TMI Tax Updates - e-Newsletter
February 25, 2025

Case Laws in this Newsletter:

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

TMI Short Notes

1. A Comparative Analysis of Scope of Total Income: Section 5 of Income-tax Act, 1961 and Clause 5 of Income Tax Bill, 2025

  Bill:

2. Regulatory Framework for Commercial Activities by Non-Profit Organizations: A Comparative Analysis of Income Tax Bill, 2025 and Income-tax Act, 1961

  Bill:

3. Corporate Mergers and Tax Assessment: Navigating Legal Entity Changes and rectification u/s 292B

  Income Tax:

4. Reconciling Procedural Timelines with Limitation Periods in Income Tax Reassessments

  Income Tax:

Articles

1. Important Documents Required for Pvt Ltd Annual Filing

   By: Ishita Ramani

2. ASSESSMENT ORDER WITHOUT THE SIGNATURE OF THE ASSESSING OFFICER

   By: DR.MARIAPPAN GOVINDARAJAN

3. Food Safety and Standards (Vegan Foods) Regulations, 2022

   By: YAGAY andSUN

4. LEGAL TERMINOLOGY IN GST LAW (PART -10)

   By: Dr. Sanjiv Agarwal

5. Guidelines for Food Recall[Food Safety and Standards (Food Recall Procedure) Regulation, 2017]

   By: YAGAY andSUN

6. Gluten-Free Certification Program (GFCP): Overview

   By: YAGAY andSUN

7. Exporting IT or IT-enabled services you cannot ignore 𝗦𝗢𝗙𝗧𝗘𝗫 𝗖𝗢𝗠𝗣𝗟𝗜𝗔𝗡𝗖𝗘?

   By: Pradeep Reddy

8. INVESTIGATION REPORT OF SERIOUS FRAUD INVESTIGATION OFFICE

   By: DR.MARIAPPAN GOVINDARAJAN

9. Legacy of Bhopal Gas Tragedy and Indian Chemical Industrial Sector - Learnings and Path Forward.

   By: YAGAY andSUN

10. How Accidents in Indian Chemical Industries can be mitigated?

   By: YAGAY andSUN

News

1. All-party meet convened on Feb 27 for smooth budget session: J-K Speaker Rather

2. Ruling, opposition parties gear up for face-off in J'khand assembly in budget session

3. Jharkhand Cong discusses strategies for upcoming budget session of assembly

4. BJP MLAs discuss party strategy ahead of J-K Assembly Budget Session

5. Union budget aims to build healthy economy with long-term vision: Mansukh Mandaviya

6. Maharashtra assembly session to begin on March 3; budget on March 10

7. Chhattisgarh assembly's budget session to begin on Monday

8. Goa assembly's budget session from March 24

9. Budget for FY26 to be tabled in Andhra assembly session commencing on February 24

10. Uttarakhand Assembly adjourned sine die; budget of Rs 1 lakh cr passed

11. Delhi CM, ministers hold meeting with officers; discuss budget, Mahila Samriddhi Yojna

12. MRAI's 12th IMRC and Union Budget 2025 Set the Course for India's Sustainable Recycling Leadership

13. Joint Statement on the resumption of India-UK trade negotiations

14. USD 1.4 billion tax demand: Prima facie dissatisfied with Skoda Volkswagen's arguments, says HC

15. Former RBI governor Shaktikanta Das appointed second principal secretary to PM

Notifications

GST - States

1. F. 3(24)/Fin(Exp-I)/2024-25/DSI/162 - dated 18-2-2025 - Delhi SGST

Corrigendum – Notification No. F.3(24)/Fin(Exp-I)/2024-25/DSI/116, dated 30th January, 2025.

Highlights / Catch Notes

GST

• Assessment Orders Without Document Identification Number Are Invalid and Cannot Be Enforced Under GST Rules

  Case-Laws - HC : HC ruled that assessment order lacking Document Identification Number (DIN) is invalid and non-est, following Supreme Court precedent in Pradeep Goyal case. The court relied on CBIC circular No.128/47/2019-GST and previous Division Bench ruling which established that absence of DIN number compromises proceeding validity. Assessment order uploaded to portal without DIN was set aside, emphasizing mandatory compliance with electronic documentation requirements under GST framework. Petition allowed, reinforcing procedural requirement that all GST-related communications must contain valid DIN for legal enforceability.
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• Stock Discrepancies During GST Survey Cannot Trigger Section 130 Penalty Without Following Sections 73/74 Assessment Process

  Case-Laws - HC : HC quashed orders imposing tax and penalty under section 130 of GST Act arising from stock discrepancies discovered during business premises survey. Following established precedents, the Court held that mere stock discrepancies identified during survey warrant proceedings under sections 73/74 rather than section 130 of GST Act. The authority's direct invocation of section 130 was deemed legally unsustainable. The impugned orders dated 02.04.2024 by Additional Commissioner and 10.09.2018 read with 05.08.2020 by respondent authority were set aside, with the petition being allowed in favor of the registered dealer.
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• Stock Discrepancies Found During GST Survey Must Follow Assessment Under Section 73/74, Not Confiscation Under Section 130

  Case-Laws - HC : During a factory premises survey, discrepancies in raw material and semi-finished product inventory led to confiscation proceedings under s.130 read with s.122 of the GST Act. The HC ruled that when stock discrepancies are discovered during a survey of a registered dealer, authorities must initiate proceedings under s.73/74 of the GST Act rather than s.130. Following established precedents, the HC determined the respondent's orders dated 16.04.2024 and 23.11.2019 were legally unsustainable. The HC emphasized that inventory irregularities discovered during routine surveys warrant assessment proceedings under s.73/74 rather than the more severe confiscation provisions under s.130. Petition allowed, impugned orders set aside.
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• Service Tax Penalties Under CGST Act Quashed As Services Were Exempt During Pre-GST Period Under Finance Act

  Case-Laws - HC : HC allowed petition challenging service tax penalties under CGST Act. Penalties pertained to period before CGST implementation when services were exempt under Finance Act 1994. Court relied on precedent from Kanak Automobiles case where tax amount was Rs. 86 lakh compared to present case's Rs. 6,33,879. Distinguishing quantum while following ratio from SC judgment, court found penalties inapplicable since services were exempt during relevant period and CGST provisions could not be applied retrospectively.
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Income Tax

• Tax Appeal Dismissed Without Merit: CIT(A) Failed to Provide Reasoned Order Under Section 69A for Unexplained Cash Deposits

  Case-Laws - AT : ITAT set aside CIT(A)'s order regarding addition under s.69A for unexplained cash deposits. CIT(A) failed to fulfill statutory obligations under s.250(6) by not providing reasoned determination of appeal points and merely noting assessee's non-compliance with notices. The dismissal lacked merit-based adjudication and proper examination of appeal grounds. Additionally, while advance tax payment was required under s.249(4), CIT(A) neither specified the payable amount nor considered that assessee could seek exemption. Matter remanded for fresh consideration with directions to allow assessee to file advance tax exemption application. CIT(A) directed to pass speaking order addressing merits and grounds raised, following established precedents requiring substantive adjudication of appeals.
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• Bank Deposits Cannot Be Taxed Under Section 68 Without Considering Corresponding Withdrawals From Same Account

  Case-Laws - AT : ITAT reversed AO's additions under s.68 for unexplained bank deposits, finding that while deposits were added as unexplained income, corresponding withdrawals from the same account were not considered in assessment. The tribunal held that additions were unsustainable given the pattern of deposits and withdrawals evidenced in bank statements. Additionally, penalty of Rs.10,000 imposed under s.271(1)(b) for non-appearance was deleted, as AO had provided unreasonably short notice period of one day for appearance. Both issues decided in favor of appellant, with tribunal emphasizing need to consider complete banking transaction patterns and provide reasonable compliance timeframes.
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• Tax Notice Under Section 148 Invalidated Due To Wrong Jurisdiction As Assessee Falls Under Delhi Instead Of Jaipur

  Case-Laws - AT : ITAT quashed notice under section 148 and subsequent proceedings initiated by ACIT Circle-1, Jaipur due to lack of territorial jurisdiction. The assessee's case fell under ITO Ward 70(3), Delhi's jurisdiction per section 124 of IT Act. The department had not exercised transfer powers under sections 120 or 127. The tribunal found that the assessee provided sufficient evidence establishing Delhi jurisdiction, making the Jaipur ACIT's notice legally invalid. The improper jurisdictional notice rendered all consequential assessment proceedings void. The assessee's appeal was allowed, invalidating both the reassessment notice and subsequent proceedings.
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• Tax Authority Cannot Demand 20% Deposit Before Hearing Stay Application Under Income Tax Act Section 220(6)

  Case-Laws - HC : HC set aside the order requiring mandatory 20% deposit of disputed tax demand as precondition for stay application hearing. The court found this requirement violated both Income Tax Act 1961 and CBDT guidelines. Per CBDT circular, 20% deposit requirement applies only after authority determines prima facie merit for interim relief. Authority failed to consider possibility of reducing deposit percentage based on assessee's circumstances. Matter remanded for fresh consideration within 4 weeks in accordance with guidelines, requiring reasoned order on stay application merits before imposing any deposit conditions.
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• Share Allotment Through Book Entry Without Cash Receipt Not Taxable Under Section 68 As Unexplained Credit

  Case-Laws - HC : HC upheld ITAT's ruling that additions under s.68 were not warranted where shares were issued without monetary consideration through book entries. The transaction involved debiting goodwill account and crediting share capital account for share allotment. Since no actual cash was received by the assessee company and the book entries were satisfactorily explained, s.68 provisions were not attracted. The court emphasized that s.68 requires actual receipt of cash/consideration, not mere book entries. The colorable device argument was rejected as the transaction nature was properly documented and explained. Appeal dismissed in favor of assessee.
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• Taxpayer's Voluntary Disclosure of Rs. 50 Lakhs During Search Proceedings Leads to Cancellation of Penalty Under Section 271AAB

  Case-Laws - AT : ITAT cancelled penalty under s271AAB as taxpayer's disclosure of Rs. 50 lakhs during search proceedings was voluntary and not connected to search findings. While valuables were found in locker 932A, no disclosure was made during locker search statement. Revenue's argument that disclosure occurred only due to search was rejected since Assessing Officer failed to correlate seized documents with the disclosed amount. The voluntary nature of disclosure, unconnected to search materials or discovered assets, meant it could not be classified as undisclosed income warranting penalty. ITAT held penalty was not sustainable as fundamental requirement of connecting disclosed income to search findings was not established.
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• Supply of Railway Track Materials Not Subject to TDS as No Statutory Requirement Existed During Assessment Period

  Case-Laws - AT : ITAT held no TDS liability arose for payments made to supplier for railway tracks as no statutory provision mandated tax deduction on material supply payments during the relevant period. Regarding short TDS deduction and interest, matter remanded to AO for verification whether shortfall resulted from exclusion of service tax component. AO directed to examine assessee's accounts and determine issue per CBDT Circular No. 01/2014 guidelines on service tax exclusion from TDS calculations. Appeal partially allowed with matter restored to AO for limited verification of service tax component impact on TDS computation.
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• Penalty Under Section 270A Waived Despite Missing Form 68 As Taxpayer Met Core PMGKY Compliance Requirements

  Case-Laws - AT : ITAT ruled against penalty under s.270A for under-reporting income. Taxpayer met substantive conditions for immunity under s.270AA(1) by paying assessed tax and interest within prescribed time after declaring Rs.30 lakhs under PMGKY scheme. While Form 68 wasn't filed with AO, ITAT held this procedural omission shouldn't override substantive compliance. Citing principle that technical procedures shouldn't impede substantial justice, tribunal found non-filing of Form 68 was merely technical breach. Since taxpayer satisfied core requirements of s.270AA(1)(a)&(b), immunity from penalty was granted despite procedural lapse. Appeal decided in taxpayer's favor, setting aside penalty under s.270A.
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• Assessee Wins Appeal: TDS on Distributor Discounts, Year-End Provisions, and Club Membership Fees Under Section 194H

  Case-Laws - AT : ITAT allowed assessee's appeal on three key issues. First, TDS under s.194H not applicable on discounts given to prepaid distributors, following SC ruling in Bharti Cellular Ltd. Second, year-end accrual disallowances under s.40(a)(ia) reversed as provisions were credited back next day with actual bills and TDS deducted where applicable, following Karnataka HC decision in Subex Ltd. Third, club membership fees and subscription charges qualify as revenue expenditure not capital expenditure, following Karnataka HC precedent in Ingersoll-Rand India Ltd. Tribunal deleted all disallowances made by AO and ruled in favor of assessee on all grounds.
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Customs

• Customs Waives Late Fees for Bill of Entry Filing During Budget Implementation System Downtime Under 2017 Regulations

  Circulars : The Chennai Customs Commissionerate has waived late fees for Bills of Entry (BOE) filing due to ICEGATE system downtime during Union Budget 2025-26 implementation. The system was unavailable from 11:00 hrs on 01.02.2025 until 02.02.2025. The waiver applies specifically to BOEs filed for vessels granted entry inwards at INMAA1, INKAT1 & INENR1 ports on February 1, 2025, provided the BOEs were filed by February 2, 2025. This administrative relief aligns with Bill of Entry (Forms) Amendment Regulations, 2017 and addresses the technical disruption caused by budgetary system updates. The Commissioner's order serves as binding instruction for departmental officers and staff.
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• Voluntary Payment of Differential Duty Cannot Validate Improper Customs Reassessment Under Section 17 and Rule 12

  Case-Laws - AT : CESTAT held that mere voluntary payment of differential duty cannot validate reassessment without following proper procedures under Section 17 of Customs Act and Rule 12 of Valuation Rules. The Tribunal emphasized that transaction value declared in Bill of Entry must be basis for assessment unless rejected through prescribed methodology. Department's reliance solely on NIDB data to enhance valuation, without conducting mandatory enquiry under Rule 12 or Section 17(4) examination, was deemed procedurally deficient. A proper officer must issue speaking order for reassessment unless importer provides written acceptance. The confirmation of differential duty was set aside as it violated statutory requirements of Section 17(4) and Rule 12. Appeal allowed in favor of appellant.
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• Customs Must Issue Show Cause Notice Before Detention: Watch Released Due to Procedural Violation of Natural Justice

  Case-Laws - HC : HC ruled in favor of petitioner seeking release of detained wristwatch, holding that failure to issue show cause notice violated principles of natural justice. While petitioner's delayed submission of documents in response to February email was noted, the court emphasized that procedural requirement of show cause notice cannot be bypassed. Following precedent, absence of show cause notice rendered the detention invalid. Court directed unconditional release of goods within two weeks. Though petitioner's delayed disclosure was problematic, the fundamental procedural defect in detention process necessitated release. Petition succeeded on grounds of violation of natural justice principles.
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• Customs House Agent cleared of duty drawback fraud allegations after proving proper verification and due diligence procedures

  Case-Laws - AT : CESTAT overturned penalties imposed under Customs Act sections 114(i), 114(iii), and 114AA against appellant CHA regarding alleged duty drawback fraud through overvalued garment exports. The Tribunal found appellant conducted proper due diligence by verifying KYC documents, obtaining necessary authorizations, and following standard clearance procedures. Exports underwent physical examination without objections to quality or value. No evidence demonstrated appellant's involvement in fraudulent activities or receipt of benefits from duty drawbacks. Following precedents from Mauli Worldwide Logistics and Kunal Travels cases, CESTAT held CHAs are not required to verify authenticity beyond standard document processing. Given lack of evidence supporting allegations, penalties were set aside and appeal allowed.
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SEZ

• Development Commissioners Must Hold Weekly Online Grievance Sessions for SEZ Stakeholders with Mandatory Two-Hour Duration

  Circulars : Dept. of Commerce mandates weekly grievance redressal sessions ('Jan-Sunwai') via video conferencing for all SEZ Development Commissioners. DCs must schedule minimum two-hour sessions on working days, with fixed timings to be publicly notified to stakeholders and displayed on websites. Designated officers shall address grievances from developers, unit holders, and other stakeholders with time-bound resolutions. DCs required to submit schedule details and monthly compliance reports by 5th of following month, documenting number of grievances heard and resolutions provided. Directive establishes formal institutional mechanism for SEZ stakeholder grievance management through accessible virtual platform.
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Corporate Law

• Ex-promoters of Three C Shelters face SFIO probe under Section 212(3) for fund siphoning while protecting homebuyers' interests

  Case-Laws - HC : HC dismissed application to recall prior order and directed SFIO investigation into Three C Shelters Pvt Ltd's ex-promoters for alleged fund siphoning. Court found complex factual issues regarding IRP report and CIRP proceedings should be addressed by NCLT, which has constituted a Monitoring Committee. While preserving NCLT's jurisdiction over CIRP, HC ordered SFIO probe under Section 212(3) of Companies Act 2013 due to slow investigation pace by existing authorities. Investigation scope limited to TCSPL's ex-promoters, excluding ACE Group. ROC to continue examining ACE Group's transactions with TCSPL. Interim orders maintained with modifications exempting certain parties from SFIO investigation. Matter involves stalled construction project affecting homebuyers' interests for over 13 years.
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IBC

• Fund Infusion Without Interest Clause Qualifies as Financial Debt Under IBC Section 5(8), Commercial Benefits Prove Time Value

  Case-Laws - AT : NCLAT held that fund infusion by appellant into corporate debtor qualified as financial debt under IBC Section 5(8), despite absence of explicit interest clause. Following Orator judgment, tribunal confirmed that interest-free loans aren't excluded from financial debt definition. Time value of money was evidenced through commercial benefits and enhanced economic prospects expected by appellant. Tribunal found error in lower authority's characterization of transaction as mere business arrangement. Matter remanded to adjudicating authority to determine if default threshold met for Section 7 admission. Key amount claimed in default: Rs.42,47,32,067 including interest on principal loan of Rs.39,84,72,111 advanced as financial assistance.
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PMLA

• Accused in Money Laundering Case Gets Bail After Year-Long Custody With 225 Witnesses Still Pending Examination

  Case-Laws - SC : SC granted bail to appellant charged under Section 3 of Prevention of Money Laundering Act after considering prolonged custody exceeding one year and likelihood of extended trial duration with 225 witnesses pending examination. Following precedent in V.Senthil Balaji case, court determined continued detention would violate Article 21 right to speedy trial. Distinguished from Kanhaiya Prasad case where different factual matrix existed. Appellant directed to appear before Special Court within one week for release on bail with conditions including regular court attendance, cooperation for expedited proceedings, and passport surrender. Special Court tasked with imposing appropriate terms to ensure compliance and case progression.
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• Coal Syndicate Member Denied Bail Under Section 45 PMLA for Rs. 540 Crore Extortion and Money Laundering

  Case-Laws - HC : HC denied bail application under PMLA, 2002 for accused involved in illegal coal transportation extortion scheme. Evidence showed accused participated in syndicate collecting illegal levies of approximately Rs. 540 crores between July 2020-June 2022. Proceeds were used for political funding, bribes, and property purchases through benamidars. Investigation revealed accused received salary and bonuses from illegal funds, used for purchasing properties in own and spouse's name. Court found accused failed to meet twin conditions under Section 45 PMLA for bail grant and did not discharge burden of proof to dislodge prosecution's case. Following SC precedent in ED v. Aditya Tripathi regarding rigorous bail conditions under PMLA, application rejected under Section 483 BNSS, 2023.
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SEBI

• Mutual Funds Must Allocate 2 Basis Points of Daily Net Assets for Investor Education Under Section 11(1)

  Circulars : SEBI has clarified provisions regarding Investor Education and Awareness Initiatives under Chapter 10 of the Master Circular on Mutual Funds. AMCs must allocate minimum 2 basis points of daily net assets within total expense ratio limits for investor education initiatives. The clarification expands the scope to include financial inclusion initiatives subject to SEBI approval. The directive is issued under Section 11(1) of SEBI Act 1992 and Regulation 52 of MF Regulations 1996, aimed at investor protection and securities market development. The circular applies to all mutual funds, AMCs, trustee companies, and AMFI.
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• Stock Brokers Must Display Updated Investor Charter With Enhanced Protection Measures and Online Dispute Resolution Platform

  Circulars : SEBI issued updated Investor Charter for stock brokers, effective immediately, replacing previous circular from December 2021. Key changes include enhanced financial consumer protection measures, introduction of Online Dispute Resolution platform, and SCORES 2.0. Stock brokers must disclose charter to clients through websites, offices, account opening kits and communications. Monthly grievance data disclosure mandated by 7th of succeeding month. Grievance redressal mechanism includes 21-day resolution timeline, two-tier review system through exchanges and SEBI, and online conciliation/arbitration through SMARTODR platform. Charter outlines comprehensive rights, timelines for broker activities, and detailed dos/don'ts for investor protection.
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VAT

• Cinema Ticket Cess Under Section 3C Valid for Cultural Welfare Fund: Rs. 3 Cap Per Admission Upheld

  Case-Laws - HC : HC upheld constitutional validity of Section 3C of Kerala Local Authorities Entertainments Tax Act, 1961, which imposed cess on cinema tickets exceeding Rs. 25/- to fund Kerala Cultural Activists' Welfare Fund. The cess, capped at Rs. 3/- per admission, was deemed a special tax under Entry 62 of List II, Schedule VII of Constitution. Court established correlation between entertainment levy and cultural welfare, rejecting appellants' contention that only tax, not cess, could be levied under Entry 62. Challenge under Articles 14 and 19 failed as levy affected viewers, not theater owners. HC found legislative competence valid and dismissed appeal, affirming cess served legitimate purpose of cultural activists' welfare.
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Service Tax

• IT Company Must Pay Service Tax on Foreign Services Under Section 66A for Overseas Recruitment and Support

  Case-Laws - AT : CESTAT upheld service tax demands against an Indian IT company regarding manpower recruitment services, business auxiliary services, and business support services. The Tribunal determined that under Section 66A of Finance Act 1994, services received from foreign providers were taxable in India based on the recipient's location, regardless of where services were consumed. The company's liaison office in USA was deemed an extended arm of the Indian entity. The Tribunal confirmed tax liability on payments to US-based contractors for IT services and upheld referral fees/commission payments to overseas service providers. Extended period of limitation and penalties were maintained due to the company's failure to disclose relevant information promptly during audit. Appeals dismissed with tax demands, interest and penalties confirmed.
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• Service Tax on Warehouse Land: Appurtenant Areas Taxable Under RIPS, Standalone Plots Exempt; Rental Advances Taxable

  Case-Laws - AT : CESTAT partly allowed appeal concerning Service Tax liability under Renting of Immovable Property Service (RIPS). Tribunal held vacant land appurtenant to warehouses was taxable under RIPS, while standalone vacant land without associated buildings was excluded. Demand for Site Formation & Clearance Service (SFCS) and Commercial/Industrial Construction Service (CICS) remanded for recalculation considering abatements. Rental advances deemed taxable but required verification to prevent double taxation. Extended period of limitation upheld due to appellant's failure to register and pay Service Tax timely. Matter remanded to Original Adjudicating Authority for reassessment of tax liability, adjustments for prior payments, and verification of supporting documentation.
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• Refund of Unutilized Cenvat Credit Denied Under Section 142(3) as No Legal Provision Exists for Balance Credit

  Case-Laws - AT : CESTAT dismissed appeal concerning refund claim of unutilized Cenvat Credit under s.142(3) of CGST Act, read with Rule 5 of Cenvat Credit Rules and s.11B of Central Excise Act. Following Jharkhand HC's precedent in Rungta Mines Ltd case, tribunal affirmed that existing law prohibits cash refund of Cenvat Credit available on appointed date (01.07.2017). Appellant's failure to transition credit through proper channels and absence of export activities were fatal to refund claim. Tribunal held no legal provision exists under Cenvat Credit Rules 2004 for refunding balance credit, making refund claim legally untenable.
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• Service Tax Authority Must Differentiate Between Goods and Services When Calculating Turnover Under Section 73

  Case-Laws - AT : CESTAT examined whether extended limitation period under section 73 of Finance Act, 1994 was correctly invoked regarding appellant's service turnover discrepancy for FY 2015-16. While appellant cited precedents against extended limitation, their failure to rectify statutory filings was noted. The Tribunal determined that adjudicating authority must examine details of goods supplied through trading, which are excluded from service tax purview. The authority's failure to differentiate between goods and services in valuation affected order credibility. Matter remanded to original authority for fresh adjudication, specifically to evaluate documents evidencing supply of goods not includible in taxable service value for disputed period. Appeal allowed through remand.
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Case Laws:

• GST

• 2025 (2) TMI 934
  Violation of principles of natural justice - non-service of SCN - net tax payable as computed by the respondent appears to be based on a failure to reconcile the returns that were submitted - HELD THAT:- It is the case of the respondents that the notice which preceded the final order under Section 73 was placed in the Notices and Orders tab since by that time appropriate corrective measures had been taken on the portal thus ensuring that all notices were placed under the principal tab and being viewable. The writ petitioner is permitted to move an appropriate application for rectification bringing to the attention of the GST officer - petition disposed off.

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• 2025 (2) TMI 933
  Cancellation of registration of the writ petitioner - HELD THAT:- Quite apart from the evident laches in approaching this Court, the indubitable fact noted is that no provision of the Central Goods and Services Tax Act, 2017 renders the writ petitioner ineligible to apply for registration afresh. The provisions which have been made by the respondent themselves in Circular No. 95/14/2019-GST. The challenge to the impugned order fails and the writ petition shall consequently stand dismissed.

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• 2025 (2) TMI 932
  Rejection of application for voluntary cancellation of Goods and Services Tax (GST) registration - HELD THAT:- The factum of filing of returns is one which is conceded by the respondents in the counter affidavit filed in these proceedings itself. In view of the aforesaid, if there had been any discrepancy in the GSTR-1 and GSTR-3B, it was always open for the respondents to duly process the returns as submitted and frame an order of assessment. The same could have in any case not constituted sufficient ground for rejecting the application for cancellation. Petition allowed.

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• 2025 (2) TMI 931
  Challenge to assessment order - said proceedings did not contain a DIN number - HELD THAT:- The question of the effect of non-inclusion of DIN number on proceedings, under the G.S.T. Act, came to be considered by the Hon ble Supreme Court in the case of Pradeep Goyal Vs. Union of India Ors [ 2022 (8) TMI 216 - SUPREME COURT] . The Hon ble Supreme Court, after noticing the provisions of the Act and the circular issued by the Central Board of Indirect Taxes and Customs (herein referred to as C.B.I.C. ) , had held that an order, which does not contain a DIN number would be non-est and invalid. A Division Bench of this Court in the case of M/s. Cluster Enterprises Vs. The Deputy Assistant Commissioner (ST)-2, Kadapa [ 2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT] , on the basis of the circular, dated 23.12.2019, bearing No.128/47/2019-GST, issued by the C.B.I.C., had held that non-mention of a DIN number would mitigate against the validity of such proceedings. Conclusion - The non-mention of a DIN number in the order, which was uploaded in the portal, requires the impugned order to be set aside. The impugned proceedings set aside - petition allowed.

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• 2025 (2) TMI 930
  Violation of principles of natural justice - petitioner s request for a personal hearing was not even considered - the respondent would submit that the petitioner s would be granted an opportunity of personal hearing and the petitioner may submit all the documents, during the course of personal hearing. HELD THAT:- The impugned order dated 24.08.2024 is set aside. It is open to the petitioner to submit documents/additional objections/reply, if any, to the respondents and the respondents would proceed with the matter after affording the petitioner an opportunity of personal hearing. The Writ Petition stands disposed of.

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• 2025 (2) TMI 929
  Challenge to assessment order - impugned orders have been passed without taking into account the documents filed in support of the replies submitted - violation of principles of natural justice - the respondents would submit that they would re-examine the issue and would also submit that the petitioner may once again produce the entire documents which they intend to rely upon - HELD THAT:- The impugned orders are set-aside. Liberty is granted to the petitioner to treat the impugned orders as Show Cause Notice and submit its reply along with documentary evidence within a period of two (2) weeks from the date of receipt of a copy of this order, failing which, the impugned orders stands restored. Petition disposed off.

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• 2025 (2) TMI 928
  Imposition of tax and penalty u/s 130 of the GST Act - HELD THAT:- It is not in dispute that the survey was conducted at the business premises of the petitioner on 29.05.2018, in which the alleged discrepancy in stock was found. On the said basis, the proceedings were initiated against the petitioner under section 130 of the GST Act. The issue in hand is no more res integra . This Court in various cases has held that at the time of survey, if some discrepancy in stock is found against the registered dealer, then the proceedings under sections 73/74 of the GST Act ought to have been initiated, instead of section 130 of the GST Act. Reference may be had to S/s Dinesh Kumar Pradeep Kumar [ 2024 (8) TMI 71 - ALLAHABAD HIGH COURT ], M/s Maa Mahamaya Alloys Private Limited [ 2023 (3) TMI 1358 - ALLAHABAD HIGH COURT ] and M/s Shree Om Steels [ 2024 (7) TMI 1205 - ALLAHABAD HIGH COURT ]. The impugned order dated 02.04.2024 passed by the Additional Commissioner, Grade - 2, Kanpur as well as the impugned order dated 10.09.2018 read with order dated 05.08.2020 passed by the respondent no. 2 under section 130 of the GST Act cannot be sustained in the eyes of law - Petition allowed.

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• 2025 (2) TMI 927
  Challenge to search and seizure order - alleged discrepancies found during a survey - initiation of proceedings under sections 73/74 of the GST Act or u/s 130 of the GST Act - HELD THAT:- It is admitted that the survey was conducted at the factory premises of the petitioner on 13/14.03.2018, in which certain discrepancy with regard to raw material, semi/finished product, etc. was found, to which confiscation/proceedings under section 130 read with section 122 of the GST Act were initiated against the petitioner. The issue in hand is no more res integra. This Court in various cases has held that at the time of survey, if some discrepancy in stock is found against the registered dealer, then the proceedings under sections 73/74 of the GST Act ought to have been initiated, instead of section 130 of the GST Act. Reference may be had to S/s Dinesh Kumar Pradeep Kumar [ 2024 (8) TMI 71 - ALLAHABAD HIGH COURT] , S/s J.H.V. Steels Limited [ 2024 (10) TMI 1450 - ALLAHABAD HIGH COURT] and M/s PP Polyplast Private Limited [ 2024 (8) TMI 144 - ALLAHABAD HIGH COURT] . Conclusion - At the time of survey, if some discrepancy in stock is found against the registered dealer, then the proceedings under sections 73/74 of the GST Act ought to have been initiated, instead of section 130 of the GST Act The impugned order dated 16.04.2024 passed by the respondent no. 3 as well as the order dated 23.11.2019 passed by the respondent no. 4 cannot be sustained in the eyes of law - Petition allowed.

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• 2025 (2) TMI 926
  Demand for service tax penalty and imposition of various penalties under the CGST Act - penalties related to a period when the CGST Act was not in force, and services provided were exempted under the Finance Act of 1994 - HELD THAT:- Having regard to the quantum of tax involved in the present case and M/S Kanak Automobiles Private Limited are concerned, in Kanak Automobiles [ 2024 (4) TMI 1223 - PATNA HIGH COURT] it is Rs. 86 Lakh whereas in the present case it is Rs. 6,33,879/-, therefore, it is intended to dispose of in the light of Kanak Automobile case read with Hon ble Supreme Court [ 2025 (2) TMI 847 - SC ORDER] . Petition allowed.

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• 2025 (2) TMI 925
  Challenge to assessment order - service of notice - HELD THAT:- In view of the order passed by this Court in a batch of writ petitions in W.P.(MD) No.26481 of 2024 etc., batch dated 06.01.2025 [ 2025 (1) TMI 1021 - MADRAS HIGH COURT] , wherein it has been held that the assessee is entitled to service of notice in the modes described under clauses (a), (b), and (c) of Section 169(1) of the Central Goods and Services Tax Act, 2017 and since the said order applies to the present case, the impugned order dated 03.11.2023 for the assessment year 2018-19 is set aside. This Writ Petition is allowed.

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• Income Tax

• 2025 (2) TMI 940
  Addition u/s 69A - Addition based on single concept of cash deposit in bank - CIT(A) has discussed non-compliance on the part of the assessee before the Ld. AO as the notices sent were not complied with but he has not adjudicated the appeal on merit - HELD THAT:-Section 250(6) of the Act casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and the decision as well as the reason for arriving at such decision. In the present case before us, the Ld. CIT(A) has not mentioned the reasons after examining the records while disposing of the appeal. CIT(A) has neither adjudicated upon various grounds of appeal nor has passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. We further note that in Ajji Basha [ 2019 (12) TMI 320 - MADRAS HIGH COURT ] it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee s appeal; he cannot dispose the assessee s appeal merely by holding that Assessing Officer s order is a self-speaking order which requires no interference. It has also been held in the case of Premkumar Arjundas Luthra [ 2016 (5) TMI 290 - BOMBAY HIGH COURT ] that the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. There is an option available to the assessee to file an application before the Ld. CIT(A) who may dispense with the requirement of payment of advance tax on the basis of facts. Apparently, no such application was filed by the assessee and, therefore, the appeal was dismissed. Liability to pay the advance tax - Since the Ld. CIT(A) has not mentioned as to how much advance tax was payable by the assessee which has not been paid, and the assessee had the option of filing an application before the Ld. CIT(A), which however, was not filed and consequently the discretion available to the Ld. CIT(A) to exempt the assessee from the applicability of the rigours of section 249(4) could not be exercised by him and the appeal has also not been decided on merit, therefore, in the interest of justice, the order of the Ld. CIT(A) is set aside to be done afresh. The assessee may file an application for exemption from the requirement of payment of advance tax, which shall be decided by the CIT(A) in accordance with law and considering the totality of facts. Accordingly, the grounds taken by the assessee in his appeal are allowed for statistical purposes.

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• 2025 (2) TMI 939
  Addition u/s 68 - assessee failed to explain the source of cash deposited in his bank account - HELD THAT:- On perusal of the bank statement of the assessee, it is seen that there are both deposits as well as corresponding withdrawals made by the assessee from the same bank account, during the impugned year under consideration. While entire deposits/credits have been added as unexplained income of the assessee, corresponding credit for withdrawals has not been given to the assessee. Thus, on perusal of the bank statement of the assessee for the impugned year under consideration, in our considered view, the additions made by AO are not liable to be sustained, looking into the assessee s particular set of facts. Decided in favour of assessee. Penalty u/s 271(1)(b) - non-appearance in response to notice issued asking the assessee to cause appearance - HELD THAT:-Only a very short period of one day was granted by the AO to cause appearance before him, in the interest, penalty under Section 271(1)(b) of the Act for a sum of Rs. 10,000/- is liable to be deleted. It is a fit case where penalty under Section 271(1)(b) for causing non-appearance is liable to be deleted, looking into the assessee s facts as highlighted above. Decided in favour of assessee.

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• 2025 (2) TMI 938
  Addition u/s 69A - Unexplained cash deposits in bank account - Assessee argued source of cash deposit is out of cash withdrawn on earlier dates from bank accounts and savings - HELD THAT:- No hesitation in holding that the assessee has shown the sources of earlier withdrawal. By noting the fact that an amount of Rs. 84,944/- is cash out of earlier income or saving. We finally conclude that an amount in respect of which addition is made under section 69A is successfully explained and proved too. We therefore hold that such addition is incorrectly made by lower authorities by treating the same as unexplained within the meaning of Section 69A of the Act. Appeal of the assessee is allowed.

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• 2025 (2) TMI 937
  Validity of reassessment order as barred by limitation - arguments advanced by the assessee that the since the extended time limit of 12 months is not available in the case of Non-Resident as per sec.153(4), AO ought to have complete the assessment as per the provisions of sec.153(2) which is one year from the end of the financial year in which notice u/sec.148 was served - HELD THAT:-Since in the case of the assessee who is a Non-Resident during the impugned A.Ys. 2013-2014 and 2014- 2015, the Assessing Officer has completed the assessment on 25.05.2022 beyond the period of one year from the end of the financial year in which notice issued u/sec.148 dated 29.03.2021, therefore, the assessment order passed by the Assessing Officer cannot be sustainable in the eye of law. As relying on SHRI MIR IBRAHIM ALI [ 2024 (12) TMI 193 - ITAT HYDERABAD] we quash the assessment order passed by the Assessing Officer and allow the additional grounds raised by the assessee. Penalty u/sec.271(1)(c) on account of concealment of particulars of income is to be deleted.

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• 2025 (2) TMI 936
  Reopening of assessment - assessee has challenged the notice u/s 148 on the ground of jurisdiction - notice under section 148 of the IT Act which has been issued by ACIT Circle-1, Jaipur is without jurisdiction HELD THAT:- By virtue of section 124 of the IT Act, 1961 it comes under the territorial jurisdiction of ITO Ward 70(3), Delhi, therefore, the jurisdiction of the case of the assessee lies with ITO Ward 70(3), Delhi. In support of his contention, he has relied on the order of Jeeri Keerthana Reddy [ 2024 (1) TMI 1380 - ITAT MUMBAI ] A/R has also submitted that in the instant case the Income-tax Department did not exercise powers as conferred under section 120 or section 127 of the IT Act, 1961, therefore, the notice and the subsequent proceedings needs to be quashed. A/R has demonstrated with adequate evidence to prove that the jurisdiction over the case of the assessee lies with ITO Ward 70(3) Delhi whereas notice under section 148 has been issued by ACIT Circle-1, Jaipur which is not correct in terms of the Income Tax Act. We find force in the contention of the ld. A/R. Therefore, notice under section 148 and consequent proceedings undertaken on the strength of such illegal notice are quashed. Appeal of the assessee is allowed.

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• 2025 (2) TMI 935
  Addition u/s 68 - unsecured loan received by the assessee - assessee could not prove the repayment of the unsecured loans along with sources of repayment and reasons there for - CIT(A) deleted addition - HELD THATR:- The entire allegation of the ld. AO seems to be based on finding that these entities were doing some circular trading and they had defrauded the bank by adopting modus operandi of rotation of funds from one entity to another and misusing the LC facility from these banks. Despite making such allegation in the respective assessment orders of these entities, he has applied the profit rate on the sales declared by these entities to assess their income. Nowhere in their cases any deemed income has been assessed or any finding have been given that they are bogus entities not doing business. Once AO has accepted source of these loans in the case of these parties, then how can he made the addition u/s.68 in the hands of the assessee. Nowhere in the various statements as referred by the ld. AO, there is any whisper about the assessee or any question was asked by the searched parties or the authorised officers that any such person or entity have given any kind of accommodation entry to the assessee or the loan given by these parties were bogus. The entire allegation of the AO based on the statement recorded and finding of the search parties is that these groups were doing either bogus sales or purchases or circular trading to get LC from the bank. There might be movement of funds from one company to other and overdrawing the money from the banks through Letter of Credit without any credentials at the time of Bill Discounting or for any other purpose, but nowhere there is any finding of investigation wing or any material found or statement during the search, that some unaccounted money has been given by the assessee company to accommodate any loan entry or there is any cash trail. Neither there is involvement of any kind of entry operator nor were these companies found to providing accommodation entry of loan by taking some temporary cash. Without such information or material, there cannot be any presumption that these companies had provided bogus entry of loan or the transaction is not genuine. Thus, the finding of the CIT(A) cannot be tinkered with. Accordingly, the additions made u/s.68 is deleted and the order of the ld. CIT (A) is confirmed.

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• 2025 (2) TMI 924
  Penalty u/s 271(1)(c) - defective notice u/s 274 - non specification of clear charge/Default - HC decided [ 2023 (8) TMI 1373 - DELHI HIGH COURT] Revenue does not dispute that none of the penalty notices issued to the respondent/assessee for the aforementioned AYs advert to the specific limb of Section 271(1)(c) which is triggered against him. It is not clear whether the AO intended to levy a penalty on the respondent/assessee for concealment of particulars of his income, or furnishing inaccurate particulars. HELD THAT:- There is gross delay of 371 days in filing this Special Leave Petition. Delay in refiling is condoned. Following the orders passed by this Court in [ 2024 (9) TMI 1698 - SC ORDER] , [ 2024 (9) TMI 1698 - SC ORDER] and [ 2024 (7) TMI 975 - SC ORDER] in the case of the very same respondent-assessee, we dismiss the application seeking condonation of delay. Consequently, the Special Leave Petition also stands dismissed.

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• 2025 (2) TMI 923
  Stay of demand - deposit of 20% of the outstanding amount was made - HELD THAT:- In the matter of M/s. Aarti [ 2018 (4) TMI 1284 - CHHATTISGARH HIGH COURT] application for stay of demand has not been considered in the manner it was required to be considered and dealt with. Deposit of 20% of the disputed demand has been made condition precedent for hearing the application for stay which is not contemplated either under the Act of 1961 or the CBDT guidelines dated 29-2-2016 modified by the office memorandum dated 31-7-2017. It is only when the competent authority is of the opinion that the assessee has made out a case for grant of interim relief, stay can be granted subject to deposit of 20% of the disputed demand. Likewise, there is a further clause in the circular for reduction of 20% deposit if the petitioner makes out a case, it has also not been considered. In straightway, direction of deposit of 20% of the disputed demand has been made which is not the correct way of deciding the application for stay of the disputed demand. Since similar question is involved in this matter, the impugned order is set-aside and the matter is remitted to the competent authority to consider it afresh in light of the guidelines as stated above and pass a reasoned order within a period of 4 weeks from the date of receipt of a copy of this order.

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• 2025 (2) TMI 922
  Validity of the additions made u/s 68 - whether ITAT has only considered cash credit to be taxable under the provisions of section 68, whereas the provision covers within its ambit any sum credited in the Books? - whether order of Ld. ITAT is erroneous and untenable in law as it has failed to consider that the impugned transaction is a colorable devise to avoid tax liability and the facts clearly show that the assessee party has made the credit/ debit entries in contravention of provisions laid by the Act? HELD THAT:- As undisputed that the shares had been issued without any monetary consideration. The respondent appears to have debited the goodwill account of the company and made a corresponding credit to the share capital account for the purposes of allotment of shares to Mr. Kaushik. It was in the aforesaid light that it had taken the position that it was merely a book entry and thus, would not have fallen within the ambit of Section 68. the view as expressed by the CIT(A) and which came to be affirmed by the Tribunal does not merit any interference bearing in mind the undisputed fact that the transaction did not represent an actual receipt of any cash in the hands of the assessee company. In absence of any such consideration having entered the books, the provisions of Section 68 were clearly not attracted. The assessee had in any case satisfactorily explained the circumstances attached to the book entry in question. Decided in favour of assessee.

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• 2025 (2) TMI 921
  Addition of bogus expense - CIT(A) confirmed the addition @ 20% of the bogus expense - contention of the assessee that identical addition in respect of sister concern of the assessee was restricted to the extent of 12.5% only - HELD THAT:- We are of the considered opinion that the Ld. CIT(A) had correctly appreciated the facts of the case and restricted the addition to the extent of 20% of the subcontract amount which was reasonable considering the fact that documentary evidence for a return of sub-contract amount in cash to the extent of 4.21 Crores only was found in this case. Accordingly, the order of the Ld. CIT(A) is upheld. The grounds taken by the Revenue are dismissed.

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• 2025 (2) TMI 920
  Addition u/s. 69A - unexplained jewellery found in locker - locker was in the joint name of the assessee and her daughter - At the time of search assessee had given a categorical statement that the jewellery in the said locker belonged to her daughter, who was now a resident of UK - HELD THAT:- Daughter of the assessee filed an Affidavit stating that the jewellery seized from the locker belonged to her and that the same was received from her parents and relatives at the time of her marriage, on the occasion of birth of her children and on other occasion etc. Nothing has been brought on record to dispute the veracity of the statement of the assessee or the contents of the Affidavit filed by the daughter of the assessee. The only reason for the addition was that since the locker was being regularly operated by the assessee, the natural presumption would be that the jewellery found in said locker, belonged to the assessee only. Looking into the instant facts, no such presumption can necessarily be drawn, looking into the fact that the locker in question was jointly held by the assessee and her daughter. Daughter of the assessee was residing in UK and hence it was practically not possible for her to operate the locker and further, the daughter of the assessee also filed an Affidavit stating that the jewellery impounded from the locker belonged to her and her family members. Accordingly, looking into the assessee s set of facts, in our considered view, the additions made by the AO are liable to be deleted. Appeal of the assessee is allowed.

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• 2025 (2) TMI 919
  Revision u/s 263 - issues not verified by AO during the course of assessment proceedings on Disallowance u/s 14A read with Rule 8D and Payment of compensation being allegedly not allowable as deduction u/s 28 to 44DA - HELD THAT:- AO has made disallowance which stands deleted by the CIT(A). Since the issue has already been examined by the AO, adjudicated by the Ld. CIT(A), the same issue cannot be again taken up the PCIT u/s 263. Further, disallowance u/s 14A cannot be made for investments made in partnership firm and the profit earned thereof. Even on merits, we find no prejudice is caused to the Revenue and hence the order of the Ld. PCIT on this issue cannot be upheld. Compensation paid - PCIT held that assessee had neither disallowed such expense nor the Assessing Officer had verified the expense as it is not allowable within the provisions of section 28 to 44DA - Compensation expenses paid in year under consideration is on account of contractual payment and not on account of any violation of any law and hence, no disallowance in this regard is warranted under the provisions of the Act. Since no disallowance is warranted as enumerated above, the assessment order passed u/s 143(3) of the Act by Assessing Officer can neither be held as erroneous nor prejudicial or fatal to the interest of revenue . We find that the AO has also examined the issue during the assessment proceedings as found in the notice issued u/s 142(1). Therefore, twin pre-conditions to assume revisionary jurisdiction u/s 263 of the Act are not satisfied in the issue on hand. Appeal of the assessee is allowed.

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• 2025 (2) TMI 918
  Ex-parte order - non-compliance to the hearing notices issued - HELD THAT:- CIT(A) proceeded to pass impugned order on 03.12.2024 ex-parte, even before the time for furnishing response by the assessee has not expired. Moreover, we find notices of hearing sent from Office of the First Appellate Authority was not sent to e-mail ID shown in Form No.35. Therefore, there was non-compliance to the hearing notices issued from the Office of First Appellate Authority, which had resulted in ex-parte order. Denial of concessional rate of tax at 22% as per provisions of section 115BAA - delay in filing Form 10-IC - HELD THAT:- CBDT in its Circular No.6 of 2022 dated 17.03.2022 had stated that delay in filing Form No.10-IC, as per Rule 21AE of the Rules for the previous year relevant to AY 2020-21 is condoned in cases where following conditions are satisfied:- i) The return of income for AY 2020-21 has been filed on or before the due date specified u/s. 139(1) of the Act; ii) The assessee company has opted for taxation u/s/115BAA of the Act in (e) of Filing Status in Part A- GEN of the Form of Return of Income ITR-6; and iii) Form 10-IC is filed electronically on or before 30.06.2022 or 3 months from the end of the month in which this Circular is issued, whichever is later. As assessee had satisfied all the aforesaid three conditions mentioned in the Board s Circular No.6 of 2022 dated 17.03.2022. In view of the assessee satisfying all the three conditions mentioned above, delay in filing Form 10-IC stands condoned and accordingly, the assessee would be entitled to be taxed at concessional rate of tax at 22% as per provisions of section 115BAA - Appeal filed by the assessee is allowed.

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• 2025 (2) TMI 917
  Penalty order u/s 271AAB - Disclosure made in search proceedings - DR held that in case there was no search, no disclosure would have been made and a similar mention is also made in the assessment order - AR re-emphasized the fact that the assessee had voluntarily disclosed the income and the income was not represented by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other transactions found in the course of search - HELD THAT:- As gone through the statement of Poonam Mohta recorded on 08.05.2015, produced in the course of proceeding before us and a perusal of the same shows that though certain valuables were found in the locker of the assessee however, the assessee had not made any disclosure in the statement recorded while the locker no. 932A was subjected to search and seizure on 08.05.2020. Hence, as the disclosure did not relate to the finding of the search and was made suo motu and though the Ld. AO has referred to certain seized documents in the penalty order, but he has not corelated how the disclosure of Rs. 50 lakhs had any reference to the seized documents; therefore, the disclosure could not be treated as undisclosed income for the purpose of imposition of penalty u/s 271AAB and the penalty imposed is liable to be cancelled. Hence, Ground No. 1 is allowed and the penalty is hereby cancelled.

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• 2025 (2) TMI 916
  Addition made on account of short deduction of TDS - payments were made to M/s Steel Authority for supply of railways tracks in terms of contracts or for purchase of goods - CIT(A) deleted addition - HELD THAT:- We are in agreement of the finding of the Ld. CIT(A) that no liability for deduction of tax arises in respect of the contract related to supply of the material. As there is no provision of the Act that mandates for deduction of tax on the payment made for supply of material during the relevant year, we hold accordingly. However, in respect of the short deduction of deduction and interest, it is the case of the assessee that short deduction was due to exclusion of the service tax component as per the CBDT Circular. This fact is required to be verified at the end of the assessing authority. Therefore, the impugned order on the short deduction of tax is set aside and the issue is restored to the AO who would verify from the accounts of the assessee whether the short deduction was due to the exclusion of the service tax component and if so, same shall be decided in the light of the CBDT Circular No. 01/2014 dated 13.01.2014 (F.No 275/59/20124T(B). All the grounds of appeal of the Revenue are disposed off in the terms of the above.

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• 2025 (2) TMI 915
  Validity of assessment u/s 153A - invalid approval u/s 153D - HELD THAT:- Violation of the mandatory provisions of section 153D of the Act which require the approval to be issued after application of mind to the assessment record and incriminating materials. We find that the case of the assessee is squarely covered on facts with the case relied by the learned DR in the case of Uttarkhand Uthan Samiti [ 2020 (4) TMI 878 - ITAT DELHI] . Further, it is now a settled provision of law that exercise of powers u/s 153D have to pass the scrutiny that the same were not exercised mechanically. The appeal of the assessee is allowed.

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• 2025 (2) TMI 914
  Penalty levied u/s. 270A - under reporting of income - assessee didn t file Form 68 before AO - assessee s failure to explain on merits against disallowance/addition made in the assessment order - Pursuant to survey u/s. 133A return was selected for scrutiny and the AO made an addition - HELD THAT:- Since, the assessee offered Rs. 30 lakhs under PMGKY scheme, the net-assessed income was computed at Rs. 25,46,812/-. Pursuant thereto, assessee paid tax interest within the period/time given in the assessment order/demand notice and thus it is an undisputed fact that the assessee has fulfilled conditions prescribed u/s. 270AA of the Act for claiming immunity from imposition of penalty. Assessee has fulfilled both the conditions for grant of immunity as stipulated under clause (a) (b) of sub-section (1) of section 270AA of the Act, which are substantive in nature except didn t file Form 68 before AO. Therefore, in substance assessee was entitled for claiming immunity from imposition of penalty u/s. 270A of the Act. In this context, it has to be kept in mind that courts are meant to do substantial justice between the parties, and that technical rules or procedure should not be given precedence over doing substantial justice. Undoubtedly, justice according to the law, doesn t merely mean technical justice, but means that law is to be administered to advance justice [refer the decision Pankaj Bhai Rameshbhai Zalavadiya v. Jethabhai Kalabhai Zalavadiya [ 2017 (10) TMI 1397 - SUPREME COURT] ]. In the given factual background, according to us, non-filing of Form 68 is only a technical or venial breach which should not snatch away the substantive right to claim immunity from levy of penalty, which assessee got vested with on fulfillment of substantive conditions mandated in Clause (a) (b) of sub-section (1) of section u/s. 270AA of the Act. Thus no penalty ought to have been levied u/s. 270A of the Act for under-reporting of income - Decided in favour of assessee.

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• 2025 (2) TMI 913
  TDS u/s 194H - disallowance of discount extended to prepaid distributors u/s. 40(a)(i) - assessee has paid sum to its various distributors of prepaid SIM cards/recharge coupons as amount represents the difference between MRP of the talk time and prepaid connections and the price at which these are transferred to pre-paid distributors and discount in nature - HELD THAT:- Whether TDS is to be deducted by the cellular mobile services company on the discount given to distributor has now been settled by the decision of Bharti Cellular Ltd [ 2024 (3) TMI 41 - SUPREME COURT] wherein as held that Section 194H of the Act is not applicable in respect of payment made by the distributor/franchise - Thus, disallowances made by AO is not sustainable. The ground of appeal is accordingly allowed. Disallowance of year-end accruals u/s. 40(a)(ia) - AO has disallowed the year end provision debited on the last day of accounting - HELD THAT:- Provision has been reversed and credited back on the next day and such expenditure has been debited on the basis of actual bill and TDS deducted, wherever applicable in the next financial year. We find that the issue whether TDS is to be deducted on year-end provisions which is reversed on the first day of the subsequent year has been decided in the case of Subex Ltd. [ 2023 (1) TMI 778 - KARNATAKA HIGH COURT] held if no income is attributable to the payee there is no liability to deduct tax at source in the hands of the tax deductor. The existence or absence of entries in the books of accounts is not decisive or conclusive factor in deciding the right of the assessee claiming deduction. See KEDARNATH JUTE MANUFACTURING COMPANY LIMITED [ 1971 (8) TMI 10 - SUPREME COURT] - Decided in favour of assessee. Nature of expenses - Disallowance of club expenses - AO has made disallowance of entry fee/subscription charges paid by the assessee on the ground that the said expenditure is capital expenditure - HELD THAT:- The assessee has incurred club expenses and claimed as revenue expenditure. The A.O without examining the nature of expenditure has held it capital expenditure. As decided in the case Ingersoll-Rand India Ltd. [ 2020 (4) TMI 550 - KARNATAKA HIGH COURT] has held that expenditure spend on club expenses are revenue in nature. Respectfully following the decision of Hon ble Karnataka High Court, supra, the addition made on disallowance of club expenses is deleted. The ground of appeal is accordingly deleted. Appeal filed by the assessee is allowed.

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• 2025 (2) TMI 912
  Rejection of application for registration u/s 12AA - Assessee trust was required to file application under clause (iii) of section 12A(1)(ac) of the IT Act but due to inadvertent error the application was filed under clause (vi) of section 12A(1)(ac) - assessee is a non-profit company registered u/s 8 of Companies Act - HELD THAT:- As relying on Raj Krishan Jain Charitable Trust [ 2024 (6) TMI 1400 - ITAT DELHI] and in the light of the circular no 7/2024 issued by CBDT on 25-04-2024, i.e. after the filing of application by the assessee wherein the issue of mentioning wrong section code has been addressed / considered as a common frequent error and also observing the fact that in the instant case CIT, Exemption, Pune has not given any adverse finding on merits of the case, against the assessee, accordingly considering the totality of facts of the case and in the interest of justice we deem it fit to set-aside the order passed by Ld. CIT, Exemption, Pune and direct him to treat the application already filed by the assessee as under clause (iii) of section 12A(1)(ac) of the IT Act instead of under clause (vi) of section 12A(1)(ac) of the IT Act and decide the same as per fact and law after providing reasonable opportunity of hearing to the assessee. Appeal filed by the assessee is allowed for statistical purposes.

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• Customs

• 2025 (2) TMI 911
  Seeking unconditional release of the wrist watch detained - non-issuance of a show cause notice and personal hearing to the petitioner - violation of principles of natural justice - HELD THAT:- Though the Petitioner ought to have disclosed the fact that he had submitted the documents in response to email dated 20th February, 2024, in a belated manner, however, the fact that show cause notice was not issued in this case cannot be ignored by the Court. Following the decision in Amit Kumar [ 2025 (2) TMI 385 - DELHI HIGH COURT] the detention of the subject goods is itself liable to be set aside due to non-issuance of show cause notice, and the goods are accordingly directed to be released to the Petitioner within a period of two weeks. Conclusion - Detention is liable to be set aside due to non-issuance of show cause notice. Petition allowed.

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• 2025 (2) TMI 910
  Seeking to quash the impugned Order - misdeclaration of export goods - Narrow Woven Fabrics - HELD THAT:- Since, both the show cause notice and the final order that arise from the said show cause notice have already been quashed by the Court qua the main company i.e., M/s J.R. International, the Order In Original qua the Petitioner would also be liable to be quashed. In fact, this Court has recently in Shri Balaji Enterprises v. Additional Director General New Delhi Ors. [ 2024 (12) TMI 1208 - DELHI HIGH COURT ] also followed a similar rationale as the Coordinate Bench of this Court. The SCN along with Order In Original emanating therefrom are quashed - Petition disposed off.

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• 2025 (2) TMI 909
  Seeking release of the currency which was seized by the Respondent/Department from the Petitioner - HELD THAT:- Since the clear instructions are that the Department has challenged the Order-in-Original dated 29th March, 2024, the Commissioner (Appeals) must now adjudicate the appeal in accordance with the law. Until such adjudication, the prayer for the release of the currency cannot be granted - In terms of Section 128A(4A), the Commissioner (Appeals) is to decide every appeal where it is possible to do so within a period of six months from the date when it has been filed. Accordingly, the Commissioner (Appeals) in the present case shall decide the appeal as per the provisions of the Act within a period of four months. Petition disposed off.

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• 2025 (2) TMI 908
  Imposition of penalties u/s 114(i), 114(iii), and 114AA of the Customs Act, 1962 - Siphoning off duty drawback from the exchequer by export of inferior quality of readymade garments at highly overvalued price - HELD THAT:- There is no denial of the Revenue that appellant obtained all the requisite documents vis- -vis the identity and the place of existence by verifying said KYC documents with the respective departments. It is also observed that all the consignments were allowed to be exported after scrutiny of the documents which were filed along with shipping bills. Even the physical examination of the goods was conducted without any objection been raised at the time of clearance of the export consignment neither with respect to the quality nor the value of the exported garments. There is also no denial to the fact that with respect to the impugned exports the appellant filed eight shipping bills on behalf of M/s. Kenstar Overseas and six shipping bills on behalf of M/s. Alpha Impex in the month of May-June 2009 - Apparently and admittedly the impugned show cause notice was issued on 19.05.2015 i.e. six year after the impugned export consignments got cleared by the appellant. There are no denial of Shri Vinod Kumar Mulani, the beneficial owner of the exports, who is the alleged mastermind behind the fictitious firms fraudulently exporting the inferior quality of garments to receive ineligible duty drawback, that the appellant was authorized to clear the impugned export consignments. This Tribunal in the case of M/s. Mauli Worldwide Logistics Vs. Commissioner of Customs, New Delhi (Airport and General) [ 2022 (7) TMI 368 - CESTAT NEW DELHI ], has also held that the fact that appellant had carried out due diligence is consistent with the fact that the KYC documents were obtained by him as CHA and were submitted by him before the Commissioner. Same is the fact of the present case. Hence the decision is squarely applicable in the present case also. Hon ble Delhi High Court in the case of Kunal Travels [ 2017 (3) TMI 1494 - DELHI HIGH COURT ] has held that the CHA is not an inspector to weigh the genuineness of the transaction. It is a processing agent of documents with respect of clearance of goods through customs house - all CHA need not to sit as an examiner or supervisor to such authorities issuing the documents to the importer/exporter as the case may be. Even the CHALR Regulations do not expect the CHA to physically examine the genuineness vis- -vis the identity of his client and his existence at the address mentioned on the documents which are otherwise being verified by CHA as genuine. The onus of CHA therefore cannot be extended to verify that the officers issuing those documents/certify/registration whether or not have correctly issued the same. There is no evidence produced by the department to prove the allegations of lack due diligence on part of the CHA nor of abatement in impugned illegal exports. There is not even any evidence on record to prove that the appellant had derived any benefit out of alleged violation by the exporters or out of availment of ineligible drawback - There is no corroboration to that effect despite the department had done a meticulous enquiry with the banks of the exporter firms but no single documentary evidence could have been produced showing any remittance to the appellant out of the amounts received by those firms in the name of duty drawbacks. Conclusion - In absence of any evidence to support the allegations of the show cause notice against the appellant, the penalty against the appellant has wrongly been imposed. Appeal allowed.

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• 2025 (2) TMI 907
  Valuation of imported goods - redetermination of duty - enhancement of value - Whether the Revenue has rightly re-assessed and enhanced the value of the imported goods without passing any speaking order but based on the fact that the differential duty has voluntarily been paid by the appellant? - HELD THAT:- Once the value is declared in the Bill of Entry filed in terms of Section 46 of Customs Act 1962, the proper officer has to assess the duty and the assessment has to be made in terms of Section 17 of the Customs Act, 1962. The joint reading of 5 sub-sections in the said provision reflects that the importer/exporter initially follow a process of self-assessment of declaration of the transaction value [Section 17(1)]. The proper office is entitled to examine veracity of self declaration that is made [Section 17(2)]. For the purpose, the proper officer is required to call upon the importer or the exporter, as the case may be, to produce further document or information based whereupon the correct duty leviable on the imported/exported goods should be ascertained [Section 17(3)]. In addition to enquiry, as required under Rule 12 of Valuation Rules the enquiry prescribed under Section 17(4) of the Customs Act is required to be conducted by the proper officer to arrive at the reassessed value. It is seen from a perusal of Section 17(4) of the Customs Act that the proper officer can re-assess the duty leviable, after verification, examination or testing of the goods or otherwise if it is found that the self-assessment was not done correctly - where the proper officer is not satisfied and has reasonable doubt about the truth or accuracy of the value so declared. It is deemed that the transactional value of such imported goods cannot be determined under the provision of sub-rule (1) of Rule 3 of the 2007 Rules. Clause (iii) of Explanation to Rule 12 states that the proper officer can on certain reasons raise doubts about the truth or accuracy of declared value. The transaction value declared by the importer should form the basis of assessment unless the same is rejected for the reasons set out in Rule 12 of the Customs Valuation Rules. The Customs Valuation Rules outlines the step-by-step methodology to be adopted for re-determination of the assessable value in certain cases. The primary requirement for re-determination of the value is that the transaction value should be rejected for cogent reasons prescribed in the Customs Valuation Rules. If the transaction value is rejected, then the Customs Valuation Rules prescribes the basis for arriving at the assessable value. Conclusion - i) Where the importer confirms his acceptance in writing about the re-assessment arrived at after following the procedure of Section 17(4), it is only in that situation, that the proper officer would stand relieved of the obligation of passing his speaking order in respect of such assessment. The mere waiver will not get covered under the admission as termed by statute in Section 17(5) of the Customs Act. ii) Apparently and admittedly no enquiry as is required under Rule 12 of Valuation Rules has been conducted by the department prior rejecting the said value. Nor any exercise was undertaken as is required under Section 4 of Section 17 of the Customs Act. It is only the NIDB data which was relied upon by the department to reject the value declared in Bills of Entry and to re-assess the value of the goods at a higher price. Confirmation of differential duty is, therefore, held violative of Section 17(4) of Customs Act and of Rule 12 of Customs Valuation Rules and hence is liable to be set aside - appeal allowed.

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• Corporate Laws

• 2025 (2) TMI 906
  Public Interest Litigation or not - alleged role, irregularities, and misconduct on the part of the IRP - Siphoning of funds by the ex-promoters and directors of Three C Shelters Pvt. Ltd. - whether the submissions on the part of the learned counsels for the parties should at all be considered by this Court sitting in writ jurisdiction under section 226 of the Constitution of India, 1950? - HELD THAT:- Unhesitatingly, this Court finds no ground to recall the order dated 02.02.2024. The issues relating to the genuineness of the IRP report dated 09.08.2023, which has been espoused on behalf of the petitioner, respondent No. 11/Orris and respondent No. 4/Greenopolis Welfare Confederation on one side, and contested by applicants/respondents No. 12 and 13, along with respondent No. 5/Greenopolis Welfare Association on the other side, are complex set of facts which need to be addressed by the NCLT in view of the directions of the Supreme Court. There is no gainsaying that the NCLT is seized of the matter with regard to the CIRP proceedings pertaining to respondent No. 3/TCSPL, which will invariably delve into all the relevant aspects of the matter. At the cost of repetition, a Monitoring Committee has already been constituted by the NCLT, which will naturally examine the complex factual issues and facts raised by the parties, including the successive reports by the three IRPs appointed including the present one, besides the revival of respondent No. 3/ TCSPL so as to provide some relief to the petitioner and homebuyers. The bottom line is that the petitioner is espousing her personal cause and, in doing so, has also espoused the cause of the similarly placed investors/claimants/homebuyers, who form a distinct class and whose long-promised dream of owning residential flats remains unfulfilled, as construction has been stalled for over thirteen years now - The modus operandi adopted by them in defrauding the homebuyers has been exposed even in the above referred directions by the Allahabad High Court, the foot prints of which are evidently visible in the instant matter too. This Court is not by-passing the jurisdiction of the NCLT to determine the fate of the respondent no. 3/TCSPL, which is involved in CIRP, nor is it usurping any power under Section 63 of the IBC. However, it is undeniable that the investigation by respondents No. 1 and 2 is progressing at a snail s pace qua respondent No. 3/TCSPL and its ex-promoters directors, marked by tardiness and a lack of urgency, which is unacceptable in law and prejudicial to the interests of the homebuyers. Section 212(3) of the Companies Act, 2013 provides that the Central Government has the power to order investigation in respect of any company which it deems necessary and also to order special investigations in respect of other concerns related to corporate law. The Central Government may appoint any authority, officer or agency to conduct the investigations and to report its findings to the Central Government with the primary objective of investigating frauds and offences relating to a company under section 447 of the Act. The entire setting of the present matter, compels this Court to direct the Central Government to entrust the investigation to the SFIO as regards the role of the ex-promoters and directors of respondent no. 3/TCSPL is concerned - in the instant matter, the entire facts and circumstances presented go beyond mere assumptions, surmises or conjectures. The stark fact is that the Greenopolis project has been abandoned by the respondent Nos. 6-10/ex-promoters and directors after siphoning of funds generated directly through respondent no. 3/TCSPL and the petitioner as well as those who are similarly placed investors/claimants/homebuyers are the victims at their hands, which is an undisputed proposition. Conclusion - i) The investigation into the affairs of TCSPL and its ex-promoters is necessary to protect the interests of the homebuyers and ascertain the extent of the fraudulent activities. ii) The ACE Group is not to be investigated by the SFIO, but the Registrar of Companies will continue to examine their transactions with TCSPL. iii) The interim order remains in effect, with modifications to exclude certain parties from the SFIO investigation. iv) The NCLT will continue to handle the CIRP, with the Monitoring Committee overseeing the process. Application disposed off.

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• Insolvency & Bankruptcy

• 2025 (2) TMI 905
  Seeking dismissal of Section 7 application filed by the Appellant seeking initiation of Corporate Insolvency Resolution Proceedings (CIRP) of the Respondent-Corporate Debtor - credit facility provided by the Appellant to the Respondent was in the nature of a financial debt falling within the meaning of Section 5(8) of the IBC or not. Whether the infusion of funds by the Appellant in the Corporate Debtor was in the nature of financial debt and, if so, whether the Appellant, being a financial creditor, was entitled to file the Section 7 application? - HELD THAT:- For a debt to be treated as financial debt there has to be an element of disbursal of money and the disbursal must be against the consideration for time value of money. The concept of time value of money has been further explained to also include a transaction which does not necessarily culminate into interest being paid in respect of money that has been borrowed. The nature of underlying transaction is therefore a determinative factor in deciding whether infusion of funds can be classified as financial debt or not. To find out whether any element of commercial borrowing for time value of money is noticeable in the transactions which have taken place in the present facts of the case, it is required to study the various relevant clauses of the MoA since it is the MoA which constitutes the underlying edifice of the transactions. Whether money disbursed by the Appellant to the Corporate Debtor to operationalize its business can be treated as a financial debt? - HELD THAT:- In the present facts of the case, there is sufficient material on record to prove that there was disbursal of funds by the Appellant to the Corporate Debtor in their account. The bank transaction details have been placed at page 248-284 of Appeal Paper Book (APB) to substantiate their contention that money was actually disbursed to the Corporate Debtor, which was in dire financial straits, towards working capital to make the Corporate Debtor operational - an abstract of commission on sales received by the Appellant from the Corporate Debtor for Rs 2.95 Cr. along with tax invoices have been placed from pages 366 to 375 of APB. It has also been indicated that an amount of Rs 11.54 lakhs was still due from the Corporate Debtor towards commission. This leaves no doubts that there was fund infusion into the Corporate Debtor by the Appellant. Whether this disbursal was made by the Appellant against consideration for time value of money? - HELD THAT:- It is an undisputed fact that payment of interest against disbursal was not specifically mentioned in the clauses. Be that as it may, the IBC does not provide for any prescriptive requirement for the Financial Creditor to place on record formal written agreements/documents between the parties to establish that the disbursal made was in the form of loan with interest. It would be misconceived to hold that the fund infusion did not qualify to be a financial debt merely because loan component was not explicitly mentioned in the MoA. It is a well settled proposition of law that interest on loan is not the only binding criterion for determining time value of money. The question whether a credit facility without charging interest can be considered to be a financial debt in terms of Section 5(8) of the IBC is no longer res integra and has already been decided by the Hon ble Supreme Court in Orator judgment [ 2021 (8) TMI 314 - SUPREME COURT ] to hold that the definition of financial debt in Section 5(8) IBC does not expressly exclude an interest free loan. Viewed against this backdrop, the contention of the Respondent that the disbursal of the fund was bereft of loan component and hence not in the nature of a financial debt does not have legs to stand on. Whether the disbursal made by the Appellant in the present context reflected consideration for time value of money? - HELD THAT:- Time value of money is not only a regular or timely return received for the duration for which the amount is disbursed as an amount in addition to the principal but also covers any other form of benefit or value accruing to the creditor as a return for providing money for a long duration. It is required to see if the Appellant had envisioned enhancement of economic prospect in return for the funds disbursed and if so then the sum advanced would qualify to entail time value of money and acquire the colour and character of commercial borrowing. The disbursals clearly display commercial effect of borrowing. In our considered opinion the Adjudicating Authority committed an error in holding the transaction to be a business arrangement and non-suiting of the Appellant on the ground of not being a financial creditor. The Appellant has been wrongfully ousted by the Adjudicating Authority on the ground that the Appellant was not a financial creditor and the infusion of fund was not in the nature of financial debt. There are no hesitation to observe that this is a case of financial debt and the Appellant is clearly a financial creditor in terms of statutory provisions of IBC. The Appellant has brought on record the Section 7 application filed by them. In Part-IV of the Section 7 application, the amount claimed to be in default as well as date of default has been clearly depicted therein. Part-IV also contains the pleadings and submissions made pertaining to debt and default. In Form-1 filed by the Appellant under Section 7 of IBC read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, the principal amount of loan advanced as Financial Assistance by the Appellant is shown as Rs.39,84,72,111/- and the amount claimed in default to be Rs.42,47,32,067/- including interest - The Adjudicating Authority is obliged to determine whether default has occurred and whether the debt which was due and payable has remained unpaid. Clearly enough, the rival contentions of the two parties with respect to default in repayment of debt has not been considered and adjudicated upon by the Adjudicating Authority. Conclusion - The infusion of funds by the Appellant constituted a financial debt under the IBC, and the Appellant was a financial creditor entitled to file a Section 7 application. The absence of an interest clause does not preclude a transaction from being a financial debt if it has the commercial effect of borrowing. The matter remanded to the Adjudicating Authority to exercise its satisfaction as to whether financial debt has crossed the threshold limits and has become due and payable and basis these findings decide to accept or refuse admission of the Section 7 application of the Appellant - appeal allowed by way of remand.

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• PMLA

• 2025 (2) TMI 904
  Money Laundering - offence under Section 3 of the Prevention of Money Laundering Act, 2002 - appellant had been in custody for over a year with the trial not likely to conclude within a reasonable time - there are 225 witnesses cited, out of which only 1 has been examined - HELD THAT:- Reliance placed in the decision of this Court in the case of V.Senthil Balaji v. Deputy Director, Directorate of Enforcement [ 2024 (9) TMI 1497 - SUPREME COURT] where it was held that the appellant has been incarcerated for 15 months or more for the offence punishable under the PMLA. In the facts of the case, the trial of the scheduled offences and, consequently, the PMLA offence is not likely to be completed in three to four years or even more. If the appellant s detention is continued, it will amount to an infringement of his fundamental right under Article 21 of the Constitution of India of speedy trial. Attention is invited to a decision of a coordinate Bench in the case of Union of India through the Assistant Director v. Kanhaiya Prasad [ 2025 (2) TMI 563 - SUPREME COURT] . After having perused the judgment, it is found that this was a case where the decisions of this Court in the case of Union of India v. K.A.Najeeb [ 2021 (2) TMI 1212 - SUPREME COURT] and in the case of V.Senthil Balaji were not applicable on facts. Perhaps that is the reason why these decisions were not placed before the coordinate Bench. The appellant shall be produced before the Special Court within a maximum period of one week from today. The Special Court shall enlarge the appellant on bail on appropriate terms and conditions including the condition of regularly and punctually attending the Special Court and cooperating with the Special Court for early disposal of the case. Conclusion - The principles laid down in previous cases were not applicable in that specific case, leading to the cancellation of bail. The appellant is directed to be produced before the Special Court within a week for bail to be granted on appropriate terms and conditions, including surrendering any passport and cooperating with the court for the early disposal of the case. Appeal allowed.

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• 2025 (2) TMI 903
  Money Laundering - Proceeds of crime - Seeking grant of Regular bail - alleged illegal extortion on Coal Transportation - Sections 3 4 of the Prevention of Money Laundering Act, 2002 (PMLA, 2002) - fulfilment of twin conditions of Section 45 of the PMLA or not - HELD THAT:- From perusal of the ECIR, it is prima facie vivid that present applicant with connivance of Saumya Chaurasia, Sameer Vishnoi and other senior bureaucrats and politicians hatched a conspiracy of illegal extortion of Rs. 25/- per tonne on Coal which was transported from SECL mines other places and the same was being carried out with the active connivance of State Mining Officials, District Officials, by using a wide network of agents which were stationed in the coal belt by maintaining a close liaison with the administration. This coal syndicate had extorted illegal levy of Rs. 540 crores approximately from Coal businessmen/ transporters and other sectors from July, 2020 to June, 2022 - The proceeds of crime generated by this syndicate have been utilized for political funding, making bribes to Government Officials, purchasing of properties including coal washeries by the co-accused persons, Smt. Saumya Chaurasia in the name of their benamidars and members of syndicate their family members. The ECIR further prima facie reveals that the present applicant has played specific role in commission of offence. The investigation revealed that the applicant was actively involved in formation of syndicate, arranged meetings with coal businessmen, coal transporters etc., collected illegal cash from businessmen, distribution of illegal cash to different persons on direction of Suryakant Tiwari - The investigation conducted under PMLA, 2002 revealed that the applicant has received cash as salary out of the illegal extortion money as in his statement under Section 50 of PMLA, 2002 has stated that apart from salary he also used to receive bonus in cash from Suryakant Tiwari at regular intervals. Hence, the applicant is in possession of proceeds of crime which have been utilized by him in purchasing immovable properties on his name and on the name of his wife Smt. Talvinder Chandrakar. Thus, he was involved himself in the acquisition of proceeds of crime. The applicant is unable to fulfill twin conditions for grant of bail as per Section 45 of the PMLA, 2002 and also considering the submission that the applicant has not prima facie reversed the burden of proof and dislodged the prosecution case which is mandatory requirement to get bail. Hon ble the Supreme Court in case of Directorate of Enforcement Vs. Aditya Tripathi [ 2023 (5) TMI 527 - SUPREME COURT] has held that the High Court has neither considered the rigour of Section 45 of the PML Act, 2002 nor has considered the seriousness of the offences alleged against accused for the scheduled offences under the PML Act, 2002 and the High Court has not at all considered the fact that the investigation by the Enforcement Directorate for the scheduled offences under the PML Act, 2002 is still going on and therefore, the impugned orders passed by the High Court enlarging respective respondent No. 1 on bail are unsustainable. Conclusion - Considering the ECIR and other material placed on record, which prima facie shows involvement of the applicant in crime in question and also considering the law laid down by Hon ble the Supreme Court, it is quite vivid that the applicant is unable to fulfill the twin conditions for grant of bail as provided under Section 45 of the PMLA, 2002. Thus, the Point is answered against the applicant. The bail application filed under Section 483 of the Bhartiya Nagrik Suraksha Sanhita, 2023 is liable to be and is hereby rejected.

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• Service Tax

• 2025 (2) TMI 902
  Exemption from service tax - services provided to the government for public health purposes - Entry No.25(a) of Mega Exemption Notification No.25/2012-ST - HELD THAT:- The Appellants have provided vehicles for transportation of Doctors, Paramedics and health workers for carrying out their day to day work in the National Health Mission. Therefore, the provision of vehicles to personnel engaged in execution of National Health Mission etc. by the Appellant is to be construed as any service rendered to Government in relation to public health. The services provided by the Appellants, involving the transportation of health professionals for the National Health Mission, fell within the exemption under Notification No.25/2012-ST. The Original Authority was correct in holding that the services rendered by the Appellants are not taxable - The impugned order is set aside and the appeal is allowed.

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• 2025 (2) TMI 901
  Taxability u/s 66A of the Finance Act, 1994 - Manpower Recruitment or Supply Agency service - services consumed entirely abroad - service recipient - appellant or liaison office of the appellant or USA based clients of the appellant - Extended period of limitaton - penalty - HELD THAT:- The appellants are a company incorporated in India and having registered office in India and are also having liaison office at Pittsburgh, USA and other places in USA. The appellants are engaged in the business of export of ITSS, on which they have not been paying service tax, as such, because the export of service is exempt. The appellants have entered into contract service agreements for providing ITSS with various clients like American Solutions Inc., M/s Wilington, M/s Inalytix and M/s Financial Oxygen, etc., whereas, for providing such services directly at the offices of the clients, the appellants have also entered into professional services sub-contract agreements with service providers like Plutus Solutions Inc., Rpasoditech Inc., SK Tech Inc., Princeton Infotech and Virtue Group, all located in USA and the manpower provided by these contractors were deployed only at client s site in USA. Hon ble High Court of Allahabad in the case of Glyph International Ltd Vs UOI [ 2011 (12) TMI 201 - ALLAHABAD HIGH COURT] clearly held that insertion of section 66A w.e.f. 18.04.2006 is legal and proper by holding that no demand can be made in terms of the said provision for the period prior to that date by way of certain rules and notifications issued under different sections like 68(2) or by way of insertion of explanation under section 65 etc., therefore, the validity of section 66A post 18.04.2006 is not in dispute. Whether the plain reading of the provisions under section 66A read with Rule 3(1)(iii) of TSPOI Rules, 2006, requires that not only services should be received in India but should also be consumed in India for it to become covered by the deeming provision for the purpose of charging service tax on RCM or otherwise? - HELD THAT:- There is no dispute about legality of section 66A for the period post its introduction, as has been held by Hon ble High Court of Bombay in Indian National Shipowners Association Vs UOI [ 2008 (12) TMI 41 - BOMBAY HIGH COURT ] as well as by Hon ble Allahabad High Court in the case of Glyph International Ltd Vs UOI. The issue before the Hon ble High Courts was whether recipient of service in India is liable to service tax from abroad before 18.04.2006 or only after the said date after enactment of section 66A. The Hon ble Bombay High Court held that service tax can be charged only after the enactment of section 66A, which was upheld by Hon ble Supreme Court, whereas, charging of service tax on similar service for the period prior to the enactment of section 66A was set aside. In the case of Glyph International Ltd Vs UOI (supra), the Hon ble High Court of Allahabad, inter alia, held that section 66A of the Finance Act, 1994 creates legal fiction to deem import of service so that the provisions of Chapter V can thereon be applied. Demand of service tax on the consideration received from BSNL - HELD THAT:- In the present facts of the case, it is not alleged that they were engaged in either maintenance or repair service or WCS and the only ground was that they have provided BAS to BSNL on which service tax has not been discharged - in view of inclusive part of the definition, the taxable service of processing of transaction is also covered within the ambit of BSS. It is found that the view of the Adjudicating Authority is correct as it is not a mere printing activity rather it involves developing of software, deploying of man and machines, whereby, certain processing is done to generate a bill and if they would not have done this, then it would have to be done by BSNL themselves. Therefore, it is in the nature of BSS and not BAS or WCS, as being claimed by the appellant. The impugned orders upholding the demand of Service Tax from the appellant in respect of non-payment of Service Tax under Manpower Recruitment or Supply Agency Service , non-payment of Service Tax under Business Auxiliary Service on referral fee and commission paid to the service provider located outside India i.e., USA and non-payment of Service Tax under Business Support Service provided to M/s BSNL, do not suffer from any infirmity and therefore, we do not find any reasons to set aside the impugned orders. Extended period of limitation - Penalty - HELD THAT:- On going through these details, he observed that the liaison office system was in vogue for the appellant since 2001-02 and they have been claiming expenditure in their Annual Returns of the expenses incurred in connection with the operations of such liaison offices, which was, however, disallowed by the Income Tax department. This aspect further substantiates that liaison office was only an extended arm of Indian company, not having its own books of account, income/expenses or profit/loss. He has also relied on the chronology of sequences from start of audit till the issue of SCN, which clearly showed that last of the documents were submitted by the appellant only on 01.10.2010. Therefore, the Adjudicating Authority has taken into consideration all aspects and has dealt with extensively to come to the conclusion that in the given factual matrix, the invocation of extended period as well as imposition of penalty is maintainable. Conclusion - i) The mere fact that the basic conditions that the service recipient should be located in India, service provider is located outside India and the services are received by the recipient would bring it within the ambit of section 66A. ii) Section 66A creates a legal fiction allowing the taxation of services received from abroad by an Indian entity, regardless of where the services are consumed. The recipient s location in India is sufficient for taxability. iii) The invocation of extended period as well as imposition of penalty is maintainable. There are no infirmity in the impugned orders - appeal dismissed.

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• 2025 (2) TMI 900
  Clubbing of vacant land into the value of services - Renting of Immovable Property Service (RIPS) - Non-payment of Service Tax - Rental Advances - Site Formation Clearance Service - Commercial of Industrial Construction Service - Extended period of limitation. Whether in the facts of the case the entire area for which separate agreements have been entered into by the appellants can be considered as land appurtenant to the warehouses or these are to be considered as standalone vacant lands, which cannot be part of the services under the category of RIPS? Renting of Immovable Property Service - HELD THAT:- In terms of the agreement, which has been relied upon by the Adjudicating Authority, it is obvious that the dominant estate in this case would be the covered shed/warehouse and the open land/yard would be appurtenant to this covered shed/warehouse. It is obvious from the wordings of the agreement, especially, Annexure-2 to the agreement for covered warehouses that it has got no utility without the facilities like turning radius suitable for 40 feet trailers, land being not low lying and free from flooding, inundation, fencing all around the premises up to 4 feet height, entrance and exit gates on the main road side, etc. Therefore, the area under covered warehouses can be accessed and optionally utilized only with these facilities when the vacant land is also used in conjunction with the closed warehouse. Interestingly, the agreement is for covered warehouse approximately measuring 20,000 Sq Meter subject to certain conditions - a conjoint reading of the terms and conditions of these two agreements would show that the vacant land for which separate agreement has been entered into is nothing but land appurtenant thereto to the covered area/shed/warehouse. They are closely interlinked and interdependent. Thus, by relying on the definition of RIPS under section 65(105)(zzzz), the vacant land has to be considered as land appurtenant to the warehouses. Therefore, we do not find any infirmity in the impugned order confirming the demand on this count. Demand on account of vacant land at A9 Industrial Area Kapparada, Kancherapalam, Visakhapatnam to M/s Avnash Automobiles Pvt Ltd - HELD THAT:- The appellants have a case because if there was no building at the time of leasing out the vacant land and if it was given prior to 01.07.2010, then there would not be any demand. The fact that they have constructed a building before hand, which was also let out to M/s Avnash Automobiles Pvt Ltd is also not clear. Therefore, this factual aspect needs to be examined by the Adjudicating Authority subject to appellant submitting the evidence to the effect that there was neither a building on the vacant land at the time of leasing out nor the provision for excluding vacant land from the purview of taxation was applicable at the time of leasing out. The fact that there were some other building for which no lease has been granted by the appellant to M/s Avnash Automobiles is obvious as the agreement is only for vacant land and there is no mention of any other agreement whereby the closed building, etc., was also given on lease. Therefore, merely because a land is appurtenant to any building, it will not get covered within the scope of service if building/shed has not been rented out. It is the other way round that where a building has been rented out, which also has land appurtenant thereto, then that land will also be included for the purpose of valuation of building. Therefore, this matter also needs to be remanded back to the Original Adjudicating Authority for redetermination of Service Tax liability. Letting out of property located at S.No.51/1 B, IDA, Block-A, Mindi, Visakhapatnam to M/s Avnash Automobiles - HELD THAT:- There are much force in the ground that there is no strong evidence on record to suggest that just because certain buildings were existing, the entire land would be considered as land appurtenant to the building, especially, when the agreement is only with respect to vacant land and there is no other cogent evidence by the department to prove that the clients of the appellants were using both building and the land though showing only land in their agreement. Therefore, in view of the same, the demand would not sustain on this ground and it will be only a vacant land, which is not includable for the purpose of charging Service Tax under RIPS. Exemption from Service Tax in respect of vacant land let out to M/s ATR Cars Pvt Ltd. - HELD THAT:- The Adjudicating Authority has clearly held that the appellants have let out only the vacant land appurtenant to the building and not the building and therefore, liable for exclusion from the definition of immovable property under section 65(105)(zzzz) of the Finance Act, 1994. Merely because he was unable to exclude the income arising out of this property, no relief was given, which is not correct. The appellants are at liberty to show them the breakup of rents received from M/s ATR Cars and the Service Tax liability which has been included in the total liability needs to be excluded for the purpose of calculating the demand. Therefore, this also needs to be remanded back. Non-payment of Service Tax during the period May, 2009 to Feb, 2010 - HELD THAT:- There is no doubt about the classification or the valuation and the only dispute is as regards amount payable and paid. As per the appellant, the entire Service Tax liability was discharged except for the interest liability on the delayed payment but the same was not accepted in view of the fact that appellant has not included rent received for the open land and that certain documents were also not submitted. Since the issue as regards classification and Service Tax leviability is not disputed, the only dispute is whether the total amount of Service Tax is paid with interest or there is some short recovery - Since it would require recalculation of amount as well as verification of certain documents, etc., and therefore, to this extent, the impugned order is set aside and the matter is required to be remanded back to the Original Adjudicating Authority for recalculating the total demand of Service Tax along with interest after allowing abatement for tax and interest already paid. Rental advances - HELD THAT:- The demand has been confirmed on the ground that the said amounts cannot be treated as security deposit, inasmuch as the said amounts were actually rental advances which were adjusted on the monthly pro rata basis as agreed upon in the agreement between the appellant and the tenant. The Adjudicating Authority has also considered that there is a possibility that in respect of some of these pro rata payments, the Service Tax would have been paid at the time of payment of rent. However, the said submission of the appellant could not be verified as no supporting documents were available. Therefore, the entire demand has been upheld. The amount cannot be considered as security deposit, inasmuch as it has been applied continuously for discharging of rent, which is an admitted position and therefore, Service Tax would be leviable on the said amount. However, as the appellants are submitting that some of these amounts have already suffered Service Tax, this needs to be verified. Accordingly, this issue is also required to be remanded back for working out the net Service Tax payable. Site Formation Clearance Service - HELD THAT:- The services of muck cleaning and disposal is rightly classifiable under the category of SFCS. The appellants have not refuted the amount of Service Tax demanded by the department, which they have paid under Works Contract Service (WCS) and also certain portion under SFCS. Therefore, as far as the classification is concerned, there is no dispute that it is in the nature of SFCS. However, there is dispute as regards some of the amounts already paid under the category of WCS as well as under the category of SFCS. These amounts need to be adjusted against the total amount demanded from the appellant under this category. Therefore, this issue is also required to be remanded back to the Original Adjudicating Authority for recalculation. Commercial of Industrial Construction Service - HELD THAT:- The Adjudicating Authority has not considered the abatement claimed by the appellant for calculating the total Service Tax liability while paying certain Tax liability under this category. The appellants could not put forth any evidence to claim having fulfilled the conditions for availing the benefit under Notification No.01/2006-ST dt.01.03.2006 and therefore, the same was denied by the Adjudicating Authority. Here, it is again felt that proper opportunities were not given to the appellant to adduce evidence in support of their claim for abatement in terms of Notification No.01/2006-ST. Therefore, this issue is also remanded back to the Original Adjudicating Authority for recalculation of Service Tax liability. Time limitation - suppression of facts or not - HELD THAT:- The appellants have not canvassed any concrete reasons as to why the extended period should not be invoked in the factual matrix of this appeal. In fact, they have although been claiming that the demand itself is not maintainable on merit. They have also taken a plea from time to time that certain amount of service tax has already been paid by them, though not as per the demand made by the department. Therefore, having regards to submissions from both sides and the facts of the case, we find no infirmity in the order of the adjudicating authority holding that extended period is invocable in this case. Conclusion - i) The vacant land leased by the appellant was appurtenant to the warehouses and subject to service tax under RIPS. ii) For SFCS and CICS, recalculation of tax liability is required, considering abatements and the nature of contracts. iii) The rental advances are part of the taxable value and required verification of payments to avoid double taxation. iv) The invocation of the extended period for demand upheld due to the appellant s failure to register and pay service tax timely. Appeal allowed partly by way of remand.

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• 2025 (2) TMI 899
  Cenvat credit in respect of input services used for exporting output services - denial on various grounds including their output service not being a taxable service as also on account of input services not having any nexus with the output service. Whether in the absence of sufficient documents or description in the export invoice, can the service be treated as non-taxable or exempt service as such? - HELD THAT:- Admittedly, there is an agreement in terms of which many kinds of services are required to be provided to their parent company. However, there has not been any attempt to classify those services under the category of one or more taxable services, after going through the details of the said services. Therefore, apart from the services being claimed under BSS or ITSS, there could be possibility that some of these activities may not at all be in the nature of service or they would probably fall under some other service head. We also find that there is a clear provision under Rule 4A to give, inter alia, specific description of the services irrespective of whether it is meant for consumption within the country or abroad. Since they have used only abbreviated/short terms in their export invoices, the Adjudicating Authority was correct that it would not be possible for them to classify the same and since the appellant failed to convince the department that their export services are taxable, the next question would be whether the credits would also be not admissible in view of the fact that the services were exempted services, without resorting to proving any nexus or otherwise. A great deal of services are covered within the category of agreements and covered within the schedule to the agreements. Schedule-A covers operational services: development, with generic description as development. The definition itself says that to provide services and developmental support and gives certain examples. Merely by going through these services, one cannot arrive at proper classification during the pre-negative list regime where each and every activity has to be classified under specific heading of taxable services. This is not the finalization of classification as proposed/submitted by the appellant, rather only an observation by the Commissioner (Appeals) and the entire matter was remanded back to the Original Authority for reexamination and to be decided on merit. If they are treated as taxable service, can the credit be allowed if there is no nexus between the input service and the output service? - HELD THAT:- Since it is already held that the export service is non-taxable/exempt service, they have not gone into the issue of ineligibility on account of nexus between input and output services. It is seen the nature of services in respect of which the credit has been taken and find that most of these services would be eligible, in view of settled legal position. However, since this issue has not at all been discussed by the Adjudicating Authority even when the same was one of the grounds for denying the credit in the SCN, we feel that to that extent the impugned orders are non-speaking. More so, when some of these services may be having nexus, while some of them may not at all be having nexus with the output service. Conclusion - The appeals are allowed by way of remand with direction that the Adjudicating Authority will go through the submissions both on the grounds of proper classification as well as the nexus before arriving at the final demand in case of inputs not having been considered eligible either on account of nexus or on account of concerned export service not being taxable service. Appeals are allowed by way of remand.

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• 2025 (2) TMI 898
  Refund of unutilized Cenvat Credit u/s 142(3) of the CGST Act, 2017, read with Rule 5 of the Cenvat Credit Rules, 2004, and Section 11B of the Central Excise Act, 1944, by virtue of Section 83 of the Finance Act, 1994 - Rejection on the ground that there exists no provision of refund of the balance Cenvat Credit in the Cenvat Credit Rules, 2004 - HELD THAT:- The decision of the Hon ble Jharkhand High Court in the case of M/s Rungta Mines Limited [ 2022 (2) TMI 934 - JHARKHAND HIGH COURT] is exactly on the issue which is involved in the present case. The Hon ble High Court after analyzing all the decisions cited before it, has come to the conclusion that under the existing law, cash refund cannot be granted of Cenvat Credit which is available on the appointed day i.e. 01.07.2017. Conclusion - The appellant s failure to transition the Cenvat Credit and the lack of export activity precluded them from claiming a refund under the applicable legal framework. Appeal dismissed.

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• 2025 (2) TMI 897
  Recovery of service tax with interest and penalty - rent-a-cab service - period April 2006 to March 2009 - HELD THAT:- It is found that the stand of the adjudicating authority that the decision of the Tribunal on non taxability in identical circumstances was not valid precedent from non-acceptance of the decision on merit is erroneous. That the reviewing authorities did not consider the said decision as fit to contest in appeal either owing to the threshold prescribed by the Central Government under the Litigation Policy or for any other reason and does not detract from the applicability of such an order. The Hon ble Supreme Court, in re Kamalakshi Finance Corporation Ltd [ 1991 (9) TMI 72 - SUPREME COURT] has eloquently determined the mandate of judicial discipline and extraction of a contends of a circular of Central Board of Excise Customs (CBEC) does not condone the demonstrated lack of judicial discipline. Nor can such circular purport to guide adjudication in a particular direction. It is also seen that the rejection was based upon a N/N. 4/2004 dated 31st March 2004 which preceded the Special Economic Zones Act, 2005. Section 51 of Special Economic Zones Act, 2005 renders the provisions of that law to prevail over any other statute in the event of conflict. Conclusion - As the adjudicating authority has relied upon an outdated notification the final outcome not tenable warranting a fresh appreciation of proposals in the show cause notice in the context of settled law as well as exemption afforded by Special Economic Zones Act, 2005. The matter remanded back to the original authority for a fresh adjudication within the framework of law - appeal allowed by way of remand.

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• 2025 (2) TMI 896
  Invocation of extended period of limitation - appellant s turnover of services for the financial year 2015-16 was accurately reported or not - HELD THAT:- The plea is that settled law, in re Dinesh Chandra R Agarwal [ 2023 (11) TMI 1080 - CESTAT AHMEDABAD] and in re GD Goenka Pvt Ltd [ 2023 (8) TMI 995 - CESTAT NEW DELHI] that were adjudicated in identical or in near identical circumstances, precludes resort to extended period of limitation under section 73 of Finance Act, 1994 merely from such discrepancy. At this stage, it is not required to examine the applicability of these two decisions as the adjudicating authority has correctly pointed out that no steps were taken by appellant to rectify the statutory filings, which, according to their submissions in response to the show cause notice, was genesis of the dispute. While neither adjudicating authority nor the Tribunal is concerned with the correctness of the records filed before other tax authorities, the inferences that may be drawn from the two records, neither of which were defended except by furnishing of details of sale of goods either independently or along with the services that is beyond the purview of Finance Act, 1994, is the foundation for rectification of one of the returns on the one hand or deficiency in one or the other on the other hand. Empowerment to invoke section 73 of Finance Act, 1994 extends from the obligation in section 70, read with section 68, of Finance Act, 1994 and not much different from the scope of normal assessment under section 72 of Finance Act, 1994 which enables obtaining of additional documents and evidence for re-determination of sum payable by an assessee. Conclusion - It was incumbent upon the adjudicating authority to examine the details of the goods said to have been supplied either by way of sale or in the course of supply of service, that constitutes trading and, thereby, excluded from the purview of taxability in Finance Act, 1994. Failure to undertake such exercise affects the credibility of the impugned order warranting remand back to the original authority for a fresh decision after taking note of the documents evidencing supply of goods which are not liable to be included in the value of taxable service for the disputed period. Appeal allowed by way of remand.

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• 2025 (2) TMI 895
  Denial of entitlement to refund of CENVAT credit accumulated - procurement of inputs and input service for undertaking development of pharmaceutical stable coleman hydrochloride tablets under agreement with foreign entity that were claimed to have been exported - Failure to address the issue properly by appellate authority - Violation of principles of natural justice - HELD THAT:- The first appellate authority had not appreciated the issue in dispute before it which is essential in determining applicability of rule 4 of Place of Provision of Services Rules, 2012. Instead, the first appellate authority ruled on the taxability devolving on the appellant as intermediary , under rule 9 of Place of Provision of Services Rules, 2012, which was neither proposed in show cause notice nor proposed in appeal of jurisdictional Commissioner of Service Tax. In the light of the elaboration on intellectual property rights , there are no reasoning as to the manner in which such rights had been created in India. A right relating to intellectual property is not, as expressed by the first appellate authority, a provision for incentivizing innovation but is very much for securing property in the manner peculiar to each national jurisdiction. It is not policy but a prescription in law and the vestment of such right must meet the test of law. A right that is not registered in India cannot be deemed to have come into existence in the territory of India. The finding of the first appellate authority is, thus, mis-directed. The consequence in terms of allowing the appeal of jurisdictional Commissioner of Service Tax as well as rejection of the appeal of assessee lacks validity. Conclusion - The impugned order is set aside and the matter remanded back to the first appellate authority for adjudging the validity of the grounds preferred by the respective appellants in accordance with the law as set out in Place of Provision of Services Rules, 2012 and judicial pronouncements now in place. Appeals are allowed by way of remand.

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• Central Excise

• 2025 (2) TMI 894
  Violation of principles of natural justice - impugned order has been passed without properly appreciating the facts - denial of cross-examination of witnesses by the Adjudicating Authority - violation of Section 9D of the Central Excise Act, 1944 - HELD THAT:- The identical issue has been decided by the Hon ble Punjab Haryana High Court in the case of Jindal Drugs Pvt. Ltd. [ 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT] as well as by this Tribunal in the case of M/s Lauls Ltd. [ 2023 (7) TMI 1113 - CESTAT CHANDIGARH] and M/s Tibrewala Industries (P) Limited [ 2023 (7) TMI 1112 - CESTAT CHANDIGARH] wherein it was held that the cross-examination of witnesses whose statements were relied upon by the Revenue to make out a case against the assessee has to be allowed and by following the ratio of the said decisions, the impugned order is not sustainable and therefore, the same is set aside and the cases remanded back to the Adjudicating Authority for a fresh decision after affording opportunity of cross-examination of the material witnesses and by following the procedure as prescribed in Section 9D of the Central Excise Act. Conclusion - Both the appeals are allowed by way of remand to the Original Authority, who will comply with the requirement of Section 9D of the Central Excise Act by affording an opportunity of cross-examination and thereafter will pass a reasoned order in accordance with law. Appeal allowed by way of remand.

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• 2025 (2) TMI 893
  Irregular availment of CENVAT Credit - credit of inputs, input services and capital goods used in captive mine of the appellant, Bolani Mines has been correctly availed by the appellant at its Durgapur Steel Plant and correctly utilised in or in relation to manufacture of dutiable final products therein or not? - CENVAT Credit availed and utilised by the appellant against the ISD documents issued by the Bolani Mines was legal and valid - Bolani Mines can be termed as Input Service Distributor under Rule 2(l) of the CENVAT Credit Rules. HELD THAT:- The issues involved is no more res integra, as this Tribunal has already decided these issues in favour of the appellant in their own cases, with respect to the companies located at other places and for different periods - The credit disallowed along with interest and the penalties imposed in the impugned order are not sustainable. Conclusion - The distribution of credit by captive mines as ISD was in accordance with the law, and the credits disallowed in the impugned order were not sustainable. The appeals filed by the appellants /SAIL are allowed.

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• CST, VAT & Sales Tax

• 2025 (2) TMI 892
  Constitutional validity of Section 3C of the Kerala Local Authorities Entertainments Tax Act, 1961 - Section 5 of the Kerala High Court Act, 1958 - levy of cess on cinema tickets to fund the Kerala Cultural Activists Welfare Fund - HELD THAT:- The Cess levied under Section 3C of the Act of 1961 and collected is for the Kerala Cultural Activists Welfare Fund, established under the Act of 2010. This Cess shall not exceed Rs. 3/- per cinema admission where the ticket price is more than Rs. 25/-. The local authority has to collect the Cess along with the tax on cinema admission and, after deducting the collection charges at a rate specified by the Government, has to transfer the proceeds to the Kerala Cultural Activists Welfare Fund Board. The Cess is levied on the cinema viewers and not on the theatre owners. The impugned provision seeks to levy a cess on the ticket purchased by cinema viewers for the purpose of entertainment, and, therefore, it is clearly relatable to entertainment under Entry 62 of List II, VII Schedule to the Constitution of India. In the case of M/s. Vijayalakshmi Rice Mill [ 2006 (8) TMI 307 - SUPREME COURT] , the Hon ble Supreme Court, had an occasion to consider the term Cess . In this case, a cess under the Andhra Pradesh Rural Development Act, 1986, which was in addition to the purchase of sales tax, was the subject matter of challenge. The contention was that the enactment does not fall in any of the entries in List II or List III of Schedule VII to the Constitution of India. The Supreme Court considered the question of whether the said impost was a fee or a tax. In that context, the Supreme Court elaborated on the term Cess and held that ordinarily, Cess is also a tax but is a special kind of tax. The Cess can also mean a tax levied for a special purpose or as an increment to the existing tax and, in given circumstances, a fee. In the case at hand, entertainment tax is already levied under the Act of 1961 and the Cess under Section 3C is an additional levy. Thus, the contention of the learned Senior Advocate for the Appellants that under Entry 62 of List II of Schedule VII to the Constitution of India, only tax can be levied, and Cess cannot be levied is without merit. The Cess is another term for the tax that is levied, which is a special kind of tax. The levy of impugned Cess is traceable to Entry 62 of List II, VII Schedule to the Constitution of India. If the levy of the impugned Cess on entertainment improves the quality of entertainment, then a broad correlation will be established. We find a correlation between the Cess on entertainment levied on the cinema viewers as a fee and the utilisation of the Fund for the welfare of cultural activists. That is because the levy on cinema viewers contributes to the welfare of cultural artists in the State and the overall development of cultural and artistic ethos. When cultural activities relatable to art are supported and valued, it fosters a culture that appreciates art. This then creates a positive cycle of creativity and appreciation. When society encourages and supports artists, the overall artistic ethos strengthens, leading to quality artistic output - the impugned Cess can be traced to the legislative power of the State Government to Entries 62 and 66 of List II, Schedule VII to the Constitution of India, and the levy of this Cess is relatable to the benefits received by the cinema viewers on whom the Cess is levied. Challenge to levy of impugned Cess on the grounds of violation of Articles 14 and 19 of the Constitution of India - HELD THAT:- The Cess impugned is to be collected by the local authority. The proceeds of the Cess have to be remitted by the local authority to the account of the Kerala Cultural Activists Welfare Fund Board. There is no role for the theatre owners, and the levy does not fall on them. No data has been provided to demonstrate how this levy amount per ticket has affected the functioning of the theatre owners business. This argument is not supported by adequate pleadings and cannot be accepted. Conclusion - i) The constitutionality of Section 3C upheld, affirming the State s legislative competence under Entry 62 of List II. ii) The cess was a valid tax on entertainment, serving a specific purpose of funding the welfare of cultural activists. There is no merit in the challenge. There is no error in the view taken by the learned Single Judge - Appeal dismissed.

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