TMI Tax Updates - e-Newsletter
March 12, 2025

Case Laws in this Newsletter:

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

TMI Short Notes

1. Capital Gains on Share Buy-Backs: Clause 69 of the Income Tax Bill, 2025 vs. Section 46A of the Income-tax Act, 1961,

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2. Capital gains - Distribution of assets by companies in liquidation: Clause 68 of the Income Tax Bill, 2025 vs. Section 46 of the Income-tax Act, 1961

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3. Capital Gains - Chargeability: Clause 67 of the Income Tax Bill, 2025 vs. Section 45 of the Income Tax Act, 1961

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4. Tax Implications in Co-operative Bank Mergers (Reorganizations): Clause 65 of the Income Tax Bill, 2025, vs. Section 44DB of the Income-tax Act, 1961

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5. Acceptance of Electronic mode of Payment: Clause 64 and Clause 187 of the Income Tax Bill, 2025 vs. Section 269SU of the Income Tax Act, 1961

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6. Tax Audit Requirements in India: Clause 63 of the Income Tax Bill, 2025 vs. Section 44AB of Income Tax Act, 1961

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7. Maintenance of books of account: Clause 62 of the Income Tax Bill, 2025 vs. Section 44AA of the Income Tax Act, 1961

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8. Presumptive Taxation for Non-Residents in India: Clause 61 of the Income Tax Bill, 2025 merging Sections 44B, 44BB, 44BBA, 44BBB, 44BBC and 44BBD of Income Tax Act, 1961

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9. Head Office Expenditure Deductions - Reforming Non-Resident Tax Deductions: Clause 60 of Income Tax Bill, 2025 vs. Section 44C of the Income-tax Act, 1961

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10. Computing income by way of royalties, etc., in case of non-residents - Clause 59 of the Income Tax Bill, 2025 vs. Section 44DA of the Income Tax Act, 1961

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Articles

1. LIQUIDATOR IS TO OBTAIN GST REGISTRATION

   By: DR.MARIAPPAN GOVINDARAJAN

2. What is in a month with respect to GST Perspective

   By: K Balasubramanian

3. Product Liability and Unfair Trade Practices under the Consumer Protection Act, 2019

   By: YAGAY andSUN

4. NPOP for organic products.

   By: YAGAY andSUN

5. Empowering Women in Global Trade (International Trade)

   By: YAGAY andSUN

6. What are the SEA MANIFEST AND TRANSHIPMENT REGULATION?

   By: YAGAY andSUN

7. Infringed IPRs - What to do next?

   By: YAGAY andSUN

8. Chemical Accidents (Emergency Planning, Preparedness, and Response) Rules, 1996

   By: YAGAY andSUN

9. How to Select a Sub-Category of Trade Mark for a Product/Service, which you are Offering (or intent to offer)?

   By: YAGAY andSUN

News

1. GST official suicide: Wife claims 'immense work pressure'

2. Foundation of robust future for J&K: CM Omar on his govt's budget

3. Himachal CM Sukhu presents supplementary budget of Rs 17,053 crore for 2024-25

4. No new announcements in Assam budget, focus on expansion of existing schemes: Himanta

5. Nearly 700 human traffickers nabbed in 2024, 174 kg heroin seized: Assam budget

6. Assam mulls India's first AI lab for cyber surveillance

7. AI-based solutions, fodder barrier to mitigate human-animal conflict in Assam

8. Goa CM reviews Budget preparations

9. Cong holds strategy meet for 2nd half of Budget Session, to raise voter list 'manipulation' issue

10. Budget allocations to CAPFs like CRPF, BSF, CISF fall short of projections: Par panel

11. BJP govt to table maiden budget in Delhi Assembly on March 25

12. Bengal gives priority to 'inclusive economic empowerment' for women: Minister

13. PMG Reviews Mega Infrastructure Projects in Andhra Pradesh and Tamil Nadu

14. APEDA Showcases India’s Agricultural and Processed Food Excellence at the 39th Edition of AAHAR 2025

15. APEDA Showcases India's Organic Excellence at Natural Products Expo West 2025

16. Ex-post facto approval granted to Memorandum of Understanding (MoU) signed by Ministries of Finance of India and the State of Qatar on 18.02.2025 for Financial and Economic Cooperation between the two countries

17. RBI to issue Rs 100 and Rs 200 notes bearing signature of Guv Malhotra

18. Address by Shri Sanjay Malhotra, Governor, Reserve Bank of India at the Inauguration of Digital Payments Awareness Week 2025, March 10, 2025, RBI, Mumbai

19. Report of investigation into Affairs of M/s. Salt Experiences and Management Private Limited (SEMPL) and M/s. Hero MotoCorp Limited under examination

20. BUDGETARY ALLOCATIONS TO STRENGTHEN REAL TIME DATA COLLECTION

21. Dow drops 1,000, US stocks tumble toward their worst day in years as economic worries worsen

22. Ontario slaps 25% tax increase on electricity exports to US in response to Trump's trade war

23. RBI will push payment systems innovations with soft touch regulations: Guv

24. Assam borrowings increase by 78 pc over 3 years: Economic Survey

Notifications

DGFT

1. 64/2024-25 - dated 10-3-2025 - FTP

Extension in "Free" Import Policy of Urad ([Beans of SPP Vigna Mungo (L.) Hepper]) [ITC (HS) code 07133110] under ITC (HS) 2022, Schedule -I(Import Policy)

2. 63/2024-25 - dated 10-3-2025 - FTP

Extension in Import Period for Yellow Peas under ITC(HS) Code 07131010 of Chapter 07 of ITC (HS) 2022, Schedule -I(Import Policy)

Income Tax

3. 19/2025 - dated 11-3-2025 - IT

Zero Coupon Bond - Specified bond notified u/s 2(48) of the Income-tax Act, 1961.

Circulars / Instructions / Orders

DGFT

1. 50/2024-2025 - dated 10-3-2025

Amendment to Para 10.12(D) of the Handbook of Procedures 2023 – Revised Procedure for General Authorization for Export after Repair (GAER)

Highlights / Catch Notes

GST

• Incomplete Job Work Challans Justify GST Penalty Under Section 129 for Goods Found at Undocumented Destination

  Case-Laws - HC : The HC upheld tax and penalty under GST Act Section 129 after goods were found at a different destination than documented. The court determined that the petitioner failed to comply with Rule 55 requirements for issuing proper job work challans. Upon examining the challan produced by the ACSC, the court noted it lacked several mandatory descriptions prescribed under Rule 55. This incomplete documentation constituted a clear contravention of the Rules. The court rejected the petitioner's argument that the proceedings were arbitrary, finding that the violation of Rule 55 justified the tax and penalty imposition under Section 129 of the GST Act. Petition dismissed.
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• Petitioner Granted Bail After 4-Year Incarceration: Court Reduces Onerous Conditions Under Section 167(2) CrPC and Section 479 BNSS

  Case-Laws - HC : The HC granted bail to the petitioner who had been incarcerated for over 4 years despite being eligible for default bail under Section 167(2) of CrPC (now Section 187(3) of BNSS). The Court held that imposing onerous conditions like surety bonds of Rs. 1.10 crore and a bank guarantee of Rs. 55 lakhs was antithetical to principles of justice and fairness. The Court emphasized that default bail is not merely a statutory right but flows from the fundamental right to life and liberty under Article 21. Additionally, the petitioner qualified for release under Section 479 of BNSS having served detention exceeding one-third of the maximum prescribed sentence. The petitioner was ordered released on bail upon furnishing bonds of Rs. 50,000 with one surety.
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• GST Adjudication Orders Quashed: Section 74 Proceedings Conducted Without Personal Hearing Violate Natural Justice

  Case-Laws - HC : The HC quashed adjudication orders passed under s.74 of the Jharkhand GST Act, 2017, as they were issued without granting the petitioner an opportunity for personal hearing, violating principles of natural justice. The court noted that state tax authorities continue to conduct proceedings in disregard of mandatory statutory provisions, resulting in potential revenue loss. Despite previous directions in M/s. Godavari Commodities Limited (2022) instructing the Commissioner to issue guidelines on proper procedures, compliance was lacking. The court allowed both writ petitions with costs, quashing the impugned adjudication orders dated 05.06.2024 and 10.07.2024, and remanded the matter for fresh consideration following proper procedure.
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• Fruit Juice-Based Drinks Correctly Classified Under Tariff Item 2202 99 20, Not 2202 10 90; Section 74 Penalties Set Aside

  Case-Laws - HC : HC determined the petitioner's products were correctly classified under Tariff Item 2202 99 20 as "fruit pulp or fruit juice-based drinks" rather than under 2202 10 90 as "waters containing added sugar or flavoured." The court held that classification depends on the dominant nature of the product, with the presence of fruit juice attributing essential character to the beverage. The Revenue failed to discharge its burden of proof by not providing alternative test reports. The court set aside penalties under Section 74 of CGST Act, finding no evidence of willful suppression or fraud. Interest levied under Section 50 was also invalidated, and the court clarified that post-October 2021 tax notifications could not be applied retrospectively.
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• GST Proceedings Stayed for MIDC Land Leasehold Rights Transfers Under Schedule III Clause 5

  Case-Laws - HC : HC stayed GST proceedings related to assignment of leasehold rights of MIDC land plots and buildings constructed thereon for lump sum consideration. Following Gujarat HC's precedent in Gujarat Chambers of Commerce case, which held that assignment/transfer of leasehold rights of industrial development corporation land constitutes transfer of benefits arising from "immovable property" and falls outside GST's scope under Section 7(1)(a) read with Schedule II clause 5(b) and Schedule III clause 5. All show cause notices remain unadjudicated, and any existing adjudication orders for listed entities are stayed. The court scheduled the matter for directions on March 10, 2025, when a final hearing date will be determined.
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• Improper Service of GST Demand Notice on Portal Under "Additional Notices" Section Invalidated as Inaccessible to Taxpayer

  Case-Laws - HC : The HC quashed the impugned order where a demand notice was challenged for improper service. Following Anhad Impex precedent, the Court found that notices uploaded under "additional notices and orders" on the GST portal were not easily accessible and thus escaped the petitioner's attention. While Section 169 permits service via the common portal, the Court emphasized that the purpose of service is to make assessees aware of communications. The Court directed respondents to allow the petitioner to file a response within 30 days and for the notice to be properly adjudicated. The HC left open the question of whether email notifications should accompany portal uploads to ensure effective service.
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• GST Authority's Order Quashed for Failing to Provide Hearing Under Section 75(4) Despite Taxpayer's Reconciliation Explanation

  Case-Laws - HC : The HC held that the tax authorities violated principles of natural justice by failing to consider the petitioner's explanation regarding duplication of taxable supply amounts in Form GSTR-1. The petitioner had demonstrated in Form GST ASMT-11 that there was no actual discrepancy between GSTR-3B and GSTR-9 returns, as the data had been reconciled. Despite this, authorities proceeded to issue notice under section 73 and passed an order-in-original without providing the mandatory hearing opportunity required by section 75(4) of the GST Act. The Court allowed the petition, remanding the matter to respondent no.3 for a fresh de novo order after providing the petitioner proper hearing opportunity.
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• GST Adjudication Challenge Dismissed: Writ Petition Rejected as Statutory Appeal Remedy Available Under Section 107A

  Case-Laws - HC : The HC dismissed a petition challenging a GST adjudication order on grounds of natural justice violations, specifically denial of cross-examination opportunity. The Court held that orders under Section 74 of the GST Act are appealable under Section 107A, providing an adequate statutory remedy for the aggrieved party. Following established legal principle, the HC's writ jurisdiction cannot be invoked when specific statutory remedies exist, absent exceptional circumstances. The petitioner failed to demonstrate such exceptional circumstances warranting judicial intervention through writ jurisdiction. The Court determined that adequate opportunities had been provided to the petitioner to present their case, and the denial of cross-examination did not constitute a breach of natural justice principles.
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• Appeal Under GST Section 107 Deemed Timely Based on Three-Month Limitation Period Calculation Method

  Case-Laws - HC : The HC allowed the petition challenging the rejection of an appeal against Ext.P1 order under Section 107 of CGST/SGST Acts, 2017. The respondent had dismissed the appeal as time-barred, but the Court relied on Supreme Court precedent in Himachal Techno Engineers, which established that a three-month limitation period expires in the third month on the date corresponding to the commencement date, regardless of the actual number of days. Consequently, the Court held that the petitioner's appeal filed on 06-11-2023 was within the condonable period stipulated in Section 107 of the CGST/SGST Acts, and accordingly allowed the petition.
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Income Tax

• Taxpayers allowed to challenge assessment order with application for waiver of 20% deposit requirement under CBDT Memoranda.

  Case-Laws - SC : The SC permitted petitioners to challenge the assessment order for AY 2022-2023 before CIT (Appeals) with an application for stay and waiver of the 20% deposit requirement under CBDT Office Memoranda dated 29.02.2016 and 31.07.2017. The Court directed that if an appeal is filed within five days, it should not be dismissed on grounds of limitation, considering petitioners had previously approached the High Court. The SC also ordered that no coercive recovery measures be taken for ten days. The Court noted that 30% of the tax demand for AY 2021-2022 had already been recovered through coercive measures. The SLP was disposed of accordingly.
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• Assessment Order Invalidated for Violating Section 144B and 147 of IT Act Without Providing Opportunity to File Returns

  Case-Laws - HC : The HC invalidated an assessment order for violating mandatory provisions under Section 144B read with the first proviso to Section 147 of the IT Act, rendering the assessment without jurisdiction and legally null. The Court emphasized that principles of audi alteram partem are fundamental to tax law, and refusing to permit the assessee to file returns would contradict the purpose of tax legislation. Following precedents in Jyotsna Mehta and Teerth Developers cases, the Court held that Section 144B incorporates principles of natural justice requiring reasonable opportunity for representation, which was absent in this case. Consequently, both the impugned assessment order and resulting demand notice were set aside as legally unsustainable.
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• Trust's Decades-Long Compliance Record Justifies Condonation of Delay in Filing Form 10-B Under Income Tax Act

  Case-Laws - HC : The HC allowed two writ petitions filed by a charitable trust seeking condonation of delay in filing Form 10-B for AYs 2014-15 and 2015-16, with delays of 3533 and 3198 days respectively. The Court set aside the rejection orders, noting the trust's 45-year record of compliance with only two instances of delay occurring due to reasons beyond its control. Relying on Sarvodaya Charitable Trust and Al Jamai Mohammediyah Education Society precedents, the Court determined that denying the applications on limitation grounds was unjustified, particularly given the petitioner's long history of substantial compliance as a public charitable organization.
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• Principal Commissioner Can Cancel Section 12A Registration Without Prior Assessment by Assessing Officer Under Section 12AA Powers

  Case-Laws - HC : The HC set aside the Appellate Tribunal's order and remanded the appeals for fresh consideration. The court held that Section 12AA independently empowers the Principal Commissioner to cancel registration granted under Section 12A of the Income Tax Act without requiring prior determination by the Assessing Authority. The Tribunal erroneously assumed that determination of relevant facts by an Assessing Officer was a prerequisite for the Principal Commissioner to exercise powers under Section 12AA. The statutory provisions do not support this interpretation, nor do they suggest that the Principal Commissioner's determination would bind the Assessing Officer's independent assessment. The questions of law were answered in favor of the department.
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• Mandatory Aadhaar-PAN Linkage for Demat Accounts Upheld as Constitutional Under Section 139AA of Income Tax Act

  Case-Laws - HC : The HC upheld the mandatory linkage of Aadhaar with PAN for Demat account operations, rejecting a senior citizen's challenge who deliberately avoided Aadhaar enrollment. The court found that SS139AA of the Income Tax Act satisfies the Puttaswamy triple test of legality, necessity, and proportionality. While acknowledging data security concerns, the court determined that the state's compelling interest in preventing financial fraud and tax evasion justifies this limited privacy restriction. The provision serves legitimate regulatory purposes in the securities market by eliminating duplicate PANs and ensuring transaction traceability. The court concluded that adequate safeguards exist to mitigate risks, rendering the requirement constitutionally valid.
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• Real Estate Developers Can Follow AS-9 Instead of Percentage Completion Method Under Section 43CB

  Case-Laws - AT : The ITAT ruled in favor of the assessee real estate developer, rejecting the Revenue's attempt to apply the Percentage Completion Method under Section 43CB. The Tribunal held that real estate developers appropriately follow AS-9 for revenue recognition, recognizing revenue only upon execution of conveyance deeds and transfer of possession. The ITAT distinguished between contractors (who provide construction services to clients) and developers (who build and sell property at their own risk), finding that the assessee's business model involved selling completed units rather than entering into construction contracts. The Tribunal also upheld the principle of consistency, noting the Revenue had accepted the same accounting method in previous assessment years with no material change in circumstances.
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• Outstanding Receivables from Associated Enterprises Require Separate Benchmarking Under Section 92B with LIBOR-Based Interest Computation

  Case-Laws - AT : The ITAT held that outstanding receivables from Associated Enterprises constitute an international transaction requiring separate benchmarking under section 92B (retrospectively amended from 01/04/2002). The Tribunal directed the AO to compute interest on delayed receivables using LIBOR + 200 basis points as per the DRP's revised direction, partially allowing the assessee's appeal. Regarding the disallowance of bonus payment deduction under section 43B made in the section 143(1) intimation, the ITAT permitted consideration of this issue within the section 143(3) proceedings despite no separate appeal having been filed against the intimation. The matter was remanded to the AO for fresh adjudication on merits, partially allowing this ground of appeal for statistical purposes.
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• Penalties for Delayed TDS Remittance and Returns Set Aside Following Supreme Court's US Technologies Interpretation

  Case-Laws - AT : The ITAT set aside penalties imposed on the appellant under sections 271C and 272A(2)(g) of the Income Tax Act. Following the Supreme Court's decision in US Technologies (2023), the Tribunal held that section 271C penalties apply only to failure to deduct tax at source, not to delayed remittance of TDS already deducted. The SC had noted that penalty provisions must be interpreted strictly, with CBDT Circular No.551 confirming this position. Regarding penalties under section 272A(2)(g) for delayed filing of TDS returns, the Tribunal found these were incorrectly imposed as section 271H was the applicable provision during the relevant period. The appeal was allowed and all penalties were set aside.
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• Additional Compensation and Interest for Compulsory Acquisition of Agricultural Land Exempt Under Section 10(37)

  Case-Laws - AT : The ITAT ruled that additional compensation received for compulsory acquisition of agricultural land by the Gujarat Government, along with interest component, is exempt under s.10(37) of the Act. Since the acquired land was agricultural, it does not qualify as a capital asset under s.2(14). Following precedents established in Lakshmiana and Movaliya Bhikhubhai Balabhai, the Tribunal held that interest received on enhanced compensation under s.28 of Land Acquisition Act, 1984 is eligible for exemption under s.10(37). The ITAT further determined that interest payments under s.28 of the 1894 Act constitute interest as envisaged under s.145A and cannot be treated as income from other sources. The assessee's appeal was allowed.
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• Agricultural Land Deduction Under Section 54B Upheld Based on Khasra Girdawari Records Proving Cultivation

  Case-Laws - AT : The ITAT upheld the CIT(A)'s decision allowing deductions under section 54B to the appellant. The Tribunal found that Khasra Girdawari records for Samvat 2074-2077 substantiated the appellant's claim that the transferred land was used for agricultural activities during the two years immediately preceding its sale. The records showed that the appellant and his brother, as joint Khatedars, had cultivated Bajra crops on 0.69 hectares of land during Samvat 2075-2077. As the Revenue failed to produce contradictory evidence against these official agricultural records, the ITAT confirmed the appellant's eligibility for section 54B deductions.
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• NRE Account Credits from Foreign Remittances Exempt Under Section 10(4) Without Proof of Indian Source (4)

  Case-Laws - AT : The ITAT ruled that additions made by the AO based solely on credits in the non-resident assessee's NRE accounts were unsustainable without establishing that the original source of funds was taxable in India. Following precedents in Nitin Mavji Vekariya and Bhavesh Chandrakantbhai Bhatt, the Tribunal held that NRE deposits from foreign remittances are exempt under s.10(4). For AY 2013-14, the HSBC Bank (NRE) addition was deleted as it represented redemption of an NRE fixed deposit, while HDFC and Deutsche Bank additions were remanded for verification of source. For AY 2015-16, the HDFC Bank (NRE) addition was deleted as it constituted an inward remittance from JP Morgan Chase Bank, UK. The appeal was partly allowed with directions for further verification.
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• Tax Revision Upheld: AO's Failure to Verify Agricultural Land Rights Makes Assessment Erroneous Under Section 263 (1)

  Case-Laws - AT : The ITAT upheld revision proceedings under section 263 against the assessee who claimed agricultural income exemption under section 10(1). Despite limited scrutiny focused on "larger agricultural income," the AO failed to verify the assessee's title or leasehold rights on the agricultural land. The Tribunal rejected the assessee's arguments that the PCIT should have conducted inquiries himself before terming the assessment erroneous, noting that the PCIT had clearly established a case of "no enquiry" by the AO. The ITAT found that both conditions-erroneous assessment and prejudice to Revenue's interests-were satisfied per Malabar Industries Ltd. The revision jurisdiction was properly exercised, and the appeal was decided against the assessee.
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• Educational Society Granted Tax Exemption Under Section 10(23C)(iiiad) as Each School's Annual Income Remains Below Rs. 1 Crore Threshold

  Case-Laws - AT : The ITAT reversed the CIT(A)'s order, granting exemption u/s.10(23C)(iiiad) to the appellant educational society. The Tribunal found that despite operating nursery and primary schools from the same premises with shared staff and a common bank account, the appellant existed solely for educational purposes. Since annual income from each school was below Rs. 1 crore threshold, the appellant qualified for tax exemption. The AO had erroneously aggregated the receipts from both schools to deny exemption, and the CIT(A) incorrectly upheld this assessment based on common premises and banking arrangements. The ITAT allowed the appeal, confirming the appellant's eligibility for exemption r.w.r. 2BC of I.T. Rules, 1962.
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Customs

• Customs Commissionerate Announces Electronic Refund Applications Through ICEGATE Portal Starting April 2025

  Circulars : The Chennai Customs IV (Export) Commissionerate announced automation of refund application and processing, effective April 1, 2025. The system enables electronic filing of refund applications on ICEGATE portal, eliminating manual processing. Key features include electronic scrutiny, deficiency notification within 10 days, digital communication of orders, and direct deposit of refunds to registered bank accounts via PFMS. The reform replaces concurrent audit with post-audit procedures for all refund claims. During the transition period until March 31, 2025, applicants may file refunds either manually or electronically. After this date, manual applications will require special approval from the Commissioner. This initiative aligns with CBIC's digitization goals to reduce trade costs and processing time.
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• LED Chip Classification: Importers Must Submit Complete Technical Documentation to Avoid Customs Delays

  Circulars : The Chennai II Customs Commissioner issued a notice addressing delays in LED chip classification. The notice emphasizes that importers should upload complete technical documentation when filing declarations to avoid assessment delays. In a highlighted case, LED chips self-classified under CTH 85414100 faced reclassification queries because supporting documents were not initially provided. Though the original classification was ultimately accepted, the process was unnecessarily delayed. The Commissioner reiterates that importers must submit catalogs, technical write-ups, end-use documentation, product data sheets, user manuals, and product images when filing to ensure expeditious assessment, particularly for LED components which could potentially fall under CTHs 8539, 8541, or 9404.
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• FOB Value Cannot Be Modified by Customs for Export Incentive Calculations - Transaction Value Prevails

  Case-Laws - AT : CESTAT ruled that Free on Board (FOB) value is the transaction value agreed between buyer and seller, which cannot be modified by any Customs officer or third party. The Tribunal held that Customs authorities lack statutory power to redetermine FOB values for export incentive calculations, as these incentives (drawback, MEIS, and ROSL) must be paid as a percentage of FOB value per government notifications. The Joint Commissioner's order accepting the declared FOB values was restored, as officers have no authority to direct that export incentives be paid on alternative values. The Tribunal criticized DRI's interference in the adjudication process and dismissed Revenue's appeals.
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DGFT

• DGFT Amends Rice Export Policy: Basmati Exports to Non-European Countries Exempt from Inspection Certificate for Six Months

  Notifications : The DGFT, exercising powers under the Foreign Trade (Development & Regulation) Act 1992, has amended export policy conditions for rice under Notification No. 19/2024-2025. For Non-Basmati Rice (ITC(HS) codes 1006 2000, 1006 3010, 1006 3090, 1006 4000), exports to EU Member States, UK, Iceland, Liechtenstein, Norway, and Switzerland require Certificate of Inspection by EIC/EIA. For Basmati Rice (ITC(HS) code 1006 3020), the inspection certificate requirement is waived for exports to non-specified European countries for six months until September 9, 2025. This modification streamlines export procedures by limiting certification requirements to specific European destinations only.
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IBC

• Liquidator Cannot Claim Fees When Secured Creditors Independently Conduct Asset Sales Under Regulation 4(2)(b)

  Case-Laws - Tri : The Tri determined that a liquidator is only entitled to fees for realization and distribution when they have actually performed these functions, per Regulation 4(2)(b) of IBBI (Liquidation Process) Regulations, 2016. In this case, the Respondent Banks conducted the sale of the Panagarh Unit independently, with no involvement from the liquidator in the realization or distribution process. Consequently, the liquidator's claim for fees related to this sale was deemed not payable. The Tri distinguished this case from Shikshak Sahakari Bank Ltd., noting that while secured creditors must contribute to CIRP and liquidation costs under Regulation 21A(2)(a), this obligation does not extend to paying the liquidator's fees for processes in which they had no participation.
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Indian Laws

• Orders Requiring 10% Pre-Deposit Without Statutory Basis Quashed for Violating Opportunity of Hearing Principle

  Case-Laws - HC : The HC quashed orders demanding 10% pre-deposit of grant-in-aid as a precondition for considering the petitioner's representation. The Court determined that the demand lacked statutory foundation and was inappropriately imposed at the representation stage rather than appellate stage. The impugned orders were issued without affording the petitioner an opportunity of hearing, violating the principle that no order resulting in civil consequences can be passed without such opportunity. The Court directed authorities to consider the petitioner's representation without requiring any pre-deposit within three months, while abstaining from commenting on the merits of the underlying cancellation order. The petition was allowed.
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• Compounding of Offense by One Partner Under Section 138 NI Act Discharges All Partners' Liability

  Case-Laws - HC : In a case under Section 138 of the N.I. Act against partners of a firm, the HC held that compounding of the offense by one partner discharges the entire liability of the partnership firm and all partners. The court emphasized that while a firm is not a legal entity separate from its partners, Section 141 of the N.I. Act allows prosecution in the firm's name. Partners' liability is joint and several, meaning each partner is liable for the entire debt individually and collectively. The court rejected partial settlement with one partner, ruling that once a matter is compromised for any amount, the offense is compounded toward all existing liabilities of the firm. Consequently, the complaint was quashed as compounded and the petitioner was acquitted.
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• Equitable Mortgage Without Registration Valid, But Lender Must Possess Original Title Deeds to Claim Priority Rights

  Case-Laws - HC : The HC dismissed the petition, upholding the Appellate Court's decision to set aside the impugned judgment. The Court determined that in an equitable mortgage, registration is not compulsory, and borrowers can sell mortgaged property without the lender's knowledge. ARCL, as SBI's assignee, failed to establish a valid equitable mortgage as they possessed only a lodgment receipt rather than the actual title deeds. Applying principles from precedent cases, the Court found that a first mortgagee who negligently allows title deeds to remain with the mortgagor (enabling subsequent fraudulent loans) can be postponed in priority to a second mortgagee. The Court concluded the appellant's negligence in securing proper documentation justified the Appellate Court's ruling.
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PMLA

• Enforcement Directorate Allowed to Finalize Rs. 40 Crore Property Sale While Accused Must Deposit Rs. 25 Crores or Face Bail Cancellation

  Case-Laws - SC : The SC permitted the Enforcement Directorate to finalize the sale of one property valued at approximately Rs. 40 crores, while directing immediate fresh auction of a second property following a failed first attempt. The Court maintained its previous order requiring the accused to deposit Rs. 25 crores within three months, failing which bail would be automatically cancelled without further orders, allowing the Enforcement Directorate to take the accused into custody. The Court indicated it would cease monitoring the litigation if the accused returned to custody. The ED was instructed to proceed with auctioning all attached properties to maximize recovery. The Court determined the petitioner's miscellaneous application was maintainable based on the proposal presented.
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• Bail Denied in 2000 Crore Money Laundering Case Under Sections 3 & 4 of PMLA for Key Liquor Syndicate Player

  Case-Laws - HC : The HC rejected bail for the applicant charged under Sections 3 & 4 of PMLA involving proceeds of crime exceeding 2000 crores. The court determined the applicant was a key player in a liquor syndicate that engaged in massive corruption within the Excise Department, causing substantial loss to the State Exchequer. Despite retraction statements by co-accused persons, the court found prima facie evidence of the applicant's involvement in money laundering activities. The applicant failed to satisfy the twin conditions under Section 45 of PMLA, as the ED established reasonable grounds to believe the applicant was guilty of the offense. The bail application under Section 483 of BNSS read with Section 45 of PMLA was accordingly rejected.
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SEBI

• Regulatory Framework for Securities Issuances: Formatting, Disclosure, and Allocation Procedures for Non-Institutional Investors in SME IPOs

  Notifications : The document outlines regulatory requirements for securities issuances, particularly focusing on public offerings. Key provisions include formatting requirements for issue closing advertisements, disclosure obligations, and allocation procedures for non-institutional investors in SME company IPOs. The regulations establish a structured allotment methodology with specific examples demonstrating how securities should be allocated when issues are oversubscribed. For SME exchanges, the term "retail individual investors" is interpreted as "individual investors who applies for minimum application size." The document includes detailed illustrations of proportionate allotment procedures, with particular attention to ensuring minimum application sizes are respected while implementing fair distribution through lottery systems when necessary.
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VAT

• Title: Directors' Personal Properties Cannot Be Attached for Company's Tax Dues Under Gujarat VAT Act

  Case-Laws - HC : The HC quashed attachment orders dated 19.01.2013, 17.02.2014, and 01.05.2015 against directors' personal properties under the Gujarat Value Added Tax Act, 2003. Following precedent in MR Choksi, the court reiterated that corporate veil cannot be lifted without strong factual foundation, which was absent in this case. The court emphasized that personal properties of directors cannot be attached to secure company dues, as this issue is no longer res integra. The respondents failed to establish any basis for disregarding the company's separate legal personality to pursue directors personally. Petition allowed.
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Service Tax

• Supply of DG Sets to IOCL Deemed as Sale, Not Service, Under Article 366(29A); Installation Incidental to Sale

  Case-Laws - AT : CESTAT ruled in favor of the appellant, setting aside service tax demands on two grounds. First, the tribunal determined that the supply of DG sets to IOCL constituted a deemed sale under Article 366(29A) of the Constitution, subject to VAT/sales tax by state governments rather than service tax under Finance Act, 1994. Second, contracts involving sale of DG sets with installation were primarily sales transactions, not works contracts. The installation was merely incidental to ensure proper functioning, similar to home appliance deliveries. Consequently, the tribunal also dismissed the revenue department's projected demand based on assumed 25% growth in service tax liability, as the underlying tax classification was incorrect. The appeal was allowed with all demands set aside.
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• Renting of Immovable Property Constitutes a Taxable Service Under Service Tax Provisions

  Case-Laws - AT : CESTAT upheld the levy of service tax on renting of immovable property, rejecting appellant's contention that such activity cannot be considered a service. The Tribunal determined that unless declared ultra vires by a constitutional court, the tax remains valid, noting that five different High Courts had previously affirmed this position. While the Commissioner (Appeals) had set aside the penalty under section 78 of the Finance Act, the penalty of Rs. 10,000/- under section 77 was sustained. The appellant must pay the service tax with appropriate interest. Appeal dismissed.
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• Appeal Dismissed After Multiple Adjournments Exceeding Statutory Limit of Three Under Rule 20 of CESTAT Procedure Rules

  Case-Laws - AT : The CESTAT dismissed an appeal for non-prosecution under Rule 20 of CESTAT Procedure Rules, 1982, after multiple adjournments exceeded the statutory maximum of three. Citing Ishwar lal Mali Rathod [2021], where the Supreme Court condemned the practice of mechanical adjournments, the Tribunal noted that appellant had misused judicial grace by repeatedly seeking postponements. The Court emphasized that granting adjournments beyond the statutory limit lacks justification, particularly when parties fail to utilize previously granted opportunities for presenting their case. This ruling reinforces judicial efficiency principles and discourages dilatory tactics in tribunal proceedings.
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Central Excise

• Tribunal Dismisses Appeal After Exceeding Three Adjournments Limit Under Section 35C(1A) of Central Excise Act

  Case-Laws - AT : CESTAT dismissed the appeal for non-prosecution pursuant to Rule 20 of CESTAT Procedure Rules, 1982. The appellant had sought adjournments beyond the statutory maximum of three times permitted under Section 35C(1A) of the Central Excise Act, 1944. Relying on Ishwar lal Mali Rathod, where the SC condemned the practice of mechanical adjournments, the Tribunal found no justification for granting additional adjournments. The SC had previously emphasized that parties who repeatedly seek adjournments despite specific warnings and opportunities effectively misuse judicial grace, warranting dismissal of their proceedings.
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Case Laws:

• GST

• 2025 (3) TMI 555
  Levy of tax and penalty u/s 129 of GST Act - contravention of the provisions prescribed under Rule 45 and 55 of the GST Rules or not - goods in question were found at different destination from the destination mentioned in the accompanying documents - HELD THAT:- There is requirement for issuing a challan for the goods send to job work. Rule 55 provides that challan should be issued or in duplicate and duly filled in prescribed format. Learned ACSC has produced a photocopy of challan issued by the petitioner (which is not disputed by the counsel for the petitioner) and on perusal of the same, it shows that various descriptions as required under Rule 55 of the Rules are not mentioned on it and the same was incomplete. Once various requirements as contemplated under the Rules were not complied with, which demonstrates the contravention of Rules 55, therefore, the proceeding under Section 129 of the GST Act cannot be said to be arbitrary. Conclusion - The petitioner s failure to provide a complete challan as required by Rule 55 constituted a violation of the GST Rules, thereby justifying the imposition of tax and penalty under Section 129. Petition dismissed.

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• 2025 (3) TMI 554
  Seeking a writ, order or direction under Article 226 of the Constitution of India seeking to quash the order - whether the Petitioner was liable to deduct TCS (Tax Collected at Source) @1% [towards GST] of the transactions entered into on the portal of the Petitioner, and not having done so, would it be liable to pay this GST or otherwise? - HELD THAT:- As far as the interim relief is concerned, having heard Mr. Mishra, the learned counsel appearing on behalf of Respondent Nos. 2 and 3, and Mr. Sriram Sridharan, the learned counsel appearing on behalf of the Petitioner, a prima facie case is made out for grant of interim relief. Stand over to 25th March 2025.

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• 2025 (3) TMI 553
  Violation of principles of natural justice - failure to acknowledge the petitioner s response to the show cause notice - opportunity for personal hearing denied - HELD THAT:- Once the reply to the show cause notice was filed, the indication made in the order impugned that no reply has been filed and various pleas, which were taken in reply to the show cause notice have not been considered, clearly shows non application of mind to the record of the case. So far as issuance of notice for personal hearing is concerned, the material placed on record (Annexure - 3 4 to the petition) clearly indicates that the details of authorized signatories are different from the e-mail address on which the notices for personal hearing had been sent and therefore, sending of notices on e-mail address, which was abandoned and changed under intimation to the respondents, cannot be used by the respondents to indicate that despite notices for personal hearing, the petitioner did not appear. It is apparent that the order impugned dated 15.01.2025 has been passed without considering the response to the show cause notice, which was already on record, and without affording opportunity of personal hearing and as such, the same cannot be sustained. Conclusion - Once the reply to the show cause notice was filed, the indication made in the order impugned that no reply has been filed and various pleas, which were taken in reply to the show cause notice have not been considered, clearly shows non application of mind to the record of the case. The order impugned dated 15.01.2025 and demand raised based on the said order are quashed and set aside. The matter is remanded back to the respondent authority to afford opportunity of personal hearing to the petitioner and pass appropriate order in accordance with law - petition allowed by way of remand.

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• 2025 (3) TMI 552
  Challenge to order passed under Section 73 of the WSBGST /CGST 2017 - disallowance of ITC claimed by the petitioner on the basis of the returns filed under Section 39 of the said Act in Form GSTR 3B beyond the due date - HELD THAT:- In this case, the ITC had been disallowed by reasons of the petitioner filing the return in Form GSTR 3B beyond the due date, and on the basis of insertion of subsection (5) to Section 16, the returns filed by the petitioner which are in respect of the tax period from September 2018 to March 2019 have now been regularized having regard to the new cut of date provided for in Section 16(5) of the said Act, it is opined that the petitioner cannot be denied the benefit of the aforesaid amendment. The petitioner is permitted to apply before the appropriate authority by making appropriate rectification application. Petition disposed off.

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• 2025 (3) TMI 551
  Seeking grant of default bail - principal orchestrator of a fraudulent scheme involving fake transactions - petitioner has been in custody for the past 04 years, 01 month and 20 days - Whether the imposition of stringent financial and other onerous conditions is permissible while granting default bail under Section 167 (2) of Cr.P.C. (now Section 187(3) of BNSS) and bail under Section 479 of the BNSS? HELD THAT:- Personal liberty holds a pre-eminent position in our constitutional framework, embodying the essence of fundamental rights enshrined in the Constitution. In the present case, onerous conditions such as furnishing surety bonds of Rs. 1.10 crore from each of the two sureties as well as a bank guarantee to the tune of Rs. 55.00 lakhs have been imposed as a pre-requisite for grant of bail. This Court is of the considered opinion that such an approach is antithetical to the principles of justice and fairness. The primary objective of bail is to ensure the appearance of the accused at trial, and this objective can be achieved by releasing him on bail and imposing reasonable conditions. A surety bond of such exorbitant value cannot be deemed reasonable in good conscience, as it effectively places a monetary price on liberty, which is inherently invaluable. Judicial custody, it must be underscored, is preventive in nature and not punitive. Therefore, deprivation of liberty must not be used as a form of punishment but rather as a measure of last resort to secure the ends of justice. The petitioner has undergone over 04 years in custody, in spite of being eligible for default bail, as provided by Section 167 (2) of Cr.P.C., merely because of his inability to meet the onerous conditions imposed by learned Court below. It is trite law that grant of bail under Section 167 (2) of Cr.P.C. is an indefeasible right, which accrues to the petitioner upon failure of the investigating agency to conclude the investigation within the stipulated timeframe i.e. expiration of the prescribed period of 90 days or 60 days, as applicable. Once this right accrues, the accused is entitled to bail upon expressing readiness and furnishing the requisite bail bonds as directed by the Magistrate. Further, default bail is not only a statutory right but flows from the cherished fundamental right to life and liberty as enshrined under Article 21 of the Constitution of India. As such, grant of default bail can reasonably be construed to be a fundamental right once the conditions as prescribed in the first proviso to Section 167 (2) of Cr.P.C. are fulfilled. The facts of the present case paint a distressing picture of the criminal justice system s failure to uphold the rights of undertrial prisoners. The petitioner, despite being entitled to default bail continued to languish in custody due to the imposition of excessively stringent conditions. However, what makes this case even more egregious is the fact that the petitioner was not released under Section 479 of BNSS despite having undergone detention exceeding one-third of the maximum prescribed sentence for the alleged offence - The duty cast upon the Superintendent of Jail under sub-section (3) of Section 479 of BNSS to inform the Court of an undertrial s eligibility for bail was either overlooked or ignored, resulting in the continued incarceration of the petitioner in clear contravention of the law. The Hon ble Supreme Court, in In Re-Inhuman Conditions in 1382 Prisons [ 2024 (8) TMI 1504 - SC ORDER ], unequivocally held that Section 479 of BNSS applies retrospectively to all undertrial prisoners, irrespective of whether their case was registered before the enactment of the BNSS. It directed the immediate implementation of this provision to address the crisis of overcrowding in jails. Yet, the petitioner was deprived of this relief, showcasing a systemic lapse in adhering to judicial directions. The failure to release the petitioner under Section 479 BNSS, when his right to default bail itself was an indefeasible statutory and constitutional right, reflects a glaring miscarriage of justice. The right to liberty cannot be rendered illusory by administrative inaction or judicial indifference. The present case highlights the urgent need for strict adherence to statutory safeguards meant to prevent arbitrary detention, lest the criminal justice system becomes complicit in perpetuating prolonged and unjustified incarceration. Conclusion - This Court has no hesitation in holding that the conditions imposed by learned trial Court for grant of default bail do not meet the objective standards of reason and justice. The petitioner Pawan Kumar is ordered to be released on bail during the pendency of the trial, on his furnishing bail bonds in the sum of Rs. 50,000/- with one surety in the like amount - petition allowed.

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• 2025 (3) TMI 550
  Seeking quashing of the adjudication order including summary of demand passed by adjudicating authority - adjudication orders passed u/s 74 of the Jharkhand Goods and Services Tax Act, 2017 without granting any opportunity of personal hearing to the petitioner - violation of principls of natural justice - HELD THAT:- It appears that State Tax authorities are continuing to conduct adjudication proceedings in utter disregard to the mandatory provisions of the Act and in violation of the principles of natural justice. Due to procedure being not followed by State Tax authorities in conduct of adjudication proceedings, huge revenue of the State is otherwise lost which could have been protected, if due procedure is followed while passing adjudication orders. This Court in the case of M/s. Godavari Commodities Limited [ 2022 (4) TMI 1026 - JHARKHAND HIGH COURT] have already issued directions in the year 2022 itself directing Commissioner of State Tax Department to issue appropriate guidelines/circular/notification elaborating therein the procedure which is to be adopted by State Tax authorities regarding the manner of issuance of show cause notice, adjudication and recovery proceedings, so that proper procedure is followed by State Tax authorities in conduct of the adjudication proceedings. It appears that the aforesaid directions passed by this Court have not been complied with. Conclusion - The adjudication orders were invalid due to procedural violations and quashed them. It is deemed appropriate to allow both these writ applications by imposing cost as adjudication orders have been passed blatantly ignoring the statutory provisions. Accordingly, both these writ petitions are allowed and the impugned adjudication order including summary of order dated 05.06.2024 and impugned adjudication order including summary of order dated 10.07.2024w.r.t. both these petitions, passed by the 5th Respondent, is hereby, quashed and set aside - Petition allowed by way of remand.

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• 2025 (3) TMI 549
  Classification of products manufactured by the petitioner - to be classified under Tariff Item 2202 99 20 as fruit pulp or fruit juice-based drinks or under Tariff Sub-Heading 2202 10 90 as waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured? - invocation of provisions under Section 74 of the CGST Act - fraud or wilful suppression of facts or not - Revenue contends that the classification of the finished products under Assam GST Act must be done as per the HSN Code and not by borrowing any other standard like from FSSAI which is codified for a different purpose - onus to prove - Levy of penalty - levy of interest. HELD THAT:- A beverage could be a fruit juice based drink (e.g. SI. 1 2 above) or it could be flavoured water (e.g. Sl No. 3 4 above). The classification is seen to be determined by the nature of the beverage, particularly by the presence of the fruit juice to an extent that it attributes the essential character to the beverage, not merely as a flavouring agent. It is the dominant nature of the product which determines the classification. From these Technical Literatures, what is seen is that a substance or an ingredient of a food item can be called its base it s when such substance or ingredient forms the main or fundamental ingredient and imparts the essential attribute to the food item. The most significant feature of a food beverage is not it s food content but the function for which it is designed and marketed. The fruit is often a dominant ingredient providing its overall character to the subject product which cannot be achieved in any other way. This view is also found in the US Customs Ruling No. N122815 in the matter of Ms. Michele Peplinski Parker s Organic Fruit Juice. The said authority had classified the beverages by the presence of the fruit juice to the extent it attributes the essential character to the beverage. In CCE, Bhopal Vs. Parle Agro Pvt. Ltd. [ 2008 (3) TMI 67 - CESTAT NEW DELHI] , the classification sought to be made by the Revenue was rejected. This classification was sought to be made by the Revenue placing reliance on the HSN explanatory notes of chapter 22. The issue involved before the Tribunal in respect of classification of the product in question Appy Fizz . The classification sought to be made by the Revenue under item head 2202 10 10 on the ground that it was aerated whereas the assessee had classified the item under Tariff Subheading 2202 90 20 as it is a juice based drink and also because the product contained 2203% apple juice. The assessee therein relied upon the Prevention of Food Adulteration Rules, 1955 to submit that fruit beverage or fruit drink must contain soluble solids not less than 10%, whereas their product contains 13.7% soluble solids. Rejecting the contention of the Department, the Hon ble Tribunal held that the product was classifiable under tariff item 2202 90 20. The Hon ble Supreme court in the case of Parle Agro (P) Ltd. v. Commissioner of Commercial Taxes, Trivandrum, [ 2017 (5) TMI 592 - SUPREME COURT ] also held that Appy Fizz containing more than 10% fruit juice (viz. 12.7%) was a fruit juice-based drink in terms of the provisions of Kerala VAT Act, 2003. A plain reading of the schedule under Chapter 22 reveals that the Tariff item 2202 is to be applied in respect of Waters including mineral waters and aerated waters containing added sugar and other sweetening matter or flavoured, and other non- alcoholic beverages not including food or vegetable juices under heading 2009 - Coming to the facts of the present case, the chapter 22 does not specifically define the items manufactured and sold by the petitioner. Therefore, under the Rules of interpretation provided under the 1st schedule to the Customs Tariff Act, 1975, these items will have to be classified under the heading appropriate to the goods to which they are most akin. The tests conducted under the Food Safety Act quite clearly reveal that they are within the permissible limits prescribed under the Food Safety Act and except lime based products where the fruit concentrate is required to be 5% in all the other products it is seen to be more than 10%. This is not disputed by the Revenue. From the laboratory test reports and the manufacturing flow charts placed before the Court, it is clear that it cannot be classified under 2202 10 rather it is more akin to 2202 99 20 namely fruit pulp or fruit juice based drinks as has been classified by the petitioner - The only ground on which the Revenue has classified the subject product under sub-heading 2202 10 is that it contains carbonated water. However, a quick reference to the Tariff schedule makes it clear that Sub-heading 2202 10 is primarily WATER and it also includes mineral waters/ aerated waters /water containing added sugar or sweetening matter or flavour whereas sub-heading 2202 99 includes OTHERS which are further described under the said sub- heading. The Tariff heading 2202 99 20 is seen to be for fruit pulp or fruit juice based drinks. The sole basis for rejecting the assessee s classification under Sub-head 2202 99 is that these subject products contained carbonated water. However, such conclusions by the Revenue that merely because it contains carbonated water, the subject products are to be treated under classification water or aerated water is completely fallacious - Even if the classification of the subject items are to be based on the Doctrine of common perlance then also the classifications sought to be made by the Revenue cannot be sustained. These subject products have been sold in the market as Fruit Based Drinks or Drinks containing Fruit Pulp or Fruit Concentrate. When a consumer seeks to purchase water, there is no possibility that these subject products can be sold and/or purchased by such a consumer who seeks to purchase water. These products cannot be identified as water by a consumer. Taking into consideration the Rules of interpretation as prescribed under the 1st schedule to the Central Excise Tariff, the subject products classification under Tariff Heading 2202 99 20 as have been done by the assessee will have to be accepted over the claim of the Revenue that it is classifiable under the heading 2202 10 90. The contention of the Revenue therefore cannot be upheld and the same is rejected. The burden is on the department to prove the classification of the subject items. Although, the results of the State Food Laboratory have been discarded by the Revenue, no alternative test reports or methods for appropriate classification of the subject products have been placed before the Court. Where an established laboratory for food testing under the FSSAI has in it s test reports indicated presence of food content and soluble solids in the report, and these reports not having been contradicted by the Revenue by referring or relying on other reliable test reports, the contention of the Revenue that these reports cannot be reliable, therefore cannot be accepted as the same are not supported by any sufficient reason. In Hindustan Ferodo Ltd. v. CCE, Bombay, [ 1996 (12) TMI 49 - SUPREME COURT ], the Apex Court held that the onus of establishing that the said rings fell within Item 22-F lay upon the Revenue. The Revenue led no evidence. The onus was not discharged. Assuming therefore, that the CEGAT was right in rejecting the evidence that was produced on behalf of the appellants, the appeal should, nonetheless, have been allowed. Onus to prove - HELD THAT:- The burden is on the Revenue to establish with cogent materials that the classification of the subject items have been wrongly classified under the sub Heads by the assessee rather it has to be classified under the sub Heads as projected by the Revenue. Levy of penalty - penalty sought to be imposed by the Revenue on the petitioner under Section 74 of the CGST Act is by reason for recovery of tax not paid by the assessee by reasons of fraud or collusion or wilful mis- statement or suppression of facts and contravention of any of the provisions of the Act or the Rules with the intent to evade to payment of tax - HELD THAT:- Under Section 74 Explanation 2, the term suppression has been explained as non declaration of facts or information in the returns. In this context, it is necessary to examine whether there was any suppression or non-declaration of materials by the assessee while payment of taxes by classifying the subject items under Tariff Head 2202 99 20. In the case of CCE V. Chemphar Drugs Liniments, [ 1989 (2) TMI 116 - SUPREME COURT ], it has been observed that the term willful and suppression signifies conscious withholding of information with mala fide Intention and not an unintentional failure due to inadvertence. Thus, in order to invoke the extended period of limitation, it is necessary to prove an act or omission on the part of the petitioner equivalent to collusion or wilful misrepresentation or suppression of facts. Again in Anand Nishikawa Co. Ltd. Vs. Commissioner of Central Excise, Meerut, [ 2005 (9) TMI 331 - SUPREME COURT ], the Apex Court held that suppression of facts can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty. But when facts were known to both parties, the omission by one to do what he might have done, not that he must have done, would not render it suppression. It is settled law that mere failure to declare does not amount to wilful suppression. There must be some positive act of the assessee to bring it within the ambit of wilful suppression. From the Judgments above, it is seen that for arriving at the conclusion that there was a suppression of facts, it must be evident that the correct information was deliberately not disclosed by the petitioner or that there was a conscious withholding of information with malafide intention by the petitioner/assessee. Mere failure due to inadvertence will not amount to suppression for invoking the powers under Section 74. For imposition of penalty under Section 122 (2) (b), there should be an intention to evade payment of tax or there should be suppression or concealment or wilful mis- statement of the facts - It is apparent that the ingredients for imposition of penalty under Section 122(2)(b) are identical to the ingredients for invocation of the provisions of Section 74 of the CGST Act. If the proposed demand is unsustainable in law, no penalty is imposable on the petitioner. Under such circumstances, it is held that where the demand has been found to be unsustainable on the ground that there was no wilful and deliberate suppression or mis-statement or evasion or payment of tax, the question of imposition of penalty must also failed. Accordingly, the imposition of penalty by the Revenue is therefore interfered with and set aside. Levy of interest - HELD THAT:- The imposition of interest under Section 50 is also not recoverable in the present proceedings. The reason being that where the primary demand has been held to be unsustainable there is no basis for levy of any interest. Therefore, the levy of interest under Section 50 of the CGST Act is also interfered with and set aside. Applicability of N/N. 8/2021-Central Tax (Rate) dated 30.09.2021 and N/N. 1/2021- Compenation Cess (Rate) dated 30.09.2021 - HELD THAT:- The said Notification No. 8/2021-Central Tax (Rate) dated 30.09.2021 whereby a new entry was inserted as Serial No. 12A in Schedule IV making Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice to be taxable @ 14% and Notification 1/2021-Compensation Cess (Rate) dated 30.09.2021 whereby in the Schedule of the Goods and Services Tax (Compensation to States) Act, 2017 a new entry namely 4B was inserted levying 12% Cess on Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice and the same was made effective from 01.10.2021. The tax @ 14% and Cess @ 12% cannot be imposed on the said items for the periods prior to 01.10.2021. These Notification have been made effective only from the date it is notified. The periods involved in the present writ petitions are prior to the issuance of the said Notifications re-classifying the items. These Notifications therefore can only have effect from the date it is made effective and prospectively. There is no justification by the Revenue to make these notifications applicable retrospectively. Conclusion - i) The products manufactured by the petitioner are correctly classified under Tariff Item 2202 99 20 as fruit pulp or fruit juice-based drinks. ii) Invocation of Section 74 of the CGST Act was deemed inappropriate due to the absence of evidence of fraud or willful suppression. iii) Penalties under Section 122 of the Assam GST Act were invalidated due to the lack of evidence supporting the allegations of fraud or willful misstatement. iv) GST notifications cannot be applied retrospectively unless explicitly stated. The impugned show cause notices and orders set aside - appeal allowed.

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• 2025 (3) TMI 548
  Levy of GST on the assignment of leasehold rights of a plot of land allotted on lease by the Maharashtra Industrial Development Corporation (MIDC), and the buildings constructed thereon by the lessee to a third party, on the payment of a lump sum consideration - HELD THAT:- The Division Bench decision of the Gujarat High Court in the case of Gujarat Chambers of Commerce and Industry Others v/s. Union of India Others [ 2025 (1) TMI 516 - GUJARAT HIGH COURT] has held that the assignment by sale or transfer of leasehold rights of the plot of land allotted by the Gujarat Industrial Development Corporation (GIDC) to the lessee or its successor (assignor) in favour of a 3rd party (assignee) for consideration, shall be an assignment/sale/ transfer of benefits arising out of immovable property by the lessee-assignor in favour of a 3rd party who would then become a lessee of GIDC in place of the original allottee-lessee. In such circumstances, the Gujarat High Court held that the provisions of Section 7 (1) (a) of the GST Act providing for scope of supply read with clause 5 (b) of Schedule II and clause 5 of Schedule III would not be applicable to such a transaction and the same would not be subject to levy of GST as provided under Section 9 of the GST Act. In all these cases (listed at Exh. H), where any show cause notice has been issued and not adjudicated, the adjudication of the show cause notice, shall remained stayed. If any adjudication orders have already been passed, (in relation to the entities mentioned at Exh. H), then the adjudication orders shall also remained stayed. We place the above Writ Petition along with Writ Petition No. 14434 of 2023 on board for directions on 10th March, 2025. On that date, we will decide when to fix these matters for hearing and final disposal. Petition disposed off.

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• 2025 (3) TMI 547
  Levy of GST on the assignment of leasehold rights of a plot of land allotted on lease by the Maharashtra Industrial Development Corporation (MIDC), and the buildings constructed thereon by the lessee to a third party, on the payment of a lump sum consideration - HELD THAT:- The Division Bench decision of the Gujarat High Court in the case of Gujarat Chambers of Commerce and Industry Others v/s. Union of India Others [ 2025 (1) TMI 516 - GUJARAT HIGH COURT ] has held that the assignment by sale or transfer of leasehold rights of the plot of land allotted by the Gujarat Industrial Development Corporation (GIDC) to the lessee or its successor (assignor) in favour of a 3rd party (assignee) for consideration, shall be an assignment/sale/ transfer of benefits arising out of immovable property by the lessee-assignor in favour of a 3rd party who would then become a lessee of GIDC in place of the original allottee-lessee. In such circumstances, the Gujarat High Court held that the provisions of Section 7 (1) (a) of the GST Act providing for scope of supply read with clause 5 (b) of Schedule II and clause 5 of Schedule III would not be applicable to such a transaction and the same would not be subject to levy of GST as provided under Section 9 of the GST Act. In all these cases (listed at Exh. E), where any show cause notice has been issued and not adjudicated, the adjudication of the show cause notice, shall remained stayed. If any adjudication orders have already been passed, (in relation to the entities mentioned at Exh. E), then the adjudication orders shall also remained stayed. We place the above Writ Petition along with Writ Petition No. 14434 of 2023 and Writ Petition No. 16665 of 2024 on board for directions on 10th March, 2025. On that date, we will decide when to fix these matters for hearing and final disposal.

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• 2025 (3) TMI 546
  Violation of principles of natural justice - issuance of the show cause notice and the subsequent orders without providing the petitioner an opportunity for a personal hearing - HELD THAT:- Instead of orders being passed by the same officer who issued the show cause notice, due to administrative arrangements, the files were apparently reassigned to the second respondent, who subsequently issued the impugned order Ext.P5. Curiously, it was never informed to the petitioner that there was such a re-assignment. Petitioner was not given any opportunity of hearing as well, before the second respondent. Since the impugned order was passed by the second respondent without hearing the petitioner or even granting him an effective opportunity to appear before the second respondent, Ext.P5 order is vitiated due to violation of principles of natural justice. Ext.P5 order dated 06.04.2024 as well as Ext.P7 order, are set aside - Petition allowed.

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• 2025 (3) TMI 545
  Challenge to demand notice - no proper service of notice - it is submitted that since no notice was uploaded under the heading of notices and orders the petitioner could not learn about the issuance of such notice, and therefore, could not submit its response to the respondents - violation of principles of natural justice - HELD THAT:- An identical issue, as to whether, the notice put under the heading additional notices and orders on the common portal may be taken to have been duly served upon the Assessee or not arose for consideration before the Hon ble Division Bench of the Delhi High Court in the case of Anhad Impex [ 2024 (2) TMI 1070 - DELHI HIGH COURT] . It was found that the show-cause notice was uploaded on the portal in the category of additional notices and orders which were not easily accessible hence, skipped the attention of the petitioner. The Hon ble Court having noticed that the petitioner had made out a case that he had missed out the receipt of the notice, therefore, could not respond to the show-cause notice, quashed the impugned order dated 29.11.2023 and directed the respondent to enable the petitioner to file a response to the show-cause notice within a period of 30 days and the respondent was directed to adjudicate the showcause notice. It is also noticed that Section 169 lays down the methods for service of notice/summons/order/any other communication. Clause(e) provided one of the modes of service by making it available on the common portal. We find from reading of Sub-Section(2) and Sub-Section (3) that the legislators have provided for deemed service of notice in those cases where the notice, summons, order or decision have been served by tendering or publishing a copy thereof and affixed in the manner provided in Sub- Section(1). The notice or summons or any communication sent by registered post or speed post shall be deemed to have been received by addressee on the expiry of the period normally taken by such post in transit unless the contrary is proved. In course of argument, a question arose, as to whether Assessee is required to go on and examine the common portal everyday to find out whether there is any notice, summon or communication relevant to him or in his respect, why while putting the notice on the common portal, in order to facilitate the Assesee to know about the placement of the notice on the common portal an E-mail be not sent simultaneously on the registered E-mail address of the Assessee - the purpose behind service of notice is to make an Assessee aware of the notice/summons/orders/decisions or any communication issued by the Department. Thus, this aspect of the matter is required to be looked into by the Department in order to ensure itself that the notices are duly served. For the present, this Court is not going into this issue and keeping it open to be considered in an appropriate matter. In the meantime, the Department may take a view on it, if so advised. Conclusion - For notices to be considered duly served under Section 169, they must be easily accessible and placed under the appropriate heading on the GST portal. The impugned order is quashed and set aside. Application allowed.

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• 2025 (3) TMI 544
  Maintainability of petition - availability of alternative remedy - Seeking directions for release of the goods and the vehicle seized under Sections 129 130 of the Rajasthan Goods and Service Tax Act, 2017 - Challenge to penalty order and confiscation order - HELD THAT:- Taking into account that the petitioner has remedy of appeal, the writ petition is disposed of relegating the petitioner to the remedy of appeal. Considering that as on date GST, Tribunal is not functional, in the eventuality of the petitioner filing an appeal within three months of the constitution of the Tribunal, the same shall be considered to have been filed within limitation.

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• 2025 (3) TMI 543
  Violation of principles of natural justice - Service of proper SCN - petitioners were not aware of the passing of the order-in-original which was uploaded on the GST portal - discrepancy between Form GSTR-1 and Form GSTR-3B - HELD THAT:- It is apparent that due to error the petitioner has shown the taxable supply twice in Form GSTR-1 , once at the time of advance received and secondly at the time of issuing invoice - In the facts of the case, the petitioners in response to the notice in Form GST ASMT-10 filed a reply in Form GST ASMT-11 showing that there was a duplication of the amount shown in Form GSTR-1 disclosing the taxable supply for the particular month. The petitioners in reply in Form GST ASMT-11 categorically stated that there is no difference due to data reconciliation along with Form GSTR-9 to point out that such data was reconciled and there was no discrepancy in the return in Form GSTR-3B and Form GSTR-9. However, without taking into consideration such reply and without issuing Form GST DRC-01A respondent issued the impugned notice in Form GST DRC-01 under section 73 of the GST Act and thereafter without providing any opportunity of hearing to the petitioners contrary to the provisions of section 75(4) of the GST Act has passed the impugned order-in-original. The matters are remanded to respondent no.3 for passing fresh de novo order after giving an opportunity of hearing to the petitioners - Petition allowed by way of remand.

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• 2025 (3) TMI 542
  Violation of principles of natural justice - adjudication order was passed without giving an opportunity of hearing - prayer for cross-examination, to those whose statements have been relied upon while passing the adjudication order - HELD THAT:- An order passed under Section 74 of the GST Act is appealable under Section 107A of the said Act. The above Section categorically states that there is a statutory mechanism for redressal enabling the aggrieved party to challenge the reassessment order before an appropriate appellate authority. This Court underlines that this statutory provision ensures that the petitioner has a clear and adequate remedy available for his grievance. This Court further holds that when a specific remedy is available, it is a well settled principle of law that the High Court s writ jurisdiction cannot be ordinarily invoked unless under exceptional circumstances. In the present case, as the petitioner could not demonstrate any exceptional circumstances and has adequate relief by way of preferring an appeal under Section 107 of the GST Act and there arises no need for judicial intervention through a writ petition at this stage. Conclusion - The petitioner was afforded adequate opportunities to present their case and respond to the allegations. The denial of cross-examination did not constitute a breach of natural justice. Petition disposed off.

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• 2025 (3) TMI 541
  Rejection of appeal filed by the petitioner against Ext.P1 order on the ground that it was barred by limitation under the provisions of Section 107 of the Central Goods and Services Tax/State Goods and Services Tax Acts, 2017 - HELD THAT:- The issue stands covered in favour of the petitioner by the judgment of the Supreme Court in Himachal Techno Engineers [ 2010 (7) TMI 875 - SUPREME COURT] , where while considering the question of whether an application under Section 34 of the Arbitration and Conciliation Act, 1996, had been filed within time, the Supreme Court held that when the period prescribed is three months (as contrasted from 90 days) from a specified date, the said period would expire in the third month on the date corresponding to the date upon which the period starts. As a result, depending upon the months, it may mean 90 days or 91 days or 92 days or 89 days . Conclusion - The appeal presented by the petitioner against Ext.P1 order on 06-11-2023 was within the condonable period mentioned in Section 107 of the CGST/SGST Acts. Petition allowed.

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• Income Tax

• 2025 (3) TMI 540
  Grant of stay and for waiver of the condition to deposit 20% of the disputed tax demand - Additions u/s 68 - validity of invocation of Section 148 - HELD THAT:- It is open to the petitioners to challenge the assessment order relating to Assessment Year 2022-2023 before the CIT (Appeals) along with an application for grant of stay and for waiver of the condition to deposit 20% of the disputed tax demand in terms of the Office Memoranda Office Memorandum (O.M.) F.No. 404/72/93-ITCC dated 29.02.2016 and O.M. of the even number, dated 31.07.2017 issued by the Central Board of Direct Taxes. If any such appeal and application is filed, the same shall be considered and disposed of in accordance with law. If the petitioners are aggrieved by any order, they may take recourse to appropriate remedies as may be available to them in law. In case the appeal is preferred by the petitioners before the CIT(Appeals) within five days from today, the same will not be dismissed on the ground of limitation, as the petitioners filed a writ petition before this Court and had approached the High Court also. We also direct that, for a period of ten days from today, coercive steps for recovery of the impugned tax demand shall not be taken. It is stated that, for the assessment year 2021-2022, 30% of the impugned tax demand has been recovered by taking recourse to coercive steps. Special Leave Petition shall be treated as disposed of in the above terms.

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• 2025 (3) TMI 539
  Interest payable to petitioner u/s 244A - Failure on the part of AO to comply with the decisions / principles given by the ITAT and High Court - Delay by filling SLP As decided by HC [ 2024 (5) TMI 701 - BOMBAY HIGH COURT] matter is remanded to an AO, who shall compute interest payable to petitioner u/s 244A of the Income Tax Act, 1961 by strictly applying the principles laid down in India Trade Promotion Organisation 2013 (9) TMI 451 - DELHI HIGH COURT] . HELD THAT:- There is an inordinate delay of 444 days in filing the present petition. We find no justifiable reason to condone the delay. The application seeking condonation of delay is rejected. Even otherwise, there is no merit in the present petition. The special leave petition is dismissed on the ground of delay as well as on the merits.

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• 2025 (3) TMI 538
  Reopening of assessment - petitioner received notice u/s 148 - as argued order u/s 148A(d) not having been passed - as decided by HC [ 2023 (8) TMI 91 - BOMBAY HIGH COURT] in the assessment order petitioner s detailed submissions have been recorded and the assessing officer has point by point rebutted petitioner s contention. We would say it is one of the well detailed order though, we would not certify the contents as correct. We have not gone into those details or merits. That, we leave for petitioner to challenge in the appeal that it may want to file against the assessment order. We would reject this petition with a direction to petitioner to adopt the alternate remedy available by way of filing an appeal. Petitioner may file the appeal within four weeks from today. HELD THAT:- We are not inclined to interfere in the matter. We extend the time for availing the alternative remedy by a further period of one month from today. If an appeal is filed by the petitioner herein within a period of one month from today, the issue of limitation shall not be raised by the respondent-Department or by the Appellate Authority. It is needless to observe that the Appellate Authority would consider all contentions raised by both sides and decide the appeal in accordance with law. The Special Leave Petition is hence dismissed.

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• 2025 (3) TMI 537
  Reopening of assessment u/s 147 - Reason to believe - information received from the Investigation Officer, Kolhapur that Petitioner made some cash deposit by assessee-trust - as decided by HC [ 2024 (3) TMI 954 - BOMBAY HIGH COURT] no live link, which is a sine qua non between the material before the AO in the present case and the belief which he has to form regarding escapement of income. The sanction u/s 151 of the Act granted by the prescribed authority as well as the notice is issued by the Department without any application of mind. Decided in favour of assessee. HELD THAT:- There is a gross delay of 246 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner. Special Leave Petition is, accordingly, dismissed on the ground of delay.

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• 2025 (3) TMI 536
  Violation of the mandatory provisions u/s 144B - petitioner is in violation of mandatory unamended provisions u/s 144B, read with the first proviso to Section 147 rendering such assessment, ex facie without jurisdiction and a nullity in law. HELD THAT:- The foundational principles of audi alteram partem are not just paramount but jurisprudentially accepted in the IT Act as noted by us above. One cannot take a pedantic view by not permitting the assessee to file her returns, which would be counter to the very object and purpose the tax laws intend to achieve, as held by us in the judgment of Jyotsna Mehta [ 2024 (9) TMI 585 - BOMBAY HIGH COURT] As in the case of Teerth Developers and Teerth Realties [ 2024 (11) TMI 1269 - BOMBAY HIGH COURT] of which one of us was a member to hold that section 144B inherits the principles of natural justice, which embraces the reasonable opportunity of representation to the assessee, being discernibly absent in the given case, as noted by us above. Accepting the submissions would be contrary to and the teeth of these judgments referred to supra. Considering that the impugned order is legally unsustainable, as a sequel the impugned demand notice would not survive and has to be set aside. We are of the clear opinion that the petitioner has become entitled to the reliefs as prayed for. Accordingly, the petition deserves to be allowed.

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• 2025 (3) TMI 535
  Cancellation of registration granted u/s 12A - no prior determination by the Assessing Authority as to whether or not the assessee had occasioned a breach of the statutory provisions or conducted themselves in violation of the objects of the Trust concerned - HELD THAT:- We find that the Appellate Tribunal in the impugned order, proceeded on a mistaken assumption with regard to the order passed by the Principal Commissioner. Appellate Tribunal erroneously found that the powers of the Principal Commissioner u/s 12AA could not be exercised without a prior determination by the Assessing Authority as to whether or not the assessee had occasioned a breach of the statutory provisions or conducted themselves in violation of the objects of the Trust concerned. In our view, the provisions of Section 12AA independently empower the Principal Commissioner to consider whether or not the circumstances mentioned in Section 12AA (3) and 12AA (4) of the Income Tax Act exist as a pre-condition for directing a cancellation of the registration that was granted to the Trust under Section 12A of the Income Tax Act. The statutory provisions do not require the Principal Commissioner to await a decision of the Assessing Authority concerned before passing an order cancelling the registration granted to an assessee u/s 12A of the Income Tax Act. The assumption by the Appellate Tribunal that the determination of relevant facts by an Assessing Officer was a pre-condition to the Principal Commissioner exercising his powers under Section 12AA, or that the exercise of power by the Principal Commissioner under Section 12AA would preclude an independent assessment by the Assessing Officer, as he would be bound by the determination by the Principal Commissioner under Section 12AA, is in our view flawed since the statutory provisions do not admit of any such interpretation. We set aside the impugned order of the Appellate Tribunal and remand these appeals back to the Appellate Tribunal for a fresh consideration on the merits of the appeals preferred by the assessee against the order of the Principal Commissioner. I.T. Appeals are therefore allowed by way of remand by answering the questions of law raised in favour of the department and against the respondent-assessee.

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• 2025 (3) TMI 534
  Additions u/s 68 - validity of invocation of Section 148 - HELD THAT:- In the absence of any sustainable jurisdictional challenge having been raised coupled with the fact that an identical issue is presently engaging the attention of the Tribunal, we are of the considered opinion that we would neither be justified nor would it be appropriate for us to entertain a writ challenge at this stage and thus pre-empt the view that the appellate authority may take upon hearing respective sides. There would thus be no justification for us to either interdict that process or to render our own opinion on the merits of the additions made and which would undoubtedly have an impact on the pending appeal. Stay of demand and deposits that the petitioner may be constrained to make during the pendency of pursuing the appellate remedy goes, those are issues which are clearly separate and distinct from the challenge which stands mounted here. In case the petitioner be aggrieved by any order that the respondents may choose to pass while considering its application for stay or for placement of the demand in abeyance during the pendency of the appeal, those issues shall be open to be canvassed independently.

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• 2025 (3) TMI 533
  Assessment of charitable trust - applications filed for condonation of delay of 3198 and 3533 days respectively in filing Form 10-B of the Income Tax Act, 1961, pertaining to Assessment Years 2015-16 and 2014-15, were rejected - petitioner categorically pleaded that the petitioner is a charitable Trust and in last 45 years without there being any default, returns were filed. Thus, on two occasions if delay had occurred because of reasons beyond the control of the petitioner, a lenient view should have been taken. HELD THAT:- As relying on Sarvodaya Charitable Trust [ 2021 (1) TMI 214 - GUJARAT HIGH COURT] and Al Jamai Mohammediyah Education Society [ 2024 (4) TMI 939 - BOMBAY HIGH COURT] it will be clear like noon day that there is lot of similarity amongst these matters. The petitioners before both the High Courts were also Charitable Trusts and delay was occasioned because of compelling reasons. The Courts opined that the assessee is a public Charitable Trust and for last three decades have substantially satisfied the conditions. Denial on the basis of bar of limitation is not justified. The case of the petitioner herein is somewhat on better footing because it has a record of compliance for 45 years. Both the Writ Petitions are allowed by setting aside the impugned rejection orders and consequently, the delay of 3198 and 3533 days respectively are condoned.

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• 2025 (3) TMI 532
  Mandatory linkage of Aadhaar with PAN for the operation of Demat accounts - Petitioner denied to access to his Invest Right app and Demat Account linked to HDFC Bank Savings Account as alleged that the bank withheld the petitioner s funds and profits and made his accounts dormant in July 2023, citing the lack of Aadhaar linkage, despite Aadhaar not being required when the accounts were opened. Petitioner submits that he is a senior citizen and a four-term Member of Parliament as deliberately not enrolled under Aadhaar, as it has been his consistent stance in Parliament that biometric data should not be collected from citizens unwilling to enroll under Aadhaar. Therefore, since he has not enrolled under Aadhaar, furnishing an Aadhaar enrollment number to the bank to operate the Invest Right App Demat Account does not arise. HELD THAT:- The concept of I or the self has been a central theme in Indian philosophy since its inception. In Indian culture, the term Swa ( ) directly translates to self, signifying one s individual identity, essence, or inner being. It embodies not just personal identity but also a profound spiritual dimension, emphasizing self-reliance, autonomy, and the realization of one s true nature. Swadharma is not a cage that limits Swa ; it is the force that gives it meaning, anchoring the self in a larger purpose. When Swa aligns with duty, it does not diminish; it transcends, transforming the individual into something far greater than the sum of personal wants. Mandatory linkage of Aadhaar with PAN for the operation of his DEMAT account - It is essential to acknowledge that the securities market has historically been misused as a channel for money laundering and tax evasion. Unscrupulous individuals and entities have used layered transactions, shell companies, and offshore accounts to obscure the origins of illicit funds. One of the most common methods has been circular trading, where stocks are bought and sold repeatedly among related parties to artificially inflate prices and create a facade of legitimate gains. This practice allows black money to be converted into white through capital gains exemptions, often at the expense of market integrity and government revenue. Additionally, the anonymity afforded by multiple (read: fake) PAN cards and unverified accounts has further facilitated tax evasion. Fraudulent market participants have used benami Demat accounts to conduct high-value transactions while avoiding taxation. The lack of robust verification mechanisms in the past enabled individuals to hold multiple PAN cards, which allowed them to siphon money through the stock market without detection. As a result, tax authorities often faced significant hurdles in tracing taxable income and enforcing financial transparency. Recognizing these loopholes, the government introduced the mandatory linkage of PAN with Aadhaar u/s 139AA of the Income Tax Act. This measure aims to eliminate duplicate and fraudulent PANs, ensuring that every financial transaction is traceable to a verifiable individual. By linking Aadhaar, a unique biometric-based identity, with PAN, the authorities can effectively track income, detect discrepancies, and curb tax evasion within the securities market. This move enhances accountability, strengthens anti-money laundering efforts, and reinforces the credibility of India s financial system. The linkage requirement, coupled with strict enforcement by regulatory bodies like SEBI and NSDL, ensures that Demat accounts remain a legitimate channel for investment rather than a tool for illicit financial activities. The mandatory linking of Aadhaar with PAN and Demat accounts u/s 139AA of the Income Tax Act aligns with the constitutional principles laid down in Puttaswamy and its triple test: legality, necessity, and proportionality. Section 139AA satisfies this test as it is backed by a valid legislative mandate, serves a legitimate state interest, and imposes only a proportionate restriction on privacy. As for proportionality, Aadhaar is already a widely accepted authentication tool, and linking it with PAN does not impose an excessive burden on individuals. While data security concerns exist, the state s compelling interest in preventing financial fraud and tax evasion justifies this limited restriction on privacy, especially with safeguards like encryption and data protection protocols in place. Therefore, even though the Aadhaar-PAN linkage does not guarantee absolute privacy, it does not amount to an unconstitutional infringement of fundamental rights. The measure is a reasonable restriction in furtherance of public interest, ensuring that financial transactions remain transparent and that the securities market is not misused for illicit purposes. As long as adequate security measures are in place to protect Aadhaar data, the linkage requirement remains a constitutionally valid and proportionate policy aimed at strengthening the financial ecosystem. The fear among individuals mandated to link their Aadhaar with PAN and Demat accounts is not unfounded. Any vulnerability in the Aadhaar database can lead to misuse of personal and financial information, with grave consequences such as unauthorized access to bank accounts, cloning of identities, and financial fraud. The very system designed to prevent tax evasion and money laundering may inadvertently expose people to new risks if adequate safeguards are not in place. As financial institutions and regulatory bodies increasingly rely on Aadhaar for verification, the risks associated with a compromised database could have far-reaching consequences for the economy and public trust in digital governance. Thus, the need of the hour is to strengthen the security framework of Aadhaar by implementing state-of-the-art encryption, multi-layered authentication protocols, and stringent access controls. The government must prioritize cyber security measures, conduct regular audits, and ensure that data protection laws are rigorously enforced. Transparency in addressing data breaches, along with proactive steps to fortify the Aadhaar infrastructure, is essential to instill confidence in the system. Without these measures, the very objective of Aadhaar-PAN linkage i.e. to ensure financial transparency and curb fraud, may be undermined by the risk of data breaches and privacy violations. The impugned provision mandating Aadhaar-PAN linkage for Demat accounts stands on firm constitutional and legal footing. It satisfies the triple test established in Puttaswamy [ 2018 (9) TMI 1733 - SUPREME COURT ] serving a legitimate state interest in curbing tax evasion and ensuring financial transparency. While concerns regarding data security and privacy are acknowledged, they do not outweigh the compelling need for regulatory oversight in the securities market. Adequate safeguards have been implemented to mitigate risks, and the measure remains a proportionate and reasonable restriction on privacy. Therefore, the provision does not warrant interference by this Court.

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• 2025 (3) TMI 531
  Validity of Revision u/s 263 - Tribunal dismissed the appeal filed by the appellant and did not interfere with the order passed u/s 263 by the PCIT - HELD THAT:- Vide order passed u/s 263 of the Act by the PCIT, the matter was remanded back to the AO to pass a fresh order. During the pendency of the appeal before the Tribunal, itself, the Assessing Officer passed a fresh order in compliance of order dated 27.03.2023. Undisputedly the appellant has preferred appeal against order as well, which is pending consideration. Since the very order of remand which was challenged before the learned Income Tax Appellate Tribunal, Delhi Bench G , New Delhi, was implemented and a fresh order was passed by the AO, further the learned Tribunal [ 2024 (7) TMI 501 - ITAT DELHI] did not interfere with the order passed u/s 263 by PCIT (remanding the case back to the Assessing Officer) and the appellant has preferred an appeal against order which is pending consideration, therefore, the present appeal is liable to be dismissed. Present appeal is dismissed.

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• 2025 (3) TMI 530
  Reopening of assessment - Additions u/s 69A - reasons to suspect OR reason to belief - investment made for purchase of flats and interest on such investments - based on certain information received by AO from ADIT (Investigation)-II, Faridabad, as per letter the case of the assessee was re-opened by issuance of notice u/s 148 HELD THAT:- In the instant case, neither the exact copy of reasons were provided nor were provided the copy of approval provided nor the material in possession of AO while allegations of vast proportions were made against the assessee. Apparently, the vested right of the assessee to file meaningful objections to purported unlawful assumption of jurisdiction has been completely trampled causing serious prejudice to the assessee and embroiled him in protracted litigation. For assumption of lawful jurisdiction u/s 147 all jurisdictional conditions and procedural requirements need to be satisfied. In the absence of copy of reasons and copy of approval made available to assessee in spite of specific requests, presumption would arise adverse to the Revenue on compliance of pre-requisites of sec 147 151. The re-assessment order thus framed is liable to be quashed on this ground alone. Jurisdictional issues - On perusal of the reasons recorded, it is apparent that the information referred to in the reasons recorded are generic, non-descript and unintelligible. No meaningful particulars of so-called information received are not mentioned at all. There is no reference to any material which may justify the bonafides of belief held by the AO. The basic particulars of property supposedly invested by the assessee are also not available. The date on which the transaction supposedly occurred for investment in property are also not recorded. In the absence of any basic particulars of specific nature and reliable in character emanating from extract of reasons, the reason to belief claimed by the AO to justify the assumption of jurisdiction is nothing but reason to suspect as rightly held by the CIT(A). The reasons recorded apparently smacks of pedantic belief without disclosing any live link or close nexus between material, if any and formation of belief. The threshold for meeting pre-requisites for re-opening the assessment are sorely missing in the instant case. We thus see no difficulty in endorsing the conclusion drawn by the CIT(A) that the re-opening action was without jurisdiction and thus impugned re-assessment order framed is outside the legal sanction and is bad in law. We also find merit in the plea raised on behalf of the assessee that in the absence of even basic material in possession of AO and confronted to the assessee, the onus continues to be on the Revenue to demonstrate the alleged presence of unexplained investment which was not discharged at all. CIT(A) in our view has also addressed the issue on merits correctly in accordance with law. Without reiterating the process of reasoning, we are of the view that no interference with the order of CIT(A) is called for. Appeal of the Revenue is dismissed.

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• 2025 (3) TMI 529
  Validity of Reopening of assessment - no valid service of notice purportedly issued u/s 148 - HELD THAT:- The notice has been sent to some other e-mail ID which has no relation with the assessee. The fact of service of notice at the wrong e-mail ID has been demonstrated to be supported by the screenshot of e-filing portal and ITBA system portal and further reinforced by the copy provided by the Department in response to RTI application. These evidences clearly show that notice u/s 148 cannot be deemed to have been validly served on the assessee. Noticeably the e-mail ID of the assessee is a part of the record of the Department as evident from the screenshot which is the communication of processing intimation under s.143(1) sent at the correct e-mail address as demonstrated in the submissions of the assessee recorded in the preceding paras. The assessee also claims that no communication of notice has been made to the assessee either physically or through post or other modes of communication adopted by the Department. The electronic communication appears to be made but delivered at the wrong e-mail ID. We may usefully refer to the judgement of Suman Jeet Agarwal [ 2022 (9) TMI 1384 - DELHI HIGH COURT] wherein held that when the notices were sent to unrelated e-mail address, the date on which such notice was first viewed by the assessee on e-filing portal should be construed as the date of issuance of notice. There is no rebuttal on facts from the Revenue that notice was served on the correct e-mail ID or communicated physically or through the modes prescribed under s. 282 of the Act. Thus, we find merit in the plea of the assessee that impugned re-assessment order framed in consequence of notice issued under s. 148 which was never served, to be regarded as nonest and bad in law. Decided in favour of assessee.

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• 2025 (3) TMI 528
  Revenue recognition method - application of section 43CB - As submitted real estate developers are required to follow Accounting Standard-9 (AS-9) Revenue Recognition, which prescribes revenue recognition upon the transfer of significant risks and rewards of ownership Whether the assessee, a real estate developer, was required to follow the Percentage Completion Method u/s 43CB or could recognize revenue based on AS-9 and the ICAI Guidance Note? HELD THAT:- The assessee follows AS-9, as it recognizes revenue only when conveyance deeds are executed, and possession is handed over to buyers. The Institute of Chartered Accountants of India (ICAI) has also clarified in its Guidance Note on Accounting for Real Estate Transactions (2012, Revised) that real estate developers should follow AS-9, not AS-7. AO s attempt to apply Section 43CB of the Act, which mirrors AS-7, is fundamentally flawed. The assessee s method of revenue recognition is consistent with ICAI s AS-9 and the Guidance Note, both of which allow revenue recognition only upon sale deed execution and possession transfer. DR s contention that the assessee is a contractor is misplaced, as it fails to recognize the fundamental distinction between a contractor executing a construction project for a client and a real estate developer constructing and selling units on its own land. The assessee is not providing a service to a third party under a contractual obligation but is developing a project at its own risk and selling completed units to buyers. In contrast, a contractor undertakes construction for another party based on predetermined specifications. DR s assertion that Section 43CB of the Act does not differentiate between a real estate developer and a contractor is incorrect. The assessee s business model does not involve entering into construction contracts but rather the sale of completed units. The fact that the agreement specifies stage-wise payments does not convert the nature of the transaction into a construction contract. Advances received from customers are not contract revenue but part of the consideration for the ultimate sale of property. DR s contention that the judicial precedents relied upon by the CIT(A) relate to periods before the introduction of Section 43CB of the Act and are therefore not applicable is flawed. The principle that real estate developers must recognize revenue upon the transfer of ownership and not on a percentage completion basis has been established through long-standing jurisprudence, which remains applicable even after the introduction of Section 43CB of the Act. The principle of consistency must be followed. The Revenue had accepted the same method in earlier and subsequent assessment years, and there is no material change in facts warranting a deviation. Decided against revenue.

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• 2025 (3) TMI 527
  Unexplained income u/s 68 or 69A - assessee deposited in cash into its bank account during the demonetization period - structured nature of these transactions, where all sales were below the PAN disclosure threshold of Rs. 2 lakh, was found to be highly suspicious - AO noted that there is no instance of sale in cash after 08.11.2016, making it unusual that such a high volume of cash sales occurred on a single day HELD THAT:- Law does not mandate PAN disclosure for cash transactions below Rs. 2 lakh, and if buyers voluntarily structured their purchases within the legal limit, the assessee cannot be penalized for complying with existing rules. The AO has not brought any evidence to show that the sales did not occur or that the cash deposited was from undisclosed sources. Assessee did not maintain a detailed stock register containing itemized inventory records, which made it impossible for the AO to verify whether the sales actually took place from available stock - We note that the assessee had maintained stock records and submitted the same during the proceedings, and the auditor had reported stock details in Annexure to Form 3CD (Tax Audit Report). AO did not reject the books of accounts or point out any defects in stock movement, nor did he dispute the purchases made by the assessee. When purchases are accepted, the corresponding sales cannot be arbitrarily disregarded without evidence to the contrary. Therefore, the AO s assumption that the stock records were inadequate is not supported by any material evidence. Assessee has duly recorded the cash deposits as sales in its books of accounts, and once a transaction is recorded in books, Section 69A of the Act cannot be invoked. The AO has not rejected the books of accounts under Section 145(3) of the Act, nor has he pointed out any material discrepancies in stock movement, VAT returns, or financial statements. Revenue s reliance on Namdeo Arora is misplaced, as that case dealt with unexplained loans, whereas the present case involves recorded business transactions supported by documentary evidence. The AO failed to disprove the genuineness of the sales or conduct any independent verification, making the addition purely based on suspicion. - Decided in favour of assessee.

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• 2025 (3) TMI 526
  TP adjustment to Software Development Services and IT Enabled Services - outstanding receivables from Associated Enterprises (AEs) are an international transaction or not? - HELD THAT:- As per the amendment to section 92B by way of Finance Act, 2012 with retrospective effect from 01/04/2002 that, the interest on outstanding receivables is an international transaction, and it certainly requires separate benchmarking. Accordingly, the extended credit period or credit allowed over and above the agreed period shall be considered as separate international transaction which would be required to be benchmarked. In holding so, we refer to the decision of this Tribunal in case of AMD India Pvt Ltd. [ 2017 (10) TMI 1615 - ITAT BANGALORE] Rate of interest - TPO has taken SBIL PLR at 13.27% whereas the assessee on the strength of case law argued that the rate of interest should be LIBOR + 200 basis point - DRP in his direction originally has confirmed the action of the TPO. On rectification application filed by the assessee, the learned DRP directed the TPO to calculate the interest on delayed period falling with the year under consideration only for the purpose of making addition to the total income of the assessee for the year. The revised direction of learned DRP was not considered in the final assessment order passed by the AO as the same was passed before the issue of revised direction. Therefore we direct the AO to compute the interest on delayed receivable as per revised direction of the learned DRP and after taking the interest at LIBOR + 200 basis point. Hence the grounds of appeal raised by the assessee is partly allowed for statistical purposes. Scope of the provisions of section 143(1) - whether the adjustment made in the intimation order u/s 143(1) can be agitated in the proceedings u/s 143(3) or in the appeal proceeding arising out of assessment order u/s 143(3) - Disallowance of deduction u/s 43B - deduction on account of payment of bonus - HELD THAT:- We are not inclined to encourage the assessee not to prefer separate appeal against the intimation generated u/s 143(1) but in the interest of justice and fair play we accept the issue arising from intimation under section 143(1) of the Act in the proceedings arising under the provisions of section 143(3) r.w.s. 144C of the Act. We note that the impugned issue raised u/s 143(1) of the Act has not been looked into by the lower authorities, therefore in the interest of justice and fair play we are inclined to set aside the issue to the file of the AO for fresh adjudication as per the provisions of law. Hence the ground of appeal of the assessee is hereby partly allowed for statistical purposes.

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• 2025 (3) TMI 525
  Levy of penalty u/s 272A(2)(g) and section 271C - not depositing TDS in time and also for not furnishing requisite TDS returns in time Default of non-deposit of TDS within the time prescribed in law, u/s 271C - HELD THAT:- As going through the decisions of the Hon ble Apex Court in US Technologies [ 2023 (4) TMI 418 - SUPREME COURT] we see no reason to disagree with assessee that the Hon ble Apex Court has categorically held that default for delayed remittance of TDS does not attract any penalty u/s 271C of the Act. The language of section 271C of the Act is very clear and it attracts the levy of penalty only for the default to deduct tax at source. The Hon ble Apex Court noted that it does not speak about the belated remittance of TDS and noting that penalty provisions are to be strictly and literally read, and nothing is to be added or taken out, the Hon ble Court held that there could not be any penalty leviable on belated remittance of TDS after the same is deducted by the assessee, under section 271C. Apex Court also referred to CBDT Circular No.551 dated 23.1.1998 and noted that it talked about the levy of penalty on failure to deduct TDS and noted that even the CBDT has taken note of the fact that no penalty is envisaged under section 271C of the Act for belated remittance of TDS. Considering all of the above, the Hon ble Apex Court categorically held that no penalty under section 271C of the Act is leviable for default of not depositing TDS deducted. Penalty u/s 272A(2)(g) for the delayed filing of quarterly TDS returns in Forms 24Q and 26Q - When the matter was ultimately heard on 25th February 2025 both the parties admitted to the position of law noted by us that no penalty was leviable for the default in non/ delayed filing of TDS returns u/s 272A(2)(k) in the impugned year. That the same was leviable u/s 271H and the quantum of penalty also was at variance as against that provided u/s 272A(2)(g) of the Act. Accordingly, since admittedly the penalty for default in furnishing of quarterly returns has been levied by invoking the provision of law which was not applicable in the impugned year at all, the same, we hold, is not sustainable. Penalty levied for the delay in furnishing returns in Form No.24Q and 26Q was wrongly levied and confirmed by the ld.CIT(A) for all the reasons noted above. The order of the ld.CIT(A) is, therefore, set aside and the appeal of the assessee is allowed.

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• 2025 (3) TMI 524
  Addition u/s 56(2)(viii) - assessee had received additional compensation against compulsory acquisition of agricultural land by the Government of Gujarat, along with interest component - HELD THAT:- In the present case, since the land acquired was agricultural land, the same is not a capital asset u/s 2(14) of the Act and therefore is exempt u/s 10(37) of the Act. As decided in Lakshmama [ 2019 (11) TMI 1101 - ITAT BANGALORE] following the decision of.Movaliya Bhikhubhai Balabhai [ 2016 (5) TMI 488 - GUJARAT HIGH COURT] wherein it was held that the interest received on enhanced compensation u/s 28 of Land Acquisition Act, 1984 is eligible for exemption u/s 10(37) of the Act. As decided in Movaliya Bhikhubhai Balabhai [ 2016 (5) TMI 488 - GUJARAT HIGH COURT] the words interest received on compensation or enhanced compensation in section 145A of the Act have to be construed in the manner interpreted in CIT vs. Ghanshyam (HUF) [ 2009 (7) TMI 12 - SUPREME COURT] As a necessary corollary, therefore, the payment made u/s. 28 of the 1894 Act is interest as envisaged u/s. 145A and cannot be treated as income from other sources. Appeal of the assessee is hereby allowed.

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• 2025 (3) TMI 523
  Denial of deductions u/s 54B - assessee failed to prove that land sold by him was used by him for agriculture activities for a period of two years immediately preceeding the date of transfer - CIT(A) allowed claim - HELD THAT:- Copy of Khasra Girdawari for the period Samvat 2074 to 2077, pertaining to Village Todi Ramijipura, Luniyawas, Jagatpura, Jaipur, has been made available to us in the course of arguments. As per entry at Sr. No. 145, land in an area of 0.69 hectares, belonged to Chiranji Lal and his brother Chote Lal, Khatedars to the extent of half share each, and they had sown Bajra crop in Samvat 2075, 2076 and 2077. Above said entry in the Khasra Girdawari lends corroboration to the claim of the assessee that the land sown by him was under agriculture activities during the relevant period of two years prior to the date of transaction of sale thereof. The department did not bring on record anything to the contrary to the entries recorded in the Khasra Girdawari. Thus, CIT(A) was justified in allowing the claim of the assessee as regards the deductions claimed u/s 54B on the basis of agricultural activities done on the said land. Appeal of assessee allowed.

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• 2025 (3) TMI 522
  Revision u/s 263 - undisclosed income declared during survey proceedings - treated as business income or as unexplained income - assessee has accepted the disclosure made in the survey which was also considered ld. AO and he has not invoked the provision of section 68 of the Act while passing the order - HELD THAT:- The phrase prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the AO. Every loss of Revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. If the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the ld. PCIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. See MALABAR INDUSTRIAL CO. LTD. VERSUS COMMISSIONER OF INCOME-TAX [ 2000 (2) TMI 10 - SUPREME COURT] Thus, invoking of sec.263 was not legally justified when the ld. AO considered the income offered as sourced from the business of the assessee. Thus, we note that the AO has taken one of the impossible view by treating the income offered during survey operation as income under the head business and profession. Appeal of the assessee is allowed.

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• 2025 (3) TMI 521
  Unexplained cash credit u/s. 68 - assessee has failed to discharge his onus with respect to the credit worthiness and genuineness of the transaction - CIT(A) deleted addition as the amount is found to have been received through banking channel HELD THAT:- Based only on suspicion, conjectures and surmises the AO couldn t have spurned it away. Even though, original MoU was placed before the AO, he failed to call for the stamp vendor [Mr.N.Jyothi Selvam] who sold the stamp paper on 05.12.2018 as well as any of the witnesses whose names have been cited as witnesses to the aforesaid MoU. AO couldn t point out any material infirmity in the MoU i.e. as to the assertions made by the assessee that he was the owner of the scheduled property and that the buyer has part performed his part of the obligation by advancing Rs. 2 Crs. through banking channel on 21.12.2018 [which was an event which happened before the search took place on 29.01.2019]. AO erred in law, by observing that unregistered document [MoU] is not enforceable contract. And as noted, the AO has not been able to rebut the onus which shifted on him after the MoU was presented before him and the payer/purchaser has confirmed the transfer of Rs 2 Crs online to assessee s account. Having said so, we also agree with the Ld.CIT(A) that the addition u/s.68 of the Act was not warranted because the identity of the credit is not disputed [i.e. Shri Ramajayam Rangasamy]; and the nature of the transaction has been shown as advance for the purchase of scheduled property owned by the assessee. Section 68 addition could have been made only if assessee failed to prove the identity, creditworthiness and genuineness of the transaction. In this case, even if the statement of assessee recorded during the search is accepted, then it is loan from Shri Ramajayam Rangasamy; and if the statement of transferee of the credit is taken, then it is advance of the sale consideration given to assessee; in both scenario, there is no element of income embedded in either transaction. Decided in favour of assessee.

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• 2025 (3) TMI 520
  Deduction denied u/s. 80P(2)(d) - assessee has two classes of members; A class as well as B class - assessee is a primary agricultural co-operative credit society registered under the Tamilnadu Co-operative Societies Act, 1983 HELD THAT:- According to Ld.AR, as decided by Apex Court in the case of Mavilayi Service Co-operative Bank [ 2021 (1) TMI 488 - SUPREME COURT] assessee s claim would be allowable since similar provisions are governing the present case of assessee i.e. TamilNadu Co-operative Societies Act and hence, giving loans by the assessee/primary agricultural credit society to its B class members is perfectly valid because the definition of member under the TNCS Act, permits loans to be given to B class members Hence, giving loan to B class members would not disqualify assessee from claiming deduction u/s. 80P(2)(a)(i) of the Act. Therefore, we allow the appeal of the assessee and direct the AO to grant 80P deduction. Appeal of the assessee is allowed.

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• 2025 (3) TMI 519
  Addition made on account of credits in the assessee s Non- Resident External (NRE) bank accounts - AR submitted that the additions made by the AO were solely on account of credits in the NRE account, which are not subject to tax as per the provisions of Section 10(4) - AR further emphasized that the assessee s non-resident status is an admitted fact, and throughout the assessment and DRP proceedings, the assessee had duly explained all credits appearing in the NRE accounts. HELD THAT:- AO s additions cannot be sustained merely on the basis of NRE credits without proving that the original source of funds was taxable in India. As held in judicial precedents like Nitin Mavji Vekariya 2023 (11) TMI 649 - GUJARAT HIGH COURT] and Bhavesh Chandrakantbhai Bhatt [ 2024 (6) TMI 1396 - GUJARAT HIGH COURT] , NRE deposits sourced from foreign remittances are beyond Indian taxation. In the absence of material establishing that the credits were from an Indian taxable source, the additions are legally unsustainable. Considering all the facts, legal precedents, and provisions of Section 10(4) of the Act, it is evident that funds remitted from foreign sources into NRE accounts are not taxable in India unless there is material to establish that they originate from taxable Indian income. In AY 2013-14, the addition credited on 13-09-2012 in HSBC Bank (NRE) is deleted, as it represents a redemption of an NRE fixed deposit, which qualifies for exemption under Section 10(4). However, the addition in HDFC Bank (NRE) and in Deutsche Bank (NRE) requires further verification by the AO to ascertain whether the original source of funds in the NRO account was from taxable income or tax-free foreign remittances. For AY 2015-16, the addition credited on 23-01-2015 in HDFC Bank (NRE) is deleted, as it is an inward remittance from JP Morgan Chase Bank, UK, and qualifies for exemption under Section 10(4) of the Act. Accordingly, the appeal for AY 2013-14 is partly allowed for statistical purposes, with a direction to the AO for further verification.

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• 2025 (3) TMI 518
  Validity of Revision u/s 263 - entitlement of claim section 10(1) agricultural income exemption - HELD THAT:- As given the fact that even the assessee s title or lease hold rights on the corresponding agricultural land have neither been examined nor verified till date despite the fact that the limited scrutiny raised the sole issue of larger agricultural income , we are of the considered view that even if there were some other inadequate enquiries with the commission agents concerned would not negate applicability of section 263(1) explanation-2 of the Act (supra). Non-application of mind as the agricultural income exemption claim has been treated as the one falling under chapter-VIA of the Act - We find no merit in the assessee s instant argument(s) as once the PCIT had already concluded upto para 9 of his revision directions that the assessment had been framed by the AO without carrying out an adequate enquiries as the above sole issue, merely because there are certain inconsistencies in the last para 10 thereof would not vitiate the entire revision proceedings. PCIT ought to have carried out the necessary enquiry himself before terming the assessment herein as an erroneous one causing prejudice to the interest of the Revenue - We hold that the assessee s instant last argument also does not carry any substance once the learned PCIT has clearly made out a case of no enquiry by the assessing authority which attracts both the limbs of it s assessment as an erroneous one as well as causing prejudice to the interest of the Revenue in light of Malabar Industries Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] We accordingly conclude in light of our preceding detailed discussion that the learned PCIT has rightly exercised his impugned revision jurisdiction in the given facts of the case. Decided against assessee.

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• 2025 (3) TMI 517
  Exemption denied u/s.10(23C)(iii)(ad) - Charitable purposes or not? - assessee is running educational institution in the same building and the same teaching staff is teaching for both the entities as seen in the website of the society HELD THAT:- The assessee is existing solely for educational purpose and annual income earned during the year does not exceed Rs. 1.00 crore from each school i.e., nursery school and primary school and hence, the society is exempted from tax as per the provisions of section 10(23C)(iiiad) r.w.r. 2BC of I.T. Rules, 1962 and filed the return of income on 07.03.2023 u/s.139(4C) of the Act showing the gross receipts from Nursery school and from Primary School. AO has considered the entire receipts as revenue of the organization and hence assessed to tax without giving the benefit of section 10(23C)(iiiad). The same was confirmed by the ld.CIT(A) stating that the assessee is having run both the institutions in the same premises and maintaining one bank account and depositing fee receipts. The said receipts have been deposited to the common bank account held by the society. The cash deposited into bank account, receipts of fees collected in the educational institutions and the same has been shown in the audited financial statements along with the supported bank statements furnished before the lower authorities. We also note that the annual income is less than Rs. 1.00 crore from each school i.e., Nursery school and Primary school and existing solely for educational purposes, is exempted from tax in the hands of the assessee as per the provisions of section 10(23C)(iiiad) of the Act r.w.r. 2BC of I.T. Rules, 1962. Thus, we are of the considered opinion that the CIT(A) has erred in confirming the denial of exemption u/s.10(23C)(iiiad) to the assessee for the impugned assessment year and hence we are setting aside the order of the CIT(A) by allowing the grounds of appeal of the assessee.

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• 2025 (3) TMI 516
  Reopening of assessment - recording the reasons to believe that the Assessee had taken accommodation entry in the form of share application money fortified - HELD THAT:- As in the assessment order no such addition has been made on account of share application money forfeited and the A.O. has examined the issue of fresh share application of money received by the Assessee during the year and thereby made addition u/s 68 on the ground that the Assessee has failed to establish the creditworthiness of the persons/entity who have invested the amount and also opined that the Assessee has failed to prove the genuineness of the transaction. Thus, it is crystal clear that the A.O. has initiated the re-assessment proceedings on one issue and has not made any addition on that issue. Thus no infirmity in the order of the Ld. CIT(A) in quashing the reopening proceedings initiated by the A.O. u/s 147. Decided in favour of assessee.

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• 2025 (3) TMI 515
  Validity of reopening of assessment - lack of issuance of a mandatory notice u/s 143(2) - HELD THAT:- Although the assessee had assailed the validity of the jurisdiction that was assumed by the A.O for framing the assessment without issuing any notice u/s. 143(2) of the Act i.e. an issue which is squarely covered by the judgments in the cases of Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] and in the case of CIT Vs. Laxman Das Khandelwar [ 2019 (8) TMI 660 - SUPREME COURT] but find that the CIT(Appeals) had merely referred to the said contention of the assessee and not adjudicated the same as in CIT(Appeals) s order. There is no whisper in the body of the CIT(Appeals) qua the adjudication on the aforesaid specific ground of appeal based on which the validity of the jurisdiction assumed by the A.O for framing the impugned assessment was assailed before him. We are unable to comprehend as to why the CIT(Appeals) had failed to adjudicate the aforesaid material aspect, based on which, the validity of the assessment was challenged before him. The aforesaid evasive approach on the part of the CIT(Appeals) needs to be deprecated. CIT(Appeals) had failed to dispose off the appeal after considering the specific contention that was raised by the assessee qua the validity of the jurisdiction that was assumed by the AO for framing the impugned assessment vide his order passed u/s.147 r.w.s. 144 r.w.s. 144B i.e. framing of the assessment without taking cognizance of the return of income that was filed by the assessee and dispensing with the issuance of notice u/s. 143(2) of the Act, therefore, the matter is restored to his file with a specific direction to adjudicate the appeal on the said specific issue. Appeal filed by the assessee is allowed for statistical purposes.

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• Customs

• 2025 (3) TMI 514
  Determination of FOB values - Entitlement for export incentives in the form of drawback, MEIS and ROSL - suspicion of the department is that the exporters had overvalued their goods so as to claim excess export benefits. What is the meaning of FOB value of the goods and who decides it? - HELD THAT:- If goods are agreed to be sold on FOB basis, the exporter is free once the goods are put on board the vessel and all risks and costs associated with transporting them up to destination thereafter is on account of the importer. Similarly, C F is an INCOTERM in which in addition to the value of the goods the cost of freight is also to be borne by the exporter and CIF is a term under which the cost, freight as well as the transit insurance are to be borne by the exporter. Business contracts are entered into under FOB, C F or CIF basis or as per as per any other INCOTERMS. For instance, for a consignment, the parties may agree the goods will be sold for US$ X on FOB basis and that settles the rights and liabilities of the buyer and seller in the transaction. In short, FOB value is the transaction value of the goods agreed to between the buyer and the seller. Does the Joint Commissioner, Commissioner (Appeals) or any other officer of Customs have the power to re-determine the FOB value of the goods and if so, under what legal provisions? - HELD THAT:- The exported goods are the consideration which the overseas buyer would receive and the price is the consideration which the exporter would receive. Therefore, this price has to be determined only by the buyer and seller. Consideration, as per the Indian Contract Act, need not be adequate for the goods. It can be higher or lower and so long as some consideration is paid the contract is valid. There is a privity of contract between the buyer and the seller and they alone can decide the terms of contract and in case of non-compliance by one, the other can seek to enforce it. The consideration or the transaction value cannot be modified by any stranger to the contract including any officer. If the assessable value of the export goods is re-determined under the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 by the proper officer, will it also change the FOB value? - HELD THAT:- Import and export duties are usually levied as a percentage of the value in the Customs Tariff. The question as to what value should be taken as the value to determine the duties is answered in section 14. It shall be the transaction value for delivery at the time and place of import or export. However, Section 14 itself provides for rejection of the transaction value under certain circumstances and the Valuation Rules lay down the procedure for rejection of transaction value and determination of value using some other methods - Even when the proper officer rejects the transaction value and re-determines the value-whether in import or exports-all that he does is to refuse to accept the declared transaction value as the assessable value for the purpose of determining the duty. He does not change and cannot change the transaction value-be it on FOB, C F or CIF basis. The FOB value cannot be modified by anyone including any Customs officer. Nothing in the Customs Act confers any power on anyone to modify the transaction value between the buyer and seller-be it FOB, C F or CIF or on any other terms. If the export incentives are based on FOB value, does any Customs officer have the power under the law to order that the export benefits shall instead be paid on the basis of some other value determined by the officer? - HELD THAT:- It is in exercise of this power under section 75, the Central Government notifies the rates at which drawback shall be allowed. Once the drawback schedule is notified by the Central Government, it is a direction to the officers that the drawback shall be paid accordingly. If the schedule prescribes drawback to be given as a percentage of FOB value, that is the direction of the central government under section 75. The concerned Customs officers are bound to follow the directions of the Central Government. No power is conferred under the Act on the Commissioner or any other officer of customs to defy the notification issued by the Central Government and to determine the drawback based on any other value. A plain reading of the Customs Act and the FT(D R) Act would have shown all these officers that they had no such powers under them. The only power under the Customs Act is to determine the assessable value of the goods and not to change the FOB value - All three export incentives in dispute-drawback, MESI and ROSL are to be paid as a percentage of FOB value as per the notifications issued by the Central Government under the Customs Act and the FT(D R) Act and no officer has the power to order that they should instead be paid as a percentage of any other value. The purported letter sent by DRI is a blatant interference in the adjudication process by the Joint Commissioner. DRI seems to have issued the letter under the wrong impression that it has the power to dictate how adjudication orders are passed by quasi-judicial officers. The Joint Commissioner was wise enough to ignore this letter from DRI but the department seems to have lost sight of the fact that quasi-judicial orders should be passed without fear or favour and without obtaining NOCs from any investigating agency. Conclusion - i) FOB value is the transaction value of the goods agreed to between the buyer and the seller. ii) The consideration or the transaction value cannot be modified by any stranger to the contract including any officer. iii) The FOB value cannot be modified by anyone including any Customs officer. Nothing in the Customs Act confers any power on anyone to modify the transaction value between the buyer and seller-be it FOB, C F or CIF or on any other terms. iv) The Joint Commissioner was wise enough to ignore this letter from DRI but the department seems to have lost sight of the fact that quasi-judicial orders should be passed without fear or favour and without obtaining NOCs from any investigating agency. The order of the Joint Commissioner is restored upholding the declared FOB values with the modification that the FOB values stand accepted because the officer had no power to modify the FOB values nor any power to direct that the export incentives should be paid on some other values - Revenue s appeals are dismissed.

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• Insolvency & Bankruptcy

• 2025 (3) TMI 513
  Condonation of delay of 15 days in filing the Appeal - case of the Respondent is that Appeal has been filed on 46th day, hence, Appeal has been filed beyond condonable period and delay condonation application deserves to be rejected - date of knowledge of order - Genuiness of medical document which has been filed by the Appellant along with additional-affidavit. Whether the appeal is filed within condonable period of 15 days or appeal has been filed beyond 15 days? - HELD THAT:- It is settled law that jurisdiction to condone the delay vested in this Tribunal is only 15 days as per Section 61(2) proviso. The order was delivered on 01.10.2024. As per Rule 3 of the NCLAT Rules, 2016, the day from which the said period reckoned shall be excluded. Thus, 01.10.2024 has to be excluded - For computing the 30 days period, if the last day expires on a day when the office of the Tribunal is closed, that day and any succeeding day on which the Appellate Tribunal remains closed shall also be excluded. After excluding 01.10.2024 from computation, limitation of 30 days was expiring on 31.10.2024. From 30.10.2024 to 03.11.2024, it was holidays both for the Court as well as the Registry (Diwali Holidays) In BSE Limited vs. Mrudula Brodie Ors. [ 2025 (2) TMI 962 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] it is held that for computing 30 days period, if 30th day is fallen on holiday, the said period also need to be excluded. In the present case, 03.11.2024 being holiday for office also, the last day of limitation for filing the appeal on 04.11.2024. Appeal admittedly has been filed on 15.11.2024, hence, while computing the limitation as per Rule 3, the delay in filing the appeal shall be 11 days. Appellant in the application, however, has come up with the case that 15 days delay be condoned. The delay in filing the appeal is within the condonable period, delay being only 11 days in filing the appeal. Next submission of the Respondent that the case of the Appellant is that he came to know about the order only on 23.10.2024 and he was communicated on 01.10.2024 itself by WhatsApp call by liquidator - HELD THAT:- The question as to when the appellant came to know about the order is inconsequential, since the limitation for filing the appeal shall begin from the date of pronouncement of the order and 01.10.2024 being to be excluded as per Rule 3, 30th day shall be on 31.10.2024 which as noted above was holiday for the office. Appeal could have been filed on 04.11.2024 i.e. on the reopening day. Genuiness of medical document which has been filed by the Appellant along with additional-affidavit - HELD THAT:- TThe said medical certificate has no bearing in the present case since delay of 15 days has to be explained by the appellant after expiry of period. Appellant in his application for condonation as well as in additional affidavit has pleaded that he has approached his counsel on 10.11.2024 and gave instructions. The delay in filing the appeal is within condonable period as noted above. It is further to be noted that Appellant claims to be vegetable vendor who has pleaded that he is not familiar with legal procedure. Conclusion - There is sufficient cause for condonation of delay which is within condonable period. Delay condonation application is allowed.

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• 2025 (3) TMI 512
  Entitlement to Liquidator, of additional Liquidation Cost including the Liquidator s Fees - HELD THAT:- Perusal of Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016, envisages that a liquidator is entitled to fees towards realisation and distribution only when he has realised or distributed any amount and not otherwise. It appears that the entire action to sell the Panagarh Unit was conducted solely by the Respondent Banks sans any involvement of the liquidator and the realisation and distribution of the sale has also been done by the Respondent Banks only. Hence, the amount apportioned by the Liquidator as his fees towards the sale of Panagarh Unit may not be payable. In the present case it is submitted that the entire action to sell the Panagarh Unit was conducted solely by the Respondent Banks sans any involvement of the liquidator. Further, that the realisation and distribution of the sale Panagarh Unit has also been done by the Respondent Banks only, hence, the Liquidator had no role to play in this sale process. Hence, in terms of Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016, the amount apportioned by the Liquidator as his fees towards sale of Panagarh Unit will not be payable. As such, the ratio held in Shikshak Sahakari Bank Ltd. [ 2025 (2) TMI 270 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH: NEW DELHI ] may not apply to the present facts, where it was held that In brief, with respect to the Secured Financial Creditor, the situation is clearly enumerated in Regulation 21-A(2)(a), which is applicable in this case. The Liquidator s fee is also prescribed under Regulation 4. Regulations 4(1) and 4(1A) provides primacy to CoC and consultation Committee. The Respondent s claim that the Liquidator is entitled for a fee under Regulation 4(2)(b) only when he has actually realised or distributed any amount is not tenable in the light of Regulation 21A. In terms of Regulation 21A(2)(a) of the IBBI (Liquidation Process) Regulations, 2016, where a secured creditor proceeds to realise its security interest, it shall pay as much towards the amount payable under Section 53(1)(a) -for CIRP and Liquidation Costs and under Section 53(1)(b)(i) - for workmen s dues, as it would have shared in case it had relinquished the security interest, to the liquidator within ninety days from the liquidation commencement date. The provision of fees as Regulation 21A(2)(a) of the IBBI (Liquidation Process) Regulations, 2016 envisages, is a mandatory provision which makes it imperative for the secured creditor to pay towards the CIRP Costs, even if the secured creditor has proceeded to realise its security interest in accordance with law. Conclusion - i) The liquidator was not entitled to fees for the sale of the Panagarh Unit. ii) The Respondent Banks had complied with their obligations under Regulation 21A, except for the liquidator s fees related to the Panagarh Unit sale. Application disposed off.

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• PMLA

• 2025 (3) TMI 511
  Money Laundering - provisional attachment order - maintainability of miscellaneous application filed by the petitioner - HELD THAT:- The Enforcement Directorate is on the verge of finalizing one deal with respect to one property at around Rs. 40,00,00,000/-. Let this deal be now finalized. It is further informed that so far as the second property is concerned, the first round of auction has failed. If that be so then, the Enforcement Directorate should at the earliest go for a fresh round of auction and see to it that the second property is also sold. It is reiterated if the amount of Rs.25,00,00,000/- is not deposited within a period of three months from today, the bail shall stand automatically cancelled without any further orders from this Court and it will be open for the Enforcement Directorate to take back the accused-lady in custody. If the accused goes back to jail then perhaps we need not have to further monitor this particular litigation. We shall close the matter in the event if arrest is effected. It is now for the Enforcement Directorate to go ahead with the auctioning of all the attached properties so as to try to recover the maximum amount possible. Conclusion - The miscellaneous application could be considered in light of the petitioner s proposal, despite questions of maintainability. Post this matter on 14th July, 2025.

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• 2025 (3) TMI 510
  Seeking grant of regular bail - Money Laundering - proceeds of crime of more than 2000 crores - scheduled offences or not - serious crime or not - applicability of twin conditions under Section 45 of the PMLA - HELD THAT:- In the instant case, there are nearly 70 accused persons while charge sheet has only been filed against 11 persons. There are 457 witnesses in the scheduled offence and the trial is not likely to conclude. However, the ED has submitted that at least 3 to 4 charge sheets are yet to be filed in the scheduled offence. It appears that the applicant was involved in the criminal acts of the syndicate and is in possession of the proceeds of crime and that he received commission from the liquor suppliers. The applicant was the key player in the syndicate - Prima facie, the involvement of the applicant in the present case has been established as massive corruption had taken place in the Excise Department by way of extorting amount of Rs. 2000 crores approximately and causing huge loss to the State Exchequer which otherwise would have yielded revenue for Central and State government. An analysis of section 19 of the PMLA unveils a delicate interplay between legal principles, enforcement challenges, and evolving due process standards. The judiciary s commitment to balancing prompt law enforcement with the protection of individual rights, particularly the right to receive timely notification of arrest grounds, not only adds value but also amplifies the ongoing conversation about the equitable consideration of security and justice in the context of any crime, whether financial or otherwise - the ED has shown the reason to believe that the applicant is guilty of the proceeds of crime. On the basis of statements recorded under Section 50 of the PMLA however, retraction statement is made by the co- accused persons namely Arun Pati Tripathi, Nitesh Purohit and Arvind Singh. The Apex Court in Directorate of Enforcement Vs. Aditya Tripathi [ 2023 (5) TMI 527 - SUPREME COURT] has held that the power to arrest under the Prevention of Money Laundering Act (PMLA) cannot be exercised on the whims and fancies of Directorate of Enforcement (ED) officers. The court wondered if the ED even had a consistent, uniform and one- rule-for-all policy on when they should arrest people. It said the ED s power to arrest must be based on objective and fair consideration of material against the accused. Conclusion - Prima facie it appears that in the investigation conducted during the predicate office, the applicant had a key role in the liquor syndicate and was involved in money laundering and proceeds of crime along with other co-accused therefore, the entitlement of the applicant to get bail under PMLA, 2002, is not acceptable and considering the entirety of the matter, this Court is of the opinion that the applicant is unable to satisfy twin conditions for grant of bail under Section 45 of the PMLA, 2002, as such, it is not a fit case for grant of bail to the applicant for the reasons mentioned hereinabove. The prayer for bail made by the applicant under Section 483 of the Bhartiya Nagrik Suraksha Sanhita, 2023 (BNSS) read with Section 45 of the PMLA, for the alleged offence punishable under Sections 3 4 of the PMLA, 2002 is hereby rejected.

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• Service Tax

• 2025 (3) TMI 509
  Classification of services - Dredging Services - Penalty - The CESTAT allowed the appeal in favor of appellant and the demand was set aside - HELD THAT:- In view of the decision of this Court in the case of Commissioner, Customs, Central Excise and Service Tax, Patna vs. Shapoorji Pallonji and Company Private Limited Ors. [ 2023 (10) TMI 748 - SUPREME COURT] , it is found that there is no error in the view taken by the Customs, Excise and Service Tax Appellate Tribunal. Appeal dismissed.

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• 2025 (3) TMI 508
  Levy of service tax on the renting of immovable property - taxable service or not - HELD THAT:- The submissions in the appeal are that the renting of immovable property cannot be considered as a service and , therefore, no service tax could be levied by the Central Government - This argument cannot be accepted. Unless the levy of service tax on renting of immovable property service is held to be ultra vires by any constitutional court, it will continue to be a valid levy. As a creation of the law, this Tribunal has to follow the law and cannot go beyond its four corners. Further, levy of service tax on renting of immovable property was upheld by five different High Courts. Conclusion - i) Unless the levy of service tax on renting of immovable property service is held to be ultra vires by any constitutional court, it will continue to be a valid levy. ii) The levy of service tax on the renting of immovable property service by the appellant needs to be upheld. Consequently, the appropriate amount of interest has to be paid. The Commissioner (Appeals) has already set aside the penalty under section 78 in the impugned order but upheld the penalty of Rs. 10,000/- under section 77 of the Finance Act. The impugned order is upheld and the appeal is dismissed.

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• 2025 (3) TMI 507
  Levy of VAT/sales tax - supply of tangible goods service or not - demand based on DG sets supplied on lease by the appellant to IOCL and the DG sets sold by the appellant to its customers - contracts involving the sale of DG sets, along with their installation and commissioning by the appellant - works contract service or not - demand based on an assumed 25% growth in service tax liability under the head of works contract service. Whether the supply of DG sets by the appellant to Indian Oil Corporation Limited (IOCL) constitutes a supply of tangible goods service under section 65 (105)(zzzzj) of the Finance Act, 1994, or a deemed sale under Article 366(29A) of the Constitution of India, thereby subject to VAT/sales tax rather than service tax? - HELD THAT:- The Supreme Court had held in the case of State of Madras vs. Ganon Dunkerly Company Limited [ 1958 (4) TMI 42 - SUPREME COURT] held that the State Government s had no power to levy sales tax on deemed sales considering the value of the goods used in works contract. Thereafter, the Constitution of India was amended and a new clause (29A) was inserted in Article 366(definition clause of the Constitution). This clause 29A enlarged the scope of expression sale and purchase of goods to include goods used in works contract service and also goods which are supplied on lease giving effective possession and control to the transferee. In 1994 the Central Government, in exercise of the powers under entry 97 (residual entry) of list-1, imposed service tax. The service tax could be imposed under this entry only on such activities which did not fall under the State list. Since the supply of tangible goods by giving effective possession and control is deemed to be a sale as per Article 366 (29A), all such transfers are chargeable to sales tax/ VAT by the State Government - However, where the goods are leased without giving effective possession and control of the goods to the transferee, it was covered under the service tax under section 65 (105)(zzzzd). Thus, there are two types of lease contracts-where the effective possession and control is given to the transferee and VAT/ sales tax is payable and where there is no effective possession and control to the transferee and service tax is chargeable. It is found that only VAT could have been charged by the State Government on the DG sets supplied by the appellant to IOCL. No service tax under section 65 (105)(zzzzd) could have been charged. Therefore, the demand in the first show cause notice cannot be sustained and needs to be set aside. Whether the contracts involving the sale of DG sets, along with their installation and commissioning by the appellant, amount to works contract service subject to service tax? - The pre-dominant nature of the contract is that of sale of DG set. When a large equipment such as DG set is purchased, the customer naturally wants the seller to install and commission it so to necessary to ensure that the DG sets were in working order. Merely because the goods were installed and commissioned after sale, the contract would not become a works contract services. It is more or less like a refrigerator or air-conditioner bought by someone for home use. The seller sells the refrigerator and also delivers and installs which satisfies the buyer that it is in good working condition. Therefore, the demand of service tax on the sale of generators by treating them as works contracts merely because the generators were also installed and commissioned by the appellant cannot be sustained and is liable to be set aside. Validity of the statement of demand based on an assumed 25% growth in service tax liability under the head of works contract service - HELD THAT:- Since it is found that in favour of the assessee and against the Revenue on the demand of service tax on the DG sets sold, this demand also needs to be set aside. Conclusion - i) The demand for service tax under supply of tangible goods service was set aside, recognizing the transaction as a deemed sale. ii) The demand for service tax under works contract service was set aside, affirming the transaction as a sale with incidental installation. iii) The statement of demand based on assumed growth was set aside due to lack of evidence. The impugned order is set aside - appeal allowed.

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• 2025 (3) TMI 506
  Valuation of service tax - non-inclusion of reimbursable expenditure or costs incurred by the service provider while providing taxable service, in the value of such taxable services, for the purpose of charging service tax - Extended period of limitation. HELD THAT:- The issue is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, [ 2018 (3) TMI 357 - SUPREME COURT] which has considered the issue of liability to pay service tax on reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client has discharged the liability to pay service tax. The Honourable Supreme Court affirmed the decision of the Delhi High Court in Intercontinental Consultants Technocrats Pvt Ltd v UOI, [ 2012 (12) TMI 150 - DELHI HIGH COURT ], wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections. Extended period of limitation - HELD THAT:- There are force in the contentions of the learned consultant for the appellant that the issue involved was of interpretational nature pertaining to the Valuation Rules and no evidence of malafides has been adduced that would attract the extended period of limitation or warrant imposition of penalties. Conclusion - The reimbursable expenses incurred in providing services should not be included in the taxable value unless explicitly mandated by statutory provisions, which was only applicable post-May 14, 2015. The impugned orders in appeal are set aside and the appeals are allowed.

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• 2025 (3) TMI 505
  Abatement given by N/N. 01/2006 to be included for the purposes of calculation of threshold limit for availing small-scale exemption under N/N. 06/2005 dated 01.03.2005 - HELD THAT:- This Bench has decided the issue in respect of similarly placed appellants vide Final Order No.60311-60317/2023 dated 30.08.2023 [ 2023 (9) TMI 1254 - CESTAT CHANDIGARH] . The Bench observed that the gross value of the taxable service rendered by each of the appellants is less than the threshold limit of Rs.10 Lakhs as prescribed under Notification No.06/2005-ST dated 01.03.2005 after giving allowance to the exemption for 60% of the gross receipt in terms of Notification No.01/2006-ST dated 01.03.2006. While computing the threshold exemption limit under N/N. 06/2005 dated 01.03.2005, abatement available under N/N.01/2006 should not be included for arriving at gross value of service. In view of the same, all the impugned orders are liable to be set aside except the one in the case of Shri Surjit Khan wherein some duty liability arises even after excluding the abatement of 60%. Conclusion - The abatement under N/N. 01/2006 should not be included in calculating the threshold limit for the small-scale exemption under N/N. 06/2005. Appeal allowed in part.

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• 2025 (3) TMI 504
  Liability to pay service Tax during the period 1.7.04 to 9.9.04 and 10.9.04 to 15.6.05 - invocation of extended period or not - HELD THAT:- Hon ble Supreme Court in Sunwin Technosolutions Pvt Ltd [ 2010 (9) TMI 71 - SUPREME COURT] held that the Central Government was fully conscious of the fact that the said computer training institute should not get the exemption and intended the same to be shown by specifically excluding the same from the purview of the notification dated 10th September, 2004. The notification was also in operation from the date of its issuance, i.e., from 10-9-2004 to 15-6-2005 without there being any other intendment. Hon ble Supreme Court made it abundantly clear that there is no doubt as to the taxability of Computer Coaching and Training Institutes during the period 10.09.2004 to 15.06.2005. Further, it is found that the Hon ble Supreme Court has interpreted the legislative intent behind the Notification in no uncertain terms. This being so, it is not inclined to buy the argument of the appellants that while interpreting the notification, intention of the government is not required to be ascertained; an amendment cannot confirm a retrospective applicability and create a liability which did not exists before. In the case cited above, Hon ble Apex Court has decided the very same issue being agitated by the appellant. Therefore, reliance on other cases is of no avail. The Appellants have not made out any case as far as the merits of the case are concerned. Time limitation - HELD THAT:- There is a considerable force in the argument of the appellant on limitation and is supported by finding of the Learned Commissioner (Appeals). The department has not filed any appeal against this finding giving cogent reason and evidence. Therefore, the contention of the Revenue is not tenable and revenue is not free to raise this issue now. In the facts and circumstances of the case, the cases relied upon by the department are not applicable. The appellant has a strong case in their favour on limitation. Conclusion - While the appellants were liable for service tax for the period from 10.9.04 to 15.6.05, they succeeded on the issue of limitation, thus nullifying the extended period for demand. Appeal allowed on limitation.

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• 2025 (3) TMI 503
  Adjournment of matter beyond three times which is the maximum number statutorily provided - HELD THAT:- In case of Ishwar lal Mali Rathod [ 2021 (9) TMI 1301 - SUPREME COURT] condemning the practice of adjournments sought mechanically and allowed by the Courts/Tribunal s Hon ble Supreme Court has observed considering the fact that in the present case ten times adjournments were given between 2015 to 2019 and twice the orders were passed granting time for cross examination as a last chance and that too at one point of time even a cost was also imposed and even thereafter also when lastly the High Court passed an order with extending the time it was specifically mentioned that no further time shall be extended and/or granted still the petitioner defendant never availed of the liberty and the grace shown. In fact it can be said that the petitioner defendant misused the liberty and the grace shown by the court. It is reported that as such now even the main suit has been disposed of. There are no justification for adjourning the matter beyond three times which is the maximum number statutorily provided - The Appeal is dismissed for non prosecution in terms of Rule 20 of CESTAT Procedure Rules, 1982.

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• 2025 (3) TMI 502
  Non/short-payment of service tax to the Government - Appellant had received amounts on account of provisions of services but failed to pay service tax - exemption of service tax under Charitable purpose - recovery of service tax with interest and penalty - HELD THAT:- Section 12 AA read with section 12 A of the Income Tax Act provides for process of registration of a trust or institution, where income derived from the property etc. held under trust, is wholly meant for charitable or religious purposes, wherein exemption from income tax is available, subject to certain conditions - Further, charitable purpose is defined under Section 2 (15) of the Income Tax Act Charitable purpose includes relief of the poor, education, yoga, medical relief, preservation of environment, etc. and the advancement of any other object of general public utility. Further, in the facts of the case, it is admitted that the service tax has been provided for civil construction of school building or hospital building to a charitable institutions or Trust registered under Section 12 AA of the Income Tax Act and the said activities are covered under the definition of Charitable Purpose under the Income Tax Act - The said activities are exempt under clause 2(k) of N/N.25/2012-ST. Conclusion - The religious use includes providing of education, and medical aid, which reduces human suffering. Accordingly, the Appellant is entitled to exemption with respect to aforementioned works contract service provided to the Trusts registered under Section 12A/12AA of the Income Tax Act. Demand with penalty set aside - appeal allowed.

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• Central Excise

• 2025 (3) TMI 501
  Withholding of refund alongwith interest despite the order of CESTAT - non-implementation of refund order - principles of unjust enrichment - HELD THAT:- The petitioner duly responded to the said show cause notice contending therein that the proposal for rejection of refund is highly arbitrary, inasmuch as, the credit was reversed with protest at the instance of the Department and consequent upon setting aside of the order of the Commissioner i.e., the Order-in-Original, by the learned tribunal; the petitioner-Company only wanted restoration of the said position. In response to the reply to the show cause notice, vide Annexure-6 i.e., letter dated 14/15.09.2022, the Assistant Commissioner, without adjudicating the issue, and without considering the reply to the show cause, only intimated the petitioner that the Department has filed an appeal before the High Court challenging the said Order-in-Appeal. To this letter, the petitioner also replied that in the absence of any stay order, implementation of the order of the learned Tribunal by way of giving refund cannot be delayed on any pretext. However, only on the aforesaid pretext, the refund has not been made. Admittedly, the show cause notice dated 11.08.2022 (Annexure-5) was duly replied by the petitioner, however, without adjudicating the show cause notice, the respondent-Department just delayed the matter of refund and forced the petitioner-company to knock the door of this Court. Accordingly, non-refund of the amount which was reversed by the petitioner on protest is unjust enrichment and is wholly arbitrary and also without jurisdiction. Conclusion - i) Compliance with a Tribunal s order is mandatory unless stayed by a higher authority. Procedural delays or pending appeals do not justify non-compliance. ii) The respondent-Department is directed to refund alongwith interest. Application allowed.

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• 2025 (3) TMI 500
  Prayer quashing and setting aside the order-in-original on the ground that the same was passed by the adjudicating authority contrary to the directions issued by the Central Excise and Service Tax Appellate Tribunal - Central Excise duty on the value of free issue material supplied by the principal manufacturers for the manufacture of the intermediate goods on job work basis - HELD THAT:- The respondent is not able to justify the stand of the respondent in not following the directions of the CESTAT and deciding the matter on merits. It is true that the respondent has passed the impugned order without understanding the difference between the manufacture of the final product by the principal manufacturer using the free goods supplied by the end user which were the facts before the Hon ble Apex Court in case of Ujagar Prints and others v. Union of India and others [ 1988 (11) TMI 106 - SUPREME COURT ] and the job work done on the intermediate products as in the facts of the present case done by the petitioners and final product manufactured by the principal manufactures using such intermediate product. In such circumstances, the CESTAT has rightly applied the decision in case of M/s. International Auto Ltd.(supra) and the matter was only remanded for the purpose of verification of the duty paid by the principal manufacturer on the final product including the intermediate goods upon which the job work was done by the petitioners. Conclusion - The adjudicating authority s order was invalid due to non-compliance with CESTAT s directions. The case was remanded for de novo adjudication by a different officer, with specific instructions to verify the duty payment by the principal manufacturer as per CESTAT s mandate. Petition disposed off.

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• 2025 (3) TMI 499
  Levy of penalty u/r 26(1) of the Central Excise Rules, 2002 - clandestine removal - transporting excisable goods without proper invoices - case of appellant is that the Revenue failed to prove that appellant were aware that the goods in question, which were transported by them, were liable for confiscation and excise duty was not paid on those goods - HELD THAT:- Non-carrying of invoices does not lead to presumption that goods are liable for confiscation. According to him the transporters are not supposed to be experts or well conversant with the excise law. Therefore, the adjudicating authority and the learned Commissioner have wrongly presumed the collusion in this case between the manufacturer and the appellant which has no basis and the impugned order based on this reason is not sustainable. It is pertinent to note that the transporter, who is engaged in transportation of excisable goods cannot escape from their responsibility to ask for invoices from their client for the goods which they used to transport. In the case of Shri Ajay S. Singhal, Shri Sandesh T Bhingrade, Shri Amrit Kumar Chauhan vs. CCE, Vapi [ 2013 (9) TMI 654 - CESTAT AHMEDABAD] , the Tribunal held so far imposition of penalty upon Shri Amrit K. Chauhan (Transporter) is concerned, it is the case of the appellant that he was not knowing that the goods cleared clandestinely by the main party were liable to seizure and confiscation under the Central Excise law. However, it is evident from his statement recorded during the course of investigation that entries made in the note pad maintained for clandestine removals showed the transportation made by him in all such clearances. It is admitted by him that he did not know the exact address and name of concern where the ingots were delivered as he had not issued any lorry receipts. It is also accepted by him that freight charged by him from the main party was received in cash. Therefore, the conduct and act of the transporter is not free from doubt as he was not maintaining any written records like lorry receipt, register etc. so that clandestine activities done by the main party could not be detected by any agency. Thus, no error has been committed by the adjudicating authority and the learned Commissioner in arriving at the conclusion that the appellant was very much aware of the clandestine removal being undertaken by M/s. Moonlight Tube Industries and the plea of the appellant cannot be accepted that he was not aware of clandestine removal by the main appellant. Conclusion - The appellant was liable for the penalty under Rule 26(1) due to their knowledge of the clandestine nature of the goods. Appeal dismissed.

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• 2025 (3) TMI 498
  Dismissal of the appeal for non-prosecution - adjournment of matter beyond three times which is the maximum number statutorily provided - Section 35C (1A) of the Central Excise Act, 1944 - HELD THAT:- In case of Ishwar lal Mali Rathod [ 2021 (9) TMI 1301 - SUPREME COURT] condemning the practice of adjournments sought mechanically and allowed by the Courts/Tribunal s Hon ble Supreme Court has held that considering the fact that in the present case ten times adjournments were given between 2015 to 2019 and twice the orders were passed granting time for cross examination as a last chance and that too at one point of time even a cost was also imposed and even thereafter also when lastly the High Court passed an order with extending the time it was specifically mentioned that no further time shall be extended and/or granted still the petitioner defendant never availed of the liberty and the grace shown. In fact it can be said that the petitioner defendant misused the liberty and the grace shown by the court. It is reported that as such now even the main suit has been disposed of. In view of the circumstances, the present SLPs deserve to be dismissed and are accordingly dismissed. Conclusion - There are no justification for adjourning the matter beyond three times which is the maximum number statutorily provided - the appeal is dismissed for non prosecution in terms of Rule 20 of CESTAT Procedure Rules, 1982. Appeal dismissed.

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• 2025 (3) TMI 497
  Remission of duty - Liability to pay excise duty for the goods not reached to the destination - transit loss upto 1% - entitlement to avail benefit of condonation of transit loss upto 1% in the light of Circular dated 30.10.1985 - HELD THAT:- The Ld. Commissioner after considering the various circulars and the Notifications has held that the said circular dated 30.10.1985 is still valid and the same has not been withdrawn till date and consequently has allowed the transit loss upto 1%. We also find that this issue has been considered by the Hon ble High Court of Gujarat in the case of Indian Oil Corporation Ltd. Vs. Union of India Ors. [ 2024 (12) TMI 151 - GUJARAT HIGH COURT] , wherein the Hon ble Gujarat High Court dealt with the same issue in the case of Indian Oil Corporation, the Hon ble Gujarat High after considering all the Circulars issued by the Department from time to time and the various Rules providing for warehousing provisions had held in view of the Notification No. 46/2001 not being disturbed by the CBEC read with Circular No. 261 dated 30.10.1985, the petitioner would be entitled to transit loss upto 1% for non payment of duty on the products transferred from the refinery/factory to the place of storage for the purpose of export only. Conclusion - The applicability of Circular dated 30.10.1985 to export warehousing affirmed, allowing for condonation of transit loss up to 1%. There is no infirmity in the order passed by the Commissioner of Central Excise, Chandigarh - Appeal of Revenue dismissed.

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• 2025 (3) TMI 496
  Invocation of extended period - Short payment of duty - whether the demand for excise duty, as raised by the show-cause notice dated 07.07.2015, is barred by the extended period of limitation? - HELD THAT:- The appellant is contesting that the demand is barred by limitation. The audit was conducted and a spot memo was issued on 25.07.2012, and which was replied by the appellants on 27.09.2012. Thereafter, a show-cause notice was issued on 07.07.2015 for the period June, 2010 to December, 2013, by invoking extended period of limitation. All the facts were in knowledge of the Department by way of audit conducted by them. In that circumstances, the extended period of limitation is not invokable. The same view was taken by this Tribunal in the case of M/s Mageba Bridge Products Private Limited i(Unit III) [ 2024 (5) TMI 1054 - CESTAT KOLKATA] , wherein this Tribunal has observed Even under the self assessment regime, scrutiny of the ER-1 Returns are still to be taken up by the Range officials. There is nothing to indicate that the self-assessed ER-1 were taken up for scrutiny and any query was raised towards the assessable value adopted by the appellant for their clearances. Extended period of limitation - penalty - HELD THAT:- The demand is barred by limitation, accordingly, the same is set aside. Consequently, no penalties are imposed on the appellants. The impugned order is set aside - appeal allowed.

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• 2025 (3) TMI 495
  Clandestine removal - manufacture and clearance of ready-made garments under the brand-name of foreign companies without payment of CE duty for export and such clearance were not made under cover of invoices under Rule 11 of the CE Rules, 2002 - ims-declaration of goods - entitlement to SSI exemption under N/N. 8/2003 CE dated 01.03.2003 - HELD THAT:- The allegations are not supported by any iota of evidence to show that the appellant has cleared goods manufactured in their factory in domestic market and procured goods for export from other sources. Neither any enquiry was made to that effect from the domestic market where the goods have been allegedly sold and from where the goods have been procured for export. 16. Moreover, if manufactured goods were sold by the appellant they are entitled for drawback claim at the rate of 7% to 8% and if goods are procured from outside market they are entitled for draw back claim of 3-4%. As appellant is a manufacturer of goods, there is no sense that the manufactured goods will be cleared in domestic market and from the domestic market appellant will procure goods for export. The allegation made against the appellant by the authorities is without any supportive evidence. In that circumstances, the allegation against the appellant is not sustainable. Moreover, as appellant was not required to take CE Registration and the appellant was exempted for taking Registration vide letter dated 12th July, 2011 therefore, the appellant was not required to issue invoices under Rule 11 of the CE Rules, 2002. In that circumstances, the whole of the demand confirmed against the appellant are not sustainable. Consequently, no penalty is imposable on the appellants. Conclusion - i) The allegation made against the appellant by the authorities is without any supportive evidence. In that circumstances, the allegation against the appellant is not sustainable. ii) Moreover, as appellant was not required to take CE Registration and the appellant was exempted for taking Registration vide letter dated 12th July, 2011 therefore, the appellant was not required to issue invoices under Rule 11 of the CE Rules, 2002. The impugned order is set aside - appeal allowed.

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• 2025 (3) TMI 494
  Denial of utilization of CENVAT Credit for payment of duty during the defaulted period in terms of Rule 8(3A) of Central Excise Rules, 2002 - HELD THAT:- The Hon ble High Court in COMMISSIONER OF CGST AND CX, HOWRAH COMMISSIONERATE VERSUS M/S. RUSTECH PRODUCTS PRIVATE LIMITED [ 2024 (7) TMI 814 - CALCUTTA HIGH COURT] has held that matter should be kept pending and is to be taken only after the Special Leave to Appeal No. 16523/2015 is decided by the Hon ble Apex Court. It is found that the issue in the case of Indsur Global Ltd. [ 2024 (7) TMI 1559 - SC ORDER (LB)] has already been decided by the Hon ble Supreme Court. In these circumstances, the issue is presently not pending before the Hon ble Supreme Court. Thus, in our view, there is no bar in taking up the issue for a decision based on the available documents. The demand of duty along with interest confirmed in the impugned order is not sustainable and accordingly, we set aside the same. As the demand for recovery of CENVAT Credit during the defaulted period is not sustainable, consequently, we hold that no penalty is imposable on the appellant. Conclusion - The ultra vires declaration of Rule 8(3A) by the High Courts prevents the denial of CENVAT Credit utilization during the defaulted period. Appeal allowed.

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• CST, VAT & Sales Tax

• 2025 (3) TMI 493
  Attachment of personal properties of directors of a company under the Gujarat Value Added Tax Act, 2003 - lifting of corporate veil - HELD THAT:- This Court finds that this very issue came up for consideration before the Division Bench of this Court in the case of MR Choksi [ 2004 (6) TMI 642 - GUJARAT HIGH COURT ] where it has been held As regards the faint plea of lifting the corporate veil, as per the settled legal position, the corporate veil is not to be lifted lightly. It is only when there is strong factual foundation for lifting the corporate veil that the question of examining the applicability of the principle of lifting such veil would be required to be examined. In neither of the two petitions raising the controversy, the authorities have passed any specific order fastening the liability on the Directors personally, much less any factual foundation has been laid to invoke the doctrine of lifting the corporate veil. Hence it is not necessary to dilate on the said principle any further. The present issue is no longer res integra and this Court has repeatedly and emphatically held that the personal properties of a Director cannot be attached to secure the dues of the Company. Besides, there is no factual foundation whatsoever, for this Court to lift the corporate veil and permit the respondents to go after the Directors of the Company, whose dues the respondents seek to secure by way of the attachment in question. The impugned attachment orders dated 19.01.2013, 17.02.2014 as well as attachment order dated 01.05.2015 are hereby quashed and set aside - Petition allowed.

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• Indian Laws

• 2025 (3) TMI 492
  Alleged wrongful confinement - seizure of 1280 grams of brown powder (allegedly heroin) - Sections 8(C), 21 and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - HELD THAT:- It is a settled principle of law that the jurisdiction conferred upon a Court under Section 439 CrPC is limited to grant or refusal of bail pending trial. In the following decisions, this Court has time and again held that the sphere of consideration, when exercising power under this Section pertains only to securing or restricting liberty of the person in question. In RBI v. Cooperative Bank Deposit A/C HR. Sha [ 2010 (8) TMI 1191 - SUPREME COURT ], this Court held that the High Court order, directing the Cooperative Bank to distribute the money recovered from the accused, to persons who had made deposits less than Rs.10,000/- as and when such recoveries are made, passed in a Bail Application had far-reaching consequences and was beyond the scope of Section 439 CrPC. In State v. M. Murugesan [ 2020 (1) TMI 1719 - SUPREME COURT] , this Court again reiterated that the Court s jurisdiction is limited to grant or refusal to grant bail, pending trial. In this case, the High Court, while taking a decision on bail application, had retained the file and directed the State to form a committee and seek its recommendations on the reformation and rehabilitation of convict/accused persons. The Court held that while ordering such directions the High Court has committed grave illegality and held that the jurisdiction under Section 439 CrPC ends when the bail application is finally decided. Time and again, the act of Courts overstepping the bounds of jurisdiction, has clearly been frowned upon. The instant case is another such example. It is undisputed that the application for bail filed before the High Court had become infructuous since the District Court had already released the respondent herein. The straightforward course of action that ought to have been adopted, therefore, was that the bail application would have been dismissed as such. No occasion arose for the Court to pass an order delving into the aspects of impermissibility of retesting and/or wrongful confinement. Not only was the same outside the bounds, as discussed above, but it is erroneous on a further count that since the application was infructuous, the exercise of jurisdiction was entirely unjustified and contrary to law. Conclusion - The High Court s order of compensation was without legal authority and set it aside. Application disposed off.

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• 2025 (3) TMI 491
  Challenge to order demanding 10% deposit of the grant-in-aid and interest from the petitioner, as a precondition for considering their representation - breach of terms and conditions of the concession - HELD THAT:- In the present case, this Court finds that the demand to deposit 10% of the total grant-in-aid concession provided to the petitioner, for hearing of the representation is neither founded in the statute nor the same is at an appellate stage. Learned Standing Counsel is unable to point out any provision under law under which the State Government/opposite party No.1 would had demanded the pre-deposit for disposal of the representation of the petitioner. Further, this Court is unable to appreciate the conduct of the opposite parties in demanding the said pre-deposit at the belated stage of April, 2023, especially when the representation had been pending since December, 2020. Further, this Court finds that the impugned order dated 24.04.2023 and consequential order dated 26.05.2023 demanding deposit of 10% of the total amount of grant-in-aid has been passed by the opposite party nos.1 and 3, respectively, without any reasoning or affording any opportunity of hearing to the petitioner. It is a trite law that no order prejudicing the interest of a person resulting in civil consequences can be passed without affording an opportunity of hearing. It is not the case of opposite parties that opportunity of hearing was afforded to the petitioner or that the present case is such wherein notice of hearing is to be dispensed with. This Court finds that no opportunity of hearing was provided to the petitioner before the passing of the impugned order dated 24.04.2023 and consequential order dated 26.05.2023, whereby the petitioner had been directed to deposit Rs. 40,75,035.90 as and towards pre-deposit for hearing of their representation dated 03.12.2021. Conclusion - i) The demand for a pre-deposit must be grounded in statutory provisions and is typically appropriate at the appellate stage, not during initial representation consideration. The orders dated 24.04.2023 and 26.05.2023 demanding a 10% pre-deposit were quashed. ii) The authorities were directed to consider the petitioner s representation dated 03.12.2021 without insisting on any pre-deposit, within three months. iii) The Court refrained from commenting on the merits of the cancellation order dated 05.02.2021, focusing solely on the legality of the pre-deposit demand. Petition allowed.

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• 2025 (3) TMI 490
  Dishonour of Cheque - whether in a case under Section 138 of N.I. Act, against the Partnership Firm, compounding by one partner would be in discharge of the entire liability of the Partnership Firm or it can be apportioned to the partners individually? - HELD THAT:- Section 142 of N.I. Act deals with cognizance of offence and provides that the Complaint under Section 138 of NI Act in writing, can be made by the Payee or holder in due course. The Legislature in its wisdom, has used the word Complaint and not Suit in Section 142 of N.I. Act thereby indicating that the bar created for maintaining a Suit in Section 69 of the Partnership Act by or against an unregistered Firm, cannot be stretched and applied to maintain a criminal proceeding under Section 138 of N.I. Act. The Apex Court in B.S.I. Ltd. and Another vs. Gift Holdings Pvt. Ltd. and Another, [ 2000 (2) TMI 719 - SUPREME COURT ], interpreted the word Suit while deciding maintainability of a proceeding under Section 138 of NI Act in the context of ban imposed by the Sick Industrial Companies (Special Provisions) Act. It provides that no Suit for Recovery of Money or Enforcement of any security against the Industry, Company or Guarantee in respect of any loan or advance granted to the Industrial Company shall lie if in respect of the Industrial Company, an inquiry under Section 16 is pending or any scheme referred to under Section 17, is under preparation or consideration. The Court observed that the word Suit envisaged in Section 22 (1) cannot be stretched to criminal prosecution as it is neither for recovery of money nor for enforcement of any security, etc. Section 138 of NI Act is a penal provision for commission of an offence which entails conviction and sentence on proof of the guilt in duly conducted criminal proceedings. Once the offence under Section 138 of NI Act is completed, the prosecution initiated is not for recovery of the amount covered by the Cheque, but for bringing the offender to penal liability. The Kerala High Court in Abdul Gafoor vs. Abdurahiman, [ 1999 (3) TMI 657 - KERALA HIGH COURT ], held that Section 138 is not a Suit and the bar of Section 69 (2) of the Partnership Act would not operate in such cases. It was further observed that the effect of non-registration of a Partnership Firm, is applicable only to the cases involving civil rights and has no application to criminal cases. Whether a Partnership Firm is a legal entity, which can sue or be sued in its own name? - HELD THAT:- Section 141 of N.I. Act read with Explanation, makes it abundantly clear that when an offence is committed by a Company or a Firm, every member who is responsible and in charge of the affairs of the Company/Firm is guilty of the offence committed under Section 138 of NI Act - the Notice under Section 251 N.I. Act was framed on 18.04.2018 only against the two partners and not the Partnership Firm, which has not been challenged by either Party. It is settled that in the absence of Company being arraigned as an accused, the Directors cannot be held liable for the offence committed by a company - Since the Notice under S.251 Cr.P.C. has not been framed against the Partnership Firm, this itself is a sufficient ground for discharge of the Petitioner. Whether compounding of Offence by one Partner would result in complete discharge of the Liability of the Partnership Firm against all the Partners? - HELD THAT:- The Firm is not a legal entity; it is a collective or compendious name for all the partners. In other words, a Firm does not have any existence away from its partners, though by virtue of S.141 NI Act, it can be sued in its name. A Decree in favour of or against a Firm has the same effect as a Decree in favour of or against the partners. When the Firm incurs a liability, it can be assumed that all the partners were incurring that liability and so the partners remain liable jointly and severally for all the acts of the Firm. Therefore, the liability of the partners is joint and several. In Ashutosh vs State of Rajasthan Ors., [ 2005 (8) TMI 725 - SUPREME COURT ], it had been observed by the Apex Court that it is open to a creditor of the Firm to recover the debt from any one or more of the partners. Each partner shall be liable as if the debt of the Firm has been incurred on his personal liability - Therefore, when there is a compromise by one partner, it has to be for and on behalf of the Partnership Firm and there cannot be any partial settlement with one partner, as has been done in the present case. In the present case, both the partners, namely, Petitioner/Satish Kumar Pawa and the Respondent No. 4/Sant Lal Agarwal, were jointly and severally responsible for the liability incurred by the Partnership Firm, meaning thereby that each is liable for the entire liability individually as well as jointly. The partners may have agreed to be entitled to the share profit loss in a particular ratio, but their legal liability towards the third person is joint and several and there can be no apportionment. Once the matter stands compromised for whatever the amount, the offence is compounded towards all the existing liabilities of the Partnership Firm; nothing survives in the Complaint which has to be necessarily disposed of as compromised against the second partner/Petitioner as well. Thus, Section 257 of Cr.P.C. do not come to the rescue of the Complainant/Respondent No. 2 in the case herein. Conclusion - The principle that compounding by one partner results in the discharge of the entire liability of the partnership firm and its partners, given the joint and several liability under Section 25 of the Partnership Act. The complaint under Section 138 of N.I. Act filed by the Respondent No. 2 is quashed/disposed of as compounded and the Petitioner/Satish Kumar Pawa is hereby, acquitted - petition allowed.

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• 2025 (3) TMI 489
  Seeking to attach the suit property - validity of mortgage which was created in favour of the erstwhile assignor SBI - principles of equity - HELD THAT:- In an equitable mortgage, the borrower can sell the mortgage property to the third party without knowledge of the lender as in an equitable mortgage, the mortgage is created by depositing the title deed with the lender as a security for the loan amount. Registration is not compulsory for an equitable mortgage - In the present proceedings, in the first transaction the SBI had collateral security by way of equitable mortgage by depositing title deed. However, admittedly, the title deed of the property was not deposited with the SBI or ARCL being the assignee. The only document referred by the ARCL was that of lodgment receipt. In the Indian Bank [ 2009 (7) TMI 1404 - MADRAS HIGH COURT ] the Court held that the Indian Bank in its apparent hurry to enter into the transaction had omitted to take precautions and because of such negligence, the owner of the property induced Punjab National Bank to advanced loan by creating equitable mortgage by deposite of original title deeds. Therefore, Appellate court has rightly applied law to derive conclusion that time the Indian Bank had not taken a proper care. The main issue was whether a first mortgagee (second defendant) should be postponed to a second mortgagee (plaintiff company) due to gross negligence in allowing the title deeds to remain in the possession of the mortgagor, which enabled the mortgagor to obtain a subsequent loan from the plaintiff company? The Madras High Court confirmed the lower court s decision in Madras Building company v. Rowlandson Anr. [ 1891 (11) TMI 3 - MADRAS HIGH COURT ] and dismissed the appeal, ruling in favour of the plaintiff company. The Court held that the second defendant (first mortgagee) should be postponed to the plaintiff company s mortgage due to gross negligence in allowing the title deeds to be out of his possession, thereby enabling the mortgagor to fraudulently obtain a loan from the plaintiff company. The Court based its decision on several key points. Conclusion - The Appellate Court had rightly allowed the appeal by setting aside the impugned judgment and order - Petition dismissed.

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• 2025 (3) TMI 488
  Direction to conclude the proceeding within a stipulated time - application u/s 14 of the SARFAESI Act, 2002 filed by the petitioner before learned Chief Judicial Magistrate, District Balrampur (C.G.) is pending consideration since 20.11.2024 - HELD THAT:- This petition is disposed of with a direction to the concerned Court i.e. Chief Judicial Magistrate, District Balrampur (C.G.) to make all endeavours to conclude the proceedings of pending Criminal MJC No. 52/2024 within statutory period. Petition disposed off.

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