position and if such an estoppel does not fall under any statutory prohibition, absence of power and authority of the promisor and/or is otherwise not opposed to public interest, and also when equity in favour of the promisee does not outweigh equity in favour of the promisor entitling the latter to legally get out of the promise. Whether the assessments made by the Department of Finance and Taxation, during the pendency of eligibility certificate applications, were valid? - HELD THAT?- The assessment orders itself reflects that the books of accounts etc were examined and pursuant to which the assessment orders and the consequential demands were raised. Therefore, in the facts of the present case, besides the other departments which had the occasion to examine the papers submitted for establishment of the industry as well as assessment order and the consequential demands raised by the Finance Department, the fact remains that there is no mala fide alleged against the industry or unit by the respondent authorities. There is also no allegation that undue advantage has been sought to be taken by the industries in respect of Industrial Policy concerned. Under such circumstances, the department of Finance as well as the Industries Department, being representatives of different department but a part of the same Government and a constituent members of the State Level Committee,- the State Level Committee being the mouth piece of the Government in so far as the Industrial Policy is concerned they must speak in one voice by taking into various views and evaluations undertaken by each of the constituent members. The sole ground for assailing the assessment orders in these writ petitions is that the Finance Department ought not to have proceeded with the assessments in question as the relevant applications for grant of eligibility certificates in respect of the industries or units were pending before the appropriate authority under the relevant Industrial Policy. As a consequence thereof, the benefit of exemptions by the petitioners could not be availed off as the returns could not be filed on the online mode supported by the eligibility certificate as is required under the procedure. These returns were filed in the physical mode with due representations that the claims for eligibility are under consideration and the department is required to await the grant of eligibility certificate by the Industries Department. Conclusion - i) The rejection of eligibility certificates on the grounds of being non-functioning is contrary to the objectives of the Industrial Policy and the evidence of operational status as indicated by tax assessments. ii) The assessments conducted by the Finance Department without awaiting the outcome of eligibility applications are procedurally flawed and must be reconsidered. iii) The doctrine of promissory estoppel applies, binding the government to its promises under the Industrial Policy, as the petitioners relied on these promises to their detriment. iv) The Court directed the State Level Committee to reconsider the eligibility applications and issue certificates, ensuring that the petitioners receive the benefits they are entitled to under the Industrial Policy. v) The Court ordered that once eligibility certificates are granted, the petitioners should receive tax exemptions and any necessary refunds or adjustments. Petition disposed off.

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• Indian Laws

• 2025 (2) TMI 796
  Validity of auction conducted by respondent No.1 (Bank) for the sale of the secured asset - right of redemption of the secured asset by respondent No.2 under Section 13(8) of the SARFAESI Act - HELD THAT:- Section 54 of the Transfer of Property Act, 1882, defines a sale as the transfer of ownership in exchange for a price that is either paid, promised, or part-paid and part-promised. This provision further describes the manner in which a sale is effected. It stipulates that, in the case of tangible immovable property valued at one hundred rupees or more, the transfer can be made only through a registered instrument. The use of the term only signifies that, for tangible immovable property valued at one hundred rupees or more, a sale becomes lawful only when it is executed through a registered instrument. Where the sale deed requires registration, ownership does not pass until the deed is registered, even if possession is transferred, and consideration is paid without such registration. The registration of the sale deed for an immovable property is essential to complete and validate the transfer. Until registration is effected, ownership is not transferred. In the present case, the original owner/borrower, Champa Ben Kundia, sold the secured asset to her son, Chandu Bhai by an unregistered sale deed dated 28.04.2000. Subsequently, the basement of the secured asset was transferred to Satnam Singh and Surinder Wadhwa through another unregistered sale deed dated 30.03.2001. Further, an unregistered agreement to sell, dated 23.04.2001, allegedly transferred the basement of the secured asset to respondent No.2. Therefore, all the documents relied upon by respondent No.2 to claim ownership of the basement of the secured asset are unregistered documents and fail to meet the requirements of a valid sale under Section 54 of the Transfer of Property Act. This Court in Babasheb Dhondiba Kute vs. Radhu Vithoba Barde [ 2024 (2) TMI 1516 - SUPREME COURT] held that the conveyance by way of sale would take place only at the time of registration of a sale deed in accordance with Section 17 of the Registration Act, 2008. Till then, there is no conveyance in the eyes of law. It is now a well-settled principle that a sale by way of public auction cannot be set aside until there is any material irregularity and/or illegality committed in holding the auction or if such auction was vitiated by any fraud or collusion. This Court in V.S. Palanivel vs. P. Sriram [ 2024 (9) TMI 625 - SUPREME COURT] held that unless there are some serious flaws in the conduct of the auction as for example perpetration of a fraud/collusion, grave irregularities that go to the root of such an auction, courts must ordinarily refrain from setting them aside keeping in mind the domino effect such an order would have. Conclusion - i) The Ownership does not pass until the deed is registered, even if possession is transferred, and consideration is paid without such registration. ii) A public auction sale cannot be set aside without evidence of material irregularity and/or illegality committed in holding the auction or if such auction was vitiated by any fraud or collusion. The impugned order of the High Court is set aside - Appeal allowed.

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• 2025 (2) TMI 795
  Dishonour of Cheque - legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881 - discharge of rebuttal of presumption of consideration under Sections 118(a) and 139 of the NI Act - HELD THAT:- In the present case, learned Trial Court has categorically observed that the petitioner herein failed to prove its case beyond reasonable doubt and the respondent has created reasonable doubt over the veracity of the story of the petitioner. It is pertinent here to discuss the law regarding the nature and extent of legal presumption in favour of complainant under NI Act and the possibility and manner of rebuttal of the same by the accused while balancing reverse onus of proof under the NI Act and presumption of innocence of accused under normal criminal jurisprudence. The Hon ble Supreme Court in Kumar Exports v. Sharma Carpets [ 2008 (12) TMI 682 - SUPREME COURT ] has held that where the complainant (respondent therein) did not produce any books of account or stock register maintained in the course of regular business or any acknowledgement for delivery of goods to establish that as a matter of fact woolen carpets were sold to the appellant therein (accused), it was opined that the complainant has failed to establish its case under section 138 of NI Act as required under law. This Hon ble Court in Pine Product Industries Another v. R.P. Gupta Sons Another [ 2006 (12) TMI 553 - DELHI HIGH COURT ] has held that if the complaint itself is vague about the nature of liability in discharge of which the cheques were issued and no details as to how the amount in question was arrived at, mere liability of the respondent to pay her dues towards purchase of goods is not enough to proceed under section 138 of NI Act. It is now well settled that the accused can always rely upon the material and circumstances brought on record by the complainant. It is also well settled law that the accused is not required to prove innocence by establishing the defence beyond all reasonable doubts as accused can always prove his innocence on basis of preponderance of probabilities - in the instant nature of the particular case in hand, the mandatory presumption under sections 118 (a) read with section 139 of NI Act does not relieve the petitioner from establishing the foundational facts. From a perusal of the testimonies, it is clear that the petitioner did not lead any evidence regarding transaction, supply of materials against which the cheques in question were issued. Further, the bills have neither been placed on record nor proved by the complainant/petitioner - the witnesses of the petitioner cannot be treated as credible witnesses and neither the sale tax forms nor the statement of account can be relied upon safely, due to various inconsistencies and contradictions. Hence, the learned Trial Court has correctly acquitted the respondent. Conclusion - The respondents have successfully rebutted the statutory presumption under section 118 (a) read with 139 of NI Act. Once the respondent has successfully rebutted the presumption, the petitioner is not able to prove its case beyond reasonable doubt. The impugned judgment passed by the learned Trial Court is well reasoned based upon the evidences and materials and documents placed on record. The leave to appeals are dismissed.

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• 2025 (2) TMI 794
  Dishonour of Cheque - Challenge to order directing the payment of interim compensation under Section 143A of the Negotiable Instruments Act, 1881 - HELD THAT:- A perusal of the reasoning given by the learned Metropolitan Magistrate if tested on the touchstone of the law laid down in Rakesh Ranjan Srivastava [ 2024 (4) TMI 719 - SUPREME COURT] shows that the learned Metropolitan Magistrate has not prima facie evaluated the merits of the case of the complainant nor the defence of the petitioner/accused has been considered. Further, there is neither any application of mind to the quantum of interim compensation to be granted nor the factors like, nature of the transaction, the relationship, if any, between the accused and the complainant, financial distress etc. have been considered. Somewhat similar is the position in case of the impugned order passed by the learned Principal District Sessions Judge, South-East, District Court Saket, New Delhi. The revisional court has not even prima facie evaluated the merits of the case set up in the complaint as well as defence of the petitioner/accused. The factors to be borne in mind for deciding the quantum of interim compensation have also not been adverted to. Conclusion - The matter is remanded back to the learned Metropolitan Magistrate for deciding the application of the complainant/respondent under Section 143A of the Act afresh, keeping in mind the law down in Rakesh Ranjan Srivastava. Petition disposed off by way of remand.

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