TMI Tax Updates - e-Newsletter
April 19, 2025

Case Laws in this Newsletter:

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

TMI Short Notes

1. Preventing Double Taxation of Corporate Dividends : Clause 148 of the Income Tax Bill, 2025 Vs. Section 80M of the Income-tax Act, 1961

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2. Future of Tax Incentives for Offshore Banking and IFSCs : Clause 147 of the Income Tax Bill, 2025 vs. Section 80LA of the Income Tx Act, 1961

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3. Continuing the legislative policy of incentivizing employment generation : Clause 146 of Income Tax Bill, 2025 vs. Section 80JJAA of Income Tax Act, 1961

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4. Tax Incentives for Bio-Degradable Waste Management in India : Clause 145 of the Income Tax Bill, 2025 Vs. Section 80JJA of the Income-tax Act, 1961

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5. Tax Incentives for reginal development in the North-Eastern States of India : Clause 143 of Income Tax Bill, 2025 vs. Section 80IE of Income-tax Act, 1961

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6. Transitional Tax Incentives for Affordable Housing : Clause 142 of Income Tax Bill, 2025 Vs. Section 80IBA of Income-tax Act, 1961

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7. Grandfathering Industrial Undertaking Deductions : Clause 141 of Income tax Bill, 2025 vs. Section 80IB of the Income Tax Act, 1961

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Articles

1. UNJUSTIFIED DENIAL OF ITC under GST

   By: K Balasubramanian

2. How to File OPC Annual Return Online?

   By: Ishita Ramani

3. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

4. 🧾 𝗔 𝘁𝗮𝘅 𝗽𝗼𝘀𝗶𝘁𝗶𝗼𝗻 𝘀𝗮𝘃𝗲𝗱 𝗺𝗶𝗹𝗹𝗶𝗼𝗻𝘀. But no one remembers why it was taken.

   By: Pradeep Reddy

5. ORDER FOR INVESTIGATION OF A COMPANY AND ITS DIRECTORS BY ‘NCLT’ – REASONABLE OPPORTUNITY TO BE GIVEN TO PARTIES CONCERNED

   By: DR.MARIAPPAN GOVINDARAJAN

6. Coffee Board of India(Introduction, Constitution, Legal Framework, Functions, Schemes, Products, Services, Membership).

   By: YAGAY andSUN

7. Carpet Export Promotion Council (CEPC)

   By: YAGAY andSUN

8. Coconut Development Board (CDB)

   By: YAGAY andSUN

9. CHEMEXCIL{Export Promotion Council}

   By: YAGAY andSUN

10. International organizations for environmental protection.{Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

11. Authorized and Governing Bodies of FSC Certification.{Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

12. Forest Stewardship Council (FSC) - who issues the FSC certification and the complete procedure/process involved.{Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

13. FSC Certification and its role in sustainable forestry and afforestation{Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

News

1. CBIC issues revised instructions for processing applications for GST registration by CBIC formations

2. Venice expands its day-tripper tax programme to combat overtourism

3. APSEZ acquires 50 MTPA capacity NQXT Australia, accelerating path to 1 billion tonnes p.a. by 2030

4. Haitians face record hunger as gang violence grips country in throes of economic crisis

Notifications

Customs

1. 26/2025 - dated 17-4-2025 - Cus (NT)

Amendment in Notification No. 77/2023 – Customs (N.T.), dated the 20th October, 2023

Income Tax

2. 34/2025 - dated 17-4-2025 - IT

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

3. 33/2025 - dated 17-4-2025 - IT

Central Government approves ‘KIMS Foundation and Research Centre’ Hyderabad, under the category of ‘University, college or other institution’ for the purposes of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961

Circulars / Instructions / Orders

GST

1. Instruction No. 03/2025 - dated 17-4-2025

Instructions for processing of applications for GST registration

Customs

2. Public Notice No. 36/2025 - dated 9-4-2025

Rescinding of JNCH PN No.101/2024 dated 22.11.2024 regarding Transhipment of movement of export cargo from Bangladesh to third Countries from Nhava Sheva Port by Rail or Road vide Circular No. 29/2020-Customs dated 22.06.2020-reg

Highlights / Catch Notes

GST

• Clubs and Associations Win: Retrospective Tax Amendments Struck Down, Mutuality Principle Preserved Under CGST and KGST Acts

  Case-Laws - HC : HC held that amendments to CGST and KGST Acts regarding deemed supply of services by clubs/associations to members are unconstitutional. The court determined that the principle of mutuality survives constitutional interpretation, and the retrospective amendments violate the Rule of Law. The statutory provisions improperly expanded the definition of "supply" and "service" without constitutional basis. The amendments were declared void, with the court emphasizing that legislative actions must respect fairness and cannot impose unexpected tax liabilities retrospectively. The judgment upholds the principle that taxation mechanisms cannot arbitrarily redefine fundamental legal concepts without appropriate constitutional amendments.
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• GST Rate Reduction Not Automatically Applicable: Council Recommendation Insufficient Without Formal Notification

  Case-Laws - HC : HC ruled on GST rate applicability for works contract services. The retrospective reduction of GST rate from 18% to 12% recommended by GST Council on 5th August, 2017 was not legally binding until formal notification on 21st September, 2017. The court held that the original GST rate of 18% prescribed in the 8th July, 2017 notification remained valid for tenders submitted before the final notification date. The GST Council's recommendation alone cannot be construed as a statutory rate change, particularly considering constitutional provisions. Consequently, the petitioner's claim for retrospective rate reduction was rejected, and the petition was dismissed.
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• Bail Granted in Tax Fraud Case: Procedural Lapses Expose Critical Flaws in Arrest Mechanisms Under Criminal Procedure Code

  Case-Laws - HC : HC allows bail for accused involved in fake invoice tax fraud, finding procedural irregularities in arrest. The court determined that mandatory provisions under Cr.P.C. and BNSS were not followed, specifically Sections 41/41A and 47/48, which violated constitutional protections under Articles 21 and 22(1). Considering substantial investigation progress and collected documents, further custodial interrogation was deemed unnecessary. Bail granted upon furnishing a bond of Rs. 50,000 with an equivalent surety, subject to CJM's satisfaction, effectively releasing the accused from custody due to technical non-compliance in arrest procedures.
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• Systematic Denial of Personal Hearing Violates Natural Justice, Rendering Ex-Parte Proceedings Under Section 75(4) Invalid

  Case-Laws - HC : HC held that systematic failure to provide personal hearing violates principles of natural justice under Section 75(4) of GST Act, 2017. The ex-parte assessment and cancellation of GST registration without ensuring personal service of notices constitutes procedural impropriety. The court critically emphasized the recurring administrative malpractice of uploading notices on portal without guaranteeing actual service. Consequently, the matter was remanded to the Joint Commissioner SGST, Corporate Circle-1, Ghaziabad to pass a fresh order after affording petitioner a proper opportunity of personal hearing, thereby allowing the petition and rectifying the procedural defect.
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• Taxpayers Granted Right to Rectify GST Returns Beyond Standard Timelines, Emphasizing Procedural Flexibility and Substantive Justice

  Case-Laws - HC : HC dismissed SLP challenging rectification of GST returns beyond prescribed timelines. The court held that the right to correct clerical or arithmetical errors is inherent in conducting business and should not be denied without substantial justification. Software limitations cannot be a valid reason to prevent error correction, as technological systems can be reconfigured to facilitate compliance. The ruling emphasizes taxpayers' procedural flexibility in addressing inadvertent mistakes in tax documentation, affirming the principle of substantive justice over rigid procedural constraints.
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• Flavoured Milk Tax Classification Resolved: Tariff Heading 0402 Confirmed, Remanded for Fresh Assessment Under Specified Guidelines

  Case-Laws - HC : HC determined that flavoured milk sold by petitioner falls under tariff heading 0402, not CH 2202. The conversion charges for milk to milk powder were remanded for reassessment, with the appellate authority previously indicating a potential 5% tax rate instead of 18%. The original assessment order and appeal order were set aside, directing the Assessing Officer to conduct a fresh assessment, specifically levying tax on flavoured milk under the specified tariff heading. The petition was subsequently disposed of, effectively returning the matter for reconsideration with specific guidance on tax classification and rate.
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• Legal Challenge Rejected: Section 161 GST Application Dismissed Due to Lack of Substantive Grounds and No Adverse Impact

  Case-Laws - HC : HC dismissed petitioner's application under Section 161 of Goods and Services Act, 2017, holding that principles of natural justice are not mandatory when no actual rectification is performed and the applicant suffers no adverse impact. The court determined that the rectification provision requires adherence to natural justice only when specific conditions are met: (i) rectification is being carried out and (ii) such rectification potentially adversely affects the assessee. In this instance, the application was deemed vague and without substantive grounds, thus justifying rejection without a personal hearing.
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• Procedural Defects in Tax Notice Invalidate SCN, HC Grants Stay Based on Jurisdictional and Electronic Filing Irregularities

  Case-Laws - HC : HC adjudicated a challenge to a SCN under Section 74 of CGST Act, 2017, primarily contesting non-compliance with Rule 142 of CGST Rules. The petitioners argued that the SCN was issued without jurisdictional validity, as no tax evasion was alleged, and the notice was not electronically uploaded. The court found a prima facie case in the petitioners' favor, noting that the subsequent final order issued on 21.01.2025 was potentially non-est due to procedural irregularities. Applying the legal maxim "sublato fundamento cadit opus", the HC admitted the petitions and stayed the operation of the impugned order pending final adjudication, emphasizing that procedural non-compliance could invalidate subsequent proceedings.
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• GST Rate Fixed at 12% for Real Estate Project Based on Original Promoter's Election, Binding Subsequent Buyers

  Case-Laws - AAR : The AAR held that the GST rate for the project is governed by the one-time option exercised by the original promoter at 12% with input tax credit. The applicant is bound by this project-specific election and cannot switch to a 5% rate without input tax credit. The ruling emphasizes that the tax treatment is project-based, not promoter-specific. Consequently, the applicant must discharge GST at 18% (9% CGST + 9% SGST) with input tax credit, applying a one-third deduction for land value. The option applies uniformly to existing and new buyers, preventing differential tax rates within the same project.
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• Railway Infrastructure Services Blend Multiple Contract Types, Determined as Mixed Supply Under GST Rule 995419 for Maintenance and Construction Work

  Case-Laws - AAR : AAR held that services provided by the applicant for reconstruction, maintenance, housekeeping, and security at Kalamboli Goods Shed constitute a mixed supply, primarily classified under works contract services. The services are not considered a composite supply and will be taxed at 18% under Heading 995419. The services involve cement concreting, platform construction, drainage, and water supply systems. The ruling explicitly notes that the input tax credit (ITC) entitlement for Central Railway cannot be determined within the scope of this advance ruling, leaving that aspect unresolved. The key determination is the tax classification and rate applicable to the mixed service contract.
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• Cancer Diagnostic Research Services Denied GST Exemption Under Notification 12/2017-CT(R) Due to Research Classification

  Case-Laws - AAR : AAR ruled that the applicant's cancer diagnostic services do not qualify for GST exemption under Notification No. 12/2017-CT(R). The tests were determined to be clinical research and experimental development, primarily focused on acquiring new knowledge in biotechnology and cancer prognostic technologies. Without proper licensing from CDSCO or ICMR, the services were classified under Service Accounting Code 9981 for research services, rendering them ineligible for tax exemption. The determination hinged on the nature of the service being research-oriented rather than a direct diagnostic healthcare service.
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• Textile-Based Geo-Membrane Water Proofing Material Classified Under 5911 10 00 as Technical Textile Product

  Case-Laws - AAR : AAR ruled that Geo-Membrane for Water Proof Lining - Type-II manufactured from HDPE woven fabrics with specific weaving patterns is classifiable under Tariff Heading 5911 10 00. The determination was based on the product's manufacturing process, technical textile characteristics, and compliance with IS Standards. Despite being laminated with plastic and involving textile components, the product's technical use and Chapter 5911 specifications dictate its classification, prioritizing Section Notes and Chapter Notes over commercial understanding or trade interpretation.
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Income Tax

• Tax Transfer Order Challenged: CBDT Directed to Investigate Procedural Irregularities in Assessment Proceedings Under Section 127

  Case-Laws - HC : HC observed that the assessment transfer order from Mumbai to Indore was abandoned, with proceedings re-transferred within Mumbai circles. Despite resolving the immediate dispute, the court directed CBDT and Ministry of Finance to conduct a preliminary inquiry into potential procedural irregularities. The HC expressed concerns about possible misuse of court proceedings and potential compromise of revenue interests. The court mandated CBDT to file a compliance report by 27 June 2025, emphasizing the importance of protecting both taxpayer rights and government revenue, while ensuring adherence to principles of natural justice and prescribed administrative procedures.
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• Charitable Society Wins Tax Exemption: Section 2(15) Interpretation Upholds Non-Commercial Purpose and Public Utility Objectives

  Case-Laws - HC : The HC affirmed the ITAT's ruling that the first proviso to Section 2(15) of the Income Tax Act does not apply to the assessee authority. The court determined that the society's activities were not commercial in nature, but rather focused on development planning and housing, which constitute a charitable objective of general public utility. Two concurrent authorities found no evidence of trade, commerce, or business operations. The assessee's predominant purpose remained charitable, with governmental control over its dissolution. The substantial questions of law were resolved in favor of the assessee, rejecting the revenue's contention that the organization was operating on commercial lines with a profit motive.
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• Taxpayer Wins: Section 147 Reassessment Invalidated Due to Lack of Sufficient Material and Limitation Constraints

  Case-Laws - HC : HC held that reopening of assessment under Section 147 was improper. The AO lacked sufficient material to demonstrate income escaping assessment, as the taxpayer had already declared and paid tax on the transaction. The notice was beyond the prescribed three-year limitation period under Section 149(1), rendering it invalid. The court emphasized that the purpose of sharing information is to enable the assessee's response and allow the AO to make an informed decision. Consequently, the HC allowed the petition and set aside the impugned notice, finding no justification for reassessment.
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• Tax Dispute: High Rate Confirmed for Undisclosed Income Under Section 115-BBE for Assessment Year 2017-18

  Case-Laws - AT : ITAT upheld the higher tax rate of 60% under section 115-BBE for assessment year 2017-18, reversing CIT(A)'s earlier determination. The tribunal followed precedential decisions from Kerala HC and coordinate bench rulings in Spectra Equipment and Chandan Garments cases. The amended provisions of section 115-BBE were deemed applicable, and the assessment order levying tax at 60% on income added under section 68 was consequently confirmed. The revenue's grounds were allowed, effectively establishing the retrospective applicability of the higher tax rate for the specified assessment year.
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• Tax Tribunal Allows Full Royalty Expense Deduction, Limits Repairs Expenditure to 10% Under Section 37 Criteria

  Case-Laws - AT : ITAT adjudicated two key tax issues: (1) repairs and maintenance expenditure disallowance was restricted to 10% after reviewing submitted ledger accounts, upholding CIT(A)'s partial disallowance; (2) royalty expenses were deemed revenue expenditure under Section 37, rejecting Revenue's capital expenditure classification. The tribunal referenced precedential case law from Delhi HC, specifically EKL Appliances and Lumax Industries, which established year-to-year license/technical knowledge payments as revenue expenditure. Considering consistent treatment in prior assessment years and absence of ongoing benefit post-agreement termination, ITAT ruled comprehensively in assessee's favor, allowing full royalty expense deduction.
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• Income Tax Deduction Claim Upheld: ITAT Rejects Revenue's Appeal for Rectification Under Section 154

  Case-Laws - AT : ITAT dismissed the Revenue's appeal regarding rectification u/s 154, finding no prima facie mistake apparent from records. The tribunal concluded that the deduction u/s 80IA(12A) was comprehensively examined by CIT(A), and the provisions of section 154 could not be invoked to modify the assessee's claim. The AO was not justified in withdrawing the deduction claim under section 80IA(2A), and both legal grounds and case merits supported dismissal of the Revenue's appeal.
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• Transfer Pricing Dispute: Tribunal Rejects Comparators, Mandates Comprehensive Study on Interest Computation for Receivables

  Case-Laws - AT : ITAT adjudicated a transfer pricing dispute involving comparability analysis and interest computation on outstanding receivables. The tribunal rejected certain comparator companies as functionally dissimilar. Regarding notional interest, ITAT held that TPO must conduct a comprehensive transfer pricing study considering credit periods and applicable LIBOR rates. The tribunal remanded the matter to the AO/TPO, directing that if working capital adjustment encompasses outstanding receivables, no separate characterization is required. For receivables outside working capital, the interest rate should be LIBOR plus 300 basis points, consistent with judicial precedent, with a 90-day credit consideration.
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• Reopening Tax Assessment Requires Concrete Evidence, Not Generic Reporting, Tribunal Strikes Down Arbitrary Reassessment Under Section 147

  Case-Laws - AT : ITAT held that the Assessing Officer (AO) lacks jurisdiction to reopen assessment under section 147. The AO failed to establish a genuine reason to believe income escaped assessment, merely relying on Investigation Wing's report without independent verification. The reasons recorded were generic, mechanical, and lacked substantive evidence of material facts not previously disclosed. The tribunal found no tangible material supporting the AO's belief, emphasizing that receipt of information alone is insufficient to trigger reassessment proceedings. Consequently, the notice under section 148 was quashed, and consequent reassessment proceedings were set aside, decisively ruling in favor of the assessee.
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• Income Tax Assessment: Tribunal Upholds Taxpayer's Claims, Rejects Revenue's Appeal on Multiple Procedural and Substantive Grounds

  Case-Laws - AT : The ITAT rejected revenue's appeal, affirming CIT(A)'s findings across multiple grounds. The tribunal dismissed revenue's challenges regarding income estimation, book of accounts rejection, and profit rate determination. Key holdings included: (1) When books are rejected and net profit estimated, no further additions can be made from the same rejected books, (2) Only real income should be taxed, not notional income, (3) Differences in form 26AS and book entries were adequately explained, and (4) The profit rate of 0.11% was consistent with coordinated bench precedent. The tribunal found no merit in revenue's grounds and dismissed all appeals, maintaining the lower appellate authority's favorable findings for the assessee.
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Customs

• Customs Dispute Resolved: Procedural Delays Invalidate Show Cause Notice Under Section 28(6) of Customs Act

  Case-Laws - AT : CESTAT adjudicated a customs dispute involving procedural time limitations under Section 28(6) of the Customs Act. The tribunal found the Principal Commissioner's reasoning illogical, noting that the department unreasonably delayed proceedings beyond statutory timelines. Despite a corrigendum issued subsequent to the original show cause notice, the appellant had timely deposited requisite amounts and complied with legal requirements. The tribunal held that the proceedings initiated on 05.03.2018 were conclusively deemed closed, as the adjudication exceeded prescribed one-year limitation period. The personal hearing occurred on 27.09.2018, and the final order was passed on 16.12.2019, significantly breaching statutory timelines. Consequently, the appeal was allowed, effectively terminating the customs proceedings.
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• Customs Broker Wins Appeal: No Intentional Misconduct Found, Regulatory Violations Dismissed After Thorough Evidence Review

  Case-Laws - AT : CESTAT adjudicated a customs broker's appeal challenging penalty allegations for alleged regulatory violations. The tribunal found no intentional misconduct by the broker, noting the authorization letter from reconstituted firm's partners validating the broker's actions. The tribunal critically examined the documentary evidence and determined that the broker was unaware of the firm's constitutional changes and acted within authorized parameters. The department's allegations of violating Regulation 11(d) and 11(n) of Customs Brokers Licensing Regulations were deemed unsubstantiated. The tribunal conclusively held that no deliberate wrongdoing was established, thereby setting aside the penalty order and allowing the broker's appeal with full exoneration.
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IBC

• Corporate Property Transfer Dispute Rejected: Resolution Professional's Possession Upheld Under Insolvency Proceedings and Take Over Agreement

  Case-Laws - AT : NCLAT dismissed the appeal involving a property transfer dispute between a corporate debtor and a sole proprietorship firm. The Appellate Tribunal held that the subject property was lawfully in possession of the Resolution Professional during Corporate Insolvency Resolution Process (CIRP). A Take Over Agreement dated 16.12.2016 demonstrated the appellant's intention to transfer the property's ownership to the corporate debtor. The Resolution Plan, approved with 80.43% voting share, further validated the property's status. The tribunal concluded that the Resolution Professional had legitimate power to possess the property, and the appellant cannot reclaim possession after voluntarily agreeing to transfer the asset. The appeal was consequently dismissed.
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• Arbitral Award Triggers Procedural Scrutiny: NCLAT Remands Insolvency Petition for Proper Limitation and Formal Amendment Review

  Case-Laws - AT : NCLAT held that the Adjudicating Authority erroneously extended the limitation period based on an arbitral award without a formal amendment to the Section 7 application. The Financial Creditor failed to formally change the date of default from 12.11.2018 through an amendment petition. Despite acknowledging the Supreme Court's precedent on arbitral awards constituting financial debt, the Tribunal found procedural irregularities in extending limitation. The matter was remanded to the Adjudicating Authority to reconsider the Section 7 application on merits, allowing potential amended pleadings by the Financial Creditor, thereby preserving the right to a substantive hearing while maintaining procedural integrity.
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Indian Laws

• Supreme Court Upholds Bribery Conviction Based on Robust Evidence and Comprehensive Trial Court Findings

  Case-Laws - SC : SC affirmed the Trial Court's conviction of the accused for bribery offenses under Sections 7 and 13(1)(d) read with Section 13(2) of Prevention of Corruption Act, 1988. The Court found that the prosecution successfully proved its case beyond reasonable doubt, rejecting the High Court's earlier overturning of the conviction. The Trial Court's detailed evaluation of evidence, including witness testimony and documentary proof, was deemed more credible than the High Court's focus on minor discrepancies. The original conviction and sentence were upheld, with the accused directed to surrender before the Trial Court within two weeks.
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• Judicial Discretion Prevails: Witness Recall Petition Dismissed Under Section 311 Cr.PC Due to Procedural Abuse

  Case-Laws - HC : HC exercised judicial discretion under Section 311 Cr.PC, rejecting petitioner's attempt to recall witnesses. The court found no substantive grounds for reopening testimony, noting petitioner's repeated failure to cross-examine respondent and abuse of procedural mechanisms. Trial court's previous orders demonstrated significant leniency, granting multiple adjournments. Fundamental principles of judicial discretion mandate cautious and circumspective application of witness recall provisions. Concluding that petitioner's actions would potentially derail judicial proceedings and cause prejudice, the HC dismissed the petition as meritless, affirming the trial court's original order and maintaining procedural integrity.
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• Cheque Alteration Case: Expert Forensic Verification Ordered for Disputed Amount Modification Under Section 138

  Case-Laws - HC : HC analyzed a cheque dishonour case involving alleged material alteration of amount from Rs. 1,90,000/- to Rs. 4,90,000/-. The court determined that the accused lacked authority to modify the cheque amount, as the figure and words were written by different persons. Previous case law references were distinguished. The trial court's order was set aside, and the court directed forensic examination of the cheque upon expense deposit by the accused. The petition was allowed, mandating expert verification of the potential alteration to determine the cheque's validity under the Negotiable Instruments Act.
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• Bank Must Compensate Customer for Cyber Fraud Losses Due to Inadequate Security Protocols and Failure to Detect Suspicious Transactions

  Case-Laws - HC : HC allowed the petition, finding SBI liable for cyber fraud losses. The court determined the petitioner was not negligent, as he did not share OTPs or payment credentials. The bank demonstrated significant service deficiency by failing to detect unusual transaction patterns, prevent unauthorized access, and take prompt action after fraud notification. The court held that the bank's security protocols were inadequate, breached by simple malware, and the Banking Ombudsman's order was legally unsustainable. The judgment emphasized the bank's duty to exercise reasonable care in protecting customer funds and responding to potential fraudulent transactions.
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Service Tax

• CESTAT Upholds Credit Reversal, Validates CA Certificates, and Rejects Department's Procedural Challenges in Tax Credit Dispute

  Case-Laws - AT : CESTAT allowed the appeal, finding that: (1) proportionate CENVAT credit reversal sufficiently complied with Rule 6(3) of CENVAT Credit Rules, 2004; (2) CA certificates validly established no credit was availed on common input services from October 2012 to March 2015; (3) original invoice submission to Range Office was acceptable; and (4) extended limitation period was improperly invoked given comprehensive prior audits and regular return filings. The tribunal set aside the demand for 5%/6% of exempted services value, effectively ruling in favor of the appellant by rejecting the department's claims and procedural challenges.
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• Foreign Currency Payments for Services Abroad Ruled Non-Taxable, Tribunal Dismisses Service Tax Claim on Procedural and Substantive Grounds

  Case-Laws - AT : CESTAT adjudicated a service tax dispute involving import of services, finding no substantive evidence that foreign currency payments constituted taxable imported services within India. The tribunal determined that services were utilized abroad, rendering them an export of service, and thus not subject to service tax. The department's demand was based solely on foreign exchange earnings without proving actual service receipt in India. Additionally, the tribunal found the proceedings time-barred under the extended period of limitation. Consequently, the tribunal set aside the service tax demand, interest, and potential penalties, effectively allowing the appellant's appeal and rejecting the revenue's claim of service tax liability.
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• Service Tax Dispute Resolved: Advances Exempt, Tax Leviable Only on Actual Invoiced Services Under Rule 6(3)

  Case-Laws - AT : CESTAT adjudicated a service tax dispute involving contractual advances and service tax adjustments. The tribunal held that service tax is leviable only on actual services provided and invoiced, not on advances or mobilization payments. The appellant correctly adjusted excess service tax paid under Rule 6(3) of Service Tax Rules, 1994, following renegotiation of contract terms and conversion of mobilization advances. The tribunal found that advances in nature of earnest deposits do not attract service tax. The impugned order was set aside, confirming the appellant's right to adjust excess service tax through credit notes or refunds when services were not ultimately provided or contract terms were modified. Appeal allowed.
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Central Excise

• Electronic Evidence Fails: Tax Authority's Case Crumbles Due to Procedural Gaps in Clandestine Manufacturing Dispute

  Case-Laws - AT : CESTAT adjudicated a case involving clandestine manufacture and removal of goods, finding critical evidentiary deficiencies. The tribunal invalidated electronic evidence from CDs and pen drives due to non-compliance with Section 36B of the Central Excise Act, 1944. Without mandatory certification and corroborative evidence, the department's case collapsed. The tribunal set aside the confirmed duty demands, interest, and penalties against the company. Additionally, the penalty imposed on the company's director was quashed due to lack of substantive evidence. The appeal was ultimately allowed, emphasizing strict procedural requirements for electronic evidence in tax proceedings.
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Case Laws:

• GST

• 2025 (4) TMI 1014
  Challenge to order passed by respondent no.2 under Section 73(9) of the Goods and Services Tax Act, 2017 - HELD THAT:- The petitioner has failed to indicate any notification issued under Section 9 of the Act having application to the contract in question and therefore, the plea sought to be raised based on the agreement between the parties cannot be countenanced. The indication made in the agreement between the parties can be enforced by the petitioner against respondent no.3, however, insofar as respondent State is concerned, the liability to pay the GST is that on the supplier i.e. the petitioner and therefore, the plea raised in this regard has no substance. Petition dismissed.

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• 2025 (4) TMI 1013
  Challenge to SCN passed by the first respondent under Rule 100(2) and 142(1) (a) of CGST Act - consequential direction to the respondents to Unblock the negatively blocked Input Tax Credit - HELD THAT:- It appears that challenge to the show cause notices in Form DRC-01 dated 18.12.2024 is premature. In the present case, the petitioner had submitted his reply to the said show cause notices issued by the first respondent along with documentary evidence. It is also pointed out that the reason for filing the present Writ Petitions is to get immediate relief to unblock the input tax credit. The learned counsel for the respondents contented that, since the petitioner have dealt with fake invoices, the respondent authority have blocked the Input Tax Credit. The respondents are directed to consider the reply filed by the petitioner along with the documentary evidence to the show cause notices dated 18.02.2025 and issue a 7 days clear notice by fixing the date for personal hearing to the petitioner - Peition disposed off.

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• 2025 (4) TMI 1012
  Reduction of GST rate on works contract services from 18% to 12%, recommended by the GST Council on 5th August, 2017 but formally notified on 21st September, 2017, applied retrospectively to tenders submitted before the notification date but after the recommendation date - HELD THAT:- In terms of SRO-GST-11 dated 8th July, 2017, the construction services falling under Section 5 Heading 9954 were taxable @ 18%. The composite supply of works contract as defined in clause 119 of Section 2 of the CGST Act, 2017 was included in the aforesaid heading. The subsequent notification SROGST- 2(Rate) dated 22nd August, 2017 did not bring any change with regard to the construction services rendered in the shape of composite supply of works contract. SRO-GST-2(Rate) dated 22nd August, 2017 brought about changes in the rates of GST only with respect to specific composite supply of works contract, which, as indicated above, were the works contracts supplied to Government, a local authority or a Governmental authority by way of construction, erection, commissioning, installation etc of specified items like a historical monument, canal, pipeline conduit etc. This is evident from Clause (iii) of Notification dated 22nd August, 2017. The composite supply of works contract as defined in Clause 119 of Section 2 of Central Goods and Services Tax Act, 2017 figures at item No. 3(ii) of Notification dated 8th July, 2017 prescribing 18% GST was not altered by SRO-GST-2(Rate) dated 22nd August, 2017. What was sought to be amended and elaborated by notification dated 22nd August, 2017 was only item No.(iii) at serial No.3 dealing with construction services other than composite supply of works contract mentioned in item No.3(ii) and the construction services mentioned in Clause 3(i). The rate of GST prescribed vide notification dated 8th July, 2017, which was in-vogue at the time of submission of bids by the petitioner as also on the last due date for submission of bids, on composite supply of works was 18%. Vide notification dated 21st September, 2017, the rate of GST came to be reduced from 18% to 12%. Conclusion - The GST Council in its meeting had only made a recommendation for reduction GST on works contract from 18% to 12%, which recommendations were accepted and statutory notification was issued only on 21st September, 2017. Recommendations of the GST Council, as already held, are only recommendations and cannot be taken as notifying new rates of GST, particularly, in the face of provisions of Article 265 of the Constitution of India. Petition dismissed.

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• 2025 (4) TMI 1011
  Seeking grant of bail to the accused/petitioner - issuance of fake invoices without actual supply of goods and thereby passing ineligible ITC - HELD THAT:- It is seen that there is no dispute in regards to the Arrest Memo issued by the respondent authorities by complying all necessary formalities under Section 69 of the CGST Act. But it is the issue raised by the petitioner that there was no proper compliance of Section 41/41A of Cr.P.C. which are mandatorily required to be followed. From the view expressed by the Hon ble Supreme Court in case of Radhika Agarwal [ 2025 (2) TMI 1162 - SUPREME COURT (LB)] , it is evident that though the CGST is a special enactment, but the same cannot be considered as a complete Code in itself as regards to the provision of search, seizure and arrest and as stated above, the provision of Code of Criminal Procedure would be applicable unless it is expressly or impliedly barred by the provision of the said Act. But, here in the instant case, it is seen that there is no compliance of Section 41/41A of Cr.P.C., which is mandatorily required to be followed as per the guideline of Hon ble Supreme Court in the cases of Arnesh Kumar Vs. State of Bihar and reiterated in Satender Kumar Antil Vs. CBI. More so, there was also no compliance of Sections 47/48 of BNSS at the time of arrest made by the respondent authorities which is in violation of Article 21 22(1) of the Constitution of India. Considering the fact that there is sufficient progress in the investigation of the case and most of the relevant documents are also found to be collected by the I.O. during investigation, it is found that further custodial interrogation of the present petitioner may not be necessary for the interest of investigation and therefore, this is a fit case to extend the privilege of bail to the accused/ petitioner. Conclusion - The arrest of the petitioner was procedurally defective due to non-compliance with mandatory provisions of the Cr.P.C. and BNSS, non-communication of reasons to believe and grounds of arrest, and absence of DIN in key documents. It is provided that on furnishing a bond of Rs. 50,000/-only with one surety of like amount to the satisfaction of the learned Chief Judicial Magistrate, Kamrup(M), Guwahati, the accused/petitioner, namely, Prabin Jha, be enlarged on bail, subject to the fulfilment of conditions imposed - bail application allowed.

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• 2025 (4) TMI 1010
  Violation of principles of natural justice - failure to provide an opportunity for a personal hearing as required under Section 75(4) of the Goods and Services Tax Act, 2017 - HELD THAT:- Innumerable cases have come before this Court where show cause notices have been issued and ex-parte assessments made after the cancellation of the GST registration of the firm, based on uploading of notices on the portal, without ensuring personal service of the notices. Such conduct of the officers in dealing with matters, besides resulting in huge loss of time on the part of the State Government, the same unnecessarily increases burden of this Court wherein numerous petitions every day, underlying violation of principles of natural justice, are being filed and as violations are so glaring, this Court is left with no option but to allow the petitions and remand back the matters to the authorities. The present case provides a glaring example of such conduct on the part of the officers of the State wherein besides denying opportunity of personal hearing in the show cause notice by indicating NA in the column pertaining to date of personal hearing, despite specific prayer made for providing opportunity of hearing in reply, the order impugned has been passed without affording any opportunity of hearing. Conclusion - Failure to provide an opportunity constitutes a violation of natural justice. The matter is remanded back to the Joint Commissioner SGST, Corporate Circle-1, Ghaziabad, respondent no. 2 for passing a fresh order after affording an opportunity of personal hearing to the petitioner - Petition allowed by way of remand.

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• 2025 (4) TMI 1009
  Rectification of errors in GST returns filed for the financial year 2017-18 beyond the prescribed timelines under Section 37(3) of the Central Goods and Services Tax Act, 2017 (CGST Act) - HELD THAT:- The Bombay High Court in the case of Aberdare Technologies Pvt. Ltd. and ors. vs. Central Board of Indirect Taxes Cusoms and Ors. [ 2024 (8) TMI 142 - BOMBAY HIGH COURT] , had allowed the assessee to amend/rectify the form GSTR 1. Against that order, a special leave petition was referred by the Revenue, which came to be dismissed vide order dated 21 March 2025. While dismissing the SLP, the Apex Court was pleased to observed that Right to correct mistakes in the nature of clerical or arithmetical error is a right that flows from right to do business and should not be denied unless there is a good justification and reason to deny benefit of correction. Software limitation itself cannot be a good justification, as software are meant to ease compliance and can be configured. Therefore, we exercise our discretion and dismiss the special leave petition. The human errors and mistakes are normal, and errors are also made by the Revenue. The right to correct mistakes in the nature of clerical or arithmetical error is a right that flows from the right to do business and should not be denied unless there is a good justification and reason to deny benefit of correction. Software limitation itself cannot be a good justification, as software is meant to ease compliance and can be configured. Appeal dismissed.

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• 2025 (4) TMI 1008
  Challenge to assessment order - falvoured milk sold by the petitioner would fall within the tariff heading CH 2202 or 0402? - conversion of milk into milk powder and the charges collected on such conversion was chargeable at the rate of 18% or not - HELD THAT:- On the question of conversion charges and taxability of conversion charges from milk to milk powder, the learned counsel for the petitioner would contend that the said issue was considered again in the appeal filed for the subsequent period of 2019-2020 wherein the appellate authority has accepted the contention of the petitioner that such conversion charges would not attract interest at 18%, but would attract tax at the rate of 5%. The order of assessment, dated 09.03.2021, and the order of appeal dated 16.12.2024 are set aside and the matter is remanded back to the Assessing Officer for passing a fresh assessment order - The assessing officer shall levy tax on the sale of flavoured milk by the petitioner, by treating the flavoured milk to be under tariff heading No.0402. Petition disposed off.

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• 2025 (4) TMI 1007
  Dismissal of application filed by the petitioner under Section 161 Goods and Services Act, 2017 - Opportunity of personal hearuing - violation of principles of natural justice - HELD THAT:- The provisions of Section 161 of the Act, which deals with rectification of errors apparent on face of record, inter alia, provides for rectification of errors, which are apparent on face of record and the third proviso provides that where the rectification adversely affects any person, principles of natural justice shall be followed by the authority carrying out such rectification . The provision of Section 161 of the Act to the extent it provides for following principles of natural justice, the same is confined to cases where (i) rectification is to be carried out and (ii) such rectification adversely affects any person (assessee). In the present case, on account of nature of application filed, which was absolutely vague and except for reproducing table, no contention was raised, the Authority did not find any reason to accept the prayer for rectification and as such, once no rectification has been carried out, there is no question of the petitioner getting affected and therefore, it cannot be said that the application could not have been rejected without affording opportunity of hearing. Conclusion - The dismissal of a rectification application under Section 161 of the Act does not require adherence to natural justice if no rectification is actually made and the petitioner is not adversely affected. Petition dismissed.

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• 2025 (4) TMI 1006
  Seeking to set aside the impugned order - availability of alternative remedy - HELD THAT:- The Petitioner shall file the Appeal before the Appellate Authority under Section 107 of the CGST Act, 2017 within a period of 4 weeks from today. If the Appeal is filed within the aforesaid period, the same shall be entertained by the Appellate Authority without raising the issue of limitation. It is needless to clarify that the pre-deposit as envisaged under Section 107 of the CGST Act, 2017 will have to be complied with by the Petitioner before the Appeal is entertained. Petition disposed off.

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• 2025 (4) TMI 1005
  Challenge to SCN issued u/s 74 of CGST Act, 2017 - compliance with mandatory provisions of Rule 142 of the CGST Rules, 2017 - HELD THAT:- From the record, it is reflected that the petitioners had initially filed the present petitions challenging common Show Cause Notice dated 29.09.2023 issued under Section 74 of CGST Act, 2017, mainly on the ground that the said show cause notice has been issued without complying with mandatory provisions of Rule 142 of CGST Rules, 2017 as the impugned show cause notice alongwith its summary thereof were not uploaded on the portal in electronic form and the impugned show cause notice and subsequent proceedings are liable to be quashed on this ground itself. Another ground of challenge of common show cause notice dated 29.09.2023 is that the impugned show cause which has been issued under Section 74 of CGST Act, 2017 is without jurisdiction on account of the fact that a show cause notice under Section 74 can only be issued when evasion of tax is alleged whereas in the case at hand there is no allegation in the entire show cause notice regarding evasion of tax but the allegation pertain to circular trading wherein admittedly at each step of such trading the petitioners have paid GST - It is reflected from record that before this court could hear the case on the question of admission and interim relief, Respondent No. 2 has passed common final order dated 21.01.2025 during the pendency of these petitions to which challenge has been made by the petitioners in their respective petitions by carrying out amendment in pursuance of order dated 23.01.2025 of this court, mainly on the ground that since the show cause notice was itself without jurisdiction and was issued without complying with mandatory provision of Rule 142 of CGST Rules, the subsequent order is non est in light of the principle that if initial action is not in consonance with law, all subsequent and consequential proceedings would fall through for the reason that illegality strikes at the root of the order. In such a fact-situation, the legal maxim sublato fundamento cadit opus meaning thereby that foundation being removed, structure/work falls, comes into play and applies on all scores in the present case. Conclusion - This court is of the considered opinion that prima facie case exists in favour of the petitioners and if the common impugned final order dated 21.01.2025 is not stayed during the pendency of the present petitions then the petitioners would suffer irreparably. These petitions are admitted for final hearing and it is directed that effect and operation of common impugned final order dated 21.01.2025 shall remain stayed, pending adjudication of these petitions.

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• 2025 (4) TMI 1004
  Rate of GST to be paid by the applicant on the consideration for sale of residential premises to buyers - exercise of option exercised by the then-promoter of payment of GST at the effective rate of 12% with input tax credit or can the applicant discharge GST at the effective rate of 5% without input tax credit under the Notification no. 3/2019-Central Tax (Rate) dated 29.03.2019, for sale of residential premises of the Project and also for premises already sold by the then-promoter - discharge of GST @5% to the existing as well as new customers - one-time option given under Notification no. 3/2019-Central Tax (Rate) dated 29.03.2019 is qua the project or the promoter or not. HELD THAT:- The Notification provides for one-time option to discharge GST for the Project and no provisions are found for change of option during the completion of the Project either to the Promoter or the new Promoter. The entry (if) of the Notification requires that the option should be exercised by the promoter. At the time, when the option was to be exercised, the obligation to exercise the option was with then-promoter and he has fulfilled the obligation. When the Applicant continues with the project through the conveyance deed in December 2022, the said condition has no applicability since the exercise of the option was one-time for the project. This interpretation that the one-time option has to be exercised vis- -vis the project and not vis- -vis the legal entity promoting the project is supported by the text of the Annexure to be filed at the time of exercising the option. On perusal of the said Annexure, it is evident that the focus is on the project rather than the promoter of the project, who is merely a confirming or verifying party to the exercise of the option. It is evident that the entire objective of the dual entries in the notification with conditions attached to each of them is to ensure that the entire project bears a uniform tax treatment throughout its life span. Such an objective seems achievable only if the activities carried out by the Applicant are eligible for classification under clause (if), of Entry No. 3 of Notification No. 11/2017-CTR dated 28.06.2017 - Further, on a perusal of the definition, it is evident that the definition of ongoing project is based on the nature of the project and not the promoter or the developer involved in the project. The applicant is bound by the option exercised by the then-promoter of payment of GST at the effective rate of 12% with input tax credit for sale of residential premises and also for premises already sold by the then promoter of the Project. The applicant can discharge the GST at the effective rate of 12% (after 1/3rd deduction for land cost) with input tax credit on the balance consideration received from the buyers to whom premises are already sold by the then promoter. Conclusion - i) Rate of GST to be paid by the applicant would be normal rate of tax i.e. 18% [(9% CGST + 9% SGST) with ITC]. Applicable deduction for value of transfer IN of land or undivided share of land, which is to be 1/3rd of the total amount charged will be available. ii) The applicant is bound by the option exercised by the then-promoter of payment of GST at the effective rate of 12% with input tax credit for sale of residential premises and also for premises already sold by the then promoter of the Project. The applicant is required to discharge the GST at the rate of 12% with input tax credit on the balance consideration received from the Buyers to whom premises are already sold by the then promoter. iii) The applicant cannot discharge GST @5% to the existing as well as new customers. iv) The applicant is bound to discharge GST at the effective rate of 12% with input tax credit on the consideration received from existing as well as new buyers since the option exercised is for the project. The applicant cannot opt for two different rates i.e. the applicant cannot discharge GST at the rate of 12% for balance consideration to be received from the buyers to whom premises are already sold by the then-promoter and at a different rate of 5% without input tax credit on the consideration for sale of premises to new buyers. The Applicant is required to discharge GST at the effective rate of 12% on consideration received from existing as well as new buyers. v) The one-time option given under Notification no. 3/2019-Central Tax (Rate) dated 29.03.2019 is qua-project.

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• 2025 (4) TMI 1003
  Classification and GST Rate applicable to the work undertaken by the applicant of Reconstruction, Maintenance, housekeeping and security at Kalamboli Goods Shed near Panvel for 90% proportion of Terminal charges a consideration - entitlement of Central Railway to claim ITC (Input tax Credit for the GST payable on the payment made to the Applicant for the said work. Classification and applicable GST rate on the services undertaken by the applicant, namely Reconstruction, Maintenance, Housekeeping and Security at Kalamboli Goods Shed near Panvel for which the applicant receives 90% proportion of Terminal Charges as consideration - HELD THAT:- The service of housekeeping and security services can be and is normally provided separately by various agencies or is more often looked after by in-house employees. Such services are not handed over to the person who undertakes the construction or repairs and maintenance of any immovable property ordinary in the course of business. They cannot be treated as naturally bundled in the ordinary course of business - in the ordinary course of business, the construction is done by one entity and the maintenance is provided by some other entity or by the owner himself. It is not naturally expected in the line of business that the work of construction, maintenance, housekeeping and security is naturally supplied by one person in one package. Therefore, the services provided by the applicant of reconstruction, repairs and maintenance, housekeeping and security of the Kalamboli goods shed to the Central Railway would not qualify as a composite supply of service. Earthwork is the process of moving a portion of the earth s surface from one location to another. Earth movement also includes transforming the earth s material into a new desired shape and physical condition. It is commonly known as Earthwork excavation. Earthwork should not be confused with soil only; the engineering processes involving unformed rocks are also termed as earthwork. For the construction of foundations and trenches, earthwork is needed, which includes excavation and backfilling of soil to a required depth. To optimise the operation and avoid safety concerns, excavation and backfilling must be done correctly. While excavating, several soil strata may be encountered which require different types of operations. Because excavation costs make up a significant portion of the foundation, accurate measurement of excavation and backfilling is necessary. From the details of the work submitted by the applicant and as can be inferred from the contract, it is seen that the major portion of the work involves cement concreting of rail level platform, cement concreting of approach roads, provision of drainage system, water supply system and hoarding structure, in addition to the maintenance of the said structures. This work would involve some amount of earthwork but by the very nature of the work involved, it would be far-fetched to arrive at a conclusion that 75% of the value of the works contract would be earth work - the works contract services supplied by the applicant would not be eligible for the benefit of Sr.No.3(vii) of Notification No. 11/2017 Central (Rate) dated 28.6.2017, as amended, from time to time. The applicant is providing supply of services such as works contract service, repairs and maintenance, housekeeping services and security services to the Central Railway which can be considered as a supply of mixed service, with works contract (repairs and maintenance) having the highest rate of tax of 18%. In terms of Section 8 of the CGST Act, 2017, the said services are appropriately classifiable under Heading 995419 and chargeable to tax at the rate of 18%. Entitlement of Central Railway to claim ITC (Input tax Credit for the GST payable on the payment made to the Applicant for the said work - HELD THAT:- The applicant in this case has raised question regarding admissibility of input tax credit for this recipient which is not covered by the scope of Section 97. Further Section 103 (1) provides that the advance ruling pronounced by the Authority or the Appellate Authority shall be binding only on the applicant and the concerned officer or jurisdictional officer in respect of the applicant. Thus, the ruling in this case would not be binding upon the recipient of the applicant. Hence, such a ruling that affects the recipient but would not be binding on him is not expected under the provisions of section 97,98 and 103 of the Act. Further Section 100 provides that an appeal against any advance ruling can be filed by the concerned officer, the jurisdictional officer or applicant. If an advance ruling order is made on issue which affects the recipient of the applicant, he would not be able to file an appeal against the said order as per the provisions of section 100. Hence, the provisions of law do not allow a ruling in respect of any other person but the Applicant - the question of admissibility of ITC to the recipient of the applicant i.e. Central Railway is not answered. Conclusion - i) The services provided by the applicant will be classified as mixed supply with works contract (repairs and maintenance) services classifiable under Heading 995419 having the highest rate of tax of 18%. Hence, this supply of reconstruction, maintenance, housekeeping and security will be liable to tax at the rate of 18% as mixed supply. ii) The question of ITC entitlement of Central Railway is outside the scope of advance ruling and remains unanswered.

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• 2025 (4) TMI 1002
  Exemption from GST under entry no. 74 of the Notification no. 12/2017-CT(R) dated 28th June 2017 - diagnostic services - to be classified under service accounting code 9993 or under Service accounting code 9981 - HELD THAT:- The applicant has not produced any license or certificate from the Central Drugs Standard Control Organisation (CDSCO) or the Indian Council for Medical Research validating their research and the resultant test provided by them as a proper diagnostic test for cancer detection. In vitro diagnostics (IVD s) are medical devices used to perform tests on samples of blood, urine, tissue etc., to diagnose diseases or monitor health conditions including cancer biomarker tests. Under Medical Devices Rules, 2017, IVDs are classified as medical devices and regulated by CDSCO. Companies manufacturing or importing IVDs must obtain a licence from CDSCO and must comply with quality standards such as ISO 13485. A Medical Device includes any instrument, apparatus, appliance, implant, material or other article, whether used alone or in combinations, including software or an accessory, intended by the manufacturer to be used specifically for human beings or animals for one or more of the specific purposes of diagnosis, prevention, monitoring or alleviation of any disease or disorder. Software used for medical purposes is explicitly ERBE included in the definition. The tests carried out by the applicant cannot be treated as a proper diagnostic test but is more in the nature of clinical research and development and as a result it does not qualify as a Health Care Service as envisaged under Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017. The services provided by the applicant is more in the nature of research and experimental development work undertaken in natural science primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application of use in view and experimental development services involving systematic work, drawing on knowledge gained from research and practical experience in the field of biotechnology, gene and RNA vectors like gene therapy, viral vectors etc. The primary activity is research and experimental development of Cancer Prognostic and Diagnostic Technologies. The said services are aptly covered under SAC 998111 and therefore, the applicant is not eligible for the benefit of exemption Notification 12/2017-Central Rate (Tax) dated 28.6.2017. Conclusion - i) The applicant s services do not qualify for GST exemption under Entry No. 74 of Notification No. 12/2017-CT(R) and are not classifiable under SAC 9993 for exemption. ii) The appropriate classification is under SAC 9981 (research and experimental development services), for which no exemption is available under the GST regime.

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• 2025 (4) TMI 1001
  Classification of Geo-Membrane for Water Proof Lining - Type-II as per IS: 153151:2015 - to be classified under Chapter Heading 5911 10 00 or under Chapter 39? - HELD THAT:- From the process of manufacture, as described by the applicant, it is apparent that after the process of extrusion and slitting, HDPE Tapes/ Strips of width less than 5mm are taken to circular looms and are woven into HDPE Woven Fabrics. The said High Density UV Stabilized Woven Fabrics are manufactured with specific weaving pattern through circular ring on horizontal and vertical direction to impact the essential property of Geomembrane fabrics i.e. impermeable to water for the specific end use of water retention. The said HDPE Tapes/Strips of width less than 5mm in width are appropriately classifiable under Heading 5404. Further Section Note 1 (g) of Section XI excludes only strips of plastic where the width is exceeding 5mm. From the manufacturing process as detailed here-in-above and on perusal of the tariff headings, it is clear that the strips of plastic, of less than 5 mm width would be appropriately classifiable under Tariff Heading 5404 and the fabric woven out of the said strips would be appropriately classifiable under Tariff Heading 5407 20. Such fabrics would also be considered as a textile fabric - In terms of Section Note 1(h) of Section XI, even woven fabrics which are laminated with plastics or articles thereof of Chapter 39 are excluded from the said Section. Section XI covers Chapters 50 to Chapter 63 of the Customs Tariff. Therefore, even if during the course of manufacture of the said product, any woven fabric emerges and even if the said woven fabric is classified under Chapter 57 as a textile fabric, if the said goods are laminated with plastic and can be classified under chapter 39, the same will go out of the purview of Section XI and consequently out of the purview of Chapter 50 to Chapter 63. On going through the method of manufacture and the main use of the product geomembrane , it is seen that the said product is a textile fabric, laminated on both sides with plastic and is made according to prescribed IS Standards. It is basically used as pond liners. The products falling under Chapter 5911 has been declared as a technical textile under the Notification issued by the Directorate General of Foreign Trade - It is a well settled principle in classification that the wordings of the Section Notes, Chapter Notes and then heading itself, will have precedence and it is only in case of ambiguity that the commercial understanding or trade parlance will be taken into consideration for the purpose of classification. The use of the product being classified will not have any bearing on the classification, unless it is so mandated in the wording of the tariff heading. In the instant case, Chapter Heading 5911 clearly envisages the use/functionality test for determination of classification of products under this heading in as much as the tariff heading itself mentions that textile products and articles, for technical uses, will be classified under the said heading. The product Geo Membrane for Water Proof Lining - Type-II as per IS 153151:2015 is rightly classifiable under Tariff Item 5911 1000. Conclusion - The product Geo Membrane for Water Proof Lining-Type-II as per IS 153151:2015 is classifiable under Tariff item 59111000.

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• Income Tax

• 2025 (4) TMI 1000
  Order u/s 127 (2) proposing to transfer the petitioner s assessment case from Mumbai to Indore - HELD THAT:- In any event, the court was not apprised of the orders/approvals, and as a routine, the petitioner went on obtaining an extension of the interim reliefs. Even an attempt on the part of petitioner to get the petition disposed of as infructuous leaves a lot to be desired. All this prima facie suggests that the court proceedings were used or abused to compromise the Revenue s interests. Now that respondents have abandoned the impugned order transferring the proceedings from Mumbai to Indore and substituted the same by transferring the proceedings from one Circle to the other in Mumbai, there is nothing much we can do in this petition. But we would be failing in our duty if we do not bring these developments to the notice of the higher authorities, i.e., the CBDT and Ministry of Finance, so that such developments are probed deeply. At least prima facie, all these orders made during the pendency of this petition and without apprising the Court of such developments suggest that there is something more than what meets the eye. This Court s orders and the Court proceedings were prima facie sought to be misused, and even the Court was kept in the dark about all these developments. The assessment orders now made by the Mumbai Assessing Authorities practically accept everything submitted by the petitioner. There is no explanation of whether any powers of review are vested in the officials for re-transferring the matters in the way they have been re-transferred. Accordingly, we direct the CBDT and Ministry of Finance to take cognizance of this matter and its proceedings, make at least a preliminary enquiry as to the developments in this matter, and decide whether any action is necessary against the officials involved. Needless to add the principles of natural justice and regular prescribed procedures must be followed, and full opportunity must be granted to the officials involved. Though we are disposing of this petition given the order dated 20 February 2025 made by PCIT Mumbai-4, we direct the Chairperson of CBDT to file the compliance report in this Court by 27 June 2025. Ultimately, the CBDT and Tax officials must realize that they are dealing with public funds, and just as this court is always anxious to see that honest tax payers are not hassled, we think that we would be failing in our duty if we do not flag issues which prima facie suggest that the interests of the revenue, which are equally important, are not being prima facie compromised by attempting to use or abuse Court proceedings.

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• 2025 (4) TMI 999
  Assessment order u/s 143 (3) read with Section 144B - HELD THAT:- In the present case, personal hearing was offered to the petitioner, but the petitioner s representatives could not avail of the same. In the case of Oberoi Constructions Ltd. Vs. Union of India Ors. [ 2024 (11) TMI 588 - BOMBAY HIGH COURT ] we discussed several precedents regarding the exhaustion of alternate remedies. They apply to the facts of the present case. This is not a fit case to deviate from the standard rule of exhaustion alternate remedies. All contentions now raised by the petitioner can be better adjudicated before the Appellate Authority, and no extraordinary circumstances have been made out to bypass statutory remedies and entertain this petition. Accordingly, by adopting the reasoning in the above case, we decline to entertain this petition and dismiss the same. The petitioner will have the liberty to avail of the alternate remedy before the Appellate Authority. Besides, if the petitioner seeks any interim reliefs, we are sure that the appropriate authority will consider such an application in accordance with the law and dispose of such application as expeditiously as possible. The observations in this order are only in the context of the non-exhaustion of alternate remedies. Therefore, the Appellate Authority or the Authority entertaining the application for interim relief need not be influenced by such observations. The appellate Authority and other authorities taking up the application for interim relief are left free to decide all parties contentions on merits.

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• 2025 (4) TMI 998
  Applicability of first proviso to Section 2(15) - Whether activities of the assessee society are commercial in nature? - HELD THAT:- Two authorities have concurrently held that the assessee RDA is engaged in preparation of development plan and selling of houses which falls within the advancement of any other object of general public utility in accordance with the Act of 1973 and there is no material on record that it involves the business of carrying on of any activity in the nature of trade, commerce or business and the Assessing Officer without there being any material available on record only recorded a finding while course of assessment that it has received rent, premium, interest, etc. and straightway proceeded to hold that first proviso to Section 2 (15) of the IT Act would attract without recording any specific finding that the respondent/assessee Authority is involved in carrying out of the activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, which the appellate authority CIT (Appeals) has corrected by holding that the respondent/ assessee Authority is not carrying out any operations on commercial lines with a motive to earn profit and which the ITAT has rightly affirmed and further held that the assessee s predominant object is charitable and the Government has complete power to control and dissolve the assessee Authority and also that the first proviso to Section 2 (15) would not be attracted. The finding recorded by the two authorities that the object of the assessee Authority is statutory and is not carrying out any operation on commercial lines with a motive to earn profit and there is no material in this regard that the assessee Authority is involved in commercial lines with a motive to earn profit, is the correct finding of fact based on the evidence available on record. ITAT is absolutely justified in affirming the order of the CIT (Appeals) holding that the first proviso to Section 2 (15) of the IT Act would not be applicable in the case of the respondent herein/assessee Authority in line with the decision of the Supreme Court in Gujarat Maritime Board s case [ 2007 (12) TMI 7 - SUPREME COURT] . As such, the substantial questions of law are answered against the Revenue and in favour of the assessee.

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• 2025 (4) TMI 997
  Reopening of assessment u/s 147 - limitation period prescribed u/s 149(1)(a) - HELD THAT:- The purpose for sharing the information, which is construed as suggestive of the assessee s income escaping assessment is to enable the assessee to respond to the same and, for the AO to take an informed decision on the basis of the record including the assessee s response. Thus, the question as to the value of income that may have escaped assessment is required to be determined by the AO at the stage of passing of an order u/s 148A (d) and not at the stage of sharing the information with the Assessee in terms of Section 148A (b) of the Act. In the present case, there can be no dispute that even if the transaction of sale and purchase of equity shares of PMC Fincorp Ltd. is held to be bogus, the only amount that could be brought under the net of tax is the sum. This is the only amount received by the Assessee from his broker on account of the said transaction and the AO has no information which suggests otherwise. Undisputedly, the Assessee has surrendered the said amount to tax as he had claimed the same as short term capital gains. In view of the above, the impugned order is unsustainable on both the grounds (i) the impugned notice is beyond the period of three years as stipulated under Section 149 (1) and, (ii) that there is no material to indicate that the Assessee s income has escaped assessment as the petitioner has declared the amount as received, chargeable to tax and has also paid the tax on the said amount. The petition is accordingly allowed and the impugned notice is set aside.

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• 2025 (4) TMI 996
  Reopening of assessment u/s 147 - no valid approval granted by the competent authority u/s 151(1) - HELD THAT:- The fact of the assessee filing the return and that it was processed u/s 143(1) of the Act has not at all been taken cognizance of by the ld. AO and he merely relied whatever information reached the Investigation Wing and how it was examined. It appears that the AO has merely reproduced the facts coming up from the Investigation Wing and added his remark of escapement of income. It is coming up from the reopening reasons that the ITO (Inv.) had called for all the relevant information with regard to credit and debit entries in the bank accounts which were filed before the ITO (Inv.). However, not a word of the same has been examined by the ld. AO to show as to if this information has been part of the assessee s return. The aforesaid also established that authority granting the approval has also not entered into the facts of the case by application of mind. The non application of mind to information to record a live link of information with the escapement of income thus not being there the reasons for reopening suffer fatal defect and thus we are inclined to allow this ground no. 2. The appeal is allowed

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• 2025 (4) TMI 995
  Reopening of assessment u/s 147 - Addition towards cash deposit u/sec.69A - appeal filled against the order passed by the AO u/sec.154 levying tax @ 60% u/sec.115BBE - HELD THAT:- In the present case, even though, the appeal filed by the assessee against the order passed by the Assessing Officer u/sec.143(3) r.w.s.147 is pending for adjudication, the learned CIT(A) disposed of the appeal filed by the assessee against the order passed by the Assessing Officer u/sec.154 of the Act without taking cognizance of the appeal filed by the assessee u/sec.143(3) r.w.s.147 of the Act. Therefore, this issue needs to be go back to the file of CIT(A) to decide the issue simultaneously along with appeal filed by the assessee against the order passed by the Assessing Officer u/sec.143(3) r.w.s.147 or after deciding the appeal filed by the assessee against the order of the Assessing Officer passed u/sec.143(3) r.w.s.147. Appeal of the assessee is allowed for statistical purposes.

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• 2025 (4) TMI 994
  Addition u/s 68 r.w.s. 115BBE - higher rate of tax, i.e., 60%, as provided under the amended provisions of section 115- BBE - Scope of amended provisions of section 115BBE - applicable provision of law prevailing during the year under consideration - CIT(A) held that the amended provisions of section 115-BBE are applicable from the assessment year 2018-19, and therefore, the rate of tax at 60% is not applicable to the year under consideration - HELD THAT:- We find that this issue is no longer res integra and has been decided in favour of the Revenue by various decisions of the coordinate bench of the Tribunal following the decision of Maruthi Babu Rao Jadav [ 2021 (1) TMI 481 - KERALA HIGH COURT] We find that the coordinate bench of the Tribunal in Spectra Equipment (P.) Ltd. [ 2025 (1) TMI 1110 - ITAT HYDERABAD] following the decision of the Hon ble Kerala High Court cited supra and Chandan Garments (P.) Ltd. [ 2023 (7) TMI 973 - ITAT INDORE] held that the higher rate of tax prescribed in section 115-BBE of the Act is applicable to the assessment year 2017-18. Thus, we are of the considered view that the CIT(A) erred in holding that the higher rate of tax, i.e., 60%, as provided under the amended provisions of section 115- BBE of the Act is not applicable to the year under consideration. Accordingly, to this extent, the impugned order is set aside, and the assessment order levying the tax at the rate of 60% under section 115-BBE on the income added under section 68 of the Act is upheld. Accordingly, the grounds raised by the Revenue are allowed.

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• 2025 (4) TMI 993
  Abnormal increase in cash deposits during demonetization period as compared to pre-demonetization period - HELD THAT:- When the assessee has explained the reasons for increase in sales for the month of November, 2016 and further, it is not even the case of the AO that the product dealt by the assessee is having sales throughout the year, the reasons given by the AO to disbelieve the claim of the assessee for source for cash deposit cannot be appreciated. AO has arrived at a conclusion on the basis of his own assumption of cash sales prior to demonetization period and during demonetization period without appreciating the fact that the sales are never predictable and just because the sales are high in the period of demonetization, AO cannot assume that such sales were fictitious sales and more particularly, when the assessee has submitted relevant sale bills in respect of sales. Since the assessee is having sufficient cash in hand as on 08.11.2016, as per the cash book maintained for the period, in our considered view, the explanation of assessee with regard to source for cash deposit into bank account during demonetization period ought to have been accepted by the AO. CIT(A), without considering the relevant facts, simply sustained the additions made by the AO towards cash deposit as unexplained cash credits u/sec.68. Thus, we direct the AO to delete the additions made towards cash deposit u/sec.68 - Assessee appeal allowed.

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• 2025 (4) TMI 992
  Charging of tax at higher rate - assessee submitted that the assessee had opted for the tax regime u/s 115BAA as per return filed by it, therefore, it is incorrect on the part of the CPC to compute the tax rate at 30% on account of non filing of Form 10-IC which is only a procedural requirement - HELD THAT:- We have also considered various decisions cited before us. It is an admitted fact that due to non furnishing of Form 10-IC, the CPC processed the return on 21.05.2024 by computing the tax at normal rate as against the lower rate computed by the assessee as per the provisions of section 115BAA of the Act. We find the various other decisions relied the assessee also supports his case to the proposition that the assessee should be given an opportunity to upload Form 10-IC and the Revenue has to condone such delay and allow the assessee to opt for taxation u/s 115BAA of the Act. Respectfully following the decision in the case of Fastner Commodeal (P.) Ltd. [ 2025 (1) TMI 769 - CALCUTTA HIGH COURT ], we restore the issue to the file of the AO with a direction to permit the assessee to file the report in Form 10-IC and consider as to what relief the assessee would be entitled to subject to the condition that the assessee fulfills all other requisite conditions as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2025 (4) TMI 991
  Addition on account of the provision of taxation while computing the book profit under section 115JB - HELD THAT:- Amount being the tax adjustment of earlier years, which was disallowed in earlier years while computing the income of the assessee, was not reduced in the year under consideration, thereby resulting in the double addition of the same amount. Therefore, we find merits in the submissions of the assessee that the amount being the tax adjustment for earlier years should be reduced from the current tax and only the balance amount being the net tax expenditure can be added under Explanation 1 to section 115-JB of the Act. We also do not find any merits in the addition of deferred tax charge by the learned CIT(A), and we are of the considered view that the same is also required to be reduced for computing total tax expenses for the year under consideration. Accordingly, we direct the AO to make an addition being the tax expenditure, under Explanation 1 to Section 115-JB of the Act. Accordingly, Ground raised in assessee s appeal is allowed.

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• 2025 (4) TMI 990
  Addition of accommodation entry of bogus billing - CIT(A) deleted addition - HELD THAT:- Assessee furnished various evidence during the re-assessment proceedings to discharge its onus of establishing the genuineness of the payment made to M/s. Culminating Management Pvt. Ltd. However, as is evident from the perusal of the assessment order, the AO, without considering any of these evidences, made the impugned addition merely relying upon the information received from the Investigation Wing, Kolkata. Further, we find that the AO also did not make any independent investigation or inquiry in respect of the transaction entered into by the assessee with M/s. Culminating Management Pvt. Ltd. As evident from the record that the AO did not examine any of these aspects of the instant case and merely because M/s. Culminating Management Pvt. Ltd. had raised the invoice on the assessee for the market development services, made the addition in the hands of the assessee on the basis that the assessee has availed accommodation entry of bogus billing without also appreciating the fact that the said invoice was reimbursed, inclusive of charging of service tax, by M/s. Tide Water Oil Co. (India) Ltd. Since no material has been brought on record by the Revenue to controvert the material placed on record by the assessee during the reassessment proceedings to substantiate its claim of genuineness of transaction, we do not find any infirmity in the findings of the learned CIT(A) in deleting the addition made by the AO. Accordingly, the impugned order on merits is upheld, and the sole ground raised by the Revenue is dismissed.

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• 2025 (4) TMI 989
  Additions of order passed u/s 153A - Whether no incriminating material found and seized from the possession of the assessee and solely on the basis of the material found and statements recorded of third parties which are not related to the assessee as neither they were the directors nor employees of the assessee company? - HELD THAT:- Any information or entry found in any document seized pertaining / relating to a person other than the person searched from the searched premises as was referred u/s 153A of the Act was to be handed over by the investigation wing to the AO of such other person (searched) and then that AO of the searched person shall handover the same to the AO of the person not searched who thereafter was to proceed against such other non-person by issuing a notice u/s 153C of the Act and then to assess / re- assess income of such other not searched person. The assessment order passed u/s 153A of the Act on the basis of an income-tax search conducted on the assessee, the impugned amount of undisclosed/unexplained income, allegedly based on some incriminating material in the shape of statement of third persons recorded elsewhere, could not be assessed in the said assessment order passed u/s 153A of the Act but it could be considered for the purpose only and only in a separate assessment order by taking recourse to the mandatory and special non obstante provisions of the section 153C of the Act and then to pass a separate assessment order u/s 153A r.w.s. 153C of the Act. Had recourse to section 153C of the Act been adopted by the revenue, then it would be in accordance with the decision of Calcutta Knitwears [ 2014 (4) TMI 33 - SUPREME COURT] Admittedly, no money, bullion, valuable article or thing or property which was not disclosed or would not be disclosed was found during the search carried out by the department in the case of the assessee. Under these circumstances, by respectfully following the decisions of Anand Jain, HUF [ 2021 (3) TMI 8 - DELHI HIGH COURT] we hold that no addition could be made in the assessment completed u/s 153A of the Act on the basis of statements of third party recorded during the search in their own case and the incriminating material, if any, found during the course of search of the assessee could only be utilized for making addition. Thus, the additions made are hereby deleted. Appeals of the assessee are allowed.

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• 2025 (4) TMI 988
  Restricting depreciation @80% only on assets of Rs. 1,63,70,847/- and @15% on the balance amount - Higher rate of depreciation on solar power generating systems - Classification of HR sections, structure for MBSL modules, cables, etc. - HELD THAT:- AO did not examine the full details of the items claimed by the assessee under the head Renewable Energy Devices/Energy Saving Devices and did not give adequate reasons/finding for the treatment of depreciation made in the assessment order. Assessee s claim that the entire amount constitutes Solar Power Generating Systems requires factual verification vis- -vis both with respect to capital goods added and as to whether the other expenses under the head custom duty, stamp duty, inverter, custom duty inverter, administrative and other expenses, consultancy charges, syndicate fee for term loan, tour travelling expenses etc. as listed out in the Chart-2 as reproduced on page no.2 of the assessment order will also be part of the Solar Power Generation Systems or not. We, therefore, set-aside the order of the Ld. CIT(A) and restore the matter to the file of the Assessing Officer for deciding this issue afresh as per law keeping in view of the above observation. Ground no.1, 2, 3 and 4 of the appeal are allowed for statistical purposes

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• 2025 (4) TMI 987
  Disallowance of repairs and maintenance on plant and machinery - assessee failed to produce the copy of high value bills and other details as desired - as contended before the CIT(A) that the expenditure on repairs and maintenance has been incurred for the purpose of business and ledger account etc. has been provided to substantiate the same - HELD THAT:- CIT(A) held that it cannot be established that the whole expenditure has been incurred towards repair and maintenance, however looking to the various details provided and as verified by AO, he deem it fit and proper to restrict the disallowance @10% of the total claim made. CIT(A) restricted the disallowance and the balance amount was allowed and directed to be deleted. CIT(A) has rightly restricted the addition @10%, which does not need any interference, on our part, hence, we uphold the decision of the CIT(A) on this issue and reject the ground no. 2 raised by the assessee. Disallowance of royalty expenses, treating 25% of the same as capital expenditure and depreciation has been allowed on the same - HELD THAT:- In the assessee s case after termination of agreement there is no benefit is available for recording. Hence, the royalty paid cannot be said to be capital in nature and same deserve to be treated as revenue in nature and allowable u/s. 37 of the Act. It is also noted that the acceptance of the royalty payments as revenue expenditure in earlier subsequent years i.e. AY 2010-11 and AY 2012-13 indicates that the Revenue has accepted u/s. 143(3) of the Act the nature of royalty payments as revenue in nature and it is well settled law that res-judicata does not apply to the income tax proceedings until there is change in the facts and circumstances and therefore, stand cannot be taken to disallow the expenditure as allowed in earlier proceedings. To fortify our aforesaid view, we draw support from the decision of EKL Appliances ltd. [ 2012 (2) TMI 354 - DELHI HIGH COURT] wherein by relying on the decision in the case of Lumax Industries Ltd. [ 2008 (3) TMI 679 - DELHI HIGH COURT] held that the payment of licenses fee on year to year basis for acquisition of technical knowledge would not amount to capital expenditure it is revenue expenditure. Thus, we hold the royalty payment in the instant case deserves to be held as revenue in nature and therefore, the royalty payment in dispute is allowable u/s. 37. Decided in favour of assessee.

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• 2025 (4) TMI 986
  Disallowance of Lease Equalization Reserve - whether the difference between the actual rent paid and the equated rent is allowable as expenditure? - HELD THAT:- There is no bar in claiming the actual rent in the Profit Loss account but the assessee, following the principle of consistency and Accounting Standard-19, has claimed the same rent as expenditure for the entire period of lease spanning over more than one year. The quantum of increase in the rent as per the lease agreement has been claimed separately under the head rent/lease equalization reserve in the computation of the income. This method of accounting is being followed consistently over the years and the Revenue is accepting it in some preceding and subsequent years. In principle, the same has to be allowed as business expenditure irrespective of nomenclature under which such expenditure is put into. The said head lease/rent equalization reserve is not the contingent liability and a reserve. We are of the considered view that the said disallowance of Lease Equalization Reserve made by the AO and sustained by the Ld. CIT(A) is not genuine. Hence, the same is deleted. Disallowance of bad debts written off u/s 36(2) - The said claim as bad debts is nothing but the business loss allowable u/s 37. We are of the considered view that the said disallowance of Lease Equalization Reserve made by the AO and sustained by the Ld. CIT(A) is not genuine. Hence, the same is deleted.

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• 2025 (4) TMI 985
  Rectification u/s 154 - Mistakes apparent from the original assessment order - Deduction u/s 80IA in respect of seven units transferred after 01.10.2009 from the demerged company - HELD THAT:- We can conclude that the issue of allowability of the deduction u/s 80IA(12A) is not an issue which could be considered a case of prima facie mistake apparent from the records. The issue under consideration was examined by the CIT(A) in appeal to the extent of partial disallowance due to reallocation of head office expenses. CIT(A) having co-terminus powers of the Assessing officer and also having powers of enhancement, however, did not consider it appropriate to modify the claim of the assessee in any other manner or for that matter invoking the provisions of above sub-section which was very much open even before him having partly considered it. Moreover, the detailed discussion and analysis in the case of Ultratech [ 2023 (2) TMI 916 - ITAT MUMBAI] in itself makes it evidently clear that the issue could not be decided by invoking the provisions of section 154 of the Act. We dismiss the grounds of appeal in this regard. Deduction u/s 80IA in respect of TPP - AO was not justified in invoking the provisions of section 80IA(2A) for withdrawing the claim of the assessee even on merits. The provisions of rectification u/s 154 of the Act, in any case could not have been applied on the facts and the circumstances of the case. Therefore, both on legal grounds and merits of the case, we do not find any substance in the grounds of the Revenue which are accordingly dismissed.

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• 2025 (4) TMI 984
  Short-term capital gains tax u/s 45(4) - HELD THAT:- A perusal of section 45(4) clearly shows that distribution of capital asset as a result of dissolution of a firm or otherwise the fair market value of the asset on the date of such transfer shall be deemed to be the full value of consideration received. In this case there is no dispute about the amount of fair market value of consideration, i.e. Rs. 7.4 crores. AO shall compute the capital gain u/s. 45(4). Hence, we remit the matter back to the file of the AO to compute the amount of capital gain u/s. 45(4) of the Act by adopting the sale consideration received from Shri Poonghat Srinivas of Rs. 7.4 crores as sale consideration by reducing the WDV of the asset as per the provisions of the Income Tax Act. Applicability of section 48 and section 50 - The provisions of section 48 provides for the method of computation of income chargeable under the head capital gains. Provisions of section 48 stipulates that the income chargeable under the head capital gains shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, viz. expenditure incurred wholly and exclusively in such transfer and the cost of acquisition of asset and cost of any improvement thereto, whereas the provisions of section 45 are charging provision and section 48 provided for basis of computation. It is also settled law that the provisions of section 45 must be read with section 48 of the Act. If the computation cannot be effected for any reason the, charging provision u/s. 45 fails. In the present case, by virtue of the dictum laid down by the Hon ble High Court that provisions of section 45(4) are applicable and capital gains u/s. 48 r.w.s. 45(4) are computed. As applicability of section 50, on mere perusal of section 50 it is clear that the object behind enacting the provisions of section 50 is to compute the short term capital loss or the gains on sale of depreciable assets, sale of an asset when the asset is sold on which depreciation has been allowed in the earlier years as per the Income Tax Act and Rules. The actual amount of depreciation in fact becomes known, which would call for an adjustment to be made to the depreciation which had been earlier allowed as per the provisions of Income Tax Act and Rules made thereunder. This adjustment is called for in the year of sale by way of short term capital gains or loss. If the realisation of sale proceeds is more than the opening WD value of the asset as increased by the value of addition made in the asset during the year, it would result in short term capital gains under the provisions of section 50 of the Act. Of course, the amount of value of addition should be adjusted in terms of the provisions of section 50 of the Act. However, these provisions of section 50 have no application to the facts of the present case as the same amount was assessed to capital gain u/s. 45(4) of the Act. Provisions of both section 45(4) and section 50 cannot be applied to the same amount. In this regard reliance is placed on the decision of Urmila Ramesh [ 1998 (1) TMI 2 - SUPREME COURT] rendered in the context of provisions of section 41(2) read with provisions of section 2(22)(c) of the Act. Appeal filed by Revenue stands partly allowed.

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• 2025 (4) TMI 983
  Rejecting the application for approval u/s 80G - HELD THAT:- It is an admitted fact that on the basis of submissions made by the assessee the CIT(E) noticed certain discrepancies for which he issued notices to the assessee on various dates. Although the assessee has clarified certain issues, however, the last notice issued by the CIT(E) was not properly complied with and the documents were not submitted to the satisfaction of the CIT(E) for which he rejected the application filed for approval of deduction u/s 80G. It is the submission of assessee that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(E) with a direction to grant one more opportunity to the assessee to substantiate its case by filing the requisite details to his satisfaction and decide the issue as per fact and law. Assessee is also hereby directed to submit the details as called for by the Ld. CIT(E) on the appointed date without seeking any adjournment under any pretext, failing which the CIT(E) is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2025 (4) TMI 982
  Addition u/s 56(2)(vii)(b) - difference between the market value and the deed value, as Income from Other Sources - HELD THAT:- As decided in Sri Anala Anjibabu, [ 2020 (8) TMI 597 - ITAT VISAKHAPATNAM ] As per the provisions the Act from the A.Y.2014-15 sub clause (ii) has been introduced so as to enable the AO to tax the difference consideration if the consideration paid is less than the stamp duty value. The AO is not permitted to invoke the provisions of section 56(2)(vii)(b)(ii) in the absence of sub clause (ii) in the Act as on the date of agreement. The department has not made out any case of application of 56(2)(vii)(b) and since the provisions of section 56(2)(vii)(b)(ii) were not available in the statute as on the date of entering into the agreement, following the reasoning given in the case of M. Siva Parvathi Others (supra), the same cannot be made applicable to the assessee. The department has not brought any evidence to show that there was extra consideration paid by the assessee over and above the sale agreement or sale deed. No other case law of any high court supporting the contention of the department was brought to our notice by the DR. Therefore, we hold that the Ld.CIT(A) has rightly applied the decision of this Tribunal in the assessee s case and deleted the addition - Decided in favour of assessee.

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• 2025 (4) TMI 981
  Rejection of registration u/s 12A(1)(ac)(iii) and approval u/s 80G(5) - non-submission of audited financial statements, and due to certain religious objects in the original trust deed respectively - HELD THAT:- Assessee has now placed on record the audited financial statements for FYs 2021-22, 2022- 23, and 2023-24 and a revised trust deed where the religious objects have been amended. The delay in filing the appeal is only 8 days, and considering the bona fide reasons stated in the affidavit, we condone the delay in the interest of justice. Since the additional documents (financial statements and modified trust deed) were not before the CIT(E) at the time of passing the orders, and the CIT(E) has not examined these crucial documents, we deem it appropriate to set aside the orders of the CIT(E) and restore the matter back to his file for fresh adjudication after considering the additional documents. Departmental Representative has not raised any objection in restoring both the matters back to the file of CIT(E) for want of verification of additional documents placed before us. Appeals of the assessee are allowed for statistical purposes.

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• 2025 (4) TMI 980
  Rejecting the application filed in Form No.10AB for registration u/sec. 80G - HELD THAT:- The assessee has explained the reasons for not appearing before the CIT(E) and argued that if one more opportunity has been given, the relevant details in support of it s application filed in Form No.10AB will be furnished to the satisfaction to the CIT(E). When the assessee is a Trust or Society registered u/sec. 12A of the Act, the application filed for grant of exemption u/sec. 80G of the Act needs to be considered on merits. In the present case, the CIT(E) rejected the application filed by the assessee for want of information. Since the assessee has explained the reasons for not filing the details as called for, in our considered view, one more opportunity of hearing needs to be given to the assessee to justify it s application filed in Form No.10AB. Thus, we set aside the order of the CIT(E) and restore the issue back to the file of CIT(E) for re-consideration of the issue. The assessee is directed to file relevant information in support of it s application filed in Form No.10AB seeking for registration u/sec. 80G of the Act without seeking any adjournment under any pretext. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.

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• 2025 (4) TMI 979
  TP Adjustment - Comparability analysis of the companies sought for inclusion/exclusion by the assessee - HELD THAT:- Cybage Software Pvt.Ltd, Nihilent Ltd. and Techwava Infotech Pvt.Ltd be rejected as functionally dissimilar with that of assessee. Notional interest computed by the Ld.AO/TPO on outstanding receivables - TPO treated the outstanding receivables from AE as advancement of loan and computed the arm s length interest adopting 6-month LIBOR plus 400 basis points - as submitted TPO did not consider the outstanding payables which were less that 20 days in respect of some AE s - HELD THAT:- No doubt there should be TP adjustment on this count after making proper TP study by the Ld.TPO by considering the period of credit enjoyed by the comparables and also applicable LIBOR rate in the place of AE s, for benchmarking the rate of interest to arrive at the ALP. As per the RBI Master Circular no. 8/2010-11 dated 1-7-2010, for average maturity period upto 3 years, the maximum cost ceiling is LIBOR plus 200 basis points. In view of the above, we deem it appropriate to set aside the impugned order on this issue and remit the matter to the file of the Ld.AO/TPO for deciding it in conformity with the above referred judgment. We also direct the Ld.TPO that in the event the WCA subsumes the outstanding receivables, no separate characterisation is to be made. However for those receivables that fall out of the WCA pertaining to year under consideration, then, the rate of interest to be charged must be LIBOR + 300 basis points which is in accordance with the principles laid down in case of CIT v. Cotton Naturals (I) (P.) Ltd [ 2015 (3) TMI 1031 - DELHI HIGH COURT] considering a credit of 90 days.

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• 2025 (4) TMI 978
  Validity of reopening of assessment - reason to believe -allegation of borrowed satisfaction - no enquiry/investigation on receipt of information from the Investigation Wing - GDR receipts - HELD THAT:- Firstly, the AO must have reason to believe that income chargeable to tax has escaped assessment; and secondly, he must also have a reason to believe that such escapement of income has occurred by reason of failure on the part of the assessee either to make a return of income under section 139 or in response to notice issued under sub-section (1) of section 142 or section 148; or to disclose fully and truly all material facts necessary for his assessment for that purpose. In the instant case, it is a not a case where the assessee has not filed a return of income, therefore, the first limb of the proviso is not relevant. What needs to be examined is the satisfaction of the second limb of the proviso as to whether there is a failure on part of the assessee to disclose fully and truly all material facts necessary for its assessment. The aforementioned requirements of law are held to be conditions precedent for invoking the jurisdiction of the AO to reopen the assessment under section 147 of the Act and both the conditions are cumulative and must co-exist and in event of any of the conditions not been satisfied, the very initiation of proceedings under section 147 of the Act shall be wholly without jurisdiction. Second part of the reasons so recorded, the Assessing officer has talked about the information collected/received by him and basis which, he has recorded the reasons of income having escaped assessment. General modus operandi involved whereby the proprietary concerns receive payments from the beneficiary companies through various modes like RTGS /CHEQUES /BANK TRASNFERS/ and the amount is immediately withdrawn as cash and returned to the beneficiaries after charging certain commission from the beneficiaries. The so called modus operandi where so found and adopted by the assessee has not been specified mode and manner of payments by the assessee, the particulars of the bank account where the payment is remitted/transferred by the assessee, the quantum of payment and the factum of withdrawal and hand over of cash to the assessee has not been specified as so found by the DDIT Investigation. It is not that the whole of the investigation report has to be reproduced in the reasons so recorded, at the same time, relevant portion thereof and how the information so found and reported in the said report and linkage thereof with the assessee should be specified in order to hold the said information as a tangible piece of information in possession of the Assessing officer. However, nothing has been specified in the reasons so recorded. We find that these are general descriptions and how the same are relevant and tangible in the case of the assessee is not borne out from the reasons so recorded. CIT(A) has held that the Assessing officer was in possession of tangible material in form of a report from the Investigation Wing and has thus tried to support the reasons so recorded by way of supplementing the same. It is a settled position that the reasons are required to be read as they were recorded by the Assessing officer and no substitution or that matter, supplementation is possible. It may be that the Assessing officer was in receipt of the report of the Investigation Wing, however, just having the report in his possession is not sufficient unless he brings out the relevant facts and bearing thereof in the hands of the assessee in the reasons so recorded which has evidently not happened in the instant case. Third part of the reasons so recorded, the Assessing officer has claimed to have carried out the analysis of the information so collected/received by him and all that he has stated was that the assessee had received many bogus entries from Rohit Trading and has made payment. There is nothing in the reasons so recorded that he has carried out any such enquiry/investigation on receipt of information from the Investigation Wing and the answer to all these questions is therefore not in affirmative. Thereafter, in part five of the reasons so recorded where he says that the assessment records, 360 degree report and financial statements are the basis for arriving at the belief that income has escaped assessment is merely a generic statement without any substance and corroboration. We therefore find that there is nothing on record that the Assessing officer has actually carried out any analysis/verification of the information so received and it is case of mechanical recording of reasons to believe that income has escaped assessment without due application of mind. We therefore find merit in the contention advanced by the ld AR that the reasons have been recorded merely basis receipt of information (even the same is not discernable from the reasons so recorded) from the Investigation Wing without any independent examination and application of mind by the Assessing officer and the same clearly lacks the jurisdictional requirements as so provided in the statute which requires the satisfaction of the Assessing officer and the reasons to believe that income has escaped assessment in the hands of the assessee. Sixth and seventh/concluding part of the reasons so recorded, the Assessing officer has recorded his findings on the applicability of requirement of true and full disclosure of material facts in terms of proviso to section 147 of the Act as fours years have elapsed from the end of the relevant assessment year. It has been stated by the Assessing officer that he has carefully considered the assessment records containing the submissions made by the assessee in response to various notices issued during the assessment/reassessment proceedings and have noted that the assessee has not fully and truly disclosed the material facts necessary for his assessment for the year under consideration. It has been further stated by the Assessing officer that it is true that the assessee has filed a copy of annual report and audited P L A/c and balance sheet along with return of income where various information/ material were disclosed, however, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. Thus, in the instant case, AO has simply relied upon the report of Investigation Wing without carrying out any preliminary enquiry and investigation and establishing the necessary nexus between material and formation of belief that income has escaped assessment. There is clearly no tangible material in possession of the Assessing officer and no independent application of mind by the Assessing officer. There is no specific failure in terms of material facts not truly and fully disclosed as can be discernable from the reasons so recorded. The whole exercise thus shows a mechanical approach on part of the Assessing officer to issue notice u/s 148 of the Act merely on receipt of information from the Investigation Wing on 26/03/2018 and issue of notice on last date of the limitation period i.e, 31/03/2018 without carrying out any further examination/verification. AO doesn t have the legal basis to acquire jurisdiction for reassessment u/s 147 and thus, the notice so issued under section 148 is hereby quashed and consequent reassessment proceedings are thus liable to be set-aside. Decided in favour of assessee.

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• 2025 (4) TMI 977
  Stay on recovery of the outstanding demand - HELD THAT:- Despite earlier directions given by ITAT while granting conditional part stay of outstanding demand of income-tax and interest to recover and adjustment of Rs. 39 crores from the refund due to the assessee against outstanding demand of income-tax and interest due thereon, the said recovery and adjustment of Rs. 39 crores has not been done by the Revenue. The AO shall take immediate steps to recover and adjust Rs. 39 crores from the refund due to the assessee, otherwise the assessee is directed to deposit the said amount of Rs. 39 crores if no refund is due and payable to the assessee. The AO shall adjust the same against the outstanding demand of income-tax and interest thereon. The assessee on its part shall also co-operate with the AO to submit relevant information w.r.t. adjustment of refunds claimed to be due to the assessee to the tune of Rs. 39 crores, or otherwise the assessee shall make payment/deposit of Rs. 39 crores with Revenue/Government if no refund is found to be due and payable to the assessee We stay recovery of remaining outstanding demand towards income-tax and interest thereon of Rs. 230.97 crores vide this order in stay application, for a period of 180 days or till the disposal of the appeal which ever is earlier, with the condition that Rs. 39 crores be adjusted/deposited towards the outstanding demand. The stay on recovery of aforesaid outstanding demand will become effectively operational on recovery and adjustment of Rs. 39 crores, either by adjustment of refund or deposit by assessee, as directed by us as above. AO will take immediate steps towards the same. The appeal was adjourned sine-die as the issue involved in this appeal concerns issue of DIN, and the same shall continue to be so, till application for fixation of hearing is moved.

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• 2025 (4) TMI 976
  Rejection of books of accounts - Estimating of net profit - CIT(A) directed to estimate profit before depreciation @ 10.32% subject to depreciation, except depreciation on fixed assets claimed to be added during the year under consideration - Disallowance made u/s 40a(ia) by appellant as the TDS amount was deposited delayed and based on the provisions of law, the same would have to be disallowed while making the computation of income and would be claimed only in the year of payment - HELD THAT:- Since the said amount stands already included in the income while making the computation of income there is hardly any need to make any comment on the same and to draw any adverse inference on the basis of the same. If the books of accounts are rejected, and net profit is estimated by application of net profit rate, there cannot be again addition on account of any disallowance based on the same set of books of accounts. Here we note that the books of accounts were rejected, and net profit rate was applied. Thus, having accepted the fact of rejection of book results making separate addition from the same set of books is incorrect. The issue raised in this year also prevailed in the earlier year wherein no separate addition were made in relation to payments for default of section 40a(ia) while estimating the income, even by the AO himself. Thus, taking a different stand in the current year is not only bad in law but is also unjustified on the facts. As is available from the above, finding that while allowing the grounds of appeal of the assessee, ld. CIT(A) has considered the decision of the ITAT in the case of the assessee s case and has accordingly allowed the grounds of appeal. The ld. DR did not demonstrate any contrary decision having binding precedent and therefore, we do not find any merit in the grounds of appeal raised by the revenue and therefore, ground no. 2 3 raised by revenue has no merit and therefore, dismissed. Excluding amount from turnover of the assessee for determining GP 29.29% whereas the above amount was shown by assessee itself in its ITR under the had other income in P L account so it is part of business receipts along with amount from revenue from operations shown by assessee and holding that this amount as un- accrued income when the assessee itself has shown the same as part of income in its ITR - When the book results were rejected while estimating the profit only the real income be taxed and not the notional income. While deciding this issue the ld. CIT(A) has considered the issue that there is no finality about the income and the estimated income is accrued at once subject to correction when the amount is agreed upon. If the amount is litigated, however, even though liability is admitted it has been held that income does not accrue until the litigation is finally terminated. But if liability is not admitted income does not arise from mere accrual of a cause of action. The income may not be accrued until a settlement is made or if the claim is litigated until all possible appeals have been taken or the liability has become final by the expiration of time to appeal from a judgement for the taxpayer and that too when book results are rejected and at that point of time only the real income be taxed and not the litigated income be considered while estimating the income. In the light of this observation we do not find any infirmity in the finding of the ld. CIT(A) and therefore ground no. 4 raised by the revenue stands dismissed. CIT(A) in excluding amount from turnover of the assessee for determining GP @ 29.29% when the assessee failed in the appellate proceedings to explain the difference in amount shown in form 26AS and amount credited in books of accounts - As is evident from the finding of the CIT(A) has favored the assessee on two reasons one the similar issue was raised in the A.Y. 2016-17 and the ld. AO accepted the explanation of the assessee, and the matter has reached to finality as the appeal before the High Court was not considered. Secondly CIT(A) has considered the explanation of the assessee and hold that difference stands explained, and no adverse inference drawn. Before us the ld. DR did not demonstrate any perversity in the explanation of the assessee and finding of the ld. CIT(A) and therefore, we do not find any merits in the ground raised by the revenue and the same stands dismissed. Estimating net profit @0.11% - AO has categorically held that 70% of expenses not subject to TDS are not genuine and this disallowance (70%) was included in the estimated addition by applying N.P. rate of 10.32% - As is evident from the above order of the ld. CIT(A) that he has followed the order of the co-ordinated bench which ultimately reached finality when challenged before our Jurisdictional High Court and therefore, when the ld. DR did not demonstrate before us as to how we can deviate from the binding precedent, when the ld. CIT(A) has compared the finding of the earlier year with that of the current year comes to loss and in that year of A. Y. 2016-17 being loss and based on the order of the co-ordinate bench applied the profit rate @ 0.11%. Thus, as discussed in the order of the ld. CIT(A) and no contrary material before us to take a difference view of the matter we do not find any infirmity in the finding of the ld CIT(A). Based on these observation ground no. 1 raised by the revenue stands dismissed.

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• 2025 (4) TMI 975
  Disallowance of Assessee s claim of deduction u/s 54F - CIT(A) who has confirmed the addition made by the AO on the ground that the sale consideration should have been deposited before the due date of filing of the return u/s. 139(1) of the Act in specified Capital Gains Account Scheme (CGAS) bank account with authorized banks and utilized in the manner prescribed under the Act - HELD THAT:- It is clear from the bank statement filed by the assessee, the assessee received sale consideration on 10-05-2016 and the entire sale consideration was reinvested in a residential flat on 17-05-2016 by transferring it to the Builder. However the assessee has not declared the sale transaction in the original Return of Income but claimed for the first time the claim of exemption u/s. 54F of the Act in the reassessment proceedings. Since the assessee has made reinvestment of the entire sale consideration within seven days from the date of sale of the original Asset, the question of depositing the sale consideration/Capital Gain amount is specified CGAS account does not arise. As perused the statutory provision contemplated u/s 54F and are of the considered view that the same does not cast any statutory obligation on the part of assessee to file his return of income within the stipulated time period as contemplated u/s 139 or 148 of the Act , as a precondition for entitling him to claim exemption under the said statutory provision. Therefore, we are of the considered view that the reference to the term due date for furnishing of return of income u/s, 139 as contemplated in section 54F(4) is in context of the time limit within which the amount which had not been appropriated by the assessee towards making of investment in the purchase and/or construction of the new residential house is permitted to be deposited in the Capital Gains Account Scheme, 1988. Which thereafter is to be withdrawn and utilized as per the terms contemplated in the said statutory provision. Section 54F, neither provides as a pre-condition the requirement of filing of the return of income by the assessee within the stipulated time period, nor places any embargo as regards the claim of such exemption in a case the return of income filed by the assessee involves some delay. Since the A.O. has no occasion to have deliberated upon the satisfaction of the requisite conditions as contemplated u/s 54F of the Act as claimed by the assessee. Therefore, in all fairness we restore the matter to the file of J.A.O for making the necessary verifications and allow the claim in accordance with law. Appeal filed by the Assessee is allowed for statistical purpose.

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• 2025 (4) TMI 974
  Validity of Reassessment proceedings - Assessee argued the proceedings were completed without jurisdiction i.e without issue of notice u/s.143(2) of the Act as prescribed under law - HELD THAT:-Admittedly, in this case, no notice u/s.143(2) of the Act was issued through e-filing portal. As per CBDT Instruction No.1 dated 12 th February, 2018, it has become mandatory that except for search related assessments, proceedings in other pending scrutiny assessment cases shall be conducted only through the E-Proceedings functionality in ITBA/Efiling. CBDT has mandated that after the issue of this instruction, all the notices should be sent through E-Proceedings functionality in ITBA/E-filing. However, in the instant case, the Assessing Officer has not sent notice u/s.143(2) in E-Proceedings functionality/ITBA/E-filing but sent the same through physical mode via Speed Post. Therefore, there was no valid issuance of notice u/s.143(2) of the Act. Once the notice u/s.143(2) is not validly issued, consequent proceedings cannot be held as valid. As decided in the case of Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] wherein as held that the issue of notice u/s. 143(2) of the I.T. Act is mandatory and not procedural and if the notice is not served within the prescribed period, the assessment order is invalid. Thus reassessment order quashed. Decided in favour of assessee.

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• Customs

• 2025 (4) TMI 973
  Smuggling of Gold of foreign origin - existence of reasonable belief/evidence that the said goods have been smuggled into the country or not - shifting the onus to prove to the person from whose possession the goods were seized - levy of penalty on appellant - HELD THAT:- Board, vide its Circular No. 01/2017 dated 08.02.2017, has instructed to pass a specific order depicting the reasonable belief of the officer concerned while seizing the goods. Therefore, deviation thereof, clearly depicts that the seizure so made is illegal and hence, the goods are liable to be released and in corollary thereof, confiscation under Section 111 of the Customs Act 1962 is not at all warranted. Thus, when preliminary seizure of goods is in dispute, the SCN proceedings become vitiated in nature thereby making the impugned order liable to be quashed. Section 123 of the Customs Act clearly stipulates that a reasonable belief that the gold is of smuggled in nature is mandatory for invocation of the said provision; However, in the present case no reasonable belief has been formed by the officers that the gold is of smuggled in nature and hence the provisions of Section 123 are not applicable in this case and the burden lies on the Department to prove that seized gold is of smuggled in nature. The Appellants contend that no evidence has been brought on record by the Revenue to substantiate the allegation that the gold is of foreign origin and smuggled in nature. No reasonable belief has been formed by the officers that the gold is of smuggled in nature. It is also found that no evidence has been brought on record by the Revenue to substantiate the allegation that the gold is of foreign origin and smuggled in nature. It is observed that the seizure of the gold without following the reasonable belief that the gold is of smuggled in nature, is not sustainable. The only ground in which the gold was seized by the officers was that the appellant was not having any document for licit purchase of the same at the time when they were intercepted. It is observed that failure to produce documents in respect of the goods carried by a person does not ipso facto prove that the goods are contraband in nature. The allegation of smuggling needs to be proved with cogent reasoning and corroborative evidence thereof. Subsequently, if the appellant could produce documents for its legal purchase, the same cannot be ignored to conclude that the gold is of smuggled in nature. The burden under Section 123 of Customs Act, to prove that the gold is not smuggled in nature, does not lie on the Appellants, in this case. The onus is on the Departmental officers that the gold is of smuggled in nature. However, it is observed that the officers of the Department could not establish that the gold is of smuggled in nature. The documents submitted by the Appellant have not been proved to be false. However, despite having found that the documentary evidence submitted by the Appellants was genuine, the ld. adjudicating authority has held that the goods are liable for confiscation vide the Order-in-Original dated 30.03.2022. Considering the documentary evidence submitted by the appellants, there are no reason to reject the evidence of legal procurement of the gold produced by the Appellants. Consequently, the provisions of Section 123 of the Customs Act, 1962 are not applicable to this case - the confiscation of the gold under Section 111 of the Customs Act, 1962 is not sustainable. Penalties imposed on the Appellants - HELD THAT:- The ld. adjudicating authority has imposed the penalties under Section 112 of the Customs Act, 1962. As the gold is not liable for confiscation, there is no offence committed by the Appellants warranting imposition of penalty under Section 112 ibid. Accordingly, the penalties imposed on the Appellants under Section 112 of the Customs Act are set aside. Conclusion - i) The seizure of gold was invalid due to non-formation of reasonable belief. ii) Section 123 was not attracted; burden of proof did not shift to appellants. iii) Documentary evidence of indigenous procurement was accepted, negating smuggling allegations. iv) Confiscation order was set aside. v) Penalties imposed under Section 112 were quashed. Appeal allowed.

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• 2025 (4) TMI 972
  Time limitation for issuance of SCN - Proceedings initiated against the appellant by issuance of a SCN dated 05.03.2018 that is said to have been received by the appellant on 09.03.2018 - SCN deemed to be conclusive as to the matters stated therein, in terms of section 28 (6) of the Customs Act, 1962 or not - HELD THAT:- The reason assigned by the Principal Commissioner for not giving benefit of section 28(6) of the Customs Act to the appellant is that an amount of Rs. 3,249/- demanded by the corrigendum dated 16.07.2019 issued to the show cause notice dated 05.03.2018 was not deposited by the appellant within 30 days from the date of the show cause notice i.e. 05.03.2018 - This reasoning of the Principal Commissioner defies all logic and cannot be countenanced at all. The Principal Commissioner expected the appellant to have deposited an amount of Rs. 3,249/- demanded through the corrigendum dated 16.03.2019 within 30 days of the show cause noticed on 05.03.2018. It clearly shows that the Principal Commissioner did not apply his mind at all while rejecting the plea of the appellant for closure of the proceedings in terms of section 28(6) of the Customs Act. Once the appellant had made the deposit in terms of section 28(5) of the Customs Act with interest and penalty and informed this fact to the department by a letter dated 12.04.2018, the department should have immediately taken steps to close the proceedings and should not have waited for over one year and six months to pass an order rejecting the plea of the appellant. The show cause notice was issued on 05.03.2018. It should, therefore, have been adjudicated upon by 04.03.2019. The personal hearing, in fact, took place on 27.09.2018. The Principal Commissioner decided the matter on 16.12.2019 much after the expiry of one year from the date the personal hearing was conducted on 27.09.2018. The corrigendum to the show cause notice was issued on 16.07.2019 much after the period within which the Principal Commissioner was required to adjudicate the show cause notice. Conclusion - The proceedings initiated by the show cause notice dated 05.03.2018 are deemed conclusively closed under section 28(6) of the Customs Act. Appeal allowed.

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• 2025 (4) TMI 971
  Levy of penalty on appellant (Customs Broker) - Whether the Customs Brokers(CB) was aware that the importer was not the Actual importers? - allegations of violation of Regulation 11(d) and 11(n) of CBLR, 2013 - CB failed to provide any authorization from M/s Rishipush Trading LLP to the effect that the CB was engaged/ authorized by the actual importers for clearance of goods - HELD THAT:- The adjudicating authority itself has held that the appellant was unaware of the change in constitution of the imported firm till the present investigation. It is also acknowledged that at the stage of investigation a letter of authorization was produced by the appellant. The said authority letter is annexed on the record as well. The perusal reveals that the authority letter has been issued by the partners of re-constituted M/s Rishi Pushp Trading LLP, namely, Shri Hemant and Shri Dinesh and both those partners have authorized Shri Pukhraj Padiyar (the previous partner of the importing firm) to do certain acts on behalf of the firm including to deal with Customs Broker for clearance of import parcel. This perusal shatters the entire case of the department. The statement of the appellant that he received documents from Shri Pukhraj Padiyar which is alleged to be an admission of the guilt, therefore, doesn t support the department. From the authority letter, it stands established that the documents were provided to appellant through Shri Pukhraj Padiyar being the authorized representative of the re-constituted importing firm. There is no denial viz-a-viz the validity of all the KYC documents including IEC code, identity of the importing firm, functioning of the firm at the declared address etc., It has also come on record that earlier partners of the importing firm were Shri Pukhraj Padiyar and Shri Rajendra Bayawat and the new partners are Shri Hemant Kumar Bhambi and Shri Dinesh Meghwanshi. Post 11.01.2018 both the new partners extended their authorization in favour of the previous partner, namely, Shri Pukhraj Padiyar only to get the Customs Broker engaged for clearance of import. These observations are sufficient to falsify the allegations of violating Regulation 11(d) and 11(n) of CBLR, 2013 as already observed in the impugned order. The adjudicating authority itself has held that these allegation in his view are not proved. Conclusion - i) The appellant has not provided any false or incorrect intention and there appears no deliberate act on part of the appellant as is alleged by the department. ii) The impugned order of imposition of penalty upon the appellant is liable to be set aside. Appeal allowed.

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• Insolvency & Bankruptcy

• 2025 (4) TMI 970
  Violation of principles of natural justice - Ownership of property - Earlier the Proprietorship firm was taken over by the Corporate Debtor - It is argued the Learned Adjudicating Authority without appreciating the mandate of Explanation to Section 18 of the Code, had wrongly passed the impugned order - HELD THAT:- Admittedly the subject property is the Corporate Office of the Corporate Debtor and is shown as property of CD in its financial statements. In view of this it cannot be said the Resolution Professional had no power to take possession of the subject property. Further, admittedly a Take Over Agreement dated 16.12.2016 was executed between KPG International Pvt Ltd, viz the Corporate Debtor as well as KPG International, a sole proprietorship firm of the appellant herein. Property bearing No.B354, Block 3 Mangolpuri, Industrial Area, Phase I, New Delhi admittedly was in the name of M/s KPG Industries, a sole proprietorship firm, per its Sale Deed. However, admittedly Take Over Agreement dated 16.12.2016 was executed between the two and a bare perusal of its provisions would reveal the intention of appellant was to pass on the ownership of property unto the Corporate Debtor - Admittedly vide the Take Over Agreement dated 16.12.2016 the subject Property came into the possession of Corporate Debtor. Now by virtue of the Takeover Agreement, if the corporate veil is pierced, then it can be seen the Appellant s sole proprietorship firm is transferring its sole asset viz. the subject Property to the Corporate Debtor Company. On approval of the Plan the Successful Resolution Applicant would step into the shoes of Resolution Professional and may prosecute the matter for a successful title - The Resolution Professional admittedly is in possession of the subject property and just because a formal sale deed has not been executed/registered, does not mean the appellant be handed over the possession of such property which he himself willingly had agreed to transfer, upon receipt of consideration, to company owned and managed by him, viz. the Corporate Debtor. Admittedly as of now an application for plan approval is still pending and in case the plan is approved it shall be the prerogative of the Successful Resolution Applicant to pursue civil remedies to perfect the title of the said Property. The Successful Resolution Applicant admittedly is made aware of the situation of the subject Property before submitting its Resolution~ Plan. Admittedly the Resolution Plan is approved with 80.43% voting share in 6th COC Meeting dated 13.01.2021 in the presence of the appellant herein and without his objecting to its approval. Conclusion - The appeal is dismissed and it is refused to restore possession of the subject property to the appellant, holding that the property vested in the Corporate Debtor under the Take Over Agreement and was lawfully in possession of the RP during CIRP. Appeal dismissed.

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• 2025 (4) TMI 969
  Time limitation for admission of Section 7 application filed by the Unity Small Finance Bank Ltd.- Respondent No.1 - whether the date of default arising out of the arbitral award could have been taken cognisance of by the Adjudicating Authority in extending the period of limitation without a formal amendment application seeking alteration of the date of default? - HELD THAT:- The date of default by the Corporate Debtor as claimed by the Respondent No.1 is 12.11.2018. It is also noticed that the Part-IV makes a mention of the arbitral award of 28.04.2022 at paras (g) and (h). However, it is also pertinent to note that the Part-IV does not claim the date of arbitral award to be the new date of default. It is also noticed that mention has been made that execution proceeding in respect of the arbitral award is currently pending adjudication before the Hon ble Bombay High Court. Perusal of the impugned order shows that the date of default in terms of the above order was 12.11.2018 and the date of NPA was 12.02.2019. The impugned order has also taken note that arbitration proceedings had been initiated against the Corporate Debtor in which arbitral award was passed in favour of the Respondent No.1-Financial Creditor on 28.04.2022. While holding the date of default to be 12.11.2018, the Adjudicating Authority has, however, worked out the period of limitation by taking into account the decision of the Hon ble Supreme Court in the Suo Moto matter and the arbitral award to find the Section 7 application to be within limitation. It is therefore, clear that the Adjudicating Authority has on its own held that the arbitral award gave rise to a fresh cause of action and a fresh period of limitation even while the date of default remained unchanged from what was declared as 12.11.2018 in Part-IV of the Section 7 application by the Respondent No.1. The Appellant, Respondent No.1 and the Adjudicating Authority have all acknowledged the settled law laid down in the judgment of the Hon ble Supreme Court in Dena Bank vs. C. Shivakumar Reddy Anr. [ 2021 (8) TMI 315 - SUPREME COURT] wherein it held that a final judgment or decree of any Court or Tribunal or any Arbitral Award for payment of money, if not satisfied would fall within the ambit of a financial debt enabling the creditor to initiate proceedings under Section 7 of the IBC. The date of default has been held to be the date of arbitral award by the Adjudicating Authority without the Respondent No.1 having made a formal pleading to that effect. The Respondent No.1 not having amended their petition or made pleadings to the effect that the date of default had changed, the Adjudicating Authority could not have held that the arbitral award of 28.04.2022 had reset the limitation period. In the given facts and circumstances, it is inclined to agree with the Appellant that the Adjudicating Authority has erred in extending the period of limitation basis the arbitral award. Conclusion - i) The Respondent No.1 failed to bring about change in the date of default through a formal amendment in the Section 7 petition. ii) The Adjudicating Authority could not have held that the arbitral award of 28.04.2022 had reset the limitation period without the Respondent No.1 having made a formal pleading to that effect. The matter is remanded back to the Adjudicating Authority to decide the matter afresh in accordance with law and on merits basis the amended pleadings, if any, filed by the Respondent No.1 - Appeal disposed of by way of remand. The matter is remanded back to the Adjudicating Authority to decide the matter afresh in accordance with law and on merits basis the amended pleadings, if any, filed by the Respondent No.1.

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• Service Tax

• 2025 (4) TMI 968
  Levy of service tax - renting of immovable property service - invocation of extended period of limitation - HELD THAT:- Admittedly the appellant did not pay the service tax during the relevant period. It is also indisputable that the Delhi High Court had vide its order dated 18-04-2009 in Home Solution Retail India Ltd, [ 2009 (4) TMI 14 - DELHI HIGH COURT] held that Section 65(105)(zzzz) does not in terms entail that the renting out of immovable property for use in the course or furtherance of business of commerce would by itself constitute a taxable service and be exigible to service tax under the said Act. Admittedly, the jurisdictional range officer had deemed it fit only in November 2011, followed by a reminder in December 2011 to advise the appellant to pay the service tax rent on the rent received during 2008-2009 and it was only almost two years thereafter on 04.10.2013 that the SCN was issued invoking the extended period. Evidently, there was no protective SCN issued during the interregnum when the levy was held untenable by the Delhi High Court s Judgement and clarity thereafter ensued only after the retrospective amendment introduced after the enactment of the Finance Bill 2010, which the appellant could not have the prescience to know. Hence, the appellant was justified in its contention that during the period the issue was debatable and therefore the question of sustaining the demand by invoking the extended period of limitation does not arise. Conclusion - The demand is hit by limitation, the SCN dated 04.10.2013 having been issued well beyond one year from the relevant date. Appeal allowed.

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• 2025 (4) TMI 967
  Levy of penalties - suppression of facts or not - failure to furnish information and failure to pay service tax electronically - benefit of cum-tax valuation under Section 67(2) of the Finance Act, 1994 - extended period of limitation - HELD THAT:- The Appellant had collected the amounts in terms of the MOU signed between them and M/s Ansal Properties M/s Sputnik Realtors Pvt. Ltd. with respect to the commission per acre to be paid to them. The fact about these amounts being collected by them was never disclosed by them to the Revenue Authorities or in their ST-3 Returns. Thereby they suppressed the value of taxable services being provided by them with a intent to evade payment of tax. From the impugned order it is evident that Appellant was aware that tax was due in respect the said amount and they agreed to discharge service tax liability of this amount during the relevant period. There is no dispute with regards to the amount of service tax demanded from the Appellant. The Appellant do not dispute the same. That being so by not reflecting these tax liabilities in their ST-3 Return Appellant have deliberately knowingly suppressed the relevant facts from the Revenue Authorities with intent to evade payment of tax. Thus their cannot be any dispute with regards to the penalties imposed upon them under Section 78 in terms of decision of Hon ble Supreme Court in the case of UOI V/s Rajasthan Spinning Weaving Mills [ 2009 (5) TMI 15 - SUPREME COURT ] . While this option to pay 25% of the amount confirmed was extended in Order-In-Original the same has not been extended in the impugned order by the Commissioner (Appeals) whereby major amount of demand has been dropped (demand confirmed by Order-In-Original is Rs.78,79,420/-and by Order-In-Appeal is only Rs.7,96,139/-) it was thus necessary for the Commissioner (Appeals) but have specifically extended this benefit of payment of penalty at 25% of the tax short paid in terms of this provisions. Conclusion - The benefit extended in terms of this Section to the Appellant for payment of entire amount of tax with interest and 25% penalty within 30 days of the receipt of this order. Appela disposed off.

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• 2025 (4) TMI 966
  CENVAT Credit - proportionate credit reversal made by the appellant for the period April 2011 to September 2012 - sufficient compliance with Rule 6(3) of the Cenvat Credit Rules, 2004 or not - credit availed on the basis of photocopies of documents - invocation of extended period of limitation. Whether the proportionate credit reversal for the period April 2011-Sept. 2012 is sufficient compliance to Rule 6(3) of the Cenvat Credit Rules, 2004? - HELD THAT:- Once the appellant have reversed proportionate credit on common input service attributable to the exempted service, along with interest, it restores the position of cenvat credit not having been availed at all, and the demand for 5%/6% of the value of exempted services cannot be sustained. In the case of Chandrapur Megnet Wires P. Limited vs. CCE, Nagpur [ 1995 (5) TMI 148 - CEGAT, NEW DELHI] , the Hon ble Supreme Court has held that we see no reason why the assessee cannot make a debit entry in the credit account before removal of the exempted final product. If this debit entry is permissible to be made, credit entry for the duties pald on the inputs utilised in manufacture of the final exempted product will stand deleted in the accounts of the assessee. In such a situation, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final exempted product under Rule 57A. In other words, the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods. - the demand cannot be sustained. Whether credit is required to be reversed for the period Octber 2012-March 2015? - HELD THAT:- From the date of the certificate, it is evident that this was not presented before the adjudicating authority. However, there are no infirmity in the said CA Certificates - It is not clear as to in what form, the adjudicating authority wanted the CA Certificate to be submitted in order to satisfy the requirements of the Department. It is well settled principle that CA Certificate cannot be rejected unless it is evidenced that the same is fake or forged. Consequently, the CA Certificates submitted are acceptable to establish that no credit was availed on common input services for the period October, 2012 to March 2015. Whether credit availed on photocopies of documents is admissible? - HELD THAT:- The appellant has claimed that the original invoices were submitted to the Range Office vide their letter dated 11.03.2014, a copy of which is annexed to the appeal paper book. It is noted that the said letter is addressed to Superintendent, Service Tax, Range-I, Division-I, Noida and the receipt stamp of the Range date 12 March 2014 is clearly visible. This contention of the appellant has been boldly rejected by the adjudicating authority holding that the letter has not been acknowledged and the signature appended is not identifiable. Once a evidence of producing the original invoices before the Jurisdictional Officer has been submitted, unless it is evidenced that the seal/signature was forged, the submission deserves to be accepted. Whether extended period is rightly invoked? - HELD THAT:- The Audit team carries out a very comprehensive action beginning from creation of the Assessee Master file to the actual audit of the records of an assessee. In the instant case, it is noted that the audit was undertaken over 3-4 days in the year 2012, looking into all the records maintained by the appellant. Further, as the appellant being subjected to audit from time to time, the invocation of extended period is neither warranted not substantiated. Once all the statutory records of the appellant has been audited and the appellant has filed this returns regularly, the Department cannot invoke the extended period. Conclusion - i) The position of cenvat credit not having been availed at all, and the demand for 5%/6% of the value of exempted services cannot be sustained. ii) The CA Certificates submitted are acceptable to establish that no credit was availed on common input services for the period October, 2012 to March 2015. iii) Once a evidence of producing the original invoices before the Jurisdictional Officer has been submitted, unless it is evidenced that the seal/signature was forged, the submission deserves to be accepted. iv) Once all the statutory records of the appellant has been audited and the appellant has filed this returns regularly, the Department cannot invoke the extended period. The impugned order is set aside - appeal allowed.

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• 2025 (4) TMI 965
  Availment of abatement under N/N. 1/2006 Service Tax dated 01.03.2006 - commercial or industrial construction construction of residential complex services - simultaneously availing CENVAT Credit of Service tax on input services used for providing such taxable services - obligation to maintain separate accounts for taxable and exempted services as prescribed under Rule 6(2) and Rule 6(3) of the CENVAT Credit Rules, 2004 - Extended period of limitation - HELD THAT:- From the wordings of Notification No. 01/2006-ST dated 01.03.2006 it is apparent that the benefit of abatement is available only when service provider is not taking any CENVAT Credit either on Capital Goods/inputs/input Services. Further, it is noted that Rule 6 of CENVAT Credit Rules, 2004 provides for certain obligations of a manufacturer of dutiable and exempted goods and provider of taxable and exempted services. According to Rule 6(2), a separate account is required to be maintained in respect of input services, if the output services are taxable as well as exempted. Rule 6(3) considers a situation wherein when separate account is not maintained, in such a situation, either a flat amount as a percentage of exempted taxable services is to be paid or an amount as prescribed under Rule 6(3A) is liable to be paid - In case abatement is availed, then Cenvat credit cannot be availed, if they have availed Cenvat credit then abatement cannot be availed. In the instant case, the appellant has chosen to avail abatement and take Cenvat credit. It was then incumbent upon him to follow the procedure as prescribed under Rule 6 of the CCR, 2004. Therefore, the denial of abatement for 2010-2011 is correct and the demand is sustained. It is also noted that the appellant has reversed the Cenvat credit availed for the year 2011-2012 which stands appropriated. Therefore, there are no reason to differ from these findings in the impugned order. Extended period of limitation - HELD THAT:- The finding recorded that suppression of facts is sufficient to invoke the extended period of limitation under the proviso to Section 73 (1) of the Finance Act and there is no necessity of any intent to evade payment of service tax, is against the well settled principles. It has to be examined whether any suppression was wilful and coupled with an intent to evade payment of service tax - In Pushpam Pharmaceuticals Company vs Commissioner of Central Excise, Bombay [ 1995 (3) TMI 100 - SUPREME COURT ] the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to Section 11A of the Excise Act. The proviso to Section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. Conclusion - It is evident that mere suppression of facts is not sufficient, but there must be a deliberate and wilful attempt on the part of the assessee to evade payment of duty. In the absence of any intention to evade payment of service tax, which intention should be evident from the materials on record or from the conduct of the appellant, the extended period of limitation cannot be invoked. As the extended period is held to be not invokable, hence the penalty under section 78 is also liable to be set aside. The demand is upheld for the normal period only. The appeal is allowed to the extent indicated and the impugned order is upheld partially.

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• 2025 (4) TMI 964
  Admissibility of adjustment of the service tax paid - adjusting of the service tax paid in respect of cancelled site mobilization advance against the service contract for erection and commissioning of boilers, which were converted into advance , by re- negotiation; and subsequent adjustment of service tax paid by them under Rule 6(3) of Rules of 1994 - HELD THAT:- The service tax is liable to be paid in respect of taxable services provided by one person i.e., service provider to the other person i.e., service receiver. It is not in dispute that the appellants are the service provider and their customer M/s Jai Prakash Associates Limited is the service receiver, in respect of the taxable services. In terms of Section 66 ibid, since the service tax is liable to be paid at the rate of 12% of the value of taxable services, recourse have to be taken to the provision of Section 67 ibid for determining the value of taxable services. As per the said legal provision, the value of services is the gross amount charged by the service provider for such service provided or to be provided by him; and the phrase gross amount includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment, and any amount credited or debited, as the case may be. In the present case, in terms of the contract entered into between the appellants and their customer, the advance amount has been re-negotiated and the same was adjusted for the initial payment made by the customer towards mobilization advance and subsequently with the total value of the contract. On perusal of the contractual terms and conditions, it is seen that the appellants was supposed to charge 10% of the Contract Price as advance within 7 days of singing the Contract and 10% of the Contract Price against mobilisation at site . However, subsequently on renegotiation, both the parties agreed that appellants will convert the 10% Mobilization Advance also as Normal Advance and thereby increasing the rate of advance to effectively 20%. Accordingly, the appellants raised a credit note for the equivalent amount of the invoices raised earlier. The appellants adjusted the invoice value against the invoices raised in subsequent periods and adjusted the excess service tax paid in the subsequent period i.e. July 2010 as per Rule 6(3) ibid. An activity which was not recognised by either of the parties cannot be said to be a service provided by the appellants. Hence, the appellants had paid excess service tax in respect of a service which was not provided by it. Therefore, the appellants has correctly adjusted the excess service tax paid under Rule 6(3) of Service Tax Rules, 1994. It is found that in the case of the appellant s group entity- Thermax Instrumentation Ltd., the Tribunal in Thermax Instrumentation Ltd. v. CCE, Pune-I [ 2015 (12) TMI 1222 - CESTAT MUMBAI] , has held that service tax is not payable on receipt of advance, since the same is in the nature of merely Earnest deposit. The impugned order dated 18.07.2016 is liable to be set aside, to the extent it had denied adjustment of service tax and had confirmed the adjudged demands and had imposed penalties on the appellants. Conclusion - The service tax is leviable only on the value of services actually provided and invoiced, and advances or mobilization payments treated as advances do not attract service tax until adjusted against invoices. Excess tax paid on cancelled or renegotiated advances can be adjusted under Rule 6(3) by issuing credit notes or refunds. Appeal allowed.

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• 2025 (4) TMI 963
  Availment of CENVAT Credit of service tax paid on reimbursement of diesel and electricity cost and its admissibility to the respondent - admissibility of CENVAT credit availed by the respondent on the basis of debit notes issued by the vendor - HELD THAT:- The issues under dispute is no more res integra in view of the decision of the Co-ordinate Bench of the Tribunal in the case of self-same respondents in COMMISSIONER OF CGST CENTRAL EXCISE, MUMBAI VERSUS VODAFONE IDEA LIMITED [ 2022 (9) TMI 1285 - CESTAT MUMBAI] , wherein it has been held that the respondents are eligible for CENVAT credit and the appeal filed by Revenue was dismissed. The cost Diesel and Electricity form a part of the value of the services provided by the Vendor. Conclusion - i) The respondents are eligible for CENVAT credit. ii) The cost Diesel and Electricity form a part of the value of the services provided by the Vendor. The appeal filed by the appellant-department is dismissed.

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• 2025 (4) TMI 962
  Non-payment of Service Tax on import of services - payments made by the appellant in foreign exchange to foreign entities - wilful suppression of facts - extended period of limitation - HELD THAT:- There is no evidence produced by the Revenue to establish that the appellant has actually received any service within the country which can be categorized as import of service . A perusal of the Show Cause Notice shows that the notice has been raised on the basis of scrutiny of the documents available with the appellant. However, it is observed that no documentary evidence has been brought on record to substantiate the allegation that the appellant has imported management, maintenance or repair service relating to software into the country, for demanding Service Tax under the category of import of service . The twin conditions of reverse charge mechanism for import of services were that the service must be rendered from outside India and the services must be received in India. In this case the services were rendered by payees of Foreign Currency from outside India but, we find that there is no evidence available on record to show that any part of these services were received in India. There is no finding by the lower authorities that the services were received in India. Only incurring of foreign currency does not render the transaction chargeable under service tax under Section 66A of Finance Act, 1994 read with Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. Demand of service tax under the category of Import of service - HELD THAT:- The demand has been raised by the Department based on the earnings in foreign exchange. However, there is no indication that these services were actually received in India - there is no evidence available to indicate that the appellant had received these services in India and utilized in India. Therefore, the services utilized abroad are to be considered as export of service at the hands of the appellant. Consequently, we hold that there is no liability to Service Tax for the services procured and utilized abroad. Accordingly, the demand of service tax confirmed in the impugned order is liable to be set aside. Extended period of limitation - HELD THAT:- The company was under the belief that the transactions for which foreign currency expenses were incurred did not attract service tax on reverse charge basis or otherwise. In the Financial Year 2011-12, there was no foreign currency expenditure incurred. The proceedings initiated by issue of the present Show Cause Notice on 21.10.2013 in respect of Financial Years 2008-09 to 2011-12 are all time-barred as on date of issue of the Show Cause Notice. Thus, the demand confirmed by invoking the extended period of limitation is not sustainable. Conclusion - The demand confirmed in the impugned order on the basis of the data recovered from the balance sheet is not sustainable and hence the same is set aside. Since the demand of Service Tax is not sustainable in the instant case, the question of demanding interest or imposing penalties thereon does not arise. Appeal allowed.

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• 2025 (4) TMI 961
  Dismissal of appeal for non-compliance of the conditions in terms of Section 35F of the Central Excise Act, 1944 - HELD THAT:- Department is placing reliance in the case of Union of India Vs Aakar Advertising [ 2008 (4) TMI 50 - HIGH COURT RAJASTHAN] in which Hon ble High Court of Rajasthan Jodhpur decided that Tribunal could not entertain appeal on merit when impugned order dismissing appeal for non-payment of predeposit not paid dismissal of appeal by Commissioner (Appeals) sustainable and Tribunal not empowered to entertain appeal on merit. Therefore, no need to decide the appeal on merit, since appellant failed to pre-deposit as directed by the Commissioner (Appeals), as required under Section 35F of the CEA 1944. Therefore, appeal is not maintainable as per law and facts of the case and liable to be dismissed on this ground itself - Appeal dismissed.

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• 2025 (4) TMI 960
  Nature of activity - activity of retreading old tyres by the appellant amounts to manufacture or is to be treated as a service - HELD THAT:- The issue of its being a manufacturing activity or otherwise has been dealt with in detail in the impugned order and it is found no reason to interfere with the same and hold that during the material time, the activities being carried out by the appellant did not amount to manufacture and therefore, no Central Excise duty was leviable thereon. It is an admitted fact that the appellants were a franchisee of MRF Ltd, which gave them certain technology of retreading of old tyre and also provided certain specified machinery and materials to be used for such retreading. The actual interaction was with their customers, who would get their old tyres retreaded by the appellant. Therefore, the terms and conditions of the agreement between the MRF Ltd, who gave the appellants the franchise for running a retreading setup with certain proprietary material and technology is of no consequence - once this activity is to be considered as WCS, then the SCN itself shall fail because the classification alleged by the department is under MMRS. However, to arrive at the said conclusion, what is required to be seen is whether the contract between the appellant and their customer is that of composite nature or otherwise. Conclusion - During the material time, the activities being carried out by the appellant did not amount to manufacture and therefore, no Central Excise duty was leviable thereon. The matter is remanded back to the Original Adjudicating Authority - Appeal disposed off by way of remand.

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• 2025 (4) TMI 959
  Service tax liability for the period 2011-12 and 2012-13 - Renting of immovable property - Outdoor catering and Restaurant services - Value of pure sales not excluded - Supply to SEZ units - Extended period of limitation - Cum-tax benefit. Service tax liability for the period 2011-12 and 2012-13 - HELD THAT:- There are no reason as to why the threshold limit in terms of Notification No. 6/2005-ST dated 01.03.2005, as amended was not calculated while determining the demand. The matter hence merits being remanded for determination afresh. Renting of immovable property - HELD THAT:- It is a settled principle in law that a contract is to be interpreted according to the joint intent of both the parties to the contract and which is to be discovered from the entirety of the contract and the circumstances surrounding its formation. The Maxim Pacta dant legem contractui means that the stipulations of the parties constitute the law of the contract. It is hence the duty of the appellant in the circumstances, to lead the best evidence in his possession, which in this case is the contract, as it would throw light on his claim and in case such material evidence is withheld, an Authority may draw adverse inference - The Hon ble Supreme Court in Smt. J. Yashoda Vs Smt. K. Shobha Rani [ 2007 (4) TMI 11 - SUPREME COURT] , held that the rule which is the most universal, is that the best evidence which the nature of the case will admit shall be produced. So long as the higher or superior evidence is within a persons possession or may be reached by him, he shall give no inferior proof in relation to it. The taxability of the service, if any, hence needs to be discussed in terms of the conditions of the contract and has to be examined afresh with a copy of the same - The impugned order also does not disclose any reason for its conclusion approving taxability for the alleged service. The Appellant has claimed that he provides item wise food based on the availability and further collects and pays Value Added Tax for such sale. The same is not seen discussed. The matter hence merits to be examined afresh by the Original Authority. Outdoor catering and Restaurant services - HELD THAT:- The Adjudicating Authority has determined the taxable value by including the sodexo sales, swiggy sales, bakery sales, etc., which are not exigible to service tax. The Appellant has submitted that they paid Rs. 19,30,844/- in excess during the period 2015-16 and therefore, requested to adjust the demand relating to the period April 2015 to June, 2017 which works out to Rs. 12,11,966/-, which has not been examined by the Original Authority. There are no discussion of this matter in the OIO and hence this matter of the stated activity not being exigible to service tax and tax not being adjusted, too deserves to be examined afresh. Supplies to SEZ - HELD THAT:- Rule 9 of the SEZ Rules provides for the grant of approval for authorized operations. As per Rule 10 the goods and services required for the authorized operations may be approved by the Board. Hence unauthorized operations performed within the SEZ area are liable to duty. In the case of Competent Authority Vs. Barangore Jute Factory [ 2005 (11) TMI 490 - SUPREME COURT] , it has been held by the Hon ble Apex Court that where statute requires an act to be done in a particular manner, the act has to be done in that manner alone (Para 5). Similar views have been expressed in the case of A.K. Roy Vs. State of Punjab [ 1986 (9) TMI 412 - SUPREME COURT] and CIT Vs. Anjum M.H. Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] . In fact a Constitutional Bench of the Hon ble Supreme Court in Commissioner Vs Hari Chand Shri Gopal [ 2010 (11) TMI 13 - SUPREME COURT] , considered the matter of exemption and also the pre-conditions for entitlement to avail such exemption. It held that the doctrine of substantial compliance cannot be pleaded if a clear statutory prerequisite which effectuates the object, and the purpose of the statute has not been met - The appellant is provided one more chance to produce the requisite documents in support of their claim for exemption and the provisions of the SEZ Act. Extended period of limitation - HELD THAT:- The OIO has alluded to evidence showing enrichment by the appellant based on public money collected as taxes. However, since the matter is being remanded, this issue can also be examined afresh. Cum-tax benefit - HELD THAT:- One of the allegations against the appellant is that they collected service tax from their customers but did not pay the same to the exchequer. This factual matter needs to be examined by the lower authority before granting the benefit of cum-duty valuation in line with the Tribunal decision in Advantage Media Consultant . This issue may also be examined by the Original Authority during remand proceedings and if necessary, the duty may be re-quantified suitably by giving the cum-tax advantage where ever due. Conclusion - i) For service Tax Liability for 2011-12 and 2012-13, the threshold limit was not considered while determining the demand, warranting a remand for fresh determination. ii) For Renting of Immovable Property, due to the absence of the contract terms with Tamarai Hotels (P) Ltd., the Tribunal could not assess the nature of the service provided. iii) For Outdoor Catering and Restaurant Services, it is found that the orders from the adjudicating authority were cryptic and lacked analysis on how the contracts met legal requirements. iv) For inclusion of Sodexo, Swiggy, and Bakery Sales, there are no discussion on this matter in the original order, necessitating a remand for reevaluation of the taxable value. v) For supplies to SEZ Units, appellant was given another opportunity to produce necessary documentation to support their exemption claim. vi) For invocation of period of limitation, there are evidence of tax collection without deposit and non-compliance with statutory obligations, suggesting suppression of facts. Appeal allowed by way of remand.

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• 2025 (4) TMI 958
  Levy of service tax - Dredging service - Extended period of limitation - penalty - HELD THAT:- As per the contract entered by the appellant with the Azhikkal Port, Kerala, the appellants were liable to pay 30% of the net sale price as consideration for the sand removed from the river. Fact being so, the actual contract is for sale of sand. Though it is admitted fact that by doing so, the appellant is helping the port and it amounts to dredging . However, considering the contract and its terms and conditions, it cannot be held that the activity is amounting to service under dredging services. Regarding reliance of the Department in the matter of Reliance Michigan [ 2013 (7) TMI 236 - CESTAT MUMBAI] , it is an admitted fact that for carrying out the dredging activities, the appellants were paid an amount of Rs. 8,36,58,054/- for the work. However, the issue raised by the appellant was that Mithi River is not a river but a nala and therefore services rendered by them does not amount to dredging of a river and accordingly, they are not liable to pay service tax. As per the judgment of Hon ble Apex Court in the matter of Grand Royale Enterprises Ltd. [ 2022 (9) TMI 273 - SC ORDER] , when there is business transaction between two parties for sale of material, service tax should not be levied. It is also an admitted fact that there is no payment whatsoever from the port to the appellant towards any service and respondent could not have vivisected the activities and charge a certain portion of the same towards service as held by this Tribunal in the matter of CMS (l) Operations Maintenance Co. P. Ltd. [ 2007 (5) TMI 74 - CESTAT, CHENNAI] . Fact being so, the activity cannot be considered as falling under the category of dredging services, but it is only sale of sand and the expenses incurred by the appellant including 30% as cost of sand to the Azhikal port can be considered only as expenses for procuring and sale of sand. Fact being so, the demand made by the respondent is unsustainable. Conclusion - The actual contract is for sale of sand. Though it is admitted fact that by doing so, the appellant is helping the port and it amounts to dredging . However, considering the contract and its terms and conditions, it cannot be held that the activity is amounting to service under dredging services. Appeal allowed.

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• 2025 (4) TMI 957
  Nature of transaction - supply of tangible goods service or deemed sale - activity of hiring out equipment by the appellant - HELD THAT:- In the present case, it is not disputed that the present proceedings have been initiated on account of periodical Show Cause Notice issued for the period April 2009 to September 2012. The facts are identical and appellant has provided documentary evidence to the effect that VAT has been paid by them. Therefore, the impugned order is legally not sustainable. Appeal allowed.

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• Central Excise

• 2025 (4) TMI 956
  Exemption from service tax under N/N. 25/2012-ST dated 20.06.2012 - Governmental Authority or not - services rendered to IIT Guwahati and M/s. Power Grid Corporation of India - adjudication order issued beyond the prescribed one-year time limit under Section 73(4B) of the Finance Act, 1994 - HELD THAT:- The Hon ble Bombay High Court in the case of IDFC First Bank Ltd. vs. Union of India, [ 2023 (8) TMI 1153 - BOMBAY HIGH COURT] while deciding whether the time limit as prescribed in Section 73 (4B) of the Act are mandatory or directory in nature, laid emphasis on the word shall used in the provision to hold that the time limit prescribed in Section 73 (4B) of the Act is mandatory and held The word where it is possible to do so thus cannot be read to defeat the timelines of six months and one year as set out in clauses (a) and (b) of sub-section (4B). Also these words cannot be construed to mean that by use of such words a complete freedom is available to the adjudicating officer to adjudicate the show cause notice at his own sweet will, much less, with such inordinate delay as in the present case which is of almost more than 12 years. Section 73 (4B) provision of the Finance Act 1994, is pari materia the provisions of Section 11A (11) of Central Excise Act 1944 and Section 128 (9) under Customs Act 1962. Under all these Acts, the words used are Shall and Where it is possible to do so and in the Manual, it is as far as possible . In the case of M/S. KOPERTEK METALS PVT. LTD. VERSUS COMMISSIONER OF CGST (WEST) NEW DELHI [ 2024 (12) TMI 269 - CESTAT NEW DELHI] decided by the Principal Bench at New Delhi, it has been held that non adjudication of the order, with no reason being given to the effect that the order could not be passed on time due to circumstance beyond the control of the adjudicating authority, would be fatal to the legality of the order. In the present case, it is observed that the Show Cause Notice was issued on 15.10.2015 and the adjudication order was passed on 06.01.2017 i.e. almost after 01 year 2 months from issue of the notice. As per amended Section 73(4B) of the Finance Act, 1994 w.e.f. 06.08.2014, the time limit for issuance of Order-in-Original is a maximum of one year, even in suppression related cases.From the said Order-in-Original, it is observed that there is nothing to indicate that the appellant has in any way delayed the proceedings necessitating the ld. adjudicating authority to delay the passing of the order at his end. As the Order-in-Original in this case has been issued beyond the one-year time limit fixed for adjudication, the whole adjudication proceedings in terms of the instant Order-in-Original have become a nullity and the Order-in-Original is to be considered as non-est in law. Conclusion - i) The whole adjudication proceedings in terms of the instant Order-in-Original have become a nullity and the Order-in-Original is to be considered as non-est in law. ii) The time limit period cannot be extended endlessly without any plausible justification. iii) The Central Excise Officer shall determine the amount of service tax due under section 73(2) within one year from the date of notice where it is possible to do so, and this timeline is mandatory and not merely directory. The appeal is allowed on the ground of delay in adjudication.

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• 2025 (4) TMI 955
  Clandestine manufacture and removal - data contained in the CDs/Pen drive and Computer print out/CD print out/pen drive printout in the instant case do not satisfy the mandatory conditions of Section 36B of CEA, 1944 - reliability of evidence - cross examination of the persons - corroborative evidences or not - penalty imposed on the Director of the company under Rule 26 of the Central Excise Rules, 2002 - HELD THAT:- The proceedings against the present Appellant No. 1, namely, M/s. Vasundhara Metaliks Pvt Ltd. has been initiated on the basis of the documents recovered from the premises of one M/s Vasundara Power and Infra Pvt. Ltd. (VPIPL) and some loose sheets/private records recovered from the factory premises of the Appellant. It is observed that from the said office premises of M/s Vasundhara Power Infra Pvt. Ltd., the Officers of DGCEI seized 16 Nos of CDs and 2 Nos Pen Drives. Scrutiny of the data recovered from the CDs, pen drives and loose sheets/private records revealed that the Appellant has been clearing the goods clandestinely. Thus, it is observed that the prime evidence of the Revenue is the documents retrieved from CDs, Pen drives and some statements recorded from various persons associated with the manufacturing and clearing, during the course of investigation. It is observed that the Appellants have raised the point about the reliability of the data recovered from the CDs/Pen drives recovered from the premises of VPIPL. A pen drive is a floating device and has no evidentiary value on its own and can be admitted as evidence only when it strictly fulfils the conditions specified in Section 36B of the Central Excise Act. Refence made to the decision of the Hon ble Apex Court in the case of Tukaram S. Dighole vs. Manikrao Shivaji Kokate [ 2010 (2) TMI 1130 - SUPREME COURT] wherein it has been held that electronic devices such as Pen Drive with fast development in the electronic techniques, are more susceptible to tampering and alterations by transposition, excision, etc which may be difficult to detect and therefore such evidence has to be received with caution. In the present case, it is observed that the officers had not obtained any certificate as required under Section 36B(4) of the said Act. It is also noted that none of the conditions stipulated under Section 36B(2) of the Act, 1944 have been followed. In such situation, it is difficult to accept the printouts retrieved from the sixteen CDs and two pen drives as evidence to support the clandestine removal of the goods. It is pertinent to note that the requirement of certificate under Section 36B(4) is also to substantiate the veracity of truth in the operation of electronic media - the data recovered from the sixteen CDs and two pen drives cannot be relied upon in the proceedings in the absence of Certificate as mandated under Section 36(4) of the Central excise Act, 1944. In the present case, therefore, the only other evidence is the data retrieved from the sixteen CDs and two pen drives, which is also not as per the procedure prescribed under Section 36B of the Act. The entire case has been built with no corroborative evidence brought in whatsoever, there are no hesitation to apply the ratio of the case laws cited supra in respect of reliability of data recovered from Compact Disks / Pen drives, non-allowing of cross-examination of the persons recording the statements, non-production of corroborative evidence, and consequently, set aside the impugned order on these counts in respect of the confirmed demands. Penalty imposed on Shri Kamalpat Dalmia, Director of the Appellant-company / Appellant No. 2 - HELD THAT:- The Department has not brought in any evidence against him warranting imposition of penalty under Rule 26 of the Central Excise Rules, 2002. Accordingly, the penalty imposed on him set aside. Conclusion - i) Without a certificate as mandated under Section 36-B (4) of the Central Excise Act, the computer print-out, Compact Discs, and pen drives cannot be relied upon by the Department in the adjudication proceedings. ii) The denial of cross-examination of persons whose statements are sought to be relied upon under Section 9D of the Central Excise Rules results in such statements losing their evidentiary value and renders them irrelevant for adjudication. iii) In the absence of compliance with mandatory provisions of Sections 36B and 9D, and without any corroborative evidence, the confirmed demands of duty, interest, and penalties cannot be sustained. iv) Penalty imposed on a Director under Rule 26 of the Central Excise Rules without evidence implicating him is unsustainable and liable to be set aside. The impugned order is set aside - appeal allowed.

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• 2025 (4) TMI 954
  Clandestine manufacture and removal of excisable goods - cogent, tangible, affirmative and corroborative material - demand has been confirmed on the basis of estimated production arrived at by supplying theoretical input / output norms based on the expert opinions - HELD THAT:- No duty can be demanded merely on the basis of input / output ratio without consideration of parameters such as quality of raw materials, kiln condition and other manufacturing parameters like fine engineering tendency of iron ore, etc. We observe that a similar view has been held by this Tribunal in the case of Commissioner of C.Ex. S.Tax, Rourkela v. Argasen Sponge Pvt. Ltd. [ 2024 (12) TMI 1531 - CESTAT KOLKATA] where it was held that As none of the test has been conducted to establish clandestine manufacture and clearance of the goods by the Respondent, therefore, the impugned demand are not sustainable against the Respondent. The clandestine removal is a serious charge which must be proved with tangible, cogent and affirmative evidence. However, in the impugned order, there is no evidence of production or clandestine removal of 13854. M.T. and 204.320 M.T. of sponge iron by the appellant. There is no evidence of acceptance of the clandestinely removed goods by the buyers and there are no statements recorded from the transporters regarding clandestine removal of the transported goods - There is no evidence of unaccounted purchase and/or consumption of raw materials (such as iron ore, coal and Dolomite) brought on record. Thus, the allegation of unaccounted production arrived at merely on estimation basis and the demand of duty on the basis of the same, are legally unsustainable. As the demands are not sustainable, the question of demanding interest thereon or imposition of penalty does not arise. Conclusion - i) No duty can be demanded merely on the basis of input / output ratio without consideration of parameters such as quality of raw materials, kiln condition and other manufacturing parameters like fine engineering tendency of iron ore, etc. ii) Clandestine removal is a serious charge which must be proved with tangible, cogent and affirmative evidence. iii) The mere application of expert opinion-based input/output ratios, without corroborative evidence or independent verification, cannot form the basis for confirming duty demands. iv) The burden of proof lies on the Revenue to establish clandestine manufacture and removal with cogent and affirmative evidence; mere estimation and assumptions are insufficient. The impugned order is set aside - appeal allowed.

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• 2025 (4) TMI 953
  Proportionate reversal of Cenvat credit on inputs and input services used in the generation of exempted goods (electricity) - compliance with the requirements of Rule 6(3)(i) of the Cenvat Credit Rules, 2004 or not. Whether the proportionate reversal of Cenvat credit of input and input services used in generation of exempted goods shall suffice to meet the provision of Rule 6(3)(i) of Cenvat Credit Rules, 2004 or not? - HELD THAT:- This Tribunal in the case of Rukmani Power Steel Ltd. [ 2015 (8) TMI 1461 - CESTAT NEW DELHI] has observed In this case, admittedly, the appellant has already reversed the entire amount of input/input services used in generation of electricity, therefore, same is sufficient. Therefore, appellant is not required to pay any amount of the value of 8/10% of electricity. - the proportionate reversal of Cenvat credit availed on input and input services which has been used for generation of electricity is sufficient to meet out the provision of Rule 6(3)(i) of Cenvat Credit Rules. Therefore, on that count no demand is sustainable against the assessee. Whether the assessee has reversed the Cenvat credit in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004 or not? - HELD THAT:- As no Cenvat credit has been availed by the aseessee on coal fine and coal reject as no duty has been paid thereof. Further, it is found that these coal fines and coal rejects are generated being the manufacturing the dutiable product namely, sponge iron, therefore, the question of availing the Cenvat credit on coal fines and coal rejects does not arise. In that circumstances, the demand raised by the learned adjudicating authority in the impugned order to the tune of Rs.2,65,35,674/- is not sustainable. Conclusion - As the assessee has reversed the proportionate Cenvat credit of input and input services used for generation of electricity the same is sufficient in compliance to Rule 6(3)(i) of Cenvat Credit Rules, 2004. Therefore no demand is sustainable against the assessee, consequently, no penalty can be imposed on the assessee. The appeal filed by the assessee is allowed.

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• CST, VAT & Sales Tax

• 2025 (4) TMI 952
  Challenge to validity of subrule (20) of rule 17 of the Central Sales Tax (Rajasthan) Rules, 1957 - misrepresentation of fact or by fraud or in contravention of the provisions of the Central Sales Tax Act, 1956 - HELD THAT:- Coming back to sub-sections (3) and (4) of Section 13, the rule-making power conferred on the State Government under sub-section (4) is for any or all of the specific purposes laid down in clauses (a) to (j). As stated earlier, none of these clauses provide for making a rule to enable the authorities to cancel a declaration in Form C. It is true that under sub-section (3) of Section 13, the State Government has power to frame rules to carry out purposes of the CST Act. However, power of sub-section (3) is circumscribed by its first part which provides that the rules made to carry out the purposes of the CST Act should not be inconsistent with the provisions of the CST Act and the rules made by the Central Government in exercise of powers under Section 13(1) of the CST Act. The Central Registration Rules do not vest power in any authority to cancel the declaration in Form C. Therefore, if the State Government exercises the rulemaking power under sub-section (3) of Section 13 by making rules providing for cancellation of a declaration in Form C as provided in Central Registration Rules, the State Rules will be inconsistent with the Central Registration Rules framed by the Central Government in exercise of power under Section 13(1)(d) of the CST Act. The State Government cannot frame rules in exercise of power under Section 13(3) which will be inconsistent with the rules framed by the Central Government in exercise of powers under Section 13(1) of the CST Act. Conclusion - It is not possible to find fault with the view taken by the High Court that sub-rule (20) of Rule 17 of the Rajasthan Rules is inconsistent with the Central Registration Rules framed in exercise of power under clause (d) of sub-section (1) of Section 13 of the CST Act. Appeal dismissed.

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• 2025 (4) TMI 951
  Levy of penalty u/s 10-A of the CST Act - inter-State purchase of Xray, Xan 250, hp CPU, which commodity was not permitted to purchase or sales against Form C under the Central Sales Tax Act, 1956 - HELD THAT:- Under the C Form issued, certain declarations have to be made. On asking counsel to produce copies of the C Forms, the same were not available. Counsel stated that his instructions are the C Forms have been given to the dealer who sold the goods and, hence, petitioner does not have copies of the C Forms. In the matter at hand, the Tribunal has only remanded the matter for fresh consideration. The grievance of petitioner is that the remand is for limited purpose to ascertain what is the actual tax paid in the other State and that may be taken into account to ascertain the balance of penalty of 150%. Counsel stated that no penalty is in fact payable. The fact that the C Form itself is not made available to this court for verification makes to draw adverse inference. Therefore, the appeal is dismissed.

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• Indian Laws

• 2025 (4) TMI 950
  Bribery - prosecution proved beyond reasonable doubt the essential ingredients of offences under Section 7 and Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988 or not - HELD THAT:- The learned Trial Court, on appreciation of the evidence got before it by the prosecution, arrived at just and proper conclusion that the prosecution proved its case against the accused beyond reasonable doubt and accordingly awarded the sentence and conviction to the accused. It is opined further that the High Court committed serious error in setting aside the well-reasoned judgment passed by the learned Trial Judge on erroneous grounds. The High Court gave an undue importance to the minor discrepancies and failed to appreciate the trust-worthy evidence in the form of ocular testimony of the witnesses as well as the documentary evidence. PW1/Complainant in his testimony before the court gave a detailed account establishing the basic and important facts such as the demand and acceptance of bribe by the accused. PW1 makes a reference to his first application seeking the entry in the revenue records - The Trial Court appreciated the evidence of PW1 in great detail. However, the High Court observed that there are discrepancies in the evidence of PW 1 and evidence of PW 1 shows that on washing by phenolphthalein, only one hand i.e. right-hand fingers of the accused, the colour got changed to pink colour. The High Court made observations that there is no material on record to support the prosecution case and particularly version of PW 1 that the accused after accepting the money i.e. Rs. 500/- kept the notes in his pant pocket. The prosecution proved its case against the accused beyond the reasonable doubt and the charges against the accused namely under Section 7,13(1)(d) read with Section 13(2) of P.C. Act are proved so as to hold the accused guilty of these offences. Conclusion - The record indicates that the respondent- accused enjoyed a liberty during the trial as he was on bail and post the judgment of the Trial Court as also during the pendency of the appeal before the High court, he was enjoying the liberty by way of bail. As such, it is unable to show any kind of indulgence on the aspect of the quantum of sentence and accordingly, the conviction and sentence recorded by the Trial Court is upheld. Resultantly, the accused is to surrender before the Trial Court within two weeks from today. Appeal allowed.

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• 2025 (4) TMI 949
  Discharge of burden to prove that the appellant and the accused named Seema Choudhari, found in possession of contraband in a WagonR car on 4th March 2016, are one and the same person - HELD THAT:- The burden was on the prosecution to prove that the present appellant was found sitting in a WagonR car on 4th March 2016, from which contraband was recovered. Therefore, it was the duty of the prosecution to prove that the accused Seema Choudhari, as described in all documents, including documents of seizure, arrest memo, etc., is the present appellant. Firstly, we deal with the contentions based on the order dated 6th September 2016. A perusal of the order dated 6th September 2016 shows that a summary inquiry was conducted by the learned Special Judge under the NDPS Act on the basis of the documents produced on record. He has also relied on an inquiry report submitted by the investigation officer. The officer had recorded statements of some persons. The said order cannot be treated as a final adjudication of the contention raised by the appellant. The reason is that there was no oral evidence adduced at that stage. Moreover, this inquiry was for a limited purpose of deciding the appellant s bail application. In the examination of the appellant under Section 313 of the Code of Criminal Procedure, 1973, it is not put to the appellant that she is the same person as Seema Choudhari, who was arrested on 4th March 2016. Therefore, the appellant was deprived of an opportunity to deal with the prosecution case. This causes prejudice to her - the prosecution has adduced no evidence to show that the appellant is Seema Choudhari, who was arrested on 4th March 2016. Conclusion - i) The prosecution must prove the identity of the accused beyond reasonable doubt, especially when contemporaneous documents name a different person. ii) The conviction of the appellant under the NDPS Act was quashed and set aside. iii) The appellant was acquitted of all charges. Appeal allowed.

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• 2025 (4) TMI 948
  Dishonour of Cheque - exercise of the court s discretionary power under Section 311 of the Code of Criminal Procedure, 1973 - HELD THAT:- Section 313 Cr. PC is a salutary provision which empowers the Court to summon any person as a witness or examine any person in attendance, though not summoned as a witness, or recall and re-examine any person already examined, if his evidence appears to be essential to the just decision of the case. It is aimed at empowering the court to find out the truth and to render a just decision. Such power is discretionary and is to be exercised only for strong and valid reasons and with caution and circumspection. This Section confers a vide discretion on the Court to act as the exigencies of justice require. The discretion conferred to the Court has to be exercised judicially. The Apex Court in its judgments in Vijay Kumar Vs. State of U.P. [ 2011 (8) TMI 1354 - SUPREME COURT] , State (NCT of Delhi Vs. Shiv Kumar Yadav [ 2015 (9) TMI 1702 - SUPREME COURT] and Ratanlal Vs. Prahlad Jat [ 2017 (9) TMI 1983 - SUPREME COURT] has held that the recall of witness is not a matter of course and power under Section 311 of the Code has to be exercised judiciously, with caution and circumspection and not arbitrarily or capriciously. Such discretionary power has to be exercised on the basis of facts and circumstances of each case and has to be balanced carefully with considerations. The trial court observed that no medical document of the previous counsel was placed on record to support the version of the accused. Even if assuming that the counsel was suffering from health issues due to which he was unable to come to Delhi from Bangalore, nothing prevented the petitioner in engaging a new advocate. The orders passed by the trial court reveal that trial court had rather been lenient with the petitioner, inasmuch as, not only NBWs were cancelled liberally, several adjournments were granted to the petitioner for cross examination of respondent No. 2. Due to frequent adjournments, the trial is yet not concluded. Petitioners did not avail the opportunities granted to them for cross examination of respondent No. 2 and for leading evidence in his defence. Mere change of name of respondent entity would not confer any fresh right of cross-examination of respondent no. 2. Conclusion - The Court is of the opinion that the provisions of Section 311 Cr. PC cannot be allowed to be misused by the petitioners to derail the proceedings or to cause inconvenience to the other party as the same would amount to miscarriage of justice and cause prejudice to respondent no. 2. There are no infirmity in the impugned order dated 20.07.2024. The petition is devoid of any merit - petition dismissed.

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• 2025 (4) TMI 947
  Benefit of the One Time Settlement (OTS) Scheme offered by HUDCO in respect of the outstanding loan dues - HELD THAT:- There can be no doubt that this is a case where the long-drawn litigation has mounted the dues which the Petitioners have to pay over a period of almost 15 years. The Petitioners have contested the matters in various forums DRT, DRAT, NCLT, NCLAT, this Court as also the Supreme Court. The factual narration would show that the final recovery certificate, which is still valid and has not been challenged by the Petitioners, is the order dated 1st April, 2016 along with the default clause as recognized by the recovery certificate dated 20th February, 2019. In terms of the said recovery certificate, in fact, the Petitioners are liable to pay the contractual rate of interest, which is 15.5% per annum with quarterly rests. The recovery certificate has clearly captured the contractual rate of interest itself and therefore, this Court is of the opinion that the Court cannot go behind the recovery certificate and look at the contractual clauses and interpret the same in this writ petition - The initial period of four months, which was granted for accepting the settlement under the OTS proposal has also lapsed. Thus, the Petitioners cannot in fact, claim any benefit after having defaulted and not paid within the four month period. Keeping in mind the prevalent rates of interest, the high rate of 15.5% with quarterly rests ought not be payable pendente lite, i.e., during the time when the present writ petition was pending. Some benefit in interest amount can be extended to the Petitioners to bring the matter to a closure. This Court is thus of the opinion that in terms of the recovery certificate itself, a simple rate of interest @14% per annum can be charged on the outstanding amount till the date of issuance of notice in this petition being 23rd January, 2020, which the Petitioners are agreeable to pay. Conclusion - The final recovery certificate, which is still valid and has not been challenged by the Petitioners, is the order dated 1st April, 2016 along with the default clause as recognized by the recovery certificate dated 20th February, 2019. Petition disposed off.

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• 2025 (4) TMI 946
  Dishonour of Cheque - tampering with the cheque - alleged alteration of the cheque amount from Rs. 1,90,000/- to Rs. 4,90,000/- - material alteration under the Negotiable Instruments Act or not - HELD THAT:- In the present case, if any authority was conferred upon the accused, it was to fill the amount in the words as was mentioned in the figure. He had no authority to alter the figure and, thereafter, to mention the altered amount in words. Section 18 would have been material had the amount in the figure and the words been written by one person, but in the present case, these were stated to have been written by two different persons, and Section 18 will not apply to the present case. In P.K. Rajan [ 2016 (7) TMI 1714 - KERALA HIGH COURT] , the amount was mentioned in the words, and the correction was carried out in the figures as per the amount mentioned in the words by the drawer of the cheque, which is not the case here. Therefore, no advantage can be derived from the cited judgment. In H.B. Bhagya Lakshmi [ 2023 (12) TMI 1432 - KARNATAKA HIGH COURT] , it was held that handing over a blank cheque authorises a person to fill it and it does not constitute a material alteration. There can be no dispute with this proposition of law. The cheque was not blank but contained the amount in figures as per the accused. Therefore, the authority to fill any amount did not vest in the holder because the drawer had expressed his intention to draw the instrument for a specific amount, and the holder did not have the authority to enlarge that amount by making the alterations. Thus, both these judgments will not help the complainant. Conclusion - The learned Trial Court erred in denying this right to the accused. Hence, the learned Trial Court failed to exercise a jurisdiction vested in it under the law and such an order is liable to be interfered with even in the exercise of inherent jurisdiction of the Court. The order dated 28.02.2022 is set aside. The application filed by the applicant/accused is allowed. The cheque is ordered to be sent to the Forensic Expert to examine whether there is any alteration in the amount in the figure of Rs.4,90,000/- on deposit of expenses by the accused/applicant - Petition allowed.

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• 2025 (4) TMI 945
  Adjustment of refund - legality of impugned notices and associated demand notices - It is the petitioner s case that demands in respect of AY 2009-10, AY 2011-12 and AY 2012-13 are reflected as due from the petitioner on account of defaults committed by its employer (Kingfisher Airlines Limited) - HELD THAT:- The demands for AY 2009-10, AY 2011-12 and AY 2012-13 raised as per notice dated 21.01.2022 are quashed. Respondents/Revenue are not entitled in law to adjust the demand raised for AY 2009-10, AY 2011-12 and AY 2012-13 against any other AY. It is ordered accordingly. The present petition is allowed and the Revenue is restrained from adjusting any refund due to the petitioner against any demand reflected for the AY 2009-10, AY 2011-12 and AY 2012-13.

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• 2025 (4) TMI 944
  Rejection order - violation of Articles 14, 16 and 21 read with Article 300A of the Constitution of India read with RBI Master Circular dated 6.7.2017 - restoration of the amount illegally siphoned off from the Petitioner s SBI savings Account - territorial jurisdiction of the Court - whether the victim i.e., the petitioner was negligent so as to fall prey to the scamsters? - HELD THAT:- The record shows that he had never shared the payment credentials, which fact is fortified from the written submissions filed by the respondents that the OTPs were not shared by the petitioner as such. It is merely upon clicking on a link received on his mobile phone after he was duped into believing that his SMS services would be blocked, that the said unauthorised transactions took place. The petitioner was a victim of cyber fraud and he cannot be said to be negligent in any manner under the notions of the civil law or for that matter under the criminal law. Negligence implies the duty to take care that would be expected from a person of ordinary prudence. The negligent act on the part of the customer should be such which is gross, utterly reckless and unconscionable. In the present case, the petitioner had taken care not to share the OTPs, in fact he had no occasion do so, and if that is the case, it would imply that even the most hyped 2 Factor Authentication [ 2FA ] was breached as the same was not secure, which is directly attributable to deficiency in service provided by the respondent no. 2 3 SBI. Tony Enterprises v. Reserve Bank of India [ 2019 (10) TMI 1610 - KERALA HIGH COURT] was a case where the Kerala High Court dealt with two cases wherein the customer s mobile had been dysfunctional since a duplicate SIM card had been issued by the service provider to a fraudster impersonating as the real mobile holder, which enabled the fraudster to withdraw a huge amount from the bank account of the customer through on line transfer. In the instant case, respondents No. 2 and 3 demonstrated a glaring service deficiency. Despite prompt intimation from the petitioner about the account breach, they showed no urgency. Respondents No. 2 and 3 failed to exercise due care, neglecting their duty to act swiftly upon notification of the fraudulent withdrawal. Consequently, they took no steps towards chargeback, retrieval, or freezing the suspicious accounts maintained with IDFC Bank and One 97 Communication. It is evident that the security protocols such as 2FA or OTP verification had been breached by a simple malware deployed by the cyber fraudsters. Evidently, the online banking service of the petitioner was linked with his mobile number, which was being used to authenticate his banking transactions, and the security apparatus of the respondent Bank failed to detect any unusual logging activity from a different Internet Protocol Address that was being used by the fraudsters. It has to be presumed that it is on account of the failure on the part of the bank to put in place a system which prevents such withdrawals, that the petitioner suffered monetary losses. It is well established under the Common Law, that funds in a bank account belong to the bank, but the bank acts as an agent for the principal (the customer). Consequently, the bank cannot refuse to process an online transfer if it appears to be authorized by the customer, however, upon detecting fraud, the bank has an implied duty to exercise reasonable care and take prompt action. Unhesitatingly, there was patent deficiency in services on the part of the bank, inasmuch as the response of the bank was lukewarm, defective, and not prompt. The respondent No. 2 i.e., SBI failed to take immediate measures to take up the issue with the other REs to whom the online payment had been remitted. Conclusion - This Court finds that the Banking Ombudsman (BO) has failed to judiciously consider the entire gamut of the controversy. The BO overlooked the aforesaid key aspects of the matter and completely misdirected itself in law - the impugned order dated 20.10.2021 is legally unsustainable. Petition allowed.

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