TMI Tax Updates - e-Newsletter
March 8, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy FEMA Service Tax Central Excise Indian Laws

TMI Short Notes

1. Ensuring Fair Tax Practices: An Analysis of Clause 36 in the Income Tax Bill, 2025 vs. Section 40A of the Income Tax Act, 1961

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2. Understanding various Deductions from Business Income: Clause 32 of the Income Tax Bill, 2025 vs. Section 40A of the Income-tax Act, 1961

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3. Tax Compliance and Non-Deductibility of certain expenditure: Clause 35 of the Income Tax Bill, 2025 vs. Section 40 of the Income-tax Act, 1961

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4. Building, etc., partly used for business, etc., or not exclusively so used: Clauses 28 and 33 of the Income Tax Bill, 2025 vs. Section 38 of the Income-tax Act, 1961

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5. The Evolution of Business Expenditure Deductions: Insights from Clause 34 of the Income Tax Bill, 2025 vs. Section 37 of the Income Tax Act, 1961

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6. Deduction from Business Income: Clause 32 of the Income Tax Bill, 2025 vs. Section 36 of the Income Tax Act, 1961

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7. Bad and doubtful debt deductions - Clause 31 of the Income Tax Bill, 2025 vs. Section 36 of Income Tax Act, 1961

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8. Digital Age Tax Enforcement: Understanding the Implications of Clause 247 of the Income Tax Bill, 2025 vs. Section 132 of the Income Tax Act, 1961

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Articles

1. Supreme Court upholds Arrest Powers under Customs and GST Acts with Robust Safeguards

   By: Bimal jain

2. ARREST UNDER CUSTOMS AND GST ACTS: COMPLETE ANALYSIS OF RADHIKA AGARWAL JUDGMENT

   By: Ansh Mishra

3. Why Online Trademark Lookup is Essential Before Business Registration?

   By: Ishita Ramani

4. Trading & Manufacturing Businesses: Save Money on Imports!

   By: Pradeep Reddy

5. COMPETITION COMMISSION OF INDIA (MANNER OF RECOVERY OF PENALTY) REGULATIONS, 2025

   By: DR.MARIAPPAN GOVINDARAJAN

6. Vertical Green Belts (VGBs) - Whether such projects ever had been implemented in any corner of the world or not?

   By: YAGAY andSUN

7. Special Insights in support of ‘Vertical Green Belts’ in Indian Industrial Areas and Zones.[Thinking out of Box – Original Idea from YAGAY & SUN]

   By: YAGAY andSUN

8. Horizontal Green Belt (Existed) vs Vertical Green Belt (Suggested)Pilot Project Worth for Implementation by MOEFCCThinking out of Box – Original Idea from YAGAY & SUN

   By: YAGAY andSUN

9. Vertical Green Belts in the Context of Indian Environmental Laws' Consents & Guidelines.[Thinking ‘OUT OF BOX’ – ORIGINAL IDEA from YAGAY & SUN][Expected Results: Mitigation in Pollution and less usage of Industrial Land]

   By: YAGAY andSUN

10. Export certification requirements for food products.

   By: YAGAY andSUN

11. Export of Cucumbers and GherkinsHS Code: 200110 (Prepared or Preserved by Vinegar or Acetic Acid)

   By: YAGAY andSUN

News

1. GST Council reconstitutes GoM on GST revenue analysis, expands ToR

2. Budget aligns with aspirations of business community in J&K: KCCI

3. Congress leaders to meet on Monday to chalk out strategy for Parliament's Budget session

4. Siddaramaiah presents record 16th budget, defends Cong guarantees as 'strategic investments'

5. Karnataka CM Siddaramaiah slams BJP for calling his budget 'Halal'

6. Abdullah presents JK's first UT Budget, proposes series of welfare, development measures

7. Opposition slams government for prioritising 'appeasement over development' in state budget

8. BJP terms Karnataka budget 'blatant appeasement', inspired by Cong's 'new icon' Aurangzeb

9. J&K govt to introduce new hydropower policy to attract private investment: CM Omar Abdullah

10. CM Siddaramaiah announces several welfare schemes for minorities

11. J&K budget unveils series of welfare and development initiatives for 2025-26

12. Abdullah presents JK's first budget in 7 years with Rs 1.12 lakh cr outlay, terms it roadmap for growth

13. Omar Abdullah unveils fiscal reforms to strengthen J-K's economy

14. Thane civic body presents Rs 5,645 crore budget; focus on better tax compliance, infrastructure

15. Omar's budget comes under fire from opposition; jibes of 'deception', 'failure' hurled

16. Abdullah presents JK's first budget in 7 years with 1.12 lakh cr outlay, terms it roadmap for growth

17. J&K chief minister presents Rs 1.12 lakh-cr budget with focus on inclusive growth

18. Siddaramaiah says his schemes are emphatic answers to social, economic questions

19. K'taka Budget: Siddaramaiah defends guarantee schemes, targets Centre for state's fiscal challenges

20. Roadmap for economic growth: CM Omar Abdullah presents JK's first budget in six years

21. CM Siddaramaiah expresses gratitude to Karnataka people before presenting budget

22. Nagaland CM presents Rs 24,849 crore budget for FY'26

23. Haryana: Budget session from Mar 7 likely to be stormy

24. India, Ireland agree to set up Joint Economic Commission to boost trade ties

25. Rs 17,505 cr given to 2.38 cr women under 'Ladki Bahin' scheme till Dec 2024: Economic Survey

26. DPIIT and Mercedes-Benz India Join Forces to Drive Innovation, Sustainability, and Road Safety

27. Maharastra’s economy to clock 7.3 per cent growth in 2024-25: Economic Survey

28. Give approval to Honey Singh's event in Indore only after payment of tax, says mayor

29. Taxpayers declare over 29,000-cr worth foreign assets; pay Rs 1K-cr tax in special I-T dept campaign

Notifications

GST - States

1. (4-B/2025)No.FD 05 CSL 2025(PS-1) - dated 14-2-2025 - Karnataka SGST

Seeks to bring rules 2, 8, 24, 27, 32, 37, 38 of the Karnataka Goods and Services Tax (Amendment) Rules, 2024 in to force.

2. (01/2025)No.FD CSL 2025 - dated 11-2-2025 - Karnataka SGST

State tax Notification for waiver of the late fee.

3. (05/2025)-No.KGST.CR.01/17-18 - dated 13-1-2025 - Karnataka SGST

Seeks to extend the due date for furnishing FORM GSTR-7 for the month of December, 2024

4. (04/2025)-No.KGST.CR.01/17-18 - dated 13-1-2025 - Karnataka SGST

Seeks to extend the due date for furnishing FORM GSTR-6 for the month of December, 2024

5. (06/2025)-No.KGST.CR.01/17-18 - dated 13-1-2025 - Karnataka SGST

Seeks to extend the due date for furnishing FORM GSTR-8 for the month of December, 2024

6. S.O. 8/P.A.5/2017/S.9/2025 - dated 11-2-2025 - Punjab SGST

Amendment in Notification No. S.O.16/P.A.5/2017/S.9/2017 dated the 30th June, 2017

7. S.O. 13/P.A.5/2017/Ss.9,11,15 and 148/2025 - dated 11-2-2025 - Punjab SGST

Amendment in Notification No. S.O.37/P.A.5/2017/s.11/2017, dated the 30th June, 2017

8. F.12(5)FD/Tax/2025-122 - dated 27-2-2025 - Rajasthan SGST

Seeks to bring Rules 2, 23, 26, 31, 36, 37 (ii) of notification no. F.12(1)FD/Tax/2024-88 dated 19.07.2024 and Rule 2 of notification no. F.12(1)FD/Tax/2024-93 dated 27.09.2024 into force

Income Tax

9. 18/2025 - dated 6-3-2025 - IT

Exemption from specified income U/s 10(46) of IT Act 1961 - ‘The Delhi Building and Other Construction Workers Welfare Board’

Highlights / Catch Notes

GST

• Goods and Services Tax Registration Cancellation Notice Quashed for Failing to Provide Specific Reasons Beyond Mere Conclusions

  Case-Laws - HC : The HC set aside both the show cause notice (SCN) dated 01.11.2024 and the consequential final order dated 16.01.2025 cancelling the petitioner's registration. The Court determined that the SCN was legally deficient as it merely stated conclusions about regulatory violations without providing factual details or substantive reasons supporting those allegations. This contravened established principles of natural justice articulated in a previous HC ruling (W.P.No.20080 of 2024). The Court emphasized the critical distinction between "reasons" and "conclusions," finding that departmental authorities had improperly substituted conclusions for actual reasoning. As the SCN formed the foundation for the final cancellation order, both were deemed unsustainable under judicial scrutiny.
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• GST Circular Struck Down for Retroactively Restricting Refund Applications Under Section 54

  Case-Laws - HC : The HC struck down para 2(2) of Circular No. 181/13/2022-GST dated 10.11.2022 as ultra vires Section 54 of the GST Act and violative of Article 14 of the Constitution. The circular had improperly applied restrictions from the 13.7.2022 notification to all refund applications filed after 13.7.2022, even for periods predating the notification. The Court found this created an arbitrary and discriminatory classification among assessees based solely on filing date, despite applications being within the statutory limitation period. Following its precedent in Ascent Meditech, the HC ruled that such artificial classification was impermissible, particularly as the notification itself had prospective effect commencing July 18, 2022. Petition allowed.
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• Appellate Authority's Rejection of GST Appeal Set Aside; 5-Day Delay Condoned for Small Businessman Under Section 73(9)

  Case-Laws - HC : The HC set aside the appellate authority's rejection of petitioner's appeal on limitation grounds. Despite a 5-day delay in filing the appeal against an order under Section 73(9), the Court found the petitioner, a small businessman, had demonstrated bona fides by making the requisite pre-deposit and seeking condonation of delay due to lack of familiarity with the GST portal. The Court held that the appellate authority erred in its strict interpretation of the condonation provision and directed it to hear and decide the appeal on merits within 8 weeks after providing the petitioner an opportunity of hearing. The petition was accordingly disposed of.
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• Tax Authority Must Separately Assess Section 74 CGST/SGST Applicability For Each Year And Credit Taxes Already Paid

  Case-Laws - HC : The HC disposed of the petition, directing the Competent Authority to consider separately for each year whether invocation of Section 74 of CGST/SGST Acts was warranted, particularly for 2018-19 through 2021-22 where petitioner claimed no justification existed. The Authority must credit any taxes already paid when finalizing proceedings. The Court explicitly mandated that petitioner be afforded an opportunity for personal hearing before the Adjudicating Authority renders its decision. The consolidated show cause notice covering 2017-18 through 2021-22 cannot stand in its current form and requires individualized assessment of each tax year's circumstances.
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• Remand for Fresh Decision on Including System Use Gas Value in Re-gasification Services Consideration Under Section 15

  Case-Laws - AAAR : The AAAR set aside the impugned ruling dated 11.5.2022 and remanded the matter back to the GAAR for fresh decision. The case concerned whether value attributable to System Use Gas (SUG) stipulated in customer agreements should be included in consideration for re-gasification services under section 15 of the CGST Act. The AAAR noted that its powers under section 101 of CGST Act are similar to those under section 35A of Central Excise Act and section 85(5) of Finance Act, relying on Gujarat HC precedent in Commissioner of Central Excise v. Medico Labs, holding that established jurisprudence may be considered pari materia when determining the scope of AAAR powers.
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• GST Applies to Canteen Charges from Contractual Workers, Not Direct Employees Under Factories Act Section 46

  Case-Laws - AAAR : The AAAR dismissed the appeal, holding that GST is applicable on canteen charges recovered from contractual workers, but not from direct employees. While providing canteen facilities is mandatory under Section 46 of Factories Act, the appellant failed to establish that it assumed responsibility as primary employer due to contractor's failure to fulfill statutory obligations. Evidence indicated contractors were paid gross amounts including canteen allowances. Input tax credit (ITC) remains available only for canteen services provided to direct employees under the Factories Act mandate, not for contractual workers. The AAAR rejected the appellant's reliance on Circular No. 172/4/2022-GST, as the contractual arrangement did not qualify under the specified exemptions.
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Income Tax

• Delhi Building and Construction Workers Welfare Board gets tax exemption under section 10(46) for cess, fees, and interest income.

  Notifications : The CBDT has notified "The Delhi Building and Other Construction Workers Welfare Board" for exemption under section 10(46) of the Income-tax Act, 1961. The specified exempt income includes cess received, registration and renewal fees collected from workers, and interest on bank deposits. The exemption is subject to conditions that the Board shall not engage in commercial activities, maintain unchanged activities and income nature, and file returns per section 139(4C)(g). This notification applies retrospectively to assessment years 2012-13, 2013-14, and 2014-15, corresponding to financial years 2011-12, 2012-13, and 2013-14.
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• Section 69C Prohibits Estimating Profit on Bogus Purchases as It Grants Partial Deduction for Unexplained Expenditures

  Case-Laws - HC : The HC ruled against the approach of estimating profit (at 12.5%) on bogus purchases, finding it contradictory to Section 69C of the Income Tax Act. The court reasoned that estimating profit on unproven purchases effectively grants partial deduction for those purchases, which Section 69C expressly prohibits for unexplained expenditures. The court partially ruled in favor of the revenue department regarding purchases from Neptune Trading Co. and Hari Om Traders, while ruling in favor of the assessee regarding purchases from other suppliers. The court capped the total additions at Rs. 1,00,10,773, representing the total purchases from the two specified parties, and reversed the CIT(A) and Tribunal orders to that extent.
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• Tax Authority Must Exercise Discretion When Considering Late Compounding Applications Despite 36-Month Limitation Period

  Case-Laws - HC : The HC set aside the Chief Commissioner's rejection of petitioner's compounding application, which was dismissed solely for being filed beyond the 36-month limitation period. The Court held that CBDT guidelines of 2014 do not preclude the competent authority from exercising discretion in exceptional circumstances. The authority erroneously treated the guidelines as binding statute and failed to exercise any discretion, incorrectly concluding it lacked jurisdiction to entertain applications beyond the limitation period. This approach contradicted precedents from the SC and Madras HC. The matter was remanded for reconsideration in light of Vinubhai Dobaria, requiring evaluation of all facts and circumstances to determine if discretionary compounding is warranted.
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• Tax Department Cannot Disallow Long-Term Capital Gains Exemption Under Section 10(38) Based Solely on Investigation Wing Report

  Case-Laws - AT : The ITAT ruled that the AO's addition under section 68 and denial of exemption under section 10(38) were untenable. The Tribunal found that the AO relied merely on assumptions from an Investigation Wing report without direct evidence, while ignoring evidence furnished by the assessee. Since the purchase of shares in an earlier year was accepted by revenue, and the sale occurred through the Stock Exchange with consideration received via banking channels, the sale proceeds could not be considered unexplained cash credits under section 68. Additionally, the ITAT deleted the disallowance under section 14A, noting that the AO failed to establish that investments were made using interest-bearing funds, making administrative expenditure disallowance impermissible.
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• Foreign Entity's Design Services for Plant Imports Not Taxable as Technical Fees Under India-USA DTAA Article 5 and 7

  Case-Laws - AT : The ITAT ruled that the Indian entity (RIC) was not a dependent agent permanent establishment (DAPE) under Article 5 of the USA-India DTAA, following its previous decision for AY 2011-12 where identical contractual arrangements existed. Consequently, no business income could be attributed to the foreign taxpayer for taxation in India. Regarding design and drawing services, the Tribunal determined these were integral components of plant and machinery imports, with payments received outside India. The services constituted business income under Article 7 of the DTAA, not separately taxable under Article 12. Without a PE in India, these receipts could not be taxed as business income nor classified as fees for technical services under section 9(1)(vii). Appeal decided in taxpayer's favor.
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• Trust Providing Education and Healthcare to COVID Victims' Families Qualifies for Registration Under Section 12AB

  Case-Laws - AT : The ITAT allowed the appellant's appeal against CIT(E)'s rejection of registration under s.12AB. The Tribunal found that the trust deed contained objects for charitable activities to the general public, and the trust had provided education and healthcare to families of employees who died during the COVID-19 pandemic. The ITAT held that deceased employees' family members constitute "public" with no employer-employee relationship existing between them and the appellant. Regarding the absence of a dissolution clause, the Tribunal ruled that after the insertion of s.115TD by Finance Act 2016, concerns about transfer of net assets have been addressed, making this insufficient grounds to deny registration. The CIT(E) erred in rejecting registration under s.12A and s.80G.
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• Reassessment Under Section 147 Barred After Four Years When All Material Facts Were Initially Disclosed

  Case-Laws - AT : The ITAT ruled against the revenue, quashing the reassessment proceedings initiated under section 147 after four years from the original assessment. The Tribunal determined that reopening was impermissible as the assessee had fully disclosed all material facts during the original assessment, and the reassessment was merely based on an audit objection constituting a change of opinion. On merits, ITAT rejected the revenue's contention that changing land use from cinema hall to commercial complex amounted to conversion of capital asset into stock-in-trade under section 45(2). The Tribunal clarified that entering into a development agreement does not automatically trigger section 45(2), particularly when the assessee consistently treated the property as a capital asset in its accounts and was not engaged in real estate business.
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• Reassessment Under Section 147 Invalid When AO Relies Solely on Investigation Wing Without Independent Scrutiny

  Case-Laws - AT : The ITAT quashed reassessment proceedings initiated under s. 147 where the AO had reopened assessment based solely on information from the Investigation Wing without independent application of mind. The Tribunal found that the assessee had fully disclosed all material facts during original assessment proceedings, substantiating the identity and creditworthiness of the loan creditor. The AO had already obtained information under s. 133(6) from Cambridge Financial Services Pvt. Ltd. during the original assessment completed under s. 143(3). Following Punia Capital (P.) Ltd., the ITAT held that reopening after four years requires failure to disclose material facts, which was absent in this case, as the AO relied merely on "reason to believe" without establishing any non-disclosure by the assessee.
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• Reassessment Under Section 147 Quashed: AO's "Borrowed Satisfaction" Without Independent Inquiry Deemed Mere Suspicion

  Case-Laws - AT : The ITAT upheld the CIT(A)'s decision quashing the reassessment proceedings under s.147 initiated after four years. The Tribunal found that the AO's reasons for reopening were based on borrowed satisfaction without independent application of mind, constituting mere "reasons to suspect" rather than "reasons to believe." The AO failed to conduct preliminary inquiries by examining the assessee's and M/s Frankdeal Traders Pvt. Ltd.'s tax returns and audited financial statements before issuing the notice. Additionally, the AO erroneously alleged the assessee received accommodation entries during FY 2010-11, when the assessment order itself acknowledged these entries were received by M/s Frankdeal Traders up to FY 2008-09. This contradiction rendered the reassessment proceedings illegal and bad in law.
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Customs

• New Import Procedures for Pet Dogs and Cats Streamline Process Under Livestock Importation Act, 1898

  Circulars : The CBIC has implemented new procedures for importing pet dogs and cats under the Live-stock Importation Act, 1898. The final "No Objection Certificate" will now be issued round-the-clock at the port of entry itself, eliminating the need for pet owners to visit Animal Quarantine and Certification Service Stations (AQCS) post-import. Pet owners must still obtain advance NoC from respective AQCS after submitting required documents and providing prior arrival information via email. Imports are restricted to designated ports including Delhi, Bengaluru, Hyderabad, Kochi airports, and Mumbai, Chennai, and Kolkata seaports/airports. This facilitation measure aims to enhance pet welfare and reduce complications for owners importing pets under baggage rules.
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• Integrated Tax on Imported Services Valid Only Under IGST Act Section 5(1), Not as Additional Customs Duty

  Case-Laws - HC : The HC held that an integrated tax on imported services can only be imposed under Section 5(1) of the IGST Act, and a service once classified cannot be recharacterized. Section 3(7) of the Customs Tariff Act cannot be interpreted as creating an independent levy but is part of the machinery for GST collection. The court rejected the government's attempt to levy additional customs duty on imported services that were already subject to IGST, finding this would impinge upon powers conferred by Articles 246A and 269A. Notification No. 36/2021 was quashed to the extent it purported to levy an additional duty beyond IGST, as such dual taxation was deemed unconstitutional.
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• Exemption Cannot Be Denied Due to Incorrect Tariff Entry When Issue Not Raised in SCN - N/N. 48/94-C.E.

  Case-Laws - AT : CESTAT ruled in favor of the appellant regarding unrecorded audio cassettes, holding that exemption under N/N. 48/94-C.E. cannot be denied based on incorrect tariff entry, especially when this issue wasn't raised in the SCN. The Tribunal affirmed that exemption benefits can be claimed at later stages, citing Share Medical Care v. Union of India [2007]. The demand for 24% interest was set aside as Section 28AB of Customs Act became effective only from 28.09.1996, while imports occurred in September 1995. The appellant was liable to pay duty at 50% rate, but no CVD was payable under the notification.
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• Department Cannot Issue New Show Cause Notice to Reclassify Goods Without First Appealing Original Assessment Order

  Case-Laws - AT : The CESTAT ruled in favor of the appellant regarding classification of imported woven fabrics of polyester staple fiber from Bangladesh. The tribunal held that the Department erred by issuing a new Show Cause Notice to reclassify goods without first challenging the original 2007 assessment before an appellate authority. Applying the principle from Priya Blue Industries, the CESTAT emphasized that assessment orders attain finality unless properly appealed, and cannot be circumvented through subsequent proceedings. The tribunal determined that the Revenue's attempt to revise classification without challenging the original assessment was procedurally flawed. Consequently, the impugned order was set aside and the appeal was allowed.
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• Differential Duty Demand on Indonesian Betel Nuts Upheld Despite Time Limitation Objection; Penalties Reduced Under Customs Act

  Case-Laws - AT : CESTAT upheld the demand for differential duty on imported betel nuts from Indonesia, rejecting the appellant's objection regarding time limitation. The Tribunal confirmed that the original show-cause notice remained valid despite a corrigendum that merely consolidated duties without material changes. For Bill of Entry No.196600, the declared transaction value was properly rejected as examination revealed misdeclaration of both description and value of various betel nut varieties. However, for other bills of entry where goods had been cleared after assessment based on contemporaneous prices, reopening based on recovered fax messages and diary entries was deemed inappropriate. The confiscation was upheld but penalties were reduced to Rs. 3,50,000 (in lieu of confiscation) and Rs. 1,50,000 under Section 112(a) of the Customs Act.
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• Refund Claims for Excess Duty on CPC Exports Denied Due to Time-Barred Filing Under Section 27 of Customs Act

  Case-Laws - AT : Appellant's refund claims for excess duty paid on CPC exports were rejected by CESTAT. The Shipping Bills had been finally assessed incorporating Cess/Cesses, but refund claims were filed beyond the prescribed timeline under Section 27 of the Customs Act. The appellant neither paid under protest nor appealed the original assessments. CESTAT affirmed that refund claims cannot substitute appeal proceedings, and assessment orders must be challenged through proper appeal channels. The Tribunal rejected appellant's attempt to invoke Sections 149 and 154, finding no clerical/arithmetical errors in the assessment, as the Cess was incorporated through conscious action by both parties. The appeal was dismissed, upholding the lower authority's order.
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FEMA

• Cross-Examination Requests Denied in Customs Act Case as Appellants Failed to Show Prejudice or Coercion

  Case-Laws - AT : The AT dismissed the appeals challenging denial of cross-examination requests for officers who recorded statements under the Customs Act and FERA. The tribunal determined that appellants failed to demonstrate how prejudice was caused by denial of cross-examination or establish reasonable grounds that coercion occurred during statement recording. The AT noted it was unlikely departmental officers would admit to coercive tactics during cross-examination. The tribunal observed that appellants had not examined the merits of the 61 relied-upon documents furnished per the Special Director's directions, instead raising cross-examination issues without demonstrating necessity. The tribunal found support in the Supreme Court's decision in State of U.P. v. Sudhir Kumar Singh and declined to intervene with the interlocutory orders.
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Corporate Law

• CA N.Bansal Guilty of Professional Misconduct: Fined Rs. 5 Lakh and Debarred for Five Years

  Case-Laws - NFRA : NFRA found CA N Bansal guilty of professional misconduct under Section 132(4) of the Companies Act and Section 22 of the Chartered Accountants Act. The EP failed to timely report fraud to the Central Government, inadequately assessed fraud risks, failed to document sufficient evidence regarding audit procedures, and failed to obtain appropriate evidence for Deferred Tax Assets recognition. Given these violations, NFRA imposed a monetary penalty of Rs. 5,00,000 and debarred CA Bansal for five years from being appointed as an auditor or internal auditor or undertaking any audit of financial statements or internal audit functions of any company or body corporate.
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IBC

• Section 10A of IBC: Operational Creditor's claim rejected as COVID-period defaults cannot trigger insolvency when remaining debt falls below threshold

  Case-Laws - AT : NCLAT ruled that a Section 9 application filed by the Operational Creditor was non-maintainable as the majority of claimed defaults occurred during the COVID-19 protected period under Section 10A of IBC (March 15, 2020 to February 28, 2022). Following the Supreme Court's Ramesh Kymal precedent, defaults during this period cannot form the basis for CIRP initiation. After excluding these protected defaults, the remaining debt fell below the mandatory Rs. 1 Cr threshold required under Section 4. Additionally, the tribunal condemned the Operational Creditor's "rapacious and intimidatory conduct" in pursuing insolvency proceedings despite having received full payment under the Settlement Deed. The impugned order was set aside, the appeal allowed, and the Corporate Debtor released from CIRP.
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• Personal Guarantor's Insolvency Approved Under Section 94(1) of IBC Despite No Ongoing CIRP Against Corporate Debtor

  Case-Laws - Tri : The Tribunal admitted an application under Section 94(1) of IBC against a Personal Guarantor despite no ongoing CIRP or liquidation against the Corporate Debtor. The Resolution Professional's report confirmed undisputed debt of Rs. 9.63 Crore, default by the Personal Guarantor, and valid invocation of guarantee through Demand Notices under SARFAESI Act and Form-B notice by Canara Bank, which remained uncontested. The Tri determined that all conditions under Section 100 of IBC were satisfied, as the guarantor failed to provide evidence of payment or cancellation of guarantee. The application was found maintainable, and the Insolvency Resolution Process was initiated against the Personal Guarantor.
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SEBI

• Securities Fraud Victim Granted Release of Rs.15.90 Lakhs from Share Sales Pending Final Ownership Determination

  Case-Laws - HC : HC determined the petitioner was entitled to release of Rs.15.90 lakhs realized from share sales. The court found the petitioner genuinely placed shares for sale through Respondent No. 2, with fraud occurring at Respondent's end through Amit Jain and potentially Ashish Aggarwal Jain. No evidence implicated the petitioner in the fraudulent transaction. Despite inconsistencies in the petitioner's statements regarding share numbers, the court acknowledged the petitioner's ownership of the sold shares. The amount was ordered released on superdari subject to furnishing a guarantee of equivalent value, with no final determination on actual ownership pending adjudication on merits.
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Service Tax

• Service Tax Show Cause Notice Quashed After 15-Year Delay in Adjudication with No Justifiable Reason

  Case-Laws - HC : The HC quashed a show cause notice (SCN) dated September 26, 2008, and the subsequent order in original dated February 28, 2019, due to inordinate delay in adjudication. The Court found no justification for the fifteen-year delay in adjudicating the SCN, particularly noting that despite dismissal of a stay application, the Adjudicating Authority failed to proceed expeditiously. Applying precedent from VOS Technologies, the HC emphasized that statutory authorities must establish they were genuinely hindered from resolving disputes with reasonable speed, and must prove either impracticability or factors beyond their control that prevented timely adjudication. The petition was allowed.
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• Service Tax Relief: Technical Inspections Remanded, Written-off Advances Non-taxable, Japan Branch Services Under Reverse Charge

  Case-Laws - AT : CESTAT partially allowed the appellant's appeal against service tax demands. The Tribunal remanded the technical inspection service tax calculation for recomputation, recognizing excess payments had been ignored. It held that written-off advances cannot attract service tax, services rendered by appellant's Japan branch to an Indian client were subject to reverse charge mechanism, and electricity charges collected as a pure agent were not taxable. The demand for maintenance charges was appropriated against tax already paid. The extended limitation period was invalidated as no suppression of facts was established. The appeal was disposed of by remanding calculation issues to the adjudicating authority for verification based on the CA certificate.
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• Service Tax Exemption for Eatable Products Under Notification No. 33/2012 Upheld for Below-Threshold Amounts

  Case-Laws - AT : The CESTAT allowed the appellant's appeal against recovery of service tax, interest, and penalties. The Tribunal found that the appellant received amounts below the threshold limit prescribed under Notification No. 33/2012, which exempted certain eatable products from service tax liability. The appellant's belief that no service tax was payable was deemed reasonable and supported by the Kwality Ice Cream Company precedent. The Tribunal held that the extended period of limitation was wrongly invoked for making the demand, rendering it time-barred. Consequently, no penalty could be imposed on the appellant. The impugned order was set aside in its entirety.
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Central Excise

• Exemption Denied: Transfer of Non-Operational Unit Cannot Create Entitlement Under Notification 50/2003-CE

  Case-Laws - AT : CESTAT held that the appellant was ineligible for area-based exemption under N/N. 50/2003-CE. The Tribunal determined that M/s Stanley Controls was non-operational at the time of transfer, despite contrary claims. Evidence showed the transferor filed multiple quarterly returns on a single date just before takeover, reported inconsistent production figures, and showed nil production after transfer. The appellant failed to provide documentary evidence contradicting the finding that the transferor was defunct. CESTAT concluded that a facade of taking over a working unit was created solely to avail exemption benefits, emphasizing that CBEC Circular permits transfer of functioning units, not merely exemption entitlements. The demand for duty, interest, and penalties was upheld.
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Case Laws:

• GST

• 2025 (3) TMI 369
  Cancellation of registration of petitioner - whether the SCN provided sufficient reasons for the suspension and cancellation of registration? - Violation of principles of natural justice - HELD THAT:- In the instant case, the impugned show cause notice, in our opinion, runs contrary to the principles laid down by this Court in aforesaid W.P.No.20080 of 2024 [ 2024 (9) TMI 98 - TELANGANA HIGH COURT] . The departmental authorities must understand the difference between the reasons and conclusions . Under the head reasons , infact departmental authorities have recorded their conclusion that the petitioner has breached certain Rules mentioned hereinabove. On what basis and on what factual details such violation has taken place is not spelled out. Thus, the impugned show cause notice which became foundation of issuance of impugned final order is bad in law. Since the foundation i.e., impugned show cause notice is cryptic and bad in law, the edifies standing of said cryptic notice by impugned final order also cannot sustain judicial scrutiny. The impugned show cause notice dated 01.11.2024 and consequential final order dated 16.01.2025 are set aside - petition allowed.

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• 2025 (3) TMI 368
  Maintainability of petition - availability of alternative remedy - double taxation - HELD THAT:- Recording the submission made by the learned Standing Counsel that the petitioner is having an appeal remedy before the Joint Commissioner of CGST (Appeals), Madurai, under Section 107 of the GST Act, 2017, this writ petition is disposed of, with liberty to the petitioner to approach the appellate authority and raise all the grounds raised in this writ petition in the appeal. Petition disposed off.

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• 2025 (3) TMI 367
  Refund under the inverted duty structure scheme, as per Section 54(3) of the Central/Gujarat Goods and Services Tax Act, 2017 - Applicability of restriction contained in N/N. 13.7.2022 to all the refund applications filed after 13.7.2022 - circular dated 10.11.2022 - HELD THAT:- It is clear from the bare perusal of the Notification that this Notification shall come into force on the 18th day of July, 2022 . This Court in Ascent Meditech [ 2024 (12) TMI 511 - GUJARAT HIGH COURT ] has struck down para 2(1) of the same Circular dated 10.11.2022 on the ground that an artificial class of assessees cannot be created on the basis of date of filing of refund application. Para 2(2) of the impugned circular dated 10.11.2022 in so far as it provides that the restriction contained in notification no. 13.7.2022 will apply to all the refund applications filed after 13.7.2022, even though they are pertaining to a period prior to the date of notification, is wholly arbitrary, discriminatory and ultra-vires Section 54 of the GST Act as well as violating Article 14 of the Constitution of India. The circular itself states that the notification dated 13.7.2022 has prospective effect - Mere fact that the refund application was filed after 13.7.2022 cannot result in denial of refund to the Petitioner even though the refund application was filed within the statutory period of limitation. The circular creates an artificial class amongst assessees based on the date of filing of refund application even though the refund application is filed within the statutory period of limitation and the refund is pertaining to the same period. Para 2 of the impugned circular is therefore grossly discriminatory and violative of Article 14 of the Constitution of India as well as ultra-vires Section 54 of the GST Act. Conclusion - The impugned para 2(2) of the Circular No. 181/13/2022-GST dated 10.11.2022 was struck down as it was ultra-vires Section 54 of the GST Act and violated Article 14 of the Constitution. Petition allowed.

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• 2025 (3) TMI 366
  Rejection of petitioner s appeal on the ground that the same was barred by time limitation - HELD THAT:- Admittedly, in this case the petitioner had filed an appeal challenging the order passed under Section 73(9) of the said Act. Simultaneously, with the filing of the appeal, the petitioner had also made a requisite pre-deposit. As such there is no lack of bona fide on the part of the petitioner in preferring the appeal. It appears that the petitioner had also made a prayer for condonation of delay, inter alia, claiming that by reasons of lack of proper knowledge of the GST portal there had been delay in filing the appeal. There appears to be a delay of 05 days in filing the appeal. Taking into consideration that the petitioner is a small businessman and there is no lack of bona fide on the part of the petitioner and one does not stand to gain by filing a belated appeal, in the instant case, the appellate authority ought to have appropriately considered the application for condonation of delay filed by the petitioner. The appellate authority, however, appears to have rejected the appeal on the ground of limitation by, inter alia, holding that the delay can only be condoned provided the same is filed within the period of one month of the time prescribed - the appellate authority is directed to hear out and dispose of the appeal, on merit, upon giving an opportunity of hearing to the petitioner, within a period of 8 weeks from the date of communication of this order. Petition disposed off.

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• 2025 (3) TMI 365
  Prayer for quashing of notice inviting tender (NIT) - tender was opened beyond 180 days - disqualification for having GST registration cancelled - HELD THAT:- The validity of a proposal can be extended by the proposer. So far as cancellation of revenue registration of petitioner is concerned, it appears the registration was cancelled prior to 20th September, 2024. The cancellation is on reason given by FORM GST REG-17, disclosed by opposite party no.3 in his counter. The phrase suo moto used in letter dated 20th September, 2024, giving information including disqualification of petitioner to be that his registration certificate was cancelled by the taxing authority. It being one of the arms of State, the phrase was used. Petition dismissed.

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• 2025 (3) TMI 364
  Imposition of GST - HELD THAT:- The claim has now been settled as is evident from the status report filed by respondent No.1. The instant petition is rendered infructuous and disposed of as such.

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• 2025 (3) TMI 363
  Invocation of provisions of Section 74 of the Central Goods and Services Tax/State Goods and Services Tax Acts, 2017 - HELD THAT:- Having regard to the directions issued by this Court in Ext.P3 judgment dated 12-09-2024 in WP(C)No.31434 of 2024 [ 2024 (9) TMI 1694 - KERALA HIGH COURT] , this writ petition will also stand disposed of directing that the reply filed by the petitioner as Ext.P2 and in respect of which Ext.P5 acknowledgement has been issued shall be considered by the adjudicating authority before final orders are passed on the show cause notice. Further, the adjudicating authority shall also consider any objection raised by the petitioner regarding the question as to whether there were any grounds to issue notice under Section 74 of the CGST/SGST Acts. The adjudicating authority shall consider such objection (if raised) as a preliminary issue, and orders shall be passed on the same before proceeding further with the adjudication of the show cause notice. The petitioner shall be afforded an opportunity of hearing before any orders are passed. Petition disposed off.

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• 2025 (3) TMI 362
  Issuance of consolidated SCN by invoking the provisions of Section 74 of the CGST/SGST Acts for the years 2017-18 till 2021-22 - HELD THAT:- Having regard to the facts and circumstances of the case, the writ petition will stand disposed of, directing that the Competent Authority shall consider the issue for each of the years separately, if there is warrant for doing so, also taking into consideration the submission of the petitioner that there was no just cause or reason to invoke the provisions of Section 74 of the CGST/SGST Acts, for the years 2018-19 till 2021-22. Any taxes paid by the petitioner shall also be given due credit to while finalizing the proceedings. It is made clear that the petitioner shall be afforded an opportunity of personal hearing before orders are passed by the Adjudicating Authority. Petition disposed off.

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• 2025 (3) TMI 361
  Levy of GST - value attributable to SUG stipulated in the agreement between the applicant and customers - requirement to include in the consideration for re-gasification services determined as per section 15 of the CGST Act - System Use Gas (SUG) is a process loss or not - HELD THAT:- The wordings in section 101 of the CGST Act, 2017, reproduced supra, is almost similar to sections 35A of the Central Excise Act, 1944 and 85 (5) of the Finance Act, 1994. To substantiate the aforementioned finding, we rely on the judgement of the Hon ble Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD-I VERSUS MEDICO LABS. [ 2004 (9) TMI 108 - HIGH COURT OF GUJARAT AT AHMEDABAD ] . This is more so because the jurisprudence developed over the years may be referred as pari materia while ascertaining the ambit and scope of the powers of the Appellate Authority for Advance Ruling. The impugned ruling dated 11.5.2022, is set aside and the matter is remanded back to the Authority for Advance Ruling (i.e. the GAAR) for a fresh decision.

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• 2025 (3) TMI 360
  Applicability of GST on the amount recovered by the company, Troikaa Pharmaceuticals Limited, from employees or contractual workers, when provision of third-party canteen service is obligatory under section 46 of the Factories Act, 1948 - Availability of input tax credit of GST paid on food bill of the Canteen Service Provider shall be available, since providing this canteen facility is mandatory as per the Section 46 of the Factories Act, 1948 - HELD THAT:- Relying on sections 20 (2) and 21 (2), it is averred that though statutorily it is the contractor who is required to provide the amenity to the contractual workers in terms of section 16, ibid, the onus shifts on the principal employer i.e. the appellant in case the contractor is not providing the same. Two things are therefore clear [a] that statutorily it is the contractor on whom the CLRA Act has entrusted the task of providing the amenity; and [b] the responsibility shifts on the principal employer ie appellant in case of the contractor is not providing the same. However, one cannot ignore the fact that the section also states that all expenses incurred by the principal employer in providing such amenity may be recovered from the contractor either by deduction from any amount payable under any contract or as a debt payable by the contractor. The appellant in his averments assumes of a situation wherein he is thrusted with the responsibility as a primary employer, which would arise only in case the contractor fails in his statutory obligation. The assumption so made is not supported by factual evidence - the contractor has been paid the gross amount which includes salary, allowances such as canteen facility, provident fund, etc. The clarification at serial no. 5, vide circular no. 172/4/2022-GST dated 6.7.2022 relied upon by the appellant to aver that no GST amount is leviable on the amount recovered from contractual workers for canteen services, fails since the clarification states that perquisites provided by the employer to its employees in terms of contractual agreement entered into between them will not be subject to GST. Further, the clarification at serial no. 3 of the said circular dated 6.7.2022, regarding availment of ITC, would also not be applicable since it is available only in respect of the goods supplied to the employees of the appellant in terms of section 46 of the Factories Act, 1948, which mandates provision of canteen facilities to the employees. Further, in terms of clause 17 of the agreement, appellant also indemnifies himself for any payment made on behalf of the contractor. Conclusion - i) GST is not applicable on canteen charges for employees but is applicable for contractual workers. ii) ITC is available for canteen services provided to employees but not for those provided to contractual workers. Appeal dismissed.

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• Income Tax

• 2025 (3) TMI 359
  Estimation of income - bogus purchases - CIT(A) estimating profit at 12.5% on the bogus purchases - As per AO assessee did not discharge its onus of proving the purchases made from various parties during the course of the assessment proceedings - HELD THAT:- If the approach of the Appellate Authorities of estimating the profit on such purchases is to be accepted, then, in effect, the consequence would be that even if respondent-assessee has failed to prove its claim of deduction of purchases, still by estimating profit, impliedly deduction of purchases is given. For example, if the purchases by accommodation entries are Rs.100/- and a profit of 10% is estimated, then to the extent of Rs.90/- deduction on account of purchases is deemed to have been given by the Appellate Authorities. This approach would not be correct since it is nobody s case that the respondent-assessee has made sales out of books by purchasing the goods out of books. If the approach of the Appellate Authorities is accepted, then the provision of Section 69C, which is an enabling provision, would become redundant. Section 69C provides that where an assessee has incurred any expenditure and offers no explanation about the source of expenditure or the explanation offered is not in the opinion of the AO satisfactory, then the amount of expenditure may be deemed to be the income of the assessee and such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income. In our view, if the approach of the CIT(A) and the Tribunal is accepted, then it would amount to endorsing outright conduct of illegality contrary to the express provisions of Section 69C of the Act, which the Appellate Authorities have entirely ignored. In the above example, by estimating 10% and thereby impliedly giving a deduction of Rs.90/-, in the teeth of the provisions of Section 69C of the Act which expressly bars the allowability of unexplained expenditure. The question of law admitted by this Court is answered against the revenue and in favour of the respondent-assessee insofar as the purchases from various suppliers except M/s Neptune Trading Co. and Hari Om Traders are concerned. With respect to the purchases from M/s Neptune Trading Co. and Hari Om Traders are concerned, the question is answered in favour of the appellant-revenue and against the respondent-assessee. The order of the CIT(A) and the Tribunal is reversed insofar as the purchases from these two parties are concerned. However, we make it clear that the total additions would not exceed Rs. 1,00,10,773, which is the total purchase from M/s Neptune Trading Co. and Hari Om Traders.

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• 2025 (3) TMI 358
  Validity of notice and finally the orders issued in the name of deceased assessee - HELD THAT:- The explanation that the department was corresponding with the chartered accountant is not quite relevant or convincing. Once it is established that Ahmed Gulamnabi Shaikh had expired by the time the notices were issued and the department had knowledge of demise, there was no justification for issuing the notices and, finally, the impugned orders in the name of the dead person. The argument based on Section 159 of the Act also does not appeal to us in the facts of the present case. Admittedly, no notices were issued to the legal representatives. The notices were issued to the dead person, and consequently, the legal representatives cannot be said to know about such notices. In such circumstances, the impugned notices or the impugned order made based thereon and same binds the legal representatives. In Devendra [ 2023 (7) TMI 694 - BOMBAY HIGH COURT] , Gourang Anil Wakade [ 2024 (12) TMI 778 - BOMBAY HIGH COURT] , and Sumit Balkrishna Gupta [ 2019 (2) TMI 1209 - BOMBAY HIGH COURT] the Coordinate Benches of this Court have consistently held that notices to a dead person or orders against a dead person are null and void. Following the reasoning in these decisions, the rule will have to be made absolute in terms of prayer clause (a) of this petition. Accordingly, we quash and set aside the impugned notices and the impugned orders.

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• 2025 (3) TMI 357
  Rejection of petitioner s application for compounding the offence - Chief Commissioner has dismissed this application on the sole ground that it was filed beyond 36 months from the date of filing of the complaint against the petitioners - HELD THAT:- CBDT guidelines of 2014 [which had referred to the period of limitation] does not exclude the possibility that in the peculiar case where the facts and circumstances so required, the competent authority should consider the explanation and allow the compounding application. This means that notwithstanding the so-called limitation period, in a given case, the competent authority can exercise discretion and allow compounding application. The competent authority has treated the guidelines as a binding statute in the present case. On the sole ground that the application was made beyond 36 months, the same has been rejected. The competent authority has exercised no discretion as such. The rejection is entirely premised on the notion that the competent authority had no jurisdiction to entertain a compounding application because it was made beyond 36 months. Such an approach is inconsistent with the rulings of this Court, Madras High Court and ruling in the case of Vinubhai Dobaria [ 2025 (2) TMI 335 - SUPREME COURT] relied upon by revenue. we set aside the impugned order and direct the Chief Commissioner to reconsider the petitioner s application for compounding in the light of observations made by the Hon ble Supreme Court in Vinubhai Dobaria (Supra). This means that the Chief Commissioner will have to consider all facts and circumstances and decide whether such facts make out the case for exercising discretion in favour of compounding the offence.

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• 2025 (3) TMI 356
  Revision u/s 263 - addition on applying the G.P. rate of 19.40% on unexplained cash transaction - ITAT set aside revision order - HELD THAT:- As correctly decided by ITAT AO had examined this issue in detail during the original assessment proceedings and had made due inquiries and detailed analysis of the material available on record in respect of transactions which was the subject of matter of revision in 263 proceedings. Secondly, on the basis of discussion with partner of National Shroff (Angadia), the Assessing Officer was of the view that the aforesaid amount represented cash sales/out of book sales carried out by the assessee during the year under consideration. Accordingly the Assessing Officer calculated the GP rate @ 19.40% on the aforesaid cash sales. Accordingly, we are of the considered view that the Assessing Officer had examined the issue in detail during the course of original assessment proceedings and also had taken a view which was a legally plausible view - We are unable to accept the proposition that the entire explained cash transaction should be brought to tax in the hands of the assessee, since it is a settled principle of law only the real income may be subject to tax in hands of the asssessee and nor the entire receipts. Accordingly, the ld. Assessing Officer not erred in applying the GP rate of 19.40% after holding that the aforesaid sum represented unaccounted cash sales of assessee. Therefore, we are of the view that the Assessing Officer took one of plausible/ possible view looking into the instant facts of the case and the ld. PCIT cannot take recourse to proceedings u/s 263 of the Act only with a view to supplant/substitute his own view with that of the Assessing Officer on the ground that alternate view should have been taken by the AO. ITAT has rightly held that the Principal CIT has erred in invoking the provisions of Section 263 - Decided in favour of assessee.

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• 2025 (3) TMI 355
  Validity of reopening of assessment - non-compliance of procedure - assessee liberty to challenge the order by filing a writ petition - whether the AO was right in not disposing of the written objection submitted by the assessee for reopening of the assessment? - HELD THAT:- This ground was canvassed by the assessee before the CIT(A) which call for a remand report but unfortunately the AO did not submit the remand report and the CIT(A) proceeded to take a decision on merits and particularly allowed the appeal of the assessee but with regard to the percentage of the gross profit rate on the entire turnover and made a restriction thereof. Tribunal, in our view, rightly took note of the decision of GKN Driveshafts [India] Ltd. [ 2002 (11) TMI 7 - SUPREME COURT ] The duty cast upon the assessing officer is to decide the written objections given by the assessee to the proposed reopening and passing a speaking order and if the order goes against the assessee, the assessee has a liberty to challenge the order by filing a writ petition as no other alternative remedy is provided under the provisions of the Income Tax Act, 1961. In the instant case, it is not in dispute that the assessing officer did not follow the procedure laid down in GKN Driveshafts [India] Ltd. [supra]. Therefore, the learned Tribunal was justified in allowing the assessee s appeal on the said ground.

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• 2025 (3) TMI 354
  Addition of provision for depreciation - provision was claimed against the notional loss/anticipated loss which has not been actually incurred by the assessee - CIT(A) deleted addition - HELD THAT:- We find that the Ld. CIT(A) has allowed the claim of the assessee giving the cogent reasons in his appellate order after considering the assessment order and the factual and legal submissions made by the assessee. Further, perusal of the decision(s) of the coordinate bench of the Pune Tribunal reveals that the impugned issue has been decided in favour of the assessee in AY 2007-08, 2008-09, 2009-10 and 2010-11 in The Karad Urban Co-op Bank Ltd.. [ 2014 (1) TMI 1691 - ITAT PUNE] wherein the Tribunal has discussed this issue in detail and accordingly gave its verdict in favour of the assessee. The Revenue has not brought on record any material to contradict the findings of the Ld. CIT(A) as well as the Tribunal in the past years. Decided in favour of assessee. Disallowing amount towards amortization of Government Securities (HMT) deleted - assessee was justified in contending for amortization of premium paid in excess of face value of securities held to maturity (HTM) category or period remaining till maturity was found reasonable by the CIT(A). Depreciation on government securities shifted from AFS to HTM Securities at the beginning of the year allowed.

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• 2025 (3) TMI 353
  Addition u/s 68 - denial of long term capital gain claimed as exempt income u/s. 10(38) - bogus accommodation entry - HELD THAT:- As correctly decided entire addition were made without any basis. AO has made certain assumptions on the basis of Investigation Wing report received by him, without adducing any direct evidences that supports his assumptions. The AO has also ignored the evidences furnished by the assessee which is unfortunate, and which makes the assessment untenable. Addition made by the A.O. is not correct, factually and legally, and disallowance of exemption u/s.10(38) is directed to be deleted. Hence these grounds are allowed. AO assessed the sale consideration of shares as unexplained cash credit u/s 68 - It is pertinent to note that the purchase of shares made in an earlier year has been accepted by the revenue. The sale of shares has taken place in the online platform of Stock Exchange and the sale consideration has been received through the stock broker in banking channels. Hence, in the facts of the case, the sale consideration cannot be considered to be unexplained cash credit in terms of section 68. We also hold that the addition made by the Assessing Officer is incorrect, factually and legally, and disallowance of exemption under section 10(38) and addition made under section 68 has rightly deleted by the CIT(A). Disallowance u/s 14A - Under the specific circumstances when the Assessing Officer has failed to establish the nexus that investment was made out on interest bearing funds, disallowance towards administrative expenditure is not permissible. We also find that the fact of the present case is similarly situated and in the absence of any changed facts of the case, We are unable to support the estimated disallowance as made by the Assessing Officer. Hence, disallowance made u/s 14A in the instant case is hereby directed to be deleted. Revenue fails on this issue also.

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• 2025 (3) TMI 352
  Permanent Establishment ( PE ) in India - treating the services in relation to preparation of design as FTS - whether RIC is a dependent agent permanent establishment/DAPE in order to tax the business income of the assessee in India and that the receipts for design and drawing is taxable as FTS u/s 9(1)(vii)? - HELD THAT:-We find that the ITAT in [ 2022 (2) TMI 1194 - ITAT DELHI ] has decided the issue of whether RIC is DAPE in terms of contract dated 01.02.2005 in favour of the assessee. We find that for the instant year, the same contract with RIC exist, hence the facts as available in AY 2011-12 remains the same in AY 2008-09. Respectfully above, we are of the considered view that RIC is not DAPE within the meaning of Article 5 of the USA-India DTAA and hence no business income can be attributed to the assessee for taxation in India. The grounds of appeal no 1 and 2 are allowed. Services related to the preparation of designs - Drawing and design has been supplied from outside India and the payment for the same has been received outside India. We find force in assessee s argument that supply of Drawings and Designs are an integral part of Imports and are highly integrated to the supply of the Plant, Machinery and equipment. Without the Drawings, the other supplies are of no worth. We are of considered view therefore that being a component of supply of Plant and Machinery and being an accrual overseas, the receipts on account of Drawing and designs formed part of business income within the purview of Article 7 of the USA-India DTAA and the same can not be taxed separately under Article 12 of the USA-India DTAA. Since it has been decided that the assessee doesn t have a DAPE in India nor an installation PE in India, the receipts on account of Drawing and Design can not be taxed as Income in India nor the same be attributed to the assessee as FTS u/ 9(1)(vii) - Decided in favour of assessee.

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• 2025 (3) TMI 351
  Rejection/cancellation registration u/s 12AB - charitable purposes - as per revenue activities carried out by the trust are restricted to its own employees, ex-employees and their family members, which shows that it is not a public charitable trust and there is no dissolution clause in the trust deed, the net asset of the trust in case of dissolution can be transferred to any other entity - As submitted CIT(E) failed to appreciate that the families and children of ex-employees are also Public which has been grossly undermined by the CIT(E) in rejecting the application HELD THAT:- In the present case, admittedly the trust deed of the Assessee contains the object of carrying out charitable activities to general public. Assessee has also incurred expenses for providing the education and health care facilities to the children and the family members of Radisson Group Employees who expired due to Covid-19 pandemic. In our opinion, the family members of the deceased employees are part of public and there is no relationship of employee and employer between the Appellant and the family members of deceased employees. Even otherwise, the ratio laid down in the case of Ahmedabad Rana Caste Association [ 1971 (9) TMI 8 - SUPREME COURT ] and Harilal Bhagwati [ 2000 (4) TMI 14 - GUJARAT HIGH COURT ] are applicable to the case in hand. Thus, in our opinion, the CIT(E) committed error in holding that the activities of the appellant are restricted only to family members of the ex- employees, thus, the Assessee is not a public charitable Trust . No dissolution clause in the trust deed of the Assessee - From the plain reading of the above Clauses, though the trustees have power to transfer and hand over the trust to any other trust/society/Association/Institution, is no mentioning regarding the dissolution of the trust and the fate of net asset of the trust in case of dissolution. It is true that the net asset of the trust can be transferred to any entity since, as per the above Clause in the trust deed, the trustees have absolute right to transfer and hand over the Trust to any other trust/society/association/institution on such terms and conditions as the Trustees shall in their absolute discretion think fit and proper. However, after the amendment to provision of Section 115TD of the Act, which has been inserted by Finance Act, 2016 w.e.f. 01/06/2016, the relevance of having dissolution clause and the apprehension on the transfer of net asset to any other entity has been taken care by the said provisions of Section 115TD. Thus, in our considered opinion, the absence of dissolution clause and non- mentioning of fate of net asset in the trust deed cannot be a ground to deny the registration u/s 12AB of the Act. Thus, the Ld. CIT(E) committed error in rejecting the registration u/s 12A and 80G of the Act. Assessee appeal allowed.

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• 2025 (3) TMI 350
  Reopening of assessment u/s 147 - Notice after a lapse of 4 years - reason to believe - re-opening was proposed merely based on the audit objection - chargeability of capital gain on conversion of capital assets into stock-in-trade - HELD THAT:- On perusal of the reasons so recorded we note that there is nothing on record which suggests that relevant documents or material information were not disclosed by the assessee during assessment proceedings. At the time of hearing of the appeal revenue vehemently supported the detailed reasoned recorded based on the inputs received from the Audit wing. That input was considered as tangible material which has been relied upon by the ld. Assessing Officer to justify initiation of reassessment proceedings. As is evident that the assessee while proceedings conducted by the revenue based on the provision of section 143(3) duly supplied and disclosed all the relevant details to decide the issue of chargeability of gain and modus-operandi of the transactions undertaken by the assessee and justified the returned income which was based on the submission so made was accepted by taking the plausible view on the matter. Based on the same material placed on record, the audit team substituted their view. Revenue accepting that view on the same material started the re-opening proceeding that too after 4 years and that too at the last date of time barring of six-year reasons were recorded, obtained the approval and notice alleged to have been served by way of affixture. As is evident from the reasons recorded that no allegation has been made in the reasons recorded that there was any failure on the part of assessee to disclose fully truly all material facts for the purpose of assessment. Thus, reassessment proceedings were initiated by the Assessing Officer based on change of opinion, which is impermissible, as in the instant case the Assessing Officer has duly applied his mind on the disclosures made in the Audit Report and replies filed by the assessee while assessment proceedings and supporting documents thereto. Also in absence of any allegation in the reasons recorded against the assessee for failure at its end to disclose truly and fully material particulars, the reassessment proceedings cannot be resorted to, as in such case normal period of limitation available to the AO would be 4 years and the benefit of extended period of limitation of 6 years would not be available. The bench perused the order of ld. CIT(A) who has after detailed deliberations of the contentions has given his finding based on the provision of section 147 of the Act, persuaded the reasons recorded and various clauses of development agreement entered by the assessee with the developer way back in 2001 and assessment order passed in the first round. After ascertaining all factum he considered the judicial precedent based on the facts and thereby ordered to quash the reassessment proceeding as bad because review of the order on the same set of fact is not permitted. CIT(A) hold a view that the initiation of proceedings u/s. 147 of the Act was not in conformity with the provision of section 147 of the Act, after 4 years when the assessment in the first round was completed as per provisions of section 143(3) of the Act. Thus, we do not find any infirmity in the finding so recorded by the ld. CIT(A). Conversion of capital asset into stock-in-trade thereby invoking the provisions of Section 45(2) - change on land use from Cinema Hall to Commercial Complex - The change on land use from Cinema Hall to Commercial Complex is not tantamount to conversion of capital asset into stock-in-trade. We are afraid to hold such a view and if such a proposition were to be approved then in such an eventuality, every change of land use from agricultural to non-agricultural, residential to commercial, industrial to commercial, or similar action could automatically lead to conversion of capital asset into stock-in-trade. Law has no intention nor section 45(2) provides for the same. To maximize the Gains by an assessee does not mean that the intention of the assessee could be meted out by carrying on the business. In all Development Agreements there are multiple units which could be sold / retained by the Land Owner as per its choice. Thus, mere entering into the Development Agreement would not permit invocation of section 45(2) of the Act. It is a well-accepted principle of tax jurisprudence that the AO cannot decide what is to could have been done by the assessee and is evident from the facts on record that the intention of assessee is not the necessary criteria for invoking section 45(2) of the Act corroborate the intention along with the passing off necessary entries in books of accounts which is absent. Even on the aspect of the charging the capital assets or business assets the CBDT vide circular dated also at the help of the assessee and directed the revenue officers vide circular no. 4/2007, issued by the Central Board of Direct Taxes (CBDT) on June 15, 2007, provides guidelines to distinguish between shares held as stock-in-trade and shares held as investments. This distinction is crucial because it affects how the income from the sale of these shares is taxed. Shares held as stock-in-trade are considered business income, while shares held as investments are treated as capital gain. The terms of the development agreement entered into by and between the assessee and developer has been referred by the ld. CIT(A) in detail. The assessee was not in the business of real estate, nor did it have any object clause for carrying out business of real estate. Entire responsibility of construction, demolition of existing structure, approval of maps, etc., was of the Developer and the assessee had simply handed over the Land owned by it for the purpose of construction of commercial complex. There is no positive act which indicates that the assessee has treated capital asset as stock-in-trade. As discussed herein above if that version of the revenue is accepted then no one would be in a position to enter into Development Agreement, since it would amount to carrying on the business, which otherwise it is not permitted to do so to the even based on object also in the case of the assessee. The arguments advanced by ld. DR purely narrow down and without seeing the other facts as discussed as to decide the issue in a holistic manner. CIT(A) perused the object clause, various clause of the development agreement, consistently followed the accounting entries to demonstrate that the asset was considered as capital assets. He also touched upon the aspect of the subsequent action of the assessee when the assets received as exchange was also shown as investment and not stock in trade. Thus, on the merits of the issue we do not find any infirmity in the finding so recorded by ld. CIT(A). Decided against revenue.

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• 2025 (3) TMI 349
  Reopening of assessment u/s 147 - Addition u/s 68 - reason to suspect or reason to believe - HELD THAT:- Admittedly, during the course of original assessment proceedings the assessee had filed the relevant details substantiating the identity and creditworthiness of the loan creditor and genuineness of the transaction by filing the requisite details as called for by the AO from time to time. AO has also directly obtained information u/s 133 (6) of the Act from Cambridge Financial Services Pvt. Ltd. and even the information obtained from the Investigation Wing reveals that the DDIT (Inv) has suggested the AO to reopen the assessment and complete the assessment by obtaining information from the said loan creditor. In our considered opinion, once the AO had obtained the information u/s 133 (6) of the Act from the said loan creditor, it is not understood as to what purpose it would serve to again call for the same information from the said loan creditor and complete the assessment. In the instant case, as mentioned earlier, the assessee had filed all the requisite details as called for by the AO from time to time and the AO after considering the details filed by the assessee and after obtaining the information u/s 133 (6) of the Act from the loan creditor i.e. Cambridge Financial Services Pvt. Ltd. had completed the assessment u/s 143 (3) of the Act. Therefore, in our opinion, so far as the assessee is concerned, there was no failure on the part of the assessee to disclose fully and truly all the material facts necessary for completion of the assessment. A perusal of the earlier reasons recorded shows that the AO has simply reopened the assessment on the basis of the information obtained from the Investigation Wing and there is no application of mind. We find in the case of Punia Capital (P.) Ltd. [ 2023 (2) TMI 717 - BOMBAY HIGH COURT] has held that where the Assessing Officer sought to reopen assessment of assessee after period of four years on ground that assessee had transacted funds with certain company which had been conclusively proven to be a shell company, since Assessing Officer had reopened assessment solely on basis of reason to believe and not on grounds of failure to disclose material facts duly and truly, and moreover, AO failed to highlight in reasons recorded as to what was that material fact, which was not disclosed by assessee in its return, impugned reopening notice and consequent order were to be quashed. We find in the instant case also the AO has reopened the assessment merely on the basis of information received by him from the DDIT (Inv) and has not applied his mind, therefore, on this score also, the re-assessment proceedings initiated by the AO are to be quashed. We set aside the order of the CIT(A) / NFAC and quash the re- assessment proceedings. Decided in favour of assessee.

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• 2025 (3) TMI 348
  Validity of reopening of assessment u/s 147 - Reasons to believe - unexplained cash credit u/s 68 - Borrowed satisfaction v/s independent application of mind - assessment has been reopened after four years HELD THAT:- As relying on case of M/s Shankar Logistics (P) Ltd [ 2024 (7) TMI 582 - ITAT KOLKATA] and taking into consideration the facts of the instant case, we are of the considered view that the reopening proceedings in the case of the assessee has been carried out on poor reasons that too based on borrowed satisfaction and clearly there is no application of mind by the AO who was duty bound to first carry out an enquiry by way of examining Income Tax Return of the assessee company as well as M/s Frankdeal Traders Pvt. Ltd. of the present year and past years and then to look at the information provided in the audited balance sheet and then if any material fact which was necessary for the assessment or such material fact which gives rise to prove that there is escapement of income and that the assessee has failed to disclose fully and truly all material facts necessary for the assessment, then he/she could have formed reasons to believe for issuing notice to reopen the assessment beyond four years. Also, the facts remain undisputed that the AO has alleging that the assessee company have received accommodation entry during F.Y 2010-11 is totally wrong and misleading because the AO has himself observed in the assessment order that the alleged accommodation entry was actually received by M/s Frankdeal Traders Pvt. Ltd. upto F.Y 2008-09. Both these facts indicate that there is a complete contradiction of information mentioned by the Assessing Officer in the reasons recorded. Therefore, the reasons recorded are merely on borrowed satisfaction and reasons to suspect and therefore, we fail to find any infirmity in the detailed findings of the ld. CIT(A) quashing the reassessment proceedings on holding this to be illegal and bad in law. All the grounds raised by the Revenue are hereby dismissed.

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• Customs

• 2025 (3) TMI 420
  Seeking deletion of bail condition - retention of the applicant s passport - HELD THAT:- On perusing the record, there is no reason as to why the present Application needs to be adjourned to hear the DRI since the DRI has already filed its Affidavit in Criminal Bail Application No.434 of 2024 and their objections have been duly considered by the Court. There can be no other different objections. Prima facie, it is seen that passport is not an incriminating document in the prosecution case and hence its seizure permanently prima facie would be violative of the provisions of Sections 10(3)(e) and 10-A of the Passports Act, 1967 and it would indirectly amount to impounding of the passport - it will be unjust to deny the Applicant the relief prayed for in the present Application, considering his deep roots in the society and he has no criminal antecedents either requiring the Applicant to constantly approach the DRI and the concerned appropriate Court for seeking permission and copy of the passport whenever he has to travel abroad is prima facie on the face of record onerous due to the aforesaid reasons. It is therefore directed that condition No.3 in bail order dated 21.05.2021 appended at Exhibit A page No.27 of the present Application stands deleted. Rest of the order dated 21.05.2021 is retained. Resultanlty, the impugned order dated 04.10.2024 is quashed and set aside. Conclusion - The bail condition requiring the retention of the applicant s passport was unjust and violative of the Passports Act. Criminal Application is allowed.

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• 2025 (3) TMI 347
  Duty leviable under Section 3 (7) of the CTA is independent of the impost created by Section 5 of the IGST or not - supply of service conferred that character by virtue of Schedule II of the CGST would remain unimpeded by the concept of import of goods as ordinarily understood or not - Levy of additional duty of customs over and above the IGST - HELD THAT:- An integrated tax on the import of services can only be imposed under Section 5 (1) of the IGST. A supply of service once so classified cannot be recharacterized. The Constitution Amending Act read along with the provisions contained in the CGST and the IGST leave in no doubt that an import of service could have only been taxed by virtue of a legislation referrable to Articles 246A and 269A. If the submission of the respondents were to be accepted, it would compel to view Entry 83 falling in List I as the conferment of an authority to legislate and levy a duty on import of service which is clearly not the legislative field or subject of that entry. In fact if Entry 83 were so read, it would impinge upon the power conferred by Articles 246A and 269A itself. A conjoint reading of the Proviso to Section 5 (1) along side Section 3 (7) of the CTA clearly establishes that they are a part of a composite and comprehensive machinery laid in place for collection of a goods and services tax. It merely designates the place and the juncture when the tax liability would be liable to be discharged. The integrated tax which is spoken of in Section 3 (7) can only be recognised as being a reference to the integrated tax leviable under the IGST. We find ourselves unable to countenance a power or authority inhering in the respondents to subject a supply or import of service to a tax under the CTA in the garb of levying an additional duty. The reliance placed on the judgment of the Supreme Court in Hyderabad Industries [ 1999 (5) TMI 29 - SUPREME COURT] is clearly misplaced since the said decision was primarily concerned with the interplay between BCD and an additional duty of customs under the CTA. While there cannot be a cavil of doubt with respect to those two levies being separate and distinct, we are in the present batch concerned with the levy of a tax upon import of services under the IGST and an additional levy which, according to the respondents, would be leviable on a purported reading of Section 3 (7) of the CTA. Regard must also be had to the amendments which came to be made in Section 3 (7) and which no longer speaks of an authority to levy a tax notwithstanding the provisions contained in any other enactment but restricts its expanse to the imposition and collection of a tax as leviable under Section 5 (1). In any case, and as we have found, both Sections 5 (1) of the IGST and Section 3 (7) of the CTA are indelibly connected to the levy and collection of the tax contemplated under the former. Section 3 (7) cannot be construed/interpreted as envisaging an independent levy. The impugned amendments ushered in by virtue of Notification No. 36/2021 together with the clarification issued by the CBIC were clearly intended to expand the tax net and cannot, therefore, be termed to be merely clarificatory. The original notifications were in unambiguous terms restricted to the levy of a BCD. It was this position which was sought to be drastically amended by those changes. In any event, the levy of an additional duty even after the transaction has been subjected to the imposition of a tax treating it to be a supply of service would be clearly unconstitutional and cannot be sustained. Conclusion - An integrated tax on the import of services can only be imposed under Section 5(1) of the IGST. A supply of service once so classified cannot be recharacterized. Notification No. 36/2021 quashed, to the extent it purports to levy an additional duty over and above the IGST imposed under Section 5(1). Petition allowed.

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• 2025 (3) TMI 346
  Seeking enforcement of the order for the return of seized gold - petitioner submitted that the market value of the detained gold today would be substantially higher - HELD THAT:- There can be no justification for the long delay in non-payment by the Department. Submission made by the Department is accepted by the Court that the amount would be paid with interest, as directed, within two weeks. Petition disposed off.

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• 2025 (3) TMI 345
  Denial of benefit of N/N. 48/94-C.E. dated 01.03.1994 on the ground of incorrect declaration of tariff entry and also on the ground that the appellant had not claimed it at the time of initial assessment - demand of interest - HELD THAT:- The description of the subject goods is fully covered by the exemption notification and when there is no other Central Excise Tariff heading for unrecorded audio cassette except 8523.12, the exemption eligible to the appellant cannot be denied on the ground of incorrect tariff entry of the subject goods. Further, we observe that the incorrect tariff entry was not raised in the SCN and hence the finding of the lower authorities on this ground is beyond the scope of the SCN and hence, the same is not sustainable. With regard to the denial of benefit of Notification No. 48/94-C.E. dated 01.03.1994 on the ground that the same was not claimed by the appellant at the initial stage, it is observed that if a benefit eligible to the appellant is not claimed initially, it can be claimed even at a later stage. This view has also been taken by the Hon ble Apex Court in the case of Share Medical Care v. Union of India [ 2007 (2) TMI 2 - SUPREME COURT ] wherein the Hon ble Apex Court has held that it is clear that even if an applicant does not claim benefit under a particular notification at the initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage. Thus, the appellant is entitled to the benefit of CVD in terms of the Notification No. 48/94-C.E. dated 01.03.1994, as claimed. Demand of interest at the rate of 24% per annum - HELD THAT:- The appellant has cleared the goods as per the Notification No.204/92-Cus dated 19.05.1992. In this notification, there is no provision for collection of interest. It is observed that the Department has relied upon Board Circular No.131/95-Cus dated 20.12.1995 to raise demand of interest @24% - the Circular No.131/95- Cus dated 20.12.1995 is not applicable to the present case. Further, the interest under Section 28AB of the Customs Act, 1962 is payable only w.e.f. 28.09.1996 whereas the subject goods were admittedly imported in Sep. 1995 i.e. prior to coming into effect of the provisions of Section 28AB of the Act, 1962. Accordingly, the interest is not liable to be paid by the appellant for the duty liable to be paid by them. Accordingly, the demand of interest @24% confirmed in the impugned order set aside. Conclusion - i) The appellant is liable to pay duty at the rate of 50% and no CVD is payable in terms of Notification No. 48/94-C.E. dated 01.03.1994. ii) The demand of interest at the rate of 24% per annum confirmed in the impugned order is set aside. Appeal disposed off.

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• 2025 (3) TMI 344
  Classification of imported other woven fabrics of polyester staple fibre, unbleached of Bangladesh origin - to be classified under HS Code 5512 1110 or under CTH 5407 52 90? - the assessment before higher authorities not challenged - HELD THAT:- The appellant has got the Bills of Entry assessed by the customs officials. Since the assessment has been done in 2007, this is not a case of self-assessment. In the case of normal assessment (not being provisional assessment), it is deemed that the same attains finality unless the same is challenged before the appellate authority - In the present case, the Department is in error in not challenging this order before the appellate authority and by directly issuing another Show Cause Notice to re-classify the goods. On this issue, in the case of Priya Blue Industries v. Commissioner of Customs (Preventive) [ 2004 (9) TMI 105 - SUPREME COURT ], the Hon ble Supreme Court has held that So long as the Order of Assessment stands the duty would be payable as per that Order of Assessment. A refund claim is not an Appeal proceeding. The Officer considering a refund claim cannot sit in Appeal over an assessment made by a competent Officer. The Officer considering the refund claim cannot also review an assessment order. In the present case, the Revenue was definitely required to challenge the assessment order of the Bill of Entry which was passed in 2007, which has not been done. While Priya Blue dealt with the issue of non-challenging of assessment order by the assessee, the present case is that of nonchallenging of the assessment by the revenue before embarking on revision of classification of goods. Conclusion - The entire proceeding initiated by the Revenue without challenging the assessment order was flawed. The impugned order is set aside - appeal allowed.

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• 2025 (3) TMI 343
  Valuation of betel nuts imported from Indonesia - time limitation - contemporaneous price of similar goods imported - rejection of declared value - HELD THAT:- The primary objection raised by the appellant is that the demand is beyond five years if the date of corrigendum to the show-cause notice is taken into consideration - The Corrigendum reproduced below has amended only the para 26(f) wherein the duties have been clubbed and there is no material change as seen in the original show-cause notice and amended para (f) issued in the corrigendum. Therefore, the original show-cause notice is valid for all the 15 bills of entry and the objection raised by the appellant is rejected. Undervaluation of the betel nuts imported by the appellant - HELD THAT:- The demand on one Bill of Entry No.196600 dated 26.03.2007 which was a live Bill of Entry at that point of time, it was assessed provisionally and later on based on documents recovered from the premises of the importer, the same was finalized by enhancing the value and demanding differential duty. The betel nuts imported by the above Bill of Entry was declared as betel nut second quality ungarbled but on examination, it was found that it consisted of various varieties of betel nuts and the value declared was for only one variety of betel nut which was applied to all the varieties of betel nuts. This clearly proves misdeclaration of the description of the products followed by misdeclaration of value also. Hence, rejection of transaction value by the authorities is upheld. With regard to Bill of Entry No.169696 dated 24.11.2005 and Bill of Entry No.175491 dated 16.03.2006, the declared value was enhanced based on the documents recovered from the computer of the appellant. Similarly for Bill of Entry No. 176606 and 176607 dated 12.04.2006, 17738 dated 26.04.2006, 177653 dated 03.05.2006, 178528 and 178567 dated 18.05.2006, the Commissioner has relied upon the entries made in the diary recovered from the appellant s premises to enhance the value and relies on fax message dated 13.06.2006 recovered from the appellant s premises to compare the container number, seal number, description of the products, weight, number of bags etc. - the question of reopening these cases based on the fax messages and diary entries where the values are declared for different varieties cannot be applied to those Bills of Entry, since the Revenue has accepted the declaration of the products by the appellant, assessed the same and cleared finally after enhancement of the value based on the contemporaneous prices prevalent at that point of time. Conclusion - i) The rejection of the declared transaction value for Bill of Entry No. 196600, determining the correct value to be USD 89,900 is upheld. ii) The demand for differential duty and interest was upheld as being within the statutory time limits. iii) Confiscation of the goods was justified, but the fine in lieu of confiscation was reduced to Rs. 3,50,000, and the penalty was reduced to Rs. 1,50,000 under Section 112(a) of the Customs Act, 1962. Appeal allowed in part.

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• 2025 (3) TMI 342
  Refund of excess duty paid - time limitation - requirement of challenging assessment orders - Sections 149 and 154 of customs Act - HELD THAT:- The appellant filed various Shipping Bills for export of CPC, which were assessed as filed by the appellant, incorporating the calculation relating to Cess/Cesses and therefore levying the same at the time of export. It is a recorded fact that the Shipping Bills were assessed finally and that recourse to provisions of Section 18 of the Customs Act was not resorted to. Thus for claiming refund of excess duty paid, the assessee-appellant filed refund claims under Section 27 of the Customs Act. The impugned refund claims were filed well beyond the prescribed timelines under Section 27 of the act ibid. It also flows from records that the said Cess was neither paid under protest nor the assessment of the Shipping Bills made under Section 17, were appealed against as warranted in law. The lower authorities have adverted to the ruling of the hon ble apex court in the case of Priya Blue Industries Ltd. vs. Commissioner [ 2003 (11) TMI 600 - SC ORDER ] to state that the assessment finalized was not challenged by filing an appeal and therefore the refund claims were not maintainable. A person aggrieved by any assessment order is required to file an appeal against the said assessment undertaken, in respect of the shipping bills for which refund is sought, to have the said assessment order nullified - The law under Section 149 of the Act provides for amendment of documents. It categorically refers therein to section 30 and 41 of the Customs Act thereby implying reference to Bill of Entry and Shipping Bill i.e. import and export documents respectively. It may at this juncture be pointed out that even a recourse to such amendment provisions is not completely open ended and would be subject to stipulations as prescribed in law. The orders of both the lower authorities are well reasoned and self-speaking, concisely amplifying the grounds on which basis, provisions of Section 149 and Section 154 of the Customs Act cannot be resorted to and made applicable to the issue herein. The appellant had themselves filed the shipping bills in the manner as aforestated incorporating the said cess. It is apparent that there is no arithmetical or clerical mistake in the assessments so done. The assessment to cess, is indeed a consequence of conscious action taken by both the sides. Irrespective of the fact of whether it being the right or wrong course of action, it cannot be considered as error arising from an accidental slip or omission in the decision or order of the assessing authority, hence the question of invoking the provisions of Section 154 for correction of clerical/arithmetical error cannot be applied to in the present matter. Conclusion - i) A refund claim is not an Appeal proceeding. The Officer considering a refund claim cannot sit in Appeal over an assessment made by a competent Officer. ii) The provisions of Sections 149 and 154 cannot be used to bypass the requirement of challenging assessment orders through an appeal process. The order of the lower authority is therefore maintained and the appeal filed is dismissed.

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• Corporate Laws

• 2025 (3) TMI 341
  Professional Misconduct - Failure to comply with Companies (Audit and Auditors) Rules, 2014 in timely reporting of fraud to the Central Government under Section 143(12) of the Companies Act, 2013 in respect of the Corporate Loan Book (CLB) of Rs. 2,036 crores - Failure to appropriately assess the risk of fraud and risk of management override of controls in RFL - Failure to document sufficient evidence regarding the audit procedures performed in the audit of the loan book of RFL - Failure in verifying the certainty of future taxable income against which the Deferred Tax Assets (DTA) of Rs. 495.63 crores were recognised in the books - failure to obtain sufficient appropriate evidence regarding impairment/diminution of such investment and failure to verify the interest income received on the investments - Failure to give an appropriate audit opinion in light of the cumulative impact of mis-statements which were material and pervasive - Failure to obtain sufficient appropriate audit evidence regarding the appropriateness, completeness and accuracy of consolidation adjustments - penalty and sanctions. HELD THAT:- The EP has committed professional misconduct as defined in Section 132(4) of the Companies Act, read with Section 22 the Chartered Accountants Act 1949 (the CA Act), as amended from time to time, as detailed below: i. The Auditors committed professional misconduct of failure to report a material misstatement known to them to appear in a financial statement with which they are concerned in a professional capacity. (Refer Clause 6 of Part I of the Second Schedule of the CA Act). ii. The Auditors committed professional misconduct by failing to obtain sufficient information which is necessary for expression of an opinion, or its exceptions are sufficiently material to negate the expression of an opinion. iii. The Auditors committed professional misconduct by not exercising due diligence and being grossly negligent in the conduct of their professional duties. iv. The Auditors committed professional misconduct by failing to invite attention to any material departure from the generally accepted procedure of audit applicable to the circumstances. Penalty and sanctions - HELD THAT:- Section 132(4) of the Companies Act, 2013 provides for penalties in a case where professional misconduct is proved. The seriousness with which proved cases of professional misconduct are viewed is evident from the fact that a minimum punishment is laid down by the law. The EP in the present case was required to ensure compliance with SAs to achieve the necessary audit quality and lend credibility to Financial Statements to facilitate its users. As detailed in this Order, substantial deficiencies in the audit, abdication of responsibility and inappropriate conclusions on the part of CA Neeraj Bansal establish his professional misconduct. The lack of documented evidence in the original Audit File severely compromises the credibility of the audit and the reliability of the Financial Statements. Considering the fact that professional misconducts have been proved and considering the nature of violations and principles of proportionality, in exercise of powers under Section 132(4)(c) of the Companies Act, 2013, order imposition of a monetary penalty of Rs. 5,00,000/- upon CA Neeraj Bansal. In addition, CA Neeraj Bansal is also debarred for five (5) years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of Financial Statements or internal audit of the functions and activities of any company or body corporate. Conclusion - The EP committed professional misconduct under Section 132(4) of the Companies Act and the Chartered Accountants Act, 1949. The EP failed to report material misstatements, obtain sufficient information for opinion expression, exercise due diligence, and invite attention to material departures from audit procedures. The court imposed a monetary penalty of Rs. 5,00,000 and debarred the EP for five years from being appointed as an auditor. Application disposed off.

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• Securities / SEBI

• 2025 (3) TMI 340
  Funds withheld by the Bombay Stock Exchange (BSE) due to an alleged fraudulent transaction involving shares - actual ownership of the Shares/amount - whether Petitioner was involved in the alleged fraud? HELD THAT:- Petitioner had genuinely put its Shares in market for sale through Respondent No. 2. The alleged fraud has been played at the end of Respondent No. 2, by one Amit Jain from Royal International Shares Pvt. Ltd. and allegedly with some involvement of Ashish Aggarwal Jain, who is an employee of the Respondent No. 2 Company. There may have been a fraudulent call received by Respondent No. 2 placing an Order for purchase of the Shares of M/s Ashutosh Paper Mills Ltd. and consequently the Shares got purchased, but in this entire alleged fraud, the role of the Petitioner as being a party to this fraud cannot be deciphered. Petitioner being the owners of the Shares, had made them available for sale. Therefore, for the alleged fraud committed on the Complainant, the Petitioners whose value of shares of Rs.15.90 lakhs got sold in the market, cannot be denied to him. It is pertinent to observe that the Shares are not in the possession of the Petitioner, but have been handed over to the concerned Agency/SEBI for being sold in the market. On a query, it has been explained that these Shares do not have any market value as on date, for which reason the Respondent No. 2 is not inclined to take responsibility of these Shares which he had admittedly purchased for and on behalf of Brij Mohan Gagrani. There may have been some fraud committed at the level of Respondent No. 2, since allegedly, no Shares were directed to be purchased by Brij Mohan Gagrani and Respondent No. 2 may have suffered some financial loss on account of some fraud committed at its end, but that cannot be foisted on the Petitioner who in no way is a party to the alleged fraud. There has been some argument raised that in the Statement of the Petitioner recorded during the further investigations as directed by the learned M.M, he has not been consistent about the number of Shares. Petitioner has explained that inadvertently the correct number of Shares has not been mentioned, though the entire transaction has been truthfully stated by Shri Rajneesh Kumar, Director of the Petitioner Company. There being no denial of the Shares originally belonged to Petitioner which he had put in the market for sale and which also got sold, the Petitioner is entitled to release of Rs.15.90 lakhs realized on sale of the Shares in the market. It is, therefore, directed that without prejudice to the merits of the case, it is hereby directed that this amount of Rs.15.90 lakhs be released to the Petitioner on Superdari subject to him furnishing a Guarantee of the same amount, before the learned M.M. It is hereby clarified that there is no finding on the actual ownership of the Shares/amount which is subject to adjudication on the merits of the case.

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• Insolvency & Bankruptcy

• 2025 (3) TMI 339
  Approval of resolution plan of the Corporate Debtor as submitted by the Resolution Professional - whether there were material irregularities in the exercise of powers by the RP in the CIRP proceedings? - whether the claims of the Operational Creditors did not receive their dues or whether there was any contravention of the provisions of law? - HELD THAT:- There is no doubt that in terms of Section 24(3)(c) of the IBC, it is the duty of the RP to give notice to the Operational Creditors or their representatives regarding the CoC meetings if the amount of their aggregate due is not less than 10% of the debt. It is also well settled that such Operational Creditors whose aggregate due is not less than 10% of the debt have a right to watch the proceedings of the CoC and express their views in the meetings without however any right to vote. In the present case, there is no denial of the fact that the Appellant received notice of the CoC meetings from the RP. As the Appellant was kept informed of the CoC meetings and records show their regular participation in such meetings, they had full knowledge of the CIRP proceedings. It is an undisputed fact that the resolution plan in the present case was approved by the Adjudicating Authority beyond 330 days. Be that as it may, we also notice that the Adjudicating Authority had already approved the extension of CIRP period on 08.01.2024 which date was before 29.01.2024 when the plan was approved. In the present case, the 23rd CoC meeting on 04.12.2023 had taken note of the fact that it was in an advanced stage of considering the resolution plans before it and since the extended CIRP period was getting expired on 10.12.2023, the CoC approved seeking further extension of CIRP period. Clearly enough, CoC having taken a considered decision in this regard, this constituted sufficient grounds for the Adjudicating Authority to extend further time beyond 330 days for completion of the CIRP process. Section 30 of the IBC which deals with submission of Resolution Plan and sub-section (6) thereto states that the resolution professional shall submit the Resolution Plan as approved by the Committee of Creditors to the Adjudicating Authority . In the present case, the RP after approval of the plan by the CoC with 97.36% vote share filed an application before the Adjudicating Authority seeking approval of the Resolution Plan under Section 31 of the Code. Section 31 deals with approval of Resolution Plan. Section 31(1) provides that if the Adjudicating Authority is satisfied that the Resolution Plan as approved by the CoC under Section 30(4) meets the requirements as referred to in Section 30(2), it shall by order approve the resolution plan which shall be binding on the Corporate Debtor and other stakeholders involved in the Resolution Plan. Law is now well settled that the jurisdiction of the Adjudicating and Appellate Authorities to interfere with approval of the resolution plan is limited. The scope of judicial review is confined to the provisions contained in Section 30(2) of the IBC for the Adjudicating Authority and Section 30(2) read with Section 61(3) for the Appellate Authority. There is only limited review which can be exercised by the Adjudicating Authority or the Appellate Authority. There can be no fetters on the commercial wisdom of CoC. Conclusion - The Adjudicating Authority cannot substitute its views with the commercial wisdom of the CoC nor deal with the merits of Resolution Plan unless it is found it to be contrary to the express provisions of law and against the public interest. There is neither any material irregularity nor contravention of any provisions of law by the CoC which has been justifiably substantiated by the Appellant. In the present case when no valid grounds have been made out to challenge the approval of the resolution plan, the legislative fiat of the IBC that the Adjudicating Authority cannot trespass upon the business decision of the CoC holds ground. There are no good ground to interfere with the impugned order approving the resolution plan - appeal dismissed.

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• 2025 (3) TMI 338
  Maintainability of Section 9 application filed by the Operational Creditor - the application was premised on default which had arisen during the prohibited period of Section 10A of IBC - HELD THAT:- The law is well settled in the landmark judgment of the Hon ble Supreme Court in Ramesh Kymal Vs Siemens Gamesha Renewable Power Pvt. Ltd., [ 2021 (2) TMI 394 - SUPREME COURT ] that no application for initiation of CIRP under Section 9 can be initiated for default which is committed during the Section 10A period. The Ramesh Kymal judgment made it crystal clear that if any Corporate Debtor suffered default on account of Covid-19, they should be protected from the filing of any insolvency application in respect of default committed by them during this prohibited period. Thus, any default committed after 15.03.2020 till 28.02.2022 (extended period of suo-motu limitation) enjoyed complete immunity from initiation of CIRP proceedings. The legislative intent of introducing Section 10A into the scheme of IBC was to protect the Corporate Debtor from being shoved into the morass of insolvency in the extenuating circumstances inflicted by the Covid-19 pandemic. In the present facts of the case, the payment schedule given in the Settlement Deed, barring one instalment due on 28.02.2020, the rest of the other instalments fell due from 31.03.2020 to 31.12.2020 which were all hit by Section 10A of the IBC on the date of filing of Section 9 application by the Operational Creditor which took place in September 2020, the major portion of the default claimed by the Operational Creditor in the said Section 9 application clearly fell within the protected and prohibited period under Section 10A. Any default falling within this period cannot form the basis for initiating CIRP. The default which occurred during the Section 10A period therefore cannot be included in the calculation of debt and default for initiating CIRP. In the present case, when the portion of debt claimed by the Operational Creditor falling within the Section 10A period is excluded, the remaining debt does not fulfil the mandatory threshold of Rs 1 Cr. The default amount having failed to cross the threshold bar as laid down by Section 4 of IBC, the Section 9 application of the Operational Creditor was rendered non-maintainable. Conclusion - In the present case, since the entire payment in terms of the Settlement Deed has already been made, even though paid belatedly, the contumacious behaviour of the Operational Creditor in harassing the Corporate Debtor not countenanced even after having received the entire payment as per Settlement Deed. Such rapacious and intimidatory conduct on the part of any Operational Creditor cannot be tolerated as such conduct violates the quintessential sprit of IBC which is insolvency resolution. The Corporate Debtor is released from the rigours of CIRP - The impugned order cannot be sustained and is set aside. The Appeal is allowed.

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• 2025 (3) TMI 337
  Maintainability of application under Section 94 of the Insolvency and Bankruptcy Code (IBC) - absence of an ongoing CIRP or liquidation against the Corporate Debtor renders the present Petition by the Personal Guarantor non-maintainable - Personal Guarantor has committed a default, justifying admission of the insolvency petition or not - fulfilment of conditions under Section 100 of the IBC for initiation of the Insolvency Resolution Process (IRP) against the Personal Guarantor. HELD THAT:- IRP has recommended accepting the application for the reason as stated in the report - Resolution Professional report states that no evidence was placed before her that Personal Guarantor paid the amount demanded by the Financial Creditors and as such in over view demanded amount is un-serviced as on the date of order. The IRP had not received any document whereby the personal Guarantee related agreement was cancelled by the guarantor and any of the Financial Creditors - Demand Notices dated 27.09.2024 were issued by the Respondent/FC Canara Bank u/s 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Further, a Recall Notice dated 07.10.2024 as well as Form-B dated 08.11.2024 was issued by the Respondent/FC Canara Bank for invocation of Guarantee against the Applicant/Personal Guarantor which has not been withdrawn till date. It is stated in the report that the Applicant is eligible under Section 94(4) of the IBC, 2016 - It is stated in the said report that all the documents required under Rule 6 along with the Form-A of Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantor to Corporate Debtor has been filed. Further, the conditions under Section 100 of the IBC are met, as there is an undisputed debt of Rs. 9.63 Crore, default by the Personal Guarantor, and a valid invocation of the guarantee. Conclusion - The application under Section 94 of the IBC was maintainable and that the absence of ongoing CIRP or liquidation against the Corporate Debtor did not affect the petition s validity. Application filed under Section 94(1) of the IBC, 2016 is admitted and the Insolvency Resolution Process stands initiated against the Applicant/Personal Guarantor.

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• FEMA

• 2025 (3) TMI 336
  Breach of the principles of natural justice - denial of request to seek the cross-examination of Officer who recorded the statement of the Appellant under the provisions of Customs Act, 1962 and Officer who recorded the statement of co-noticees under the provisions of FERA. HELD THAT:- We observe that the tool of cross-examination is used so as to establish the truth, on the basis of certain reasonable grounds available with the petitioners. It does appear far-fetched that coercion while recording the statement can be established through such tool in the absence of any other reasonable ground to make a such assertion. It is unlikely that the Departmental Officers would have admitted that the statements were recorded under coercion, duress or inducement. In any case, the Appellants have failed to specify either before the Ld. Special Director or in the Appeals before us as to how exactly the prejudice is being caused to their respective interest by denial of cross-examination other than the ground mentioned in the Appeal. We find support from the three Judge Bench judgment of the Hon ble Supreme Court in State of U.P. v. Sudhir Kumar Singh [ 2020 (10) TMI 746 - SUPREME COURT ] We also note that the list of relied upon documents to the Show Cause Notice dated 17.05.2002 has 61 serialised items which comprise of statements, retractions, letters, Bank Account opening forms, directives, postal covers, copies of invoices, summons, agreement and copies of Shipping Bills. It is on record that the Ld. Special Director issued directions to furnish the copies of relied upon documents to the Appellants. Appellants have not even examined the merit of the documents which have been relied upon in the Show Cause Notice dated 17.05.2002 and have raised the issue of cross- examination without demonstrating the necessity for it. Thus, we find that the two interlocutory orders cannot be intervened with. We therefore, dismiss the Appeals.

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• Service Tax

• 2025 (3) TMI 335
  Seeking quashing of the amendment made in Clause (105) of Section 65 by the Finance Act, 2005 - Whether the SCN and the order in original should be quashed due to delay in adjudication? - HELD THAT:- The show cause notice in this case is more than fifteen years old. There was no justification for the Respondents to keep the show cause notice adjudication pending. Despite the dismissal of the stay application, the Adjudicating Authority failed to adjudicate the show cause notice and has in fact, now gone ahead and passed the order in original after several years. The matter is fully covered by the decisions in VOS Technologies [ 2024 (12) TMI 624 - DELHI HIGH COURT ] where the Court observed Ultimately it is incumbent upon the authority to establish that it was genuinely hindered and impeded in resolving the dispute with reasonable speed and dispatch. A statutory authority when faced with such a challenge would be obligated to prove that it was either impracticable to proceed or it was constricted by factors beyond its control which prevented it from moving with reasonable expedition. This principle would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act. The impugned show cause notice dated 26th September, 2008 and all the subsequent proceedings pursuant to the same including the order in original dated 28th February, 2019 shall stand quashed - petition allowed.

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• 2025 (3) TMI 334
  Seeking quashing of the impugned Order in Original on the ground of double taxation - HELD THAT:- Considering the factual nature of the issue and the fact that the impugned OIO is an appealable order, this Court is of the opinion that the same ought to be relegated to CESTAT for the purpose of adjudication after proper appreciation of facts. Considering the facts and circumstances of the present case, the Petitioner is permitted to present its appeal before CESTAT within four weeks subject to the Petitioner depositing a sum of Rs. 1 crore within four weeks. Subject to the said deposit being made the appeal would not be dismissed on the ground of limitation and shall be heard by CESTAT on merits. Petition disposed off.

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• 2025 (3) TMI 333
  Manpower Recruitment and Supply Agency Service - Commercial Training and Coaching Service - Providing first aid training to the students of the schools and colleges - extended period of limitation. Man Power Recruitment and Supplies Agency Service - HELD THAT:- The appellant is admittedly a Welfare Voluntary Organisation created under the Indian Red Cross Society Act, 1920 and the Deputy Commissioner (DC) of Chandigarh is the Chairman of the said society. It is also found that the appellant only provides temporarily the Man Power to registration and licesensing authority for the purpose of expedition of issuance of Driving Licences and Registration Certificates of Motor Vehicles in the RLA Office where there is an acute shortage of staff - the appellant is paid a fixed share out of the fees for issuance of Driving Licences/Registration Certificates of vehicles as a lump-sum amount on per case basis. Providing first aid training to the students of the schools and colleges - HELD THAT:- The Government is not covered by the terms person . Further, the definition of person was amended only in 2012 to include Government but the period involved in the present case is prior to 2012, therefore, the service provided to the Government will not be covered in the term to any person and therefore will not be taxable. It is also found that the first aid training to the students is a part of their syllabus of health education for class 9th prescribed under CBSE and only a nominal fees is paid by the students. Extended period of limitation - HELD THAT:- The suppression cannot be alleged against the appellant which is a non-profit making society working under the direct control of the Deputy Commissioner of Chandigarh and the adjudicating authority has also dropped the penalty under Section 80 by observing that extended period cannot be invoked; therefore, once the extended period cannot be invoked, the liability for the normal period. The impugned order is not sustainable in law - appeal allowed.

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• 2025 (3) TMI 332
  Short payment of Service Tax - technical inspection and certification service - Written off the advances received for the period prior to 31.03.2003 - demand for Service Tax on services rendered by the appellant s Japan branch to an Indian client - Non-inclusion of electricity charges collected from the tenants - maintenance charges collected from tenants - calculation of Service Tax liability under renting of immovable property service - Extended period of limitation. Demand of Service Tax of Rs.34,07,106/- confirmed under the category of technical inspection and certification service - HELD THAT:- The appellant has made excess payment during the years 2007-08 and 2011-12 and short payment during the years 2008-09, 2009-10 and 2010-11. However, it is noted that the Department has only taken into account the short payment made and ignored the excess payment done by the appellant. If the excess payment is taken into consideration, the actual short payment would be Rs.18,54,859/-, as per the work-sheet submitted by the appellant. Written off the advances received for the period prior to 31.03.2003 - HELD THAT:- In the present case, since the appellant has written off an amount of Rs.1,75,55,398/- on which the Service Tax liability works out to Rs.18,08,206/- This written off amount cannot be considered as income of the appellant in the year of write off and service tax cannot be demanded on this amount. Thus, the matter is remanded for recalculating the demand on this count. Whether the demand for Service Tax on services rendered by the appellant s Japan branch to an Indian client is sustainable? - HELD THAT:- The amount has been wrongly mentioned towards the services exported by the appellant s Kolkata branch. The service has been actually rendered by the Japan branch of the appellant to the Indian company, namely, M/s. MMTC Ltd. In such circumstances, Service Tax, if at all payable, shall be payable under reverse charge mechanism by M/s. MMTC Ltd. Therefore, the demand of service tax on this count from the appellant is not sustainable. Non-inclusion of electricity charges collected from the tenants - HELD THAT:- The appellant has been collecting the electricity charges as a pure agent . Thus, these expenses amount to reimbursement of electricity charges, paid by the appellant to the electricity company. Accordingly, there is no liability to pay Service Tax by the appellant on such electricity charges. Thus, the demand of Service Tax of Rs.8,17,482/- confirmed on this count is set aside as being unsustainable. Demand of Service Tax of Rs.1,28,962/- on maintenance charges collected from tenants - HELD THAT:- The appellant have accepted this liability and already paid the tax. Thus, the amount paid by the appellant is to be appropriated against this liability. Whether the calculation of Service Tax liability under renting of immovable property service was accurate and if the appellant s recalculated liability should be accepted? - HELD THAT:- In this regard, the appellant has submitted a CA certificate which needs to be considered and the liability of service tax on this count needs to be re-worked on the basis of the CA certificate. As the appellant has questioned the calculation of Service Tax liability, the issue needs to be remanded back to the adjudicating authority, for verification of correctness of the claim made by the appellant. Extended period of limitation - HELD THAT:- The appellant has been filing returns regularly and they have not suppressed any information from the Department. Thus, suppression of facts with the intention to evade the payment of tax has not been established in this case. Consequently, the demand confirmed by invoking the extended period of limitation is not sustainable. Conclusion - i) Regarding the demand of Rs.34,07,106/- confirmed in respect of technical inspection and certification service , the issue is remanded to the adjudicating authority for the purpose of re-computing the demand. ii) The written off amount cannot be considered as income of the appellant in the year of write off and service tax cannot be demanded on this amount. iii) Service Tax, if at all payable, shall be payable under reverse charge mechanism by M/s. MMTC Ltd. iv) There is no liability to pay Service Tax by the appellant on such electricity charges. Thus, the demand of Service Tax of Rs.8,17,482/- confirmed on this count is set aside as being unsustainable. v) The appellant have accepted this liability and already paid the tax. Thus, the amount paid by the appellant is to be appropriated against this liability. vi) The appellant has submitted a CA certificate which needs to be considered and the liability of service tax on this count needs to be re-worked on the basis of the CA certificate. As the appellant has questioned the calculation of Service Tax liability, the issue needs to be remanded back to the adjudicating authority, for verification of correctness of the claim made by the appellant. v) Suppression of facts with the intention to evade the payment of tax has not been established in this case. Consequently, the demand confirmed by invoking the extended period of limitation is not sustainable. The appeal filed by the appellant is disposed by way of remand.

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• 2025 (3) TMI 331
  Recovery of not paid/short paid service tax alongwith interest and penalty - discrepancies between the amounts reported in their service tax returns and those reflected in Form 26AS - extended period of limitation - HELD THAT:- The appellant have received amounts which are much bellow the threshold limit as prescribed under N/N. 33 of 2012, whereby threshold limit of exemption was provided by 10 lakhs in relation to the services exempted from payment of service tax as per Notification No.33 of 2012 dated 20 June, 2012 in relation to eatable products. There is sufficient ground for the appellant to enter into a belief that no service tax was payable by them. It is also supported by the decision to belief is well founded on the basis of the decision of this Tribunal in the case of M/s Kwality Ice Cream Company [ 2018 (3) TMI 1389 - CESTAT NEW DELHI] . Conclusion - There are no merits in the impugned order to the extent that it holds invocation with regards to extended period of limitation for making this demand, as this demand is based by limitation, so no penalty could have been imposed on the appellant. The impugned order is set aside - appeal allowed.

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• Central Excise

• 2025 (3) TMI 330
  Area based exemption - N/N. 50/2003-CE. - Determination of the eligibility of the appellant for exemption - applicability of the doctrine of res judicata - HELD THAT:- The scope of the remand is not limited as submitted by the learned Counsel for the appellants. However, Hon ble supreme Court has directed this bench to reconsider the point raised in the civil appeal by Revenue. It is the contention of the appellants that the department after due verification has given permission to M/s Stanley controls to avail exemption: District industries Centre DIC has permitted; Chartered Engineer certified the shifting and installation/commencement of production; it is incorrect to state that the unit was not functioning; even if it is assumed that the unit is not functioning, there is no condition that the said unit must be functioning on the day of transfer - M/s Stanley Controls has filed returns for all the quarters, for the period 30.09.2009 to 31.12.2012, on one single date i.e on 14.01.2013 together just before the takeover; they have shown production/clearance of 80 Nos of Solenoid Valves valued at Rs 73,301, during the quarter ending September 2009, whereas they have shown clearance of 1050 Nos of said valves valued at Rs. 36, 750 without showing any production of these valves in the register for the quarter ending 31.12.2012; even after filing declaration dated 25.03.2013 by the applicant with the department to continue to avail the area-based exemption, their Quarterly Returns for the period from 01.01.2013 to 31.12.2013 shows NIL production/clearance. The appellants have not given any documentary evidences to controvert the findings of the adjudicating authority or the appellate authority to the effect that M/s Stanley Controls was a working unit prior to its takeover by the appellants. Therefore, M/s Stanley Controls was a non-working and a defunct unit at the time of its sale and therefore not eligible for area -based exemption as envisaged under notification no. 50/2003-CE dated 10.06.2003 as amended. Consequentially, the appellants having purchased an ineligible unit, are also not eligible for area-based exemption. M/s Stanley Controls was not working as on the date of transfer. A fa ade of taking over a working unit was made to avail exemption contained under Notification No. 49-50/2003 dated 10.06.2003. However, various documents and records and the inferences drawn by them have exposed the attempt. We are of the considered opinion that the CBEC Circular permits only transfer of a unit availing exemption but not the exemption alone. Conclusion - i) M/s Stanley Controls was not operational at the time of transfer, rendering the appellant ineligible for the exemption. ii) The demand for duty, interest, and penalties upheld. Appeal disposed off.

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• 2025 (3) TMI 329
  CENVAT Credit - extended period of limitation - HELD THAT:- Revenue had initiated an investigation and on investigation, it was revealed that M/s. Ganpati had no electricity connection and therefore the Revenue took the view that they would not be able to manufacture the goods. Thus, it has been alleged that they are not entitled to avail CENVAT Credit on the invoices issued to M/s. Ronix. However, it is a fact on record that M/s. Ganpati has manufactured the goods and the same have been cleared on payment of duty, which has been accepted by the Revenue. If the duty has been accepted by the Revenue, in these circumstances, CENVAT Credit availed cannot be denied, as has been held by the Hon ble Bombay High Court in the case of Commissioner of C.Ex., Pune-III v. M/s. Ajinkya Enterprises [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] . wherein it has been held that payment of duty shall amount to reversal of credit even if there is no manufacturing activity. Admittedly, in this case, M/s. Ganpati has paid the duty and therefore, CENVAT Credit cannot be denied. The same is with the case of M/s. Ronix, which has taken CENVAT Credit on the duty paid by M/s. Ganpati and the same has been used in the manufacture of their final product, which were cleared on payment of duty. In these circumstances, when the Revenue has accepted the duty payment from the appellants, CENVAT Credit cannot be denied. Conclusion - Since the duty payment was accepted, CENVAT Credit cannot be denied. Appeal allowed.

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• 2025 (3) TMI 328
  Determination of value in terms of Rule 10A read with Rules 8 and 9 of the Central Excise Valuation Rules, 2000 or under Rule 8 of the Rules - extended period of limitation - HELD THAT:- The value adopted by them is cost of raw material supplied by their customers plus cost of raw material procured by them plus conversion charges which includes profit. Rule 10A(iii) is applicable in case the goods are captively consumed, or the goods are used by other companies on their behalf. In this case the goods are manufactured on job work basis and supplied to the principal manufacturer, who manufacturers finished goods using the material/goods supplied by the appellant, therefore in the facts of the case, it is found that Rule 8 of Central Excise Valuation Rules, 2000 is not applicable and the method of valuation adopted by the appellant is proper and therefore the demand of duty along with the interest and imposition of penalty are not tenable. Conclusion - The method of valuation adopted by the appellant, based on the cost of raw materials supplied by customers, materials procured by them, conversion charges, and profit, was deemed appropriate. Appeal allowed.

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• 2025 (3) TMI 327
  Cash refund of cenvat credit lying in balance under Rule 5 of the Cenvat Credit Rules, 2004 consequent to closure of their factory - HELD THAT:- he issue is no more res integra. Hon ble Bombay High Court initially taking note of the conflicting views on the subject, referred the matter for resolution by Full Bench of the Hon ble Bombay High Court. The full Bench of the Hon ble Bombay High Court in the case of Gauri Plasticulture Pvt. Ltd. [ 2019 (7) TMI 1204 - BOMBAY HIGH COURT] where Larger Bench of this Court disposed of all the three questions referred to it by Division Bench of this Court by answering the same in favour of the Revenue and against the Assessee. Conclusion - The cash refund of accumulated cenvat credit lying in account on the date of closure of factory in the appellant s case cannot be admissible. Appeal dismissed.

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• 2025 (3) TMI 326
  Refund of duty paid on inputs used for export goods when foreign exchange proceeds have not been realized - amount was paid under protest or not - rejection on the ground of failure to fulfill condition of Exim policy with regard to net foreign exchange earnings - HELD THAT:- It is found that in the impugned order the appellate authority has found that the case laws cited by the appellant pertain to demand of duties on the issues like removal/diversion of goods/waste into DTA, improper removal from bonded warehouse, entitlement to deemed export and remission of duty and that the case of the appellant is with regard to consumption of inputs, where export proceeds have not being realized and therefore the decisions cited by the appellant were not found relevant to the issue and therefore were not considered. The appellant in the appeal and during the hearing also has relied on the same case laws. We find that it is an undisputed fact that the appellant has not realized foreign exchange for the exports made during the year 2006-07 to the extent of Rs. Rs. 47,68,477/-and they have also written off of Rs. 6,08,729/-as bad debts. The conditions prescribed in the Notification Nos. 23/2003-CE and 52/2003-Cus and B-17 bond executed by the appellant read with the Exim policy allows the Customs/Excise department to demand duty foregone on the inputs used in the export of goods, where the foreign exchange is not realized. Conclusion - The appellant s failure to realize foreign exchange for certain exports led to the duty foregone on inputs being recoverable under the relevant notifications and policy framework. Appeal dismissed.

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• Indian Laws

• 2025 (3) TMI 325
  Preventive detention under Section 3(1) of the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 - HELD THAT:- The orders of detention passed against Ashraf Hussain Choudhary and Adaliu Chawang cannot be sustained. The authorities concerned paid mere lip service to the mandatory requirements and mechanically went through the motions while dealing with the cases of these two individuals. The proposals submitted by the Investigating Officer noted the fact that both the detenus were arrested on 12.04.2024 and that they had not been released on bail. Reference was also made to their involvement in earlier cases. In the case of Adaliu Chawang, the Investigating Officer stated that she was arrested in Meghalaya in connection with FIR dated 21.04.2021 but noted that she was not treated as absconding after being granted bail. In the case of Ashraf Hussain Choudhary, the Investigating Officer stated that he was earlier arrested in connection with a case registered by Dimapur East PS in the year 2022, but noted that he was also not absconding in relation thereto after securing bail. The Investigating Officer, however, did not state anything about either of the detenus seeking bail in relation to Narcotics PS Case No. 005/24, after being arrested on 12.04.2024. The covering letters dated 14.05.2024 and 17.05.2024 addressed by the Additional Director General of Police to the Special Secretary, Home Department, Government of Nagaland, reiterated the factum of both the detenus having been arrested on 12.04.2024 and their being in judicial custody on that date. He, however, went on to state that, if granted bail, there was a great chance of both of them continuing with illicit trafficking of narcotic drugs and psychotropic substances. There was no basis whatsoever for this ipse dixit statement, as it is an admitted fact that neither Ashraf Hussain Choudhary nor Adaliu Chawang had applied for bail at the time the detention orders were passed against them. The material placed on record reflects that the detaining authority, viz., the Special Secretary, Home Department, Government of Nagaland, did not even make separate grounds of detention but merely acted upon the proposals for detention forwarded to her by the Additional Director General of Police (Administration), Nagaland. The cryptic orders of detention passed by her on 30.05.2024 merely recorded that she was satisfied, on careful examination of such proposals and other supporting documents, that sufficient grounds were made out for the detention of Ashraf Hussain Choudhary and Adaliu Chawang. The Gauhati High Court erred in the application of settled legal norms while testing the validity of the impugned detention orders - Appeal allowed.

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