TMI Tax Updates - e-Newsletter
April 30, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise Indian Laws

TMI Short Notes

1. Evolution of Special Tax Regimes for Offshore Funds : Clause 208 of the Income Tax Bill, 2025 Vs. Section 115AB of the Income-tax Act, 1961

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2. Tax treatment of the accumulated balance of recognised provident funds (RPFs) : Clause 191 of the Income Tax Bill, 2025 Vs. Section 111 of the Income-tax Act, 1961

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3. Streamline, simplify, and update the tax framework applicable to non-residents and foreign companies : Clause 207 of the Income Tax Bill, 2025 Vs. Section 115A of the Income-tax Act, 1961

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4. Special procedure for calculating tax liability on income discovered during search operations : Clause 192 of the Income Tax Bill, 2025 Vs. Section 113 of the Income-tax Act, 1961

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5. Recalibrating Long-Term Capital Gains Taxation : Clause 198 of the Income Tax Bill, 2025 Vs. Section 112A of the Income Tax Act, 1961

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6. Reforming Long-Term Capital Gains Taxation : Clause 197 of the Income Tax Bill, 2025 Vs. Section 112 of the Income-tax Act, 1961

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7. taxation of short-term capital gains (STCG) : Clause 196 of the Income Tax Bill, 2025 Vs. Section 111A of the Income-tax Act, 1961

  Bills:

Articles

1. Why Forms AOC-4 and MGT-7 are Important for OPC Annual Return Filing?

   By: Ishita Ramani

2. CONFISCATION AND VESTING OF BENAMI PROPERTY

   By: DR.MARIAPPAN GOVINDARAJAN

3. Detailed Write-Up: CBIC Instruction No. 03/2025-GST – Streamlining GST Registration

   By: RAHUL MODI

4. SUPREME COURT IN FUTURE GAMING CASE: RELEVANCE FOR GST ?

   By: Dr. Sanjiv Agarwal

5. US Buyers Renegotiate with India's Shrimp Farmers Amid Trump's Tariffs

   By: YAGAY andSUN

6. Tariffs, Trade, and Power: Unpacking Trump's Vision for a New Global Order.

   By: YAGAY andSUN

7. Gold Purity in India: Why Authenticity Matters More Than Ever

   By: YAGAY andSUN

8. Gold Purity Explained: Carats, Hallmark Symbols & Buying Tips in India

   By: YAGAY andSUN

9. Export of Green Tea from India

   By: YAGAY andSUN

10. Council of Scientific and Industrial Research (CSIR)

   By: YAGAY andSUN

11. Whether Trade Wars Are Relevant Between Nations When Prioritizing National Interests Amid Shrinking Global Resources?

   By: YAGAY andSUN

12. An Introduction to The Writs Under the Indian Constitution.

   By: YAGAY andSUN

13. ISO Standards - An Introduction.

   By: YAGAY andSUN

14. POSH Act - The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013,

   By: YAGAY andSUN

News

1. 'Income Inequality Affects Economic Growth' says Indian Economic Association Conference President Dr. A. Jothi Murugan

2. Faceless I-T scheme: Delhi court extends custody of income tax official, CA in bribery case

3. Indian and U.S. officials meet in Washington, Bilateral Trade Agreement Talks Make Positive Progress

4. ED attaches fresh Rs 193-cr worth assets in Goa land grab-linked PMLA case

5. Commerce Secretary Shri Sunil Barthwal Visits Netherlands to Strengthen Bilateral Trade and Economic Partnership

6. Commerce Secretary Shri Sunil Barthwal Engages with Croatian Counterparts to Strengthen Bilateral Economic Cooperation

7. National Mission for Clean Ganga gets tax exemption status

8. RBI ask banks to ensure ATMs dispense Rs 100, Rs 200 notes

Notifications

Customs

1. 24/2025 - dated 28-4-2025 - Cus

Seeks to amend List 34A and 34B of the Notification No. 50/2017-Customs dated 30.06.2017 - List of Banks for Import of Gold or Silver at Nil rate of duty

2. 31/2025 - dated 28-4-2025 - Cus (NT)

Appointment of Common Adjudicating Authority for the purpose of finalization of Provisional Assessment in SVB case w.r.t. M/s Murrplastik India Private Limited

SEBI

3. SEBI/LAD-NRO/GN/2025/243 - dated 28-4-2025 - SEBI

Securities and Exchange Board of India (Infrastructure Investment Trusts) (Second Amendment) Regulations, 2025

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2025/58 - dated 29-4-2025

Extension of timeline for implementation of provisions of SEBI Circular dated December 10, 2024, on optional T+0 settlement cycle for Qualified Stock Brokers (QSBs)

2. SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2025/59 - dated 29-4-2025

Clarificatory and Procedural changes to aid and strengthen ESG Rating Providers (ERPs)

GST - States

3. REV03-12/202/2025-POLlCY-CCT - dated 18-4-2025

APGST Act, 2017- Clarification on applicability of late fee for delay in furnishing of FORM GSTR-9C

4. REV03-12039(31)/2/2025-POLICY - dated 1-4-2025

APGST Act, 2017 - Clarifications regarding applicability of GST on certain services

5. 04/2025 – GST (State) - dated 17-2-2025

Clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 55th meeting held on 21st December, 2024, at Jaisalmer

6. 02/2025 – GST (State) - dated 1-2-2025

Clarifications regarding applicability of GST on certain services

7. 01/2025 – GST (State) - dated 1-2-2025

Regularizing payment of GST on co-insurance premium apportioned by the lead insurer to the co-insurer and on ceding /re-insurance commission deducted from the reinsurance premium paid by the insurer to the reinsurer

8. 03/2025 – GST (State) - dated 1-2-2025

Clarification on applicability of late fee for delay in furnishing of FORM GSTR-9C

Highlights / Catch Notes

GST

• Landmark GST Cancellation Ruling: Procedural Fairness Prevails, Order Quashed for Lack of Substantive Reasoning

  Case-Laws - HC : HC allowed the writ petition challenging the rejection of a voluntary GST cancellation application. The court found the original order defective due to lack of reasoned explanation, violating principles of natural justice. The impugned order dated 20 November 2024 was quashed, directing the competent authority to reconsider the cancellation application afresh and dispose of it in accordance with legal principles, ensuring procedural fairness and providing substantive reasoning for any subsequent decision.
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• GST Registration License Cancellation Overturned Due to Procedural Gaps in Verification Process Under Rule 25

  Case-Laws - HC : HC held that GST registration license cancellation was improper due to procedural irregularities. The visit note by the CGST Superintendent lacked corroborative evidence, as no additional witnesses were present during the physical verification. The officer failed to record statements from nearby shop owners and obtain their signatures, rendering the verification process fundamentally flawed. The subsequent administrative orders at different levels were found unsustainable, primarily because the initial verification was conducted without proper protocol. The court emphasized the importance of following Rule 25 of GST Rules 2017, which mandates comprehensive documentation and witness verification during business premise inspections. Consequently, the petitioner's license cancellation was quashed, and the administrative orders were set aside.
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Income Tax

• Taxpayers Barred from Challenging Tax Notice and Assessment After Participating in Proceedings Without Prior Objections

  Case-Laws - HC : HC held that under Sections 292B and 292BB of the Income Tax Act, the assessee cannot challenge the validity of a notice u/s 143(2) or assessment order u/s 143(3) after appearing in proceedings without raising objections. The procedural defect of not issuing notice by DCIT does not invalidate the assessment, as the notice substantially conforms to the Act's intent. The ITAT's order interfering with the assessment was set aside, affirming the tax authorities' jurisdiction and the assessment's legal validity.
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• Taxpayer Wins Appeal: Cash Loan Repayment Deemed Legitimate Under Section 273B, Penalty Overturned

  Case-Laws - HC : HC held that the assessee demonstrated reasonable cause under Section 273B for repaying a loan exceeding twenty thousand rupees, thereby exempting them from penalty under Section 271E. The court found the transaction was bona fide, based on a financial institution's insistence to pay in cash. The loan repayment was genuine and not intended to avoid tax liability. Consequently, the penalty orders passed by the Assessing Officer and appellate authorities were set aside, with the substantial question of law decided in favor of the assessee.
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• HC Rejects Income Tax Officer's Contradictory Affidavit, Demands Explanation for Procedural Inconsistencies

  Case-Laws - HC : HC found the Income Tax Officer's affidavit contradictory to the record and inconsistent with the petitioner's adjournment request. The court accepted the counsel's apology but refused to allow withdrawal of the submitted affidavit. The court directed the Income Tax Officer to explain the circumstances surrounding the affidavit's filing, issuing a notice returnable on 3rd March, 2025, and ordered the affidavit to remain on record for further examination of the procedural irregularities.
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• Tax Expenses Dispute: Arbitrary 25% Disallowance Rejected Due to Lack of Rational Justification and Proper Evidence Evaluation

  Case-Laws - AT : The ITAT addressed a tax assessment dispute involving disallowance of expenses. The Assessing Officer (AO) arbitrarily disallowed 25% of certain expenses without providing rational justification, despite the assessee submitting comprehensive documentary evidence. The Tribunal found that the AO failed to follow Dispute Resolution Panel (DRP) directions, did not identify specific discrepancies in bills or vouchers, and made an ad-hoc disallowance without rejecting the books of accounts. The books were not found to contain bogus or fictitious expenses, and no rationale was provided for the percentage reduction. Consequently, the ITAT deleted the 25% disallowance, allowing the assessee's appeal and emphasizing the need for substantive reasoning in expense disallowance.
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• ITAT Grants Relief in Transfer Pricing and Tax Deduction Case, Validates Comparables Exclusion and CSR Donation Claim

  Case-Laws - AT : ITAT partially allowed the appeal. In the transfer pricing dispute, the tribunal directed the TPO to exclude XS CAD India Private Limited from comparables, recognizing functional dissimilarities in software development services. Regarding corporate tax, the tribunal upheld the assessee's donation deduction under Section 80G, finding compliance with Companies Act CSR provisions and Income Tax Act requirements. The decision emphasized that denying the 80G deduction would result in gross injustice, thereby granting relief to the assessee and mandating the Assessing Officer to allow the deduction subject to statutory conditions.
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• Investor Wins Tax Appeal: Long-Term Capital Gains Exemption Upheld, No Procedural Defects Justify Revisional Order Under Section 263

  Case-Laws - AT : ITAT upheld the assessee's appeal, rejecting the revisional order under Section 263. The tribunal found no merit in the revenue's allegations regarding inadequate inquiry into long-term capital gains exemption claim. Purchase of shares occurred three years prior to sale, with payments made through banking channels and documented in demat account. The tribunal determined that minor procedural insufficiencies do not warrant revisional proceedings, emphasizing that the Assessing Officer's approach was not perfunctory. Consequently, the revisional order was set aside, affirming the original assessment order and allowing the assessee's exemption claim under Section 10(38).
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• Tax Appeal Dismissed Ex Parte: ITAT Quashes Order, Mandates Fresh Hearing with Comprehensive Merits Review Under Section 250(6)

  Case-Laws - AT : ITAT held that the CIT(A)'s ex parte order dismissing the assessee's appeal without adjudicating merits violates Section 250(6). The appellate order lacks substantive reasoning and fails to address the core issues. While the assessee's non-compliance with notices contributed to the procedural lapse, the CIT(A)'s order is unsustainable. The tribunal set aside the order and remanded the matter back to CIT(A) for fresh adjudication, directing a comprehensive review of the appeal on merits after providing opportunities to both parties. The assessee's appeal was allowed for statistical purposes, mandating a de novo examination of the underlying tax dispute.
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• Tribunal Validates Accounting Records, Limits Tax Claim on Unverified Sales Allegations

  Case-Laws - AT : ITAT upheld CIT(A)'s finding regarding unaccounted sales, dismissing Revenue's appeal. The tribunal determined that a substantial portion of allegedly unaccounted sales were already recorded in the assessee's books. Given the minimal volume of transactions with the specific party and verified accounting, the tribunal concluded that only the gross profit rate could be applied to potentially unaccounted sales. The decision emphasized that without challenging purchase records, entire sales cannot be summarily added as unaccounted. Consequently, the tribunal applied the disclosed gross profit rate reasonably and rejected the Revenue's broader claim of complete sales addition.
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• Legal Powers Affirmed: Special Bench Can Continue Hearing Despite Parallel High Court Proceedings Under Sections 253 and 255(3)

  Case-Laws - AT : ITAT addressed a procedural issue regarding the continuation of a Special Bench hearing despite a similar case pending before the High Court. The Tribunal determined that the Special Bench can proceed with hearing the matter, noting no legal prohibition exists preventing its continuation. The key considerations included: statutory powers under Sections 253 and 255(3), absence of mandatory requirement to stay proceedings, the advanced age of the case (assessment year 1998-99), and the potential for procedural complications if the reference were withdrawn. The Tribunal ultimately ruled that the Special Bench may continue hearing and decide the appeal in accordance with law, rejecting the proposal to withdraw the reference or dissolve the Special Bench.
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• Income Tax Assessment Order Invalidated Due to Procedural Defect in Original Section 263 Order, Exemption Claim Upheld

  Case-Laws - AT : ITAT dismissed the revenue's appeal, affirming the CIT(A)'s order. The Tribunal held that the consequential assessment order was invalid since the original order under section 263 was set aside. The DR's argument regarding a pending appeal before the High Court was rejected, as no stay order was produced. The Tribunal found the CIT(A)'s reasoning sound and confirmed the assessee's exemption claim, ultimately upholding the lower appellate authority's decision and dismissing the revenue's appeal.
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• Seized Search Materials Trigger Section 153C: Invalidating Alternate Assessment Pathways for Unsearched Entities

  Case-Laws - AT : ITAT adjudicated a dispute concerning assessment proceedings under sections 153C and 147. The tribunal determined that the AO improperly issued notice under section 148 when section 153C was the appropriate legal mechanism for assessment. Incriminating materials seized during search operations against another entity warranted proceedings under section 153C. The tribunal relied on precedential rulings emphasizing that amended section 153C is deemed operative from inception. Consequently, the tribunal dismissed the revenue's appeals, affirming the CIT(A)'s reasoned order and mandating that assessment proceedings for unsearched entities must be initiated exclusively under section 153C when search materials are involved, rendering section 147/148 proceedings invalid in such circumstances.
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• Income Tax Tribunal Upholds Trust's Exemption, Rejects Revisional Order Under Section 263 After Comprehensive Assessment Review

  Case-Laws - AT : ITAT held that the CIT(E)'s revisional order under Section 263 was unwarranted. The Assessing Officer (AO) had thoroughly examined the trust's activities and found them eligible for exemption under Section 2(15). The tribunal rejected CIT(E)'s contentions regarding investments, corpus donations, and advance tax payments, noting that the AO had already scrutinized these issues during assessment proceedings. The tribunal emphasized that the AO's order was based on a plausible interpretation of the law and in line with the Madras HC's previous decision reinstating the trust's registration. Consequently, the ITAT set aside the CIT(E)'s revisional order, ruling in favor of the assessee.
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Customs

• Border Crossing Suspended After Terrorist Attack, Strict Security Measures Implemented for Cross-Border Movement Until 01 May 2025

  Circulars : Government of India issued an immediate directive closing the Integrated Check Post Attari on the India-Pakistan border in Punjab following a terrorist attack on tourists in Pahalgam on 22 April 2025. The closure applies to all incoming and outgoing passengers and goods movement, effective immediately. Individuals with valid border crossing endorsements are permitted to return through the route before 01 May 2025. The decision was made in response to identified cross-border security threats, reflecting a significant national security measure implemented by MHA and Customs authorities to mitigate potential terrorist infiltration risks.
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• High Court Rejects Writ Petition over Territorial Jurisdiction Limits in Customs Seizure Case Under Article 226(2)

  Case-Laws - HC : The HC dismissed the writ petition for lack of territorial jurisdiction. Despite allegations of procedural irregularities in customs seizure and violation of natural justice principles, the court found no substantial cause of action within its territorial jurisdiction. The petitioner's business location and transportation of allegedly smuggled goods from a specific region did not establish a sufficient nexus to invoke the court's writ powers under Article 226(2). The court held that the fundamental allegations regarding improper witness examination and custodial statements did not create a valid jurisdictional foundation. Consequently, the writ petition was closed, leaving the petitioner without judicial remedy in this forum.
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• Customs Valuation: Tribunal Upholds Transaction Value Integrity by Rejecting Arbitrary Price Truncation Under Rule 4

  Case-Laws - AT : In a CESTAT decision addressing customs valuation, the Tribunal ruled against re-determining import goods' value through arbitrary price truncation. The judicial finding emphasized that transaction value under rule 4 of Customs Valuation Rules must derive from identical goods' consignment, with price alterations permitted only via specific rule 3 mechanisms. The Tribunal rejected executive authorities' attempts to challenge established judicial precedents, finding insufficient evidence to justify value substitution or penalize the commercial transaction. Consequently, the appeal was dismissed, upholding the original declared value and maintaining judicial discipline in customs valuation proceedings.
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FEMA

• Tribunal's Discretionary Power Under Section 19(1) Upheld: Penalty Reduction Validated Without Judicial Interference

  Case-Laws - HC : HC upheld the Tribunal's discretionary power in reducing pre-deposit penalty to 20% under Section 19(1)'s second proviso. The court affirmed that when legislative discretion is granted to an authority, its exercise depends solely on the authority's satisfaction and opinion. The Tribunal's decision was deemed procedurally correct, balancing potential undue hardship against penalty realization. The HC concluded that appellate forums cannot scrutinize the merits of the Tribunal's discretionary decision, thus declining to intervene in the original order.
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• Foreign Exchange Regulation Act Interpretation: Non-Indian Citizen's Residential Status Challenged Under Section 8(1)

  Case-Laws - AT : The AT held that the appellant, a non-Indian citizen, does not fall under the definition of "person resident in India" under FERA. The tribunal rejected the appellant's arguments and found insufficient evidence to prove the applicant's residential status during the relevant period. Consequently, the application of section 8(1) restricting foreign exchange transactions could not be substantiated. The tribunal summarily dismissed the first argument raised by the appellant and concluded that the provisions of the Act do not automatically apply solely to non-citizen individuals without establishing specific residential criteria as defined in the statutory provisions.
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State GST

• GST Clarifications: Loan Penalties, Payment Aggregators, R&D Services, and Multiple Sector Guidelines

  Circulars : Clarifications on several tax-related matters including: (1) no GST is payable on penal charges levied by Regulated Entities for loan contract non-compliance; (2) GST exemption is available to RBI-regulated Payment Aggregators for settlement of transactions up to 2,000; (3) regularization of GST payment for research and development services provided by Government Entities from 2017-2024; (4) restoration of GST exemption for Training Partners approved by NSDC; (5) GST applicability on facility management services for MCD Headquarters; (6) confirmation that Delhi Development Authority is not a local authority; (7) regularization of GST on commercial property rental by unregistered persons to registered composition levy taxpayers; (8) regularization of GST on support services by electricity transmission utilities; and (9) regularization of GST for Goethe Institute/Max Mueller Bhawan services from 2017-2023.
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• Late Fee Clarification for GSTR-9C: Mandatory Annual Return Filing Penalties and Waiver Under Section 47 of CGST Act

  Circulars : Legal clarification issued by tax authorities regarding late fee applicability for delayed submission of FORM GSTR-9C. The circular establishes that late fees under section 47 of CGST Act are leviable for incomplete annual return filing, specifically when FORM GSTR-9C is mandatorily required but not submitted alongside FORM GSTR-9. Late fees will be calculated from the original due date until complete return submission. For financial years up to 2022-23, late fees for delayed FORM GSTR-9C submission are waived if filed by 31st March 2025, with no additional penalties beyond original late fee calculation period.
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• Simplified GST Guidelines: Pepper, Raisins, Popcorn, Concrete Blocks, and Motor Vehicle Cess Clarified

  Circulars : The GST clarification on various several taxation issues. Key points include: (1) pepper of genus Piper attracts 5% GST under HS 0904, with agriculturists supplying dried pepper exempt from registration, (2) agriculturists supplying raisins are GST-exempt, (3) ready-to-eat popcorn is classified under different HSN codes with varying GST rates (5-18%) depending on ingredients and packaging, (4) autoclaved aerated concrete blocks with over 50% fly ash content attract 12% GST under HS 6815, and (5) amended motor vehicle compensation cess entry effective from 26.7.2023. The circular aims to ensure uniform GST implementation across jurisdictions.
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• Legal Clarity on WBGST Act Section 128A: Tax Payment Eligibility and Dispute Resolution Mechanism for Taxpayers

  Circulars : The Trade Circular addresses key interpretative issues regarding Section 128A of the WBGST Act, 2017, clarifying two primary concerns: (1) taxpayers who paid taxes through FORM GSTR-3B prior to 1st November 2024 remain eligible for benefits under Section 128A, subject to proper officer verification; and (2) for notices/orders spanning periods partially within and outside Section 128A's scope, taxpayers may file FORM SPL-01/SPL-02 after paying tax liability for covered periods, with appellate authorities empowered to adjudicate remaining periods independently, thereby providing a flexible mechanism for resolving complex tax dispute scenarios while maintaining procedural compliance.
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IBC

• Investor's Rs. 30 Crore Claim Rejected: Principal Admitted, Interest Denied Due to Incomplete Security Documentation

  Case-Laws - AT : NCLAT affirmed the Liquidator's classification of the Appellant as an Unsecured Financial Creditor. The tribunal found no error in the Liquidator's decision to admit only the principal amount of Rs. 30 crores without interest, given the absence of clear interest provisions in the investment agreement. Critical to the ruling was the lack of registered charge or security interest documentation, which precluded the Appellant's claim as a Secured Financial Creditor. The court emphasized that statutory requirements for charge registration and security documentation were not met, rendering the Appellant's arguments unsustainable. Consequently, the appeal was dismissed, upholding the original classification and claim determination.
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• Guarantor's Strategic Delay Tactics Backfire as Insolvency Petition Rejected Under Section 94 Debt Recovery Challenge

  Case-Laws - AT : NCLAT dismissed the appeal, finding the Section 94 insolvency petition was a deliberate attempt to obstruct lawful recovery proceedings. The Appellant, as a personal guarantor, had acknowledged outstanding debt since 2012, made partial payments, and consistently used judicial processes to delay creditor's recovery rights. The Tribunal concluded the petition was not filed for genuine insolvency resolution but to strategically prevent enforcement of secured residential premises, thus constituting an abuse of legal process. The appeal was rejected, upholding the lower tribunal's findings and maintaining the creditor's right to recover outstanding dues.
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Indian Laws

• Tax Officials Arrested for Alleged Bribery and Manipulation of High-Value Assessment Cases Under Faceless Scheme

  News : Delhi Sess. J. remanded a Deputy Commissioner of Income Tax and a CA to 3-day CBI custody for allegedly sabotaging the faceless assessment scheme. The accused were arrested following an FIR alleging conspiracy to manipulate high-value tax assessment cases by soliciting bribes in exchange for favorable orders. The CBI sought custodial interrogation to unearth the broader conspiracy, despite defense arguments challenging the necessity of arrest. The court granted 3-day custody to facilitate further investigation into potential systemic corruption within the income tax assessment process.
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• India's Economic Blueprint: Navigating Growth, Reform, and Global Competitiveness Through Strategic Policy Interventions and Structural Transformation

  News : Legal Summary: The document is a keynote address by a Reserve Bank of India official at the US-India Economic Forum, discussing India's economic landscape and growth potential. The address highlights India's economic resilience, with an average annual growth rate of 8.2% over 2021-2025, positioning itself as the fastest-growing major economy. Key legal and economic policy points include policy continuity, financial sector stability, fiscal prudence, infrastructure development, manufacturing focus, and digital transformation. The address emphasizes India's commitment to economic reforms, including liberalization of foreign direct investment, regulatory simplification, and creating an investor-friendly ecosystem. The government aims to become a developed economy by 2047, leveraging its demographic dividend, innovation potential, and robust macroeconomic fundamentals.
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• Supreme Court Halts Criminal Case Against Manager Not Involved in Original Transaction Under Section 482 CrPC

  Case-Laws - SC : SC quashed criminal proceedings against appellant under Section 482 CrPC, finding no criminal liability as the appellant was not the authorized officer during the relevant auction and sale certificate issuance period. The court determined the appellant had no direct involvement in the transaction, was not a signatory to the sale certificate, and assumed managerial office only subsequently. Continuation of criminal proceedings would constitute an abuse of legal process and cause unwarranted harassment, thus the appeal was allowed, effectively terminating the criminal proceedings against the appellant.
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• Strict Time Limits Trump Technical Excuses: Commercial Appeals Demand Punctual Filing Under Section 5 Limitation Act

  Case-Laws - SC : SC rejected the interim application under Section 5 of Limitation Act, 1963, declining to condone 301 days delay in filing commercial appeal. The Court emphasized the Commercial Courts Act's objective of expediting commercial litigation and strict adherence to statutory timelines. The petitioner's failure to procure certified copies within prescribed limitation period and subsequent 300-day inaction was deemed negligent. The limitation period commenced from judgment pronouncement, irrespective of certified copy provision. The Court underscored that parties cannot evade procedural responsibilities, and such interpretation would undermine limitation principles and the Act's purpose of ensuring timely case disposal. Consequently, the petition was dismissed, upholding the lower court's rejection of delay condonation.
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• Public Servant Protected: Criminal Conspiracy Charge Quashed When Prosecution Sanction Denied Under Prevention of Corruption Act

  Case-Laws - HC : HC held that a public servant cannot be prosecuted for criminal conspiracy under Section 120-B IPC when sanction for prosecution under the Prevention of Corruption Act has been expressly declined. The court determined that attempting to prosecute for conspiracy alone, when the underlying offence is legally non-prosecutable, constitutes a colourable exercise of power. The prosecution's attempt to circumvent statutory protections by invoking conspiracy charges without substantive evidence was deemed improper. Consequently, the court quashed the summoning order, affirming that procedural safeguards protecting public servants cannot be indirectly undermined through conspiracy charges when direct prosecution is statutorily prohibited.
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PMLA

• Eviction Notice Under Section 8(4) of PMLA Upheld, Technical Non-Compliance Does Not Invalidate Legal Proceedings

  Case-Laws - HC : HC held that the eviction notice under Section 8(4) of PMLA is valid and within jurisdiction. The court found that non-compliance with Rule 5(1) does not vitiate the notice under Rule 5(2), as these provisions serve different purposes. The lack of a mandatory time limit for issuing the notice does not invalidate it. The court directed the Appellate Tribunal to expeditiously hear the petitioner's appeal and stay application within two months, effectively dismissing the petitioner's challenge as premature given the pending appeal.
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SEBI

• SEBI Requires Trading Members to Collect Full Margins Upfront Before Settlement Day to Improve Market Risk Management

  Circulars : SEBI mandates Trading Members/Clearing Members to collect margins from clients by settlement day in the cash market segment, aligning with the T+1 settlement cycle. The modification requires upfront VaR and ELM margins to be collected in advance, while other margins must be collected by settlement day. Failure to collect margins by settlement day will result in penalty. This regulatory change aims to enhance risk management framework and ensure timely margin collection, with implementation effective immediately upon circular issuance.
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Service Tax

• CENVAT Credit Dispute: Manufacturer Wins Proportional Credit Reversal Under Rule 6(3A)(b) with Proper Input Service Allocation

  Case-Laws - AT : CESTAT adjudicated a CENVAT credit dispute involving manufacturing units and trading services. The tribunal found that the appellant maintained separate records for dutiable and exempted goods, correctly followed Rule 6(2) of CENVAT Credit Rules, 2004. The key issue centered on apportioning common input service credits between dutiable manufactured goods and exempted trading services. The tribunal ruled that the adjudicating authority incorrectly calculated credit reversal by not following Rule 6(3A)(b), thereby erroneously computing the proportionate credit. Ultimately, the tribunal set aside the previous order, allowing the appellant's appeal and confirming their entitlement to proportionate credit reversal under the prescribed regulatory framework.
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• Service Tax Calculation Upheld: 85% Goods, 15% Services Valuation Method Validated by Judicial Review

  Case-Laws - AT : In a dispute over taxable service value for works contracts involving goods and services, CESTAT resolved the valuation controversy. The tribunal affirmed the assessee's method of calculating service tax, where 85% was attributed to goods value and 15% to service component. The decision validated the invoiced value and confirmed VAT payment on goods portion. Relying on prior judicial precedent, the tribunal held that once VAT is paid according to state statutory provisions, the service value cannot be challenged. The appeal was ultimately dismissed, upholding the adjudicating authority's original determination of tax liability based on documentary evidence including chartered accountant certificates.
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Central Excise

• Tribunal Finds No Duty Evasion in Related Party Transaction, Validates Valuation Methodology and Dismisses Revenue Claim

  Case-Laws - AT : CESTAT adjudicated a central excise duty dispute involving alleged undervaluation of finished products sold to a related unit. The tribunal examined prior proceedings and found no substantive evidence supporting claims of intentional duty evasion. Critically, the tribunal determined the appellant's value addition and duty payments were legitimate and consistent. The tribunal concluded that the revenue demand was unsupported, effectively rendering the allegations baseless. Given the revenue-neutral nature of the transactions and precedent established in the appellant's previous case, the tribunal allowed the appeal, setting aside the original duty demand and affirming the appellant's valuation methodology.
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Case Laws:

• GST

• 2025 (4) TMI 1574
  Cancellation of the petitioner s GST registration license on the ground of discrepancies noticed during physical verification - HELD THAT:- Since the show cause notice has been adjudicated partially in favour of the petitioner hence only issue regarding the cancellation of the GST license of the petitioner is being considered in this writ petition. The entire process for cancellation of the license was initiated after the visit note prepared by Shri Avinash Joshi, Superintendent, CGST and C.X.Range-2 Division IV Indore - the officer did not record the statements of the nearby shop owners. This visit note is only signed by Shri Avinash Joshi not by any other witness. Shri Joshi ought to have recorded the statement of the nearby shop owner and obtained their signature in the visit notes as a witness. It appears that no one was accompanied with him from the GST department on 15.05.2023 at the time of the search. Had any person visited with him, he would have countersigned this visit note, therefore, such a visit note cannot be relied on for taking such a drastic action of cancellation of license. In the case of Roxy Enterprises [ 2023 (12) TMI 1098 - DELHI HIGH COURT] , the Division Bench of the High Court of Delhi has considered Rule 25 of GST Rules 2017 which deals with the physical verification of business premises in certain cases. According to Rule 25, the physical verification of the business premises should be done in the presence of the person, and it should be uploaded in the form GST REG-30 on the common portal within 15 working days following the date of such verification. The entire impugned action of the respondents is based on the presumption that the firm is bogus because the office/place of business was found locked. The order dated 29.05.2023 passed by the Superintendent Officer (respondent No.5), the order dated 03.08.2023 passed by Deputy Commissioner (respondent No.4), and the order dated 25.04.2024 passed by Joint Commissioner (respondent No.3) are unsustainable and liable to be quashed and are hereby quashed - petition allowed.

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• 2025 (4) TMI 1573
  Demand for alleged violation of Rule 96(10) of the Central Goods and Service Tax Rules, 2017 - HELD THAT:- Issue Notice returnable on 07.05.2025 for final disposal. By way of ad interim relief, no coercive action shall be initiated by the respondent during the pendency of this petition. Direct service through Email is permitted.

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• 2025 (4) TMI 1572
  Rejection of application made by the writ petitioner for voluntary cancellation of its Goods and Services Tax - no reason provided in SCN - Violation of principles of natural justice - HELD THAT:- The impugned order fails to assign any reason whatsoever and which may have indicated what could have possibly weighed upon the respondents in not acceding to the prayer for voluntary cancellation. The impugned order dated 20 November 2024 is hereby quashed. The application for cancellation as made shall consequently be taken up for consideration afresh and be disposed of by the competent authority in accordance with law. Petition allowed.

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• Income Tax

• 2025 (4) TMI 1571
  Jurisdiction of issuing notice u/s 143 (2) - omission on the part of the DCIT in not issuing notice u/s 143 (2) to the assessee - Whether the assessee can challenge the authority of the ITO, who had issued the notice u/s 143 (2) and the authority of the DCIT for issuing the assessment order u/s 143 (3) in view of the limitations prescribed under Sections 292B and 292BB of the I.T. Act? - HELD THAT:- Section 292B provides that notice as well as return of income, assessment, summons, etc., issued under the provisions of the I.T. Act cannot be treated as invalid merely by reason of any mistake, defect or omission in such notice, etc., if the same is in substance and effect in conformity with or according to the intent and purpose of the I.T. Act. ITAT, in the present case, has interfered with the order passed by the CIT (Appeals) and the assessment order mainly on the ground that there is omission on the part of the DCIT in not issuing notice u/s 143 (2) to the assessee. ITAT has not concluded that the notice issued to the assessee by the Income Tax Officer u/s 143 (2) is not in substance or not in conformity with the intent and purpose of the I.T. Act. In the absence of such finding, the ITAT cannot interfere with the notice or the assessment order issued against the assessee. In the present case, apart from that, the assessee is also debarred from challenging the assessment proceedings for the first time before the ITAT on the ground of issuance of notice under Section 143 (2) by the Income Tax Officer in the light of the provisions of Section 292BB of the I.T. Act. Section 292BB of the I.T. Act clearly provides that where an assessee has appeared in the proceedings relating to assessment or reassessment before the authority concerned without raising any objection before completion of assessment or reassessment, it is not open for him to raise such objection after passing of the assessment order. In the present case, the notice under Section 143 (2) of the I.T. Act was issued by the Income Tax Officer and was duly served upon the assessee, who, in turn, had appeared before the DCIT, to which the proceedings were transferred by the Income Tax Officer, without raising any objection till the assessment order was passed. Even in the appeal preferred by the assessee before the CIT (Appeals), no such ground was ever raised by the assessee. In such circumstances, we are of the candid view that as per law, the respondent/assessee was not within his right to raise the objection regarding issuance of notice by the Income Tax Officer under Section 143 (2) of the I.T. Act or questioning the authority of the DCIT in passing the assessment order while exercising powers under Section 143 (3) of the I.T. Act before the ITAT. Thus, in the light of the provisions of Section 292B as well as Section 292BB of the I.T. Act, the right of the assessee has been restricted to challenge the validity of a notice issued by the Income Tax Officer or the assessment order passed by the DCIT and in such circumstances, the ITAT has illegally passed the impugned order ignoring the said provisions, which restricts the right of the assessee. Question of law framed by this Court is answered in affirmative and the impugned order passed by the ITAT is set aside.

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• 2025 (4) TMI 1570
  Penalty u/s 271E - repayment of loan to the extent of more than twenty thousand rupees by the assessee is in violation of provisions contained in Section 269T - appellant has not proved reasonable cause for its failure within the meaning of Section 273B - HELD THAT:- A combined reading of the provisions contained in Section 271E [which provides penalty for failure to comply with the provisions of Section 269T] and Section 273B of the Act makes it abundantly clear that if the assessee shows reasonable cause for the failure to comply with any provision referred thereto, the penalty for its violation of Section 269T of the Act shall not be imposable on the assessee. The word reasonable cause has not been defined in the Act of 1961. Therefore, in the context of the penalty provisions, the words reasonable cause would mean a cause which is beyond the control of the assessee. Reasonable cause obviously means a cause which prevents a reasonable man of ordinary prudence acting under normal circumstances, without negligence or inaction or want of bona fides. In our considered opinion, bona fide belief coupled with the genuineness of the transactions would constitute a reasonable cause. Furthermore, the transaction which was bona fide and not aimed to avoid any tax liability would constitute a reasonable cause within the meaaning of Section 273B for not invoking Section 271E. in our considered opinion, the cause shown by the assessee that on the insistence of M/s. Tata Finance Corporation to pay the amount of loan in cash vide its letter dated 5-11-2012, would constitute a reasonable cause within the meaning of Section 273B of the Act and also in light of the decision of Kum. A.B. Shanthi s case [ 2002 (5) TMI 4 - SUPREME COURT] reasonable cause has been shown by the assessee for non-compliance with the provisions contained in Section 269T of the Act and the transaction is genuine and bona fide which is not disputed by all the three authorities, however, all the three authorities ignored the provision contained in Section 273B of the Act and proceeded to levy penalty under Section 271E of the Act rendering the provision contained in Section 273B of the Act otiose, as the provision contained in 271E of the Act for imposition of penalty for non-compliance of Section 269T of the Act is subject to Section 273B of the Act. The order imposing penalty passed by the AO, affirmed by the first appellate authority by order dated 25-10-2022 and further affirmed by the second appellate authority by order dated 6-9-2023, are liable to be and are hereby set-aside/quashed and it is held that since the appellant has shown the reasonable cause within the meaning of Section 273B the appellant is not liable to pay penalty u/s 271E for non-compliance of Section 269T. Substantial question of law is answered against the Revenue and in favour of the assessee.

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• 2025 (4) TMI 1569
  Validity of Reopening of assessment u/s 147 - Reasons to believe - whether notice under Section 148 of the Income Tax Act, 1961 requires reasons in support of notice or not? - whether official respondent while issuing notice u/s 148 require to furnish reasons or not? HELD THAT:- The general principle insofar as providing opportunity or reasons in support of any adverse order or civil consequence, in such circumstance invariably reasons must be supported. In the present case, by virtue of notice u/s 148, petitioners are required to submit their explanation or whatever the materials. In this regard, unless and until petitioners are made known that they have to answer to the notice and it is not supported by reasons, otherwise they are not in a position to submit effective reply / explanation with the material information. On this score the petitioners have made out a case. Reassessment notices set aside. Assessee appeal allowed.

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• 2025 (4) TMI 1568
  Validity of final assessment order without considering the petitioner s request for adjournment - validity and effect of the affidavit filed by the Income Tax Officer which contradicted the petitioner s claim regarding the adjournment request - HELD THAT:- Department when confronted with the contradiction of the aforesaid affidavit with the facts on record of the case submits that the deponent of the said affidavit had insisted on filing the present affidavit stating the above facts and the remarks to that effect have also been received by her in writing. She however, expresses her apology as counsel and seeks to withdraw the aforesaid affidavit. We accept the apology of Ms. Mehta, however, we decline the permission to withdraw the present affidavit which has been tendered before us. The same is directed to be kept on record. Let notice be issued to the deponent of the said affidavit - Shri Ashish Kumar Gupta serving as Income Tax Officer (Exemption) Ward-2, Ahmedabad, to explain the circumstances which has led to filing of the present affidavit, returnable on 3rd March, 2025.

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• 2025 (4) TMI 1567
  Reopening of assessment u/s 147 - period of limitation - assessee failed to explain the source of the cash deposit - HELD THAT:- We find since the notice u/s 148 of the Act has been issued after the statutory due date as per the decision of Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB)] , therefore, such notice for reopening being barred by limitation has to be quashed. We accordingly, quash the re-assessment notice issued by the AO. Since the assessee succeeds on this legal ground i.e. validity of re-assessment proceedings, therefore, the grounds challenging the addition on merit are not being adjudicated being academic in nature. The grounds raised by the assessee are accordingly allowed.

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• 2025 (4) TMI 1566
  Disallowance @ 25% of various expenditure - non rejection of books of accounts - whether A O has not followed the direction of the DRP? - HELD THAT:- The voluminous evidence regarding the expenses were submitted before the AO. The copies of those documents, addition evidence, submission, etc. were also furnished before us in the paper book with the certification that these were dully submitted before the lower authorities. AO had not consider the additional evidence submitted before the DRP and that is why he has not made any comment thereon. AO is duty bound to incorporate the specific directions issued by the DRP in the relevant para of the assessment order and do needful accordingly. DRP directed the AO to reconsider and verify the submissions (including additional evidence) before completing the assessment. DRP direction did not mandate the AO to provide opportunity of being heard to the assessee on this score. From the perusal of the final assessment order, it is not evident that whether the AO followed the direction of the DRP in this regard as there is no such mention in the final assessment order. Thus, it cannot be held that the AO has not followed the direction of the DRP in this regard as it cannot be ruled out that the verifications of submission might have not resulted new facts other than those mentioned the draft assessment order. Hence, the argument AO had failed to carry out the statutory duty to abide by the direction of the DRP as the AO had not issued any notice to the assessee, nor did he independently examine the additional evidence filed by the assessee before the DRP is held to have no merit. AO has adopted an ad-hoc percentage of 25% to make a disallowance out of certain expenses . AO has not given any rational basis for the same except holding that the assessee has not filed details of employee cost of Rs. 16.40 Crores and Marketing expenses of Rs. 148.00 Crores. however, the facts are contrary as evident from the Paper book and statement at Bar by the Ld. Counsel that the assessee has submitted these details much time ahead of the draft assessment order. As per various benches of the Tribunal on the issue of the disallowability of expenses on ad-hoc basis without rejecting the books of accounts. In the present case the AO has not specify any shortcoming/discrepancy in the bills, vouchers, etc. in the expenses. The books of accounts have not been rejected by the AO. AO has not pointed out that any part of the expenditure in question is either found to be bogus or fictitious nor is found to have not been incurred by the assessee wholly and exclusively for business. There is no mention of rationale in arriving at the percentile of disallowance in the instant case. Further, there is no clear findings as to the number of bills and vouchers requiring denial of allowances with the amount of expenditure and nature of defects therein or therewith. AO s action (25% disallowance out of certain expenses) is hereby deleted. Appeal of the assessee is allowed.

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• 2025 (4) TMI 1565
  TP Adjustment u/s 92CA (3) - international transaction of provision of Software Development Services - TPO held that XS CAD India Private Limited is functionally comparable to the Assessee and retained as a comparable company on the ground that the services provided by the Company are predominantly software development services, which are similar to the services provided by the Assessee - HELD THAT:- XS CAD India Private Limited cannot be said to be functionally comparable to the Appellant, accordingly, we direct the TPO/A.O. to exclude excess XS CAD India Private Limited while benchmarking the international transaction pertaining to provisions of IT support and related services. Since, AR submitted that by excluding the XS CAD India Private Limited from comparables, the Assessee will be at Arm s Length, accordingly, not canvassed any argument on the other comparable companies, thus, the Ground is partly allowed. Corporate tax addition made by disallowing the claim of donation made u/s 80G - HELD THAT:- As donation made to a Trust and Societies register under 80G of the Act for the purpose of compliance with the provision of Companies Act, 2013 regarding CSR activities and the subsequent claim made u/s 80G of the Act has been decided in the case of Tera data India Pvt. ltd [ 2023 (10) TMI 1376 - ITAT DELHI] as held assessee in the instant case had duly complied the provisions of Companies Act, 2013 read with CSR rules thereon and as per the provisions of the Income Tax Act had also voluntarily disallowed the CSR expenditure while computing the taxable income. Since, the donee institutions are eligible institutions enjoying exemption u/s 80G of the Act, the assessee has claimed deduction u/s 80G of the Act which is also provided in the statute itself to the assessee. Hence, denial of deduction u/s 80G of the Act to the assessee would result in gross injustice. Thus, we are of the opinion that denial of deduction u/s 80G of the Act to the Assessee would resulting gross injustice, accordingly, we direct the A.O. to grant deduction u/s 80G of the Act if other conditions of Section 80G of the Act are fulfilled - Decided in favour of assesssee.

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• 2025 (4) TMI 1564
  Revision u/s 263 - re-assessment order so framed u/s 147 r.w.s. 144B to be modified/set aside on the ground that such order of the AO is erroneous and pre-judicial to the interest of the Revenue - without proper enquiry on the bonafides of LTCG claimed as exempt u/s 10(38) - HELD THAT:- Pr.CIT in backdrop could step in u/s 263 only if it is demonstrated that the approach of the AO is perfunctory. Such finding would depend on specific facts emerging from record. In the instant case, purchase/ allotment of shares took place nearly three years prior to the year of sale. The payments were made through banking channel. The company underwent corporate restructuring in the intervening period. The factum of actual payment and investment towards purchase of shares is demonstrable from record and further supportable by corresponding receipts of shares in Demat account. CIT has merely alleged inadequacy in enquiry on the basis of absence of the bank name which is also discredited from the facts emerging from record. No third party statement or SEBI report etc. is available to impair the bonafides of claim of the assessee. No adverse material is brought on record to warrant deeper scrutiny. In our opinion, the view taken by the AO thus cannot be assailed when tested on the touchstone of circumscribed allegations on bank particulars leveled in the revisional order. We also find merit in the contention of the assessee that some inadequacy in the manner of inquiry cannot necessarily be a ground for invocation of powers u/s 263. Such view has been expressed in the judgments rendered by Sunbeam Auto Ltd [ 2009 (9) TMI 633 - DELHI HIGH COURT] DG Housing Projects Ltd [ 2012 (3) TMI 227 - DELHI HIGH COURT] Clix Finance India Pvt. Ltd. [ 2024 (3) TMI 157 - DELHI HIGH COURT] And Klaxon Trading Pvt. Ltd. etc. [ 2023 (12) TMI 36 - DELHI HIGH COURT] In the instant case, the alleged inadequacy towards bank particulars is also not correct. The facts of the present case do not indicate that the twin conditions contained in sec. 263 are fulfilled in letter and spirit. Appeal of the assessee is allowed.

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• 2025 (4) TMI 1563
  Non granting exemption u/s 11 and 12 - missing entry in the income tax return - charitable activity u/s 2(15) - HELD THAT:- It appears that while filing the return of income, the said counsel did not fill in the column 6(i) relating to the amount applied to charitable purposes in India during the previous year. While he had correctly filled the amount of exempt income claimed and the amount that have been accumulated or set apart for application to charitable or religious purposes to the extent it did not exceed 15% of the receipts, he had left the column relating the amount applied to charitable purposes as blank. Therefore, addition had been made during the course of assessment and CIT(A) instead of appreciating that the exemption could not be denied only on account of a missing entry in the income tax return, had adopted a pedantic approach in considering what expenditures were allowable under income from sources and what were not. In our opinion CIT(A) should have paused to consider that the society was a registered trust u/s 12A and therefore, it was to be assessed under the tax regime prescribed for societies u/s 11, 12 and 13. What had to be seen in such cases was whether the income of the society had been applied towards charitable purposes enshrined within the objects of the society, for which the CIT had granted the registration u/s 12A. The mere fact that the assessee may have filled wrongly or omitted to fill a column in its income tax return, would not take away its eligibility for exemption, if it was otherwise eligible under the law. Since, it is clear that the assessee trust had been registered under section 12A for the purposes of imparting education to students and it has not been pointed out that any expenditure made by the society has been made on matters outside the objects of the assessee trust or for non-charitable purposes, there was no occasion to sustain the disallowances of the nature that the CIT(A) has, on account of his understanding of what was deductible against income from other sources. We have also perused the computation filed by the assessee society and after going through the same, we delete the addition sustained by the ld. CIT(A). In making this decision, we rely upon the orders of Sh. Gujarat Bhavsar Samaj [ 2024 (11) TMI 94 - GUJARAT HIGH COURT ] which has been placed by the ld. AR in her paper book, which lays down that where the assessee trust filed its return claiming application of income for charitable purposes, but due to a technical glitch, the income applied by the assessee was not reflected in the return and consequently revision application filed u/s 264 was rejected, the Hon ble High Court held that since the assessee had incurred expenditure and applied income / donation received by it for charitable purposes, the assessee was entitled to benefit of the same. We find that the facts in the aforesaid case are quite similar to the facts of the assessee s case and therefore, relying upon the said order, we delete the addition sustained by the ld. CIT(A) and allow the appeal of the assessee.

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• 2025 (4) TMI 1562
  Validity of CIT(A) order dismissing the assessee s appeal ex parte without adjudicating the appeal on merits - Procedure in appeal u/s 250 - HELD THAT:- Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issues are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues. If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not comply with the notices issued by ld. CIT(A) in limine without adjudicating issues arising in the appeal on merits, such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6), and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits. The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating that the assessment order passed by AO is upheld, and that the assessee has not submitted details/documents is not sufficient. CIT(A) is not toothless as his powers are co-terminus with the powers of the AO, which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A), and did not file the requisite details/documents to support his contentions. Thus, the assessee is equally responsible for its woes. Thus, appellate order of CIT(A) is set aside and the matter can go back to the file of CIT(A) for fresh adjudication of the appeal of the assessee on merit in accordance with law after giving opportunities to both the parties. Appeal of the assessee allowed for statistical purposes.

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• 2025 (4) TMI 1561
  Income deemed to accrue or arise in India - taxability of background screening services - Royalty or FTS under the provision of Article 13 of India-USA DTAA - HELD THAT:- Hon ble Tribunal in assessee s own case for AY 2021-22 [ 2024 (6) TMI 1457 - ITAT DELHI] , while relying on aforesaid orders held that the background screening services provided by the assessee does not quality as royalty Thus, background screening services provided by an assessee does not qualify royalty and no additions can be made on account of royalty and decided the appeals in favour of the assessee.

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• 2025 (4) TMI 1560
  Addition by applying G.P. Rate on unaccounted sales - CIT(A) restricting the addition by applying G.P. Rate - some software were found during the search and Ratnakala Group, wherein there were some unaccounted transactions which were cash transactions - HELD THAT:- First of all, it is now matter of record that out of these unaccounted sales which has been added by the ld. AO, substantial part was accounted in the books of the assessee which has been verified and finding of fact has been given by CIT (A). Thus, entire sales could not have been added as unaccounted sales. Even if it is admitted that there are certain unaccounted sales of diamonds, then there were also purchases of diamond which has been sold in cash to Ratnakala Group. In such a scenario, the entire sales could not have been added, because purchases have not been doubted at all by the ld. AO. Without purchases, sales cannot be affected. Assessee s total turnover/sale to other parties is in hundreds of crores and sale to this party is very less and out of which most of the sales has been accounted for. Accordingly, in such a situation only the gross profit rate on alleged unaccounted sales can be applied. Here in this case most of the sales made to the same party have been accounted in the books on which assessee had disclosed certain GP rate which has not been disputed. In such a scenario, applying same GP rate is reasonable which can be applied on the sales which are alleged to be unaccounted. Accordingly, the observation and the finding of the CIT (A) for applying GP rate of such sales is upheld. Accordingly, the appeal of the Revenue is dismissed.

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• 2025 (4) TMI 1559
  Estimation of income - Bogus purchases - AO applied a gross profit rate of 1.31% on the said amount, resulting in an addition - CIT(A) held as quite rational to follow the spirit of the judgment given by Hon ble ITAT in the appellant s own case and hold that the quantum of profit attributable to total bogus purchases may be calculated @ 0.2% of the same HELD THAT:- We have also duly considered the order of the Coordinate Bench of the Tribunal rendered in the assessee s own case for Assessment Year 2011-12 [ 2018 (8) TMI 1626 - ITAT MUMBAI] . In view of the binding judicial precedent and consistent findings in earlier years, the grounds raised by the revenue are hereby rejected.

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• 2025 (4) TMI 1558
  Validity of reopening of assessment u/s 147 - Notice has been issued beyond 3 years but not more than 10 years from the end of the relevant assessment year - AO has reopened the assessee s case based on the information received from SRO office that the assessee has entered into a transaction for purchase of a property for a sale consideration of Rs. 80 lacs which according to the ld. AO was to be reckoned as Rs. 1,12,78,500/- to be the stamp duty value, thereby adding the difference - HELD THAT:- Where the threshold limit of income which has escaped assessment cannot be lesser than Rs. 50 lacs as contemplated u/s. 149(1) of the Act. It is also evident that the said provision speaks of issuance of notice u/s. 148 and not the finality of the amount determined after assessment as contended by the DR. There is no iota of doubt that the criteria for issuance of notice u/s. 148 ought to have been income escaping assessment amounting to Rs. 50 lacs or more in cases, where 3 years but not 10 years have elapsed from the end of the impugned year. In the present case in hand, the assessee was in a better footing where the notice issued by the ld. AO u/s. 148 of the Act dated 15.06.2021, and the subsequent order dated 30.07.2022, passed u/s. 148A(d) of the Act was only for income which has escaped assessment amounting to Rs. 32,78,500/-. Therefore, the assessee s case would squarely be covered by the decision of Naresh Balchandrarao Shinde [ 2022 (10) TMI 549 - BOMBAY HIGH COURT] . By respectfully following the same, we are inclined to hold that the notice u/s. 148 and the order passed u/s. 148A(d) are void ab initio and are therefore quashed. Decided in a favour of assessee.

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• 2025 (4) TMI 1557
  Revision u/s 263 - allowability of legal and professional expenses, loan origination costs, and Direct Selling Agent (DSA) costs u/s 37, allowability of other expenses including year-end provisions, treatment of cost allocation charges, allowability of finance costs amounting to Rs. 40.35 crores, correctness of depreciation claimed and admissibility of employee benefit expenditure HELD THAT:- When due enquiries have been made by the AO in the course of assessment proceedings, merely because the fact of making enquiries were not recorded by him in the assessment order, the order of the ld AO does not become erroneous. There is no need for the AO to state in his assessment order as to what enquiry he had made with regard to various issues in the assessment. He is expected to address only those issues where he is not in agreement with the claim of the assessee and he is not expected to write a thesis in the assessment order. Merely because a particular fact of enquiry is not reflected in the assessment order of the AO, it does not automatically tantamount to non-enquiry by the AO and assessment being framed with non application of mind by the ld AO. Legal and Professional charges, loan origination cost and DSA cost - more than adequate enquires have been made by the ld AO with regard to legal and professional charges and loan origination cost in the assessment proceedings itself. Hence, it cannot be said by any stretch of imagination that adequate enquiries were not made by the AO. This is not the case of no enquiry by the ld AO qua the impugned issue. PCIT had merely directed the ld AO to examine the allowability of the same u/s 37 of the Act in the light of the observation given by the auditors in the financial statements. PCIT had not even stated as to why the observations made in the financial statements by the auditors have any adverse impact on the computation of income of the assessee qua these issues. On the other hand, the assessee had furnished complete details and had also proved before the AO that this has been claimed by it on a consistent basis by clearly bringing on record the differential treatment given in the books of account and in the income tax computation. PCIT had merely directed the AO to make fishing and roving enquiries on the impugned issue, without bringing on record the error committed by the ld AO in the assessment order. Other expenses which includes year-end provision - The assessee furnished the reply dated 07.04.2021 giving the details of various expenses in a tabular form explaining the nature and the amount incurred under the respective head. The assessee also submitted that the revenue had increased three fold during the year from its business operations whereas the expenditure had increased only less than 2 fold during the year. Accordingly, it justified the claim of expenses to be in consonance with the revenue earned during the year. The assessee also gave the specific explanation with regard to year-end provision of Rs. 7.91 crores by drawing direct attention to Note No. 24 of the audited financial statements which is already reproduced supra as to how the year-end provision for expenses are accounted and reflected. Even before us, the assessee explained that in the computation of income, the amount of Rs. 6.77 crores being year-end provision created, was suo moto disallowed by the assessee and the balance provision of Rs. 1.13 crores pertains to the provision for capital expenditure which has not been included in the capital work in progress and not all debited to profit and loss account. Hence, there is no question of disallowing year-end provision again for Rs. 7.91 cores as directed by the ld PCIT in his revision order. No hesitation to hold that the ld PCIT grossly erred in assuming revision jurisdiction u/s 263 of the Act qua the issue of other expenses and year-end provision for expenses. Cost Allocation charges - We find that the ld PCIT had not understood the basic fact that this cost allocation charges represent income of the assessee and not expenditure. Without understanding this preliminary fact, he had directed the ld AO to verify and examine the same. Either way, this is not even prejudicial to the interest of the revenue as it only represent income of the assessee. Hence, revision jurisdiction u/s 263 of the Act could not be exercised by the ld PCIT for the same. Finance Cost - The assessee filed its reply dated 08.01.2021 giving the complete details of long term and short term borrowings obtained from various banks and financial institutions together with the details of interest paid thereon. Hence, it cannot be said that the ld AO had made any enquiry on the finance cost of Rs. 40.35 crores. PCIT erred in assuming revision jurisdiction u/s 263 of the Act qua this issue. Further, we also find the ld PCIT absolutely without any basis had concluded that the finance cost is not allowable as deduction. As stated earlier, the finance cost is the raw material for a finance company. How the raw material (interest paid in this case) be not allowed as deduction. It is not even the case of the ld PCIT that the borrowed funds were not utilized by the assessee for its business. The assessee is engaged in the business of financing i.e. advanced loan to others and earning interest income. For this purpose, it had used own funds as well as borrowed funds. For the borrowed funds, it has to pay interest. That interest cost becomes an allowable deduction under the head business. Depreciation - There is absolutely no reason for the ld AO to take a divergent view in this regard. Very strangely the ld PCIT goes to conclude that the depreciation has not been correctly claimed which is without any basis and the decision of the Hon ble Supreme Court in the case of ICDS Ltd had to be rejected without adducing any reasons. The directions given by the ld PCIT to the ld AO are merely to make fishing and roving enquiry which, in our considered opinion, is not permissible in proceedings u/s 263. Hence, we have no hesitation to quash the assumption of revision jurisdiction u/s 263 of PCIT qua this issue. Employee benefit expenditure - The employee benefit expenditure based on actual and based on actuarial valuation are reflected in the audited financial statements at pages 3 to 53 of the Paper Book vide Note No. 23 of the audited financial statement. PCIT does not find any error in the said working. In fact the assessee had already made suo moto disallowance of amount debited to the profit and loss Account with regard to provisions made on account of employee benefit expenditure and had claimed the actual amount of payment of gratuity and earned leave encashment in accordance with provisions of Section 43B of the Act. This fact is also duly reflected in the tax audit report. Whatever is the unpaid portion, the assessee had voluntarily added back in the computation. We find that the ld PCIT does not point out any error in the action of the assessee or in the action of the ld AO in accepting to the contentions of the assessee. We have no hesitation to quash the entire revision order u/s 263 of the Act by the ld PCIT by holding that revision jurisdiction have been invalidly assumed by PCIT and his action cannot be sustained in the eyes of law. Accordingly, grounds raised by the assessee are allowed.

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• 2025 (4) TMI 1556
  Reference made to the Special Bench in the present case be withdrawn or not in the wake of the Hon ble Jurisdictional High Court of Mumbai admitting an identical question - Disallowance u/s 14A - Whether Special Bench can proceed with the hearing of the issue in view of the fact that the Division Bench had expressed its inability to concur with the view taken by the co-ordinate Bench in the case of Oman International Bank SAOG [ 2014 (1) TMI 537 - ITAT MUMBAI] ? - HELD THAT:- The issue before this Bench has already been considered by the Special Bench of this Tribunal in Summit Securities Ltd. [ 2011 (8) TMI 657 - ITAT, MUMBAI] has also considered certain practical aspects which would eventually lead to incongruity if it is held that the Special Bench has to stay its hands and/or is liable to be disbanded in the event of a similar/substantial question of law being pending before the High Court. The Special Bench has noticed that such a course of action would lead to pendency of the issue before the Special Bench and eventually before the Division Bench also requiring the Division Bench to await decision of the Special Bench. The Special Bench has clarified that this has no bearing on the powers of the President to constitute or de-constitute any Special Bench and/or withdrawing reference in the facts of each case. It is not shown that the decision in the case of Summit Securities Ltd. (supra) was challenged any further. For all practical purposes, the said decision can be said to have attained finality. Revenue has placed reliance on the order passed in the case of Tivoli Investment and Trading Co. (P.) Ltd. [ 2011 (4) TMI 876 - ITAT, MUMBAI] on the administrative side and the decision of Harsha Achyut Bhogle [ 2007 (10) TMI 640 - ITAT MUMBAI] in support of her submissions. We find that all these three orders have already been considered by the Special Bench. We find that the Special Bench has rightly found that these decisions have no bearing on the question involved. We find that Section 253 of the Act confers statutory powers on the Tribunal to decide appeals challenging the orders of CIT(A) and other orders as are permissible under the said Section. Section 255(3) of the Act also confers statutory powers on the President to constitute Benches, including a Bench comprising of three or more Members to decide any particular issue. From the submissions advanced at the Bar, it appears that Revenue has no objection for the Division Bench continuing the hearing and considering the issue. It is difficult to see as to how only the Special Bench would be precluded from hearing the matter if according to the Revenue the Division Bench can hear the same. There is one more aspect of the matter as pointed out by the learned Senior counsel for the assessee. It is pointed out that if the reference is withdrawn and the matter goes back to the Division Bench, it will be compelled to take a view and agree with the co-ordinate Bench in the case of HSBC Bank Oman S.A.O.G (supra), which would be contrary to the opinion earlier expressed by the learned Members of the Division Bench expressing their inability to concur with the view as expressed in the case of HSBC Bank Oman S.A.O.G (supra). We find that the contention is justified. We also find that in the case of intervenor (appeals before the Delhi Benches, which appeals have since been disposed of on 03.09.2021) and in the case of Summit Securities Ltd. (supra), the Revenue had taken a contrary stand. We cannot appreciate the Revenue taking such contrary stand on the issue involved in this matter. We find that there is no prohibition either in law or in practice which has been pointed to us which would require the Special Bench as a rule to stay its hands when a similar/identical issue is pending before the High Court. This is albeit subject to the considerations on the basis of propriety, which the Special Bench itself may consider depending on the facts and circumstances of each case. In the present case, except that the appeal by another assessee, namely HSBC Bank Oman S.A.O.G (supra) has been admitted by the High Court, nothing has been brought on record to require the Special Bench to stay its hands. There is one more reason why we are inclined to hold that the Special Bench need not be deconstituted and the reference withdrawn. It is necessary to note that the dispute relates to assessment year 1998-99. The appeal itself is of the year 2004. Therefore, in our considered opinion, hearing before the Special Bench brooks no further delay. In our humble opinion, the Special Bench can proceed to hear and decide the appeal in accordance with law. Subject to this, we hold that it is not necessary to withdraw the reference and/or to deconstitute the Special Bench.

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• 2025 (4) TMI 1555
  Revision u/s 263 - denial of exemption u/s 11 - consequential assessment order passed based on the order passed by the CIT(E) u/s. 263 which was set aside by the Tribunal - pendency of appeal taken a ground to attack the order of the CIT(A) - HELD THAT:- There is no dispute with regard to the fact that the assessment unit has made the assessment u/s. 143(3) on 01/03/2023 in which the exemption claimed u/s. 11 was disallowed by relying on the proviso to section 2(15) which was made based on the order passed by the CIT(E) u/s. 263 of the act. The appellate authority viz., the Tribunal, which heard the challenge made to the order passed u/s. 263, set aside the said order and therefore the consequential order passed is not a valid order. When the main order which authorises the AO to make the assessment was not there, the consequential order would not stand by itself. DR raised the plea that the Tribunal order setting aside the order passed u/s. 263 is under challenge before the Hon ble High Court of Kerala and therefore the Ld.DR requested the Tribunal to set aside the order of the Ld.CIT(A). DR had not produced any stay orders of the Hon ble High Court in support of his argument and only submitted that the matter is under sub-judice before the Hon ble High Court and therefore find fault with the order of the Ld.CIT(A). We are not accepting the argument advanced by the Ld.DR for the simple reason that as on date, the order of the Tribunal was not set aside and a mere filing of the appeal would not be a reason for terming the order of the CIT(A) as illegal. We also found that the Ld.CIT(A) had explained the reasons in his order for allowing the appeal filed by the assessee which was not disputed by the Ld.DR and in that circumstances, we have no hesitation to dismiss the appeal filed by the revenue and we confirm the finding of the Ld.CIT(A) as a valid one. Appeal filed by the revenue is dismissed.

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• 2025 (4) TMI 1554
  Assessment u/s 153C or 147 - Scope of the phrase belongs or belong to versus pertains or pertain to in section 153C - HELD THAT:- In the case of the assesse was centralized on 03.07.2012, whereas search was conducted on 02.09.2010 and in case of search conducted on 10.10.2013 in case of Shobha Group the notice was issued on 27.03.2015 after of 17 months. The period for issue of notice under section 153C was not expired. In this case prima-facie appears that the revenue officers have not properly followed the Instruction No, 1927 dated 21.07.1995 specifically in this point (vi) The seized material shall be handed over to the Assessing Officer at the earliest. AO was the same person for the searched person and the assesse, he could have issue notice under section 153C after following the procedure laid down therein. AO has choosing to issue notice under section 148 instead of 153C since there were incriminating materials were found and seized. The very basis of reason for reopening the case is on the basis of Seized materials unearthed during the course of searched person. On examination of the documents handed over by the Investigation Wing to the AO has a bearing for determination of total income of such other person for the relevant preceding years. In view of the above the case is covered u/s 153C of the Act but not under section 147/148 of the Act. Now coming to the case of the assessee the search was conducted on 02/09/2010 10/10/2013 in the case of Davanam Jewellers and Sobha Developers and incriminating materials were found and seized and it was marked as A2/DJPL/4 Page No. 13 to 16 and AO has quantified which is clear from the AO s order at Para No. 4.2 to 4.4. noted supra. During the search it was found and seized by the Investigation Wing in respect of transactions carried out for purchase of the Madiwala Commercial Plaza and noted that huge premium have been paid by the assessee and it was not recorded by the assessee. Consequently, the case of the assessee came to be centralized on 03/07/2012. The AO has received information and perused the seized documents thereafter the AO has issued a notice under section 148 after the date of centralisation. The time limit to initiate proceedings under section 153C for each of the assessment years from Assessment Year 2006-07 to Assessment Year 2010-11 had not expired as on the date on which notice under section 148 was issued for these respective assessment years. Thus, the AO was not precluded from initiating proceedings under section 153C of the Act, since, in the case of the assessee, there were incriminating materials unearthed during the course of search, therefore the AO has to follow the procedure as per sections 153A/153C of the Act. That the case of the assessee does not fall under section 147 of the Act, since the materials were unearthed and seized during the course of search. In view of this the arguments of the learned Standing Council for the Revenue are not acceptable. The decision of Tribunal in the case of M/s. Ickon Projects [ 2023 (10) TMI 1471 - ITAT BANGALORE] where the ITAT held that the decision of Vikram Sujitkumar Bhatia [ 2023 (4) TMI 296 - SUPREME COURT] clearly mandates that the amended in Section 153C is deemed to have been on the statute since the very inception of that section thus, if any material which is seized in a search conducted under section 132 of the Act is to be used to assess a person who is not searched, the AO would have to necessarily initiate proceedings under section 153C of the Act, in order to do the same proceeding initiated under section 147 of the Act to assess the same is bad in law. To sum up, going through the arguments advanced by both the sides and considering the case laws noted supra. we find that the learned CIT (A) has done good reasoned order and there is no any infirmity. The AO should not have issued notice under section 148 of the Act. In the result the appeals filed by the Revenue are dismissed in above terms.

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• 2025 (4) TMI 1553
  Rejection of registration u/s 12AA and also not granting approval u/s 80G(5) - Trust do not conclusively prove the genuineness of the activities of the Trust in absence of such documents, it could not be determined whether the applicant is genuinely carrying out activities as per its objects - HELD THAT:- We find that the CIT(E) has rejected the application u/s 12AB of the Act cryptically and vaguely that Trust do not conclusively prove the genuineness of the activities of the Trust. In absence of such documents, it could not be determined whether the applicant is genuinely carrying out activities as per its objects which is factually incorrect. CIT(E) has not issued any show-cause notice before passing the order of rejection of assessee s application which is in violation of the principles of natural justice as per settled law. Revenue could not controvert the factual position brought on record by the assessee s learned counsel. Thus, we deem it fit and proper to remand the matter back to the CIT(E) regarding grant of registration u/s 12AB of the Act to the file of the CIT(E) with the directions to examine the issues of genuineness of the activities of the trust in consonance to the objects of the assessee s trust. CIT(E) is directed to grant reasonable opportunity of being heard to the assessee. Appeals of the assessee are allowed for statistical purpose.

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• 2025 (4) TMI 1552
  Revision u/s 263 - exemption u/s 11 - charitable purposes u/s 2(15) or not? - HELD THAT:- CIT s findings in the impugned revisional order passed u/s. 263 are highly whimsical and are not conclusive one way or the other. Each of the issue raised on merits are debatable and more than one view is possible in respect of each of the points raised by the CIT(E) to justify the revision of the order passed u/s. 143(3) of the Act. It is not open to the CIT(E) that further verification is needed on certain aspects when the records speak that thorough enquiry was done by the AO after issuing many notices and replies taken on record and it is not a case of no enquiry warranting such observation by the CIT(E). AO had verified and convinced that, the activities carried out by the assessee is eligible exemption u/s.2(15) of the Act and also respectfully following the decision of the Hon ble Madras High court [ 2020 (11) TMI 267 - MADRAS HIGH COURT] in allowing the appeal of the assessee against the cancellation of registration u/s.12AA of the Act, passed an order u/s.143(3) of the Act. This action of the AO, interfered by the Ld.CIT(E) exercising his jurisdiction U/s.263, which according to the ld. AR is wholly without jurisdiction and the issues that have been raked by the Ld.PCIT by treating the application of fund under three heads as not allowable. According to the CIT(E) the following payments Investment made in M/s. Metronation Chennai Television Pvt Ltd., Corpus donation made to M/s. Aditnar Educational Institution and Advance tax payment as application of income are to be disallowed as fund not utilised for the objects of the assessee trust and taxed at MMR. In the present facts of the case, we do not agree with the assertion laid by the CIT(E), since the AO during the assessment proceedings has considered all the three impugned issues raised by the CIT(E) and concluded the assessment by taking a plausible view permitted under the Act. The assertion of the CIT(E) that, the AO while scrutinizing the assessment has failed to verify the issue stated (supra) is contrary to the facts revealed from the records and found to be incorrect. From perusal of the SCN for draft assessment order and the assessment order, it reveals that the AO has conducted enquiry on all the impugned three issues and the assessee had furnished all the relevant material during the assessment proceedings (provided in the paper book filed by the assessee) and which have been duly considered and verified by the AO before framing the assessment by accepting the payments made by the assessee as application of funds towards objectives of the trust as claimed by the assessee. Since, the AO has considered the issues according to the merits and also followed the decision of the hon ble Madras high court in assessee s own case wherein their lordship has considered all the impugned issues before reinstating the registration granted u/s.12AA of the Act, the assessment order of the AO cannot be treated as erroneous. Therefore, we do not countenance the impugned action of ld.CIT(E) on the facts and circumstances of the case. Decided in favour of assessee.

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• Customs

• 2025 (4) TMI 1551
  Territorial jurisdiction of High Court to entertain the writ petition challenging the SCN - petitioner was not given reasonable opportunity of hearing - Violation of principles of natural justice - HELD THAT:- It is true that Article 226 (2) of the Constitution of India allows a High Court to exercise its power, to issue writs, even if the authority or person against whom the writ is sought is outside its territorial jurisdiction, as long as the cause of action or part of it arises within its territorial jurisdiction. It is also equally well settled that a small portion of cause of action within the High Court s jurisdiction is sufficient to trigger its power to issue writs - Cause of action is the bundle of facts that are necessary to be proved to obtain a relief or a judgment in favour of the petitioner, more particularly, the material facts which are essential. Material facts are those facts which are necessary to establish the right to relief. The impugned order is challenged on the ground that the seizure statements were obtained in duress and the petitioner was not allowed to cross-examine the co-accused and seizure witness in derogation of section 138(b) of the Customs Act, 1962. Thus the impugned order in original dated 18.02.2025 lacks legal standing and was passed solely on unverified custodial statements of accused persons which were subsequently retracted - the material cause of action and bundle of facts which are necessary to be proved to obtain a relief at the hands of this court is relatable to the procedure followed by the authorities under the Directorate of Revenue Intelligence and also by the Customs Adjudicatory Authorities. The fundamental allegation is as regards violation of principles of natural justice by not allowing the petitioner to cross-examine the witnesses by the Customs authorities while adjudicating the matter. The other facts required to be proved by the petitioner to grant him relief at the hands of this court is the conduct of the seizing authorities in recording the statement of the co-accused. This court is of the considered opinion that the fact that the petitioner is carrying out business at Karimganj, that the allegedly smuggled goods were transported from Karimganj etc have no connection, whatsoever, with the allegation made by the petitioner that the seizure was illegally done, that the cross-examination was not allowed, that the impugned orders are having no legal standing. The case pleaded is alleged procedural lapse in the seizure as well as in passing the impugned order in original and not relatable in any way to the factum of residence of the petitioner in the state of Assam or to the fact that it was alleged that the gold was smuggled from the state of Assam - the facts in the opinion of this court, don t give rise to any cause of action within the jurisdiction of this court to adjudicate the validity of the impugned order dated 18.02.2025 and show cause notice dated 04.08.2023. Conclusion - The fact that the petitioner is carrying out business at Karimganj, that the allegedly smuggled goods were transported from Karimganj etc have no connection whatsoever with the allegation made by the petitioner that the seizure was illegally done, that the cross-examination was not allowed, that the impugned orders are having no legal standing. The facts don t give rise to any cause of action within the jurisdiction of this court to adjudicate the validity of the impugned order dated 18.02.2025 and show cause notice dated 04.08.2023. The present writ petition stands closed for want of jurisdiction by this court.

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• 2025 (4) TMI 1550
  Smuggling of gold - detention and confiscation of the Petitioner s personal gold jewellery by the Customs Department without issuance of a Show Cause Notice (SCN) or personal hearing - Respondent has also not produced any voluntary signed waiver declaration - violation of principles of natural justice - HELD THAT:- This Court has held in several matters that signing of waiver of SCN and waiver of personal hearing by a way of preprinted waiver form would be contrary to principles of natural justice and, in any case, cannot be recognized as legally followed procedure by this Court. In the cases of Mr Makhinder Chopra vs. Commissioner of Customs, New Delhi, [ 2025 (3) TMI 19 - DELHI HIGH COURT] and Amit Kumar v. The Commissioner of Customs, [ 2025 (2) TMI 385 - DELHI HIGH COURT] this Court has discussed various issues arising in several cases where the goods have been detained from a tourist by the Customs Department, including the issue of personal jewellery being part of personal effects under the Baggage Rules, 2016 and waiver of SCN and personal hearing by way of a preprinted waiver form. Moreover, once the Commissioner of Customs (Appeals) has also allowed redemption, the decision to file revision cannot be a ground to withhold the release of the goods. Further, there is no stay which has been granted by the Commissioner of Customs (Appeals). This Court is of the opinion that the items deserve to be released to the Petitioner in terms of the OIA dated 29th January, 2025 - no warehouse charges shall be collected from the Petitioner. Petition disposed off.

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• 2025 (4) TMI 1549
  Smuggling of gold - Detention of the one gold kada of the Petitioner - personal effect under the Baggage Rules, 2016 or not - HELD THAT:- Considering the fact that the gold kada seized is merely a personal effect of the Petitioner, in the opinion of this Court, the detention itself would be contrary to law - the detention of the gold kada is set aside. Petition disposed off.

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• 2025 (4) TMI 1548
  Seeking grant of regular bail - demand of bribe for release of shipment - HELD THAT:- The applicant is in jail for about two months. As the investigation is over, further detention of the applicant is not warranted. Considering the overall facts and circumstances of the case, the applicant is released on bail. Criminal Bail Application is allowed.

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• 2025 (4) TMI 1547
  Overvaluation of imported goods - deficiency in discharge of duties of customs - jurisdiction of adjudicating authorities and appellate bodies, to determine the value of imported goods outside the statutory framework of assessment, particularly for the purpose of confiscation under section 111(m) of the Customs Act, 1962, when no duty shortfall or prohibition exists - HELD THAT:- The scheme of valuation, as set out in the extant Rules, is for the price to be the transaction value and, thereby, the value for assessment where duties of customs are to be charged on the basis of value. The optimal description of acceptable price, in rule 3 of Customs Valuation (Determination of Value of Imported Goods Rules), 2007, is also considered to be the default, save for any additions pertaining to costs and services related to the imported goods warranted by rule 10 of Customs Valuation (Determination of Value of Imported Goods Rules), 2007, except in two specified and mutually exclusive circumstances, viz., transaction between related parties with the relationship having influenced price or upon discard by recourse to rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, permitting substitution with surrogate value by sequential application of rule 4 to rule 9 therein, as the gold standard of transaction value , as the governing concept, had been elevated to the substance itself in, with amendment of 2007 to, section 14 of Customs Act, 1962. The re-determination, by adoption of price, truncated to the extent of unacceptable value addition in the document chain , is tantamount to freezing the consideration chain at a stage prior to the last in the billing for the very goods under assessment; it is neither in accord with surrogate value drawn from other legitimate transactions permitted to be appropriated for re-assessment by recourse to rule 4 to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 nor depressed / enhanced consideration for the goods under assessment permitted by rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The transaction value in rule 4 therein is intended to be drawn from consignment of identical goods which goods under assessment is not and the price of goods under assessment is alterable only in the manner permitted in rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Synthesis of the two has neither approval in law nor precedent of judicial determination. The grounds of appeal, to the extent concerned with justifying non-applicability of the leading judgements on disputes about overvaluation before the Tribunal, are not to be dignified by being even taken into consideration. To do so would be at the cost of judicial discipline and to the detriment of the responsibility assigned, especially on valuation and classification, to the Tribunal in the appellate hierarchy of national jurisdiction. The attempt by a subordinate executive authority to have the findings therein re-considered, after the Central Government withdrew its appeal in one and lost its appeal in the other, is not in keeping with the finality attributable to judicial determination. Conclusion - The scheme of valuation does not stand in support of the manner in which the value has been sought to be substituted in the notice. The facts evinced are not sufficient to tear down the weave of commercial engagement and for recourse, thereby, to discard of declared value. The mark-up is not of such unreasonable magnitude as to suggest that transaction should be penalized for obfuscation. Even without pressing into service the law, as judicially determined, on jurisdictional competence and on evidentiary value of documents for visiting penalties on the respondents under Customs Act, 1962, and as found in the impugned order too, the facts alone suffice to erase the proposals in the notice. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2025 (4) TMI 1546
  Classification of appellant as an Unsecured Financial Creditor instead of a Secured Financial Creditor by the Liquidator and the Adjudicating Authority - absence of non-registration of charge in the register of the Registrar of Companies (ROC) - breach of statutory obligation under Section 77 of the Companies Act, 2013 besides violating contractual commitments - HELD THAT:- An investment was made by BEST-Appellant in the Corporate Debtor by way of an interest free deposit amounting to Rs.30 crores. The compensation for delay on account of non-commissioning of the project was provided for in the IA in terms of the charging of the units and the discounted rate thereof. When the IA did not provide for interest component in clear and precise terms, the Liquidator could not on his own have expanded the scope of the IA by way of his own interpretation of the clauses. The Liquidator after examining the IA and not having found any enabling clause which provided for interest on the deposit invested by the Appellant in the Corporate Debtor has rightly treated the security deposit to be interest-free - The Liquidator therefore did not commit any error in concluding that the deposits were interest free and that the Appellant could not have claimed interest on security deposits which was interest free. There are no error on the part of the Liquidator to have admitted only a claim of Rs 30 Cr. in respect of the principal amount and rejecting the claim made in respect of the interest amount of Rs 126.23 Cr. The Adjudicating Authority in the exercise of its summary jurisdiction is not capacitated to determine the terms and conditions of the contractual agreement. The Adjudicating Authority is not expected to go into the commercial intent of the parties in trying to interpret the contractual provisions in the IA beyond a plain reading of the same - When the clauses of the IA did not specifically provide for interest on security deposit, the Adjudicating Authority had correctly taken the view that the Liquidator could not have interpreted the IA to the contrary. The Liquidator did not receive any proof with regard to recording of the security having been created either with the information utility or proof of Certificate of Registration of Charge issued by the ROC or registration of charge with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India. Even if the requirement of the registration of charge is side-stepped for the time being in deciding the status of the Appellant as a secured financial creditor, the need to possess documents of charge creating the interest cannot be waived as this requirement was clearly envisaged in the IA - In the absence of charge document, the Creditor could not have been treated as a Secured Financial Creditor of the Corporate Debtor. It is not for the Liquidator to look into whose fault it was for not creating the security charge. All that the Liquidator was expected to perform was whether the charge has been created. The Appellant on a pointed query made by this Bench also admitted that there was no charge document created in their favour by the Corporate Debtor. In such circumstances, when the Appellant has not controverted the fact that no charge was created on the deposit invested by them, there are no infirmity in the decision of the Liquidator in not treating the Appellant as a Secured Financial Creditor. Conclusion - The Appellant was rightly classified as an Unsecured Financial Creditor due to absence of registered charge or proof of security interest. There are no good reason to interfere with the impugned order. The Appeal not having any merits stands dismissed.

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• 2025 (4) TMI 1545
  Initiation of SARFAESI proceedings was sufficient basis to hold that the Section 94 application has been resorted to by the Appellant for putting a spanner in the recovery proceedings initiated by the Respondent No.1 or not - violation of principles of natural justice - HELD THAT:- It is an admitted fact that the Corporate Debtor had failed to discharge their repayment obligations and their account was classified as a NPA way back in 30.06.2011. The Appellant as personal guarantor had also duly acknowledged the outstanding debt as early as on 13.08.2012 and had made part payment towards the loan in 2018. The debt liability is also acknowledged in the financial statements of the Corporate Debtor for the FY-2017-18. It is also an undisputed fact that a demand notice had been issued under the SARFAESI Act by the original Lender-Bank of India on 06.08.2012. The applicant s conduct aims to wilfully misuse and abuse easy access to the justice administration system. Complying with the court s order and undertaking is fundamental to litigation to achieve fairness between the parties. The borrowers have failed the test of judicial scrutiny for repetitive breaches of the court s order or multiple non-compliance with the undertakings. The DRT also directed the Appellant to comply with the Court s order and undertaking given by them from time to time. Section 94 application was filed by the Appellant within weeks after the issue of a possession notice upon them on 11.11.2022 by the Respondent No.1. When after the 4th SA was disposed of, the Appellant realised that it had failed to secure any further relief from the DRT and that dispossession from the subject residential premises was imminent that the present Section 94 petition was filed on 03.12.2022 and a communication sent on 06.12.2022 to the Respondent No.1 to hold its hand from taking over possession of the residential premises on account of moratorium - Filing of the Section 94 application at this juncture leaves no room for doubt in our mind that these proceedings were not initiated with the intent of genuine insolvency resolution but as a tool to obstruct lawful recovery of enforcement with the manifest intent of the Appellant being to seek refuge under the moratorium provision under Section 96 of the IBC in an effort to prevent enforcement of possession of the secured residential premises. This is a case clearly where the Appellant on one excuse the other has all along tried to delay the handing over of the security to the Respondent No.1. The steps under SARFAESI Act have been pending since 2012. The Appellant has consistently misused the benevolent indulgence afforded by various adjudicatory forums to the Appellant in the past to resolve the matter. Each time the Appellant got relief from the court it slept over its commitment to either handover the subject residential premises to the Respondent No.1 or to make payment by selling the said property to clear the outstanding debt - The present Section 94 application is clearly yet another salvo on the part of the Appellant to stall the recovery by taking advantage of moratorium. This clearly shows that the Appellant has been ceaselessly orchestrating litigative proceedings and embroiled the Respondent No.1 in these proceedings clearly to subvert the recovery proceedings initiated against them and not for the purpose of the insolvency resolution. In the given fact situation, it is inclined to agree with the findings returned by the Adjudicating Authority that the Appellant had approached the Adjudicating Authority by filing the Section 94 application with an intent other than insolvency resolution. The questioning of the jurisdiction of the Adjudicating Authority by the Appellant to examine the maintainability and bonafide of an application under Section 94 at the stage of Section 100 lacks substance. Since the report under Section 99 of the IBC had already been filed by the RP, nothing prevented the Adjudicating Authority to hear the matter and pass orders under Section 100 of the IBC while also entertaining the Intervention Application of Respondent No.1 - the Adjudicating Authority by its order dated 27.03.2024 had allowed four weeks time to the Appellant to file their response. The matter was fixed for hearing on four dates viz. 08.05.2024, 25.06.2024, 03.09.2024 and 25.10.2024. However, no reply was filed by the Appellant. Conclusion - i) The statutory right under Section 94 of the IBC to file a PIRP petition cannot be denied solely on the basis of prior SARFAESI proceedings, but the bona fides of the petition must be scrutinized. ii) Repeated and persistent abuse of judicial process to delay secured creditor s recovery rights can justify dismissal of Section 94 petitions as an abuse of process. iii) The Adjudicating Authority is empowered to dismiss Section 94 petitions at the pre-admission stage upon finding fraudulent intent or abuse of process. There are no merit in the Appeal. The Appeal stands dismissed.

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• FEMA

• 2025 (4) TMI 1544
  Tribunal exercising its discretion by reducing the pre-deposit of penalty only to 20% - Tribunal has exercised its discretion in the context of second proviso to Section 19(1) of the Act or not? - HELD THAT:- Once the legislature fixes the discretion to any authority, it is to the satisfaction of that authority it should exercise such discretion. Moreover, the words used in the second proviso to Section 19(1) also states that the appellate Tribunal is of the opinion . It means, if the Tribunal forms an opinion that some discretion has to be exercised in a particular case, then only such a discretion has to be used. Therefore, with regard the question of forming an opinion, it is fully left to the discretion of the Tribunal. Whether such opinion that the Tribunal had formed was based on the merits of case, cannot be gone into by sitting over on appeal by this Court and therefore, ultimately such kind of discretion if it is exercised by the original authority to whom such power of discretion is vested, it normally would not be touched upon by the appellate forums. Here in the case in hand, in fact the Tribunal has exercised its discretion by reducing the pre-deposit of penalty only to 20%. Therefore, it is a case where the Tribunal, after having formed an opinion based on the facts and circumstances of the case, has reduced the pre-deposit of penalty to only 20%. Hence, it cannot be stated that the Tribunal has not exercised its discretion under Second proviso to Section 19(1) of the Act. The imposition of penalty is also for the purpose of safeguarding the realization of penalty as, that also has to be taken into account. Therefore, by striking a balance between undue hardship and safeguarding the realization of penalty , in between the two, the discretion of the Tribunal has to be exercised. Such a discretion cannot be exercised in the manner expected by the litigant in any lis. Since the discretionary power vested under the second proviso to Section 19(1) of the Act to the Tribunal has been exercised properly in this case, we do not find any reason to interfere with the same.

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• 2025 (4) TMI 1543
  Applicability of provisions of FERA to the appellant, who is not a citizen of India u/s 1(3) of the Act - HELD THAT:- The bare reading of sub clause (III) covers the person other than citizen of India who come and stay in India for taking employment or carrying a business or vocation in India. It can be when he is staying with his or her spouse and spouse being a resident of India, etc. The definition of person resident of India thus covers a person not citizen of India but would fall in the definition in a given circumstances narrated under clause (III). We are unable to accept the first argument raised by the appellant because under section 1 (3), word also has been used to indicate that the act of 1973 would apply to the citizen of India outside India also and branches outside India etc. Section 1(3) does not indicate that it would apply to citizen of India only. The word only does not exist under the provisions referred to above. Thus first argument raised by the appellant is summarily rejected. Applicability of section 8(1) - The restriction on dealing in foreign exchange has been imposed without previous general or special permission of RBI on all the persons other than the authorized dealer in India. No person resident in India other than authorized dealer shall outside India purchase or otherwise acquire or borrow or sale the land with any person not being authorized dealer. In the instant case, the appellants are not falling in the definition of person resident of India for the reason that no evidence was led by the respondent to prove that during the relevant period involved in this case, the appellant came and stayed for the purpose given under clause (iii) of section 2(p) of the Act of 1973. Accordingly, the counsel for the respondent could not clarify as to how section 8 (1) of the Act of 1973 can apply to the appellant. The issue aforesaid has not been dealt with by the Special Director, DOE though it has been recorded that on account of the transfer of money by the Standard Chartered Bank, there was a contravention of section 8 (1) of the Act of 1973 but in this case, it could not be proved that appellant was falling in the definition of person resident of India . Thus, how section 8 (1) would apply to him.

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• PMLA

• 2025 (4) TMI 1542
  Money Laundering - challenge to impugned notice issued under Section 8 (4) of PMLA and Rule 5 (2) of the Rules - such a notice can be issued prior to a formal order of confiscation by the Special Court under Section 8(6) of the PMLA or not - HELD THAT:- A meaningful reading of the notice in the light of section 8 (4) of the PMLA and Rule 5 (2) of the Rules would reveal that the order dated August 22, 2022 passed by the Adjudicating Authority (whereby the Provisional Attachment Order was confirmed) forms the foundation of the impugned eviction notice. The said notice is in effect a statutory consequence of the order dated August 22, 2022 passed by the Adjudicating Authority. As regards the petitioner s contention that there is nothing on record to show that the provisions of Rule 5 (1) of the Rules have been complied with, this Court is of the prima facie view that non-compliance or belated compliance with the provisions of Rule 5 (1) would not at the threshold vitiate a notice under Rule 5 (2) of the Rules. Rule 5 (1) contemplates notice of the attachment to the Registrar having jurisdiction over the area where the property is situated requiring the Registrar not to transfer or create any interest in the property till further orders are passed. The purpose of such provision is clearly different from that of Rule 5 (2). While the former provision is aimed at avoiding/preventing encumbrance and transfer of title, the latter is aimed at securing possession thereof. Both are important but non compliance or belated compliance of one would not vitiate the lawful compliance with the other. The point that the notice impugned has been issued after 2 years 9 months is also not appealing. The statute does not provide for a mandatory time limit for such notice to be issued. In such situation the length of time taken by the Respondents to issue the notice impugned cannot be taken advantage of by the petitioner in the facts of the present case. This Court, therefore, feels that the petitioner should be left free to approach the Appellate Tribunal and get the hearing of the stay application done expeditiously. Since the petitioner has approached this Court under Article 226 of the Constitution it would be just and proper for this Court to request the Appellate Tribunal before whom the petitioner s appeal under Section 26 of the PMLA is pending to dispose of the petitioner s appeal as expeditiously as possible. Insofar as the petitioner s application for stay of the order dated August 22, 2022 is concerned, this Court would request the Appellate Tribunal to consider the same on priority basis and dispose of the same as expeditiously as possible preferably within a period of 2 months from date. Conclusion - i) The eviction notice dated November 19, 2024 issued under Section 8(4) of the PMLA and Rule 5(2) of the Rules is prima facie valid and within jurisdiction. ii) The petitioner s challenge to the eviction notice is premature before the High Court given the pending appeal and stay application before the Appellate Tribunal under Section 26 of the PMLA. Petition disposed off.

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• Service Tax

• 2025 (4) TMI 1541
  Classification of service - business auxiliary service or mining service? - activities of recovery of embedded iron ore, transportation to screening points, weighment, and billing - HELD THAT:- The activity undertaken by the appellant is recovery of embedded iron ore and transporting the same to screening point for screening by machines installed by the mine owner and managed by them and after screening, the appellant was making weighment of the goods and raising invoices on such quantity at the screening point. If the Revenue is of the view that the appellant has undertaken any process and the goods became of a different name and identity, then the said activity amounts to manufacture . Similar issue was dealt with by this Tribunal in the case of Commissioner of Customs, Central Excise Service Tax, Bbsr-II v. Ores India (P) Ltd. [ 2013 (3) TMI 355 - CESTAT KOLKATA] wherein it was held that The said mining services were not taxable services during the relevant period. By way of this, the Revenue is trying to divide the contract which is not the case in the showcause notice. Therefore, division contract cannot be permitted at this stage and the grounds taken by the Revenue in their appeal are beyond the purview of show-cause notice. It is found that if any activity undertaken by the appellant is liable to be taxed, the same is provided by the appellant within the mining area and is appropriately classifiable as mining service . However, during the impugned period, mining services were not taxable. In these circumstances, no demand of Service Tax can be raised against the appellant. Extended period of limitation - HELD THAT:- The whole of the demand is barred by the extended period of limitation i.e., for the period from April, 2007 to May, 2007, the Show Cause Notice has been issued on 30th July, 2012, which is beyond the period of five years. Therefore, the impugned order deserves no merits. Conclusion - i) The appellant s activities do not qualify as business auxiliary services under Section 65(19)(v) of the Finance Act, 1994. ii) The appellant s activities are more appropriately classified as mining services, which were not taxable during the relevant period. iii) No service tax demand can be sustained against the appellant for the period April 2007 to May 2007. iv) The demand is also barred by limitation as the Show Cause Notice was issued beyond five years. Appeal allowed.

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• 2025 (4) TMI 1540
  Non-payment of service tax on the entire charges collected from M/s Hindustan Zinc - Maintenance Repair Services - Whether the appellant is liable to pay service tax on the differential amount of consideration and actual value of spare parts for the period prior to 01.07.2012 or not? - HELD THAT:- It is a fact on record that maintenance and repair contracts as were entered between appellant and M/s Hindustan Zinc Limited are the composite contracts involving supply of goods as well as for providing the service. Such Contracts were there is a contract of supply of goods as well as of providing services, are termed as Works Contracts and the same were made taxable w.e.f. 01.06.2007 under the category of Works Contract Services as held by the Hon ble Apex Court in the case of Commissioner v. Larsen Toubro Ltd. [ 2015 (8) TMI 749 - SUPREME COURT] . The Hon ble Supreme Court in Larsen Toubro in paragraph 24 drew a distinction between the service contracts simpliciter and a composite works contracts which would involve both services and goods and held that it is only w.e.f. June 01, 2007 that composite contracts can be subjected to levy of service tax and not before this date. Therefore, prior to 01.06.2007 also the nature of activity undertaken by the appellant is works contract services but for the period prior to 01.06.2007 covered by the decision of Larsen Toubro Ltd. this was not liable to pay Service Tax at all. W.e.f. 01.06.2007. Similar issue has come up before this Tribunal in the case of Xerox India Ltd. [ 2018 (3) TMI 1006 - CESTAT CHANDIGARH] wherein this Tribunal has held that if service has been provided along with material and the value of material supplied cannot be vivisected, in that circumstances, appropriate classification of the service shall be works contract service and same is not taxable prior to 01.06.2007. Hence, prior to 1.6.2007, even the service portion of a composite contract was outside the ambit of service tax net. Accordingly, the repair and maintenance services under clause (zzg) of Section 65(105) refers only to contracts for service simpliciter and not composite contracts like the present ones. Therefore, no service tax is leviable on such composite contracts upto 1.6.2007. Coming to the impugned demand for the period post 01.07.2012, it is observed from the show cause notice dated 03.09.2013 as issued for the post July 2007 amendment but the amended provisions have not been mentioned in the said show cause notice. It is utmost mandatory for the Department to first establish that the nature of the services subsequently and the respective charging provisions and the heavy burden is cast upon the department to prove that the demand is sustainable under the said charging provisions but as already observed above. The show cause notice has no proper and correct charging provisions. The show cause notice is nothing but a vague show cause notice. The demand on such show cause notice is not sustainable. Conclusion - i) The appellant s composite maintenance and repair contracts involving supply of spare parts were works contracts and not taxable as service contracts simpliciter prior to 01.07.2012. ii) Service tax demand on the spare parts portion for periods prior to 01.07.2012 is unsustainable. iii) The show cause notices issued for the post-01.07.2012 period were vague and failed to specify the correct charging provisions, invalidating the demand for that period. iv) The value of spare parts on which VAT was paid cannot be included in the taxable value for service tax under composite contracts. The orders under challenge are hereby set-aside - Appeal allowed.

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• 2025 (4) TMI 1539
  Non-compliance of the obligations imposed on the manufacturer of final products or provider of output service, in availment of CENVAT Credit, in specified situations mentioned therein, under Rule 6 of the CENVAT Credit Rules, 2004 - HELD THAT:- On plain reading of the legal provisions under Rule 6 of CCR of 2004, it transpires that while providing a comprehensive input credit scheme of the duties and taxes paid on input and input service, the Government had provided for an exception of not extending such input credit facility in respect of those inputs and input services used in or in relation to exempted goods or exempted services. The rationale of this provision is evident inasmuch as the CENVAT credit scheme enables the manufacturer or output service provider to use the credit to reduce the cascading effect of tax on input/input service embedded in the duty or tax liability on the final product or output services - the appellant has followed Rule 6(2) ibid inasmuch as the various manufacturing units situated at Aurangabad, Mulund, Baddi are registered individually with jurisdictional Central Excise authorities and maintained separate records for availing CENVAT credit, and have not taken credit on the inputs and input services used in provision of exempted service viz., trading which has been undertaken only by HO and the manufacturing units have taken credit only on the inputs and input services used in manufacture of dutiable goods and not in respect of exempted goods. From the legal provisions of the Finance Act, 1994, it is understood that trading is a form of service and no service tax is leviable on it and hence it is an exempted service. Usually the amount one pays to a service provider is the value of the services. For example, what one pays for a service, the amount paid represent not only the service rendered by trader, but also the value of the goods purchased and delivered. The service element cannot be the total turnover of the goods traded but is only a small fraction of the turnover - On reading of the Explanation I(c) to this Rule 6 ibid, for both the relevant periods (April 2016 to June 2017 and earlier periods) it clearly specifies that in case of trading service, the value of the service is the difference between the buying and selling price or 10% of the traded goods whichever is higher. In the present case, the only dispute is regarding the credit on common input services used in their HO unit, which was transferred to the field units through ISD invoices. This credit cannot be attributed wholly to either the dutiable goods manufactured or the exempted service rendered viz., trading. This should therefore, be apportioned in terms of Rule 7 ibid. The adjudicating authority, therefore, erred in taking the total credit taken (including credit taken on inputs and input services used exclusively for manufacture of dutiable goods) to calculate the amount of CENVAT credit that must be reversed under Rule 6(3A) ibid. For the period April 2016 to March 2017, this was clearly, against the explicit rule position as laid down in Rule 6(3A)(b). Therefore, the calculation of CENVAT credit adopted by the learned adjudicating authority does not stand the scrutiny of law. Conclusion - The appellants having exercised the option under Rule 6(3A)(a) and submitted requisite intimation, and having maintained separate records for inputs and input services used exclusively for dutiable goods and exempted services, are entitled to apply the formula under Rule 6(3A) for proportionate reversal of credit on common input services. The impugned order is set aside - appeal allowed.

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• 2025 (4) TMI 1538
  Determination of the value of taxable services in the execution of works contracts involving both supply of goods and provision of services - whether duty paid on 15% as service component by the assessee considering 85% element of good supplied, which has been described by it as the actual value, on the basis of contract price or as per their invoices and which as per the department`s view was not actual value but a uniform notional value on which VAT was discharged and remaining 15% was treated as value for the service tax even though the percentage of abatement under service tax only could be ousted by external value of goods based on costing? - difference of opinion - matter placed before the Hon ble President to nominate a third member for resolution. HELD THAT:- The Revenue feels that in spite of clear directions given to the adjudicating authority in the Final order of this Tribunal dated 03.07.2014 [ 2014 (7) TMI 748 - CESTAT AHMEDABAD] , proper verification has not been undertaken by him, while dropping the demand. From the above portion of the earlier Final Order, it is observed that the Tribunal has already considered that VAT was being paid on the value of the goods portion. Only to verify as to whether the same was being paid or not, and correct value was adopted or not, these facts were required to be verified by the Adjudicating Authority. The adjudicating authority has gone through the documentary evidence placed before him including the Chartered Accountant s Certificate/Cost Accountant s certificate and has concluded that the assessee has paid the VAT on goods value portion. Even for the prior period, if Notification 12/2003 is read carefully it says that subject to the condition that there is documentary proof specifically indicating the value of the said goods and materials. There can be no better documentary proof than the invoice raised by the assessee. In the present case, it is clearly seen that the VAT is being paid on the 85% consideration treating the same as value of the goods. The Supreme Court s decision in the case of Safety Retreading Co. (P) Ltd case [ 2017 (1) TMI 1110 - SUPREME COURT] has already held that once VAT is paid on the value component as per the statutory provision of the State Government, the value of service cannot be put to question. Matter to be placed before the regular bench for final disposal - In view of the majority order, the appeal is dismissed.

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• 2025 (4) TMI 1537
  Refund of the Service Tax paid by mistake on transportation of oil cakes - principles of natural justice - HELD THAT:- Revenue has not issued any Show Cause Notice seeking to know as to why the refund claim should not be rejected on account of unjust enrichment. The Department has simply issued several letters seeking documentary evidence and calling for balance sheet copies, P L account and other payment details. All these documents have been provided by the appellant. Thus, the appellant was not even made aware as to on what grounds the refund was proposed to be dismissed. This is a case where the Service Tax has been paid on RCM basis. The question of passing on the burden to the third party or to any other person will arise only when the service is being provided in the normal course for which invoice is issued along with the Service Tax component. In cases of RCM basis, no invoice is raised on any other third party. Thus the question of passing on Service Tax burden on a third party does not arise. The only point to be checked is about the taking of the Cenvat Credit on such Service Tax paid, which has not been done by the Dept., by way of issue of SCN to this effect. But, this point has been raised by the Bench and answered properly by the appellant at the Tribunal stage. Conclusion - i) The appellant is not liable to pay Service Tax on transportation of oil cakes due to exemption. ii) The refund claim filed is timely and valid. iv) The appellant satisfied the unjust enrichment condition by proving no passing on of tax burden. Appeal allowed.

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• 2025 (4) TMI 1536
  Recovery of Service Tax on Transport Charges, Delivery Charges, Freight Charges, Commission, Supervision Charges, Service Charges, and Works Contract Service for the period 2007-08 to 2011-12 - suppressios of material facts or not - invocation of extended period of limitation - HELD THAT:- The main ground of the Revenue to deny the benefit of the said Notifications is that the ld. adjudicating authority has not examined the agreements. We have gone through the impugned order. From a perusal of the impugned order, we find that the ld. adjudicating authority has recorded the findings that the respondent has received various amounts from M/s. Uttar Pradesh Rajakiya Nirman Nigam Limited during the period from 2008 to 2011 for construction and maintenance of P.M.G.I. road in Hordoi, from M/s. Hindustan Construction Company Ltd. during the year 2010-11 for construction and maintenance of approach road and land development work in the project of widening of the existing two lanes to four lane including strengthening of existing two lanes of NH-34 from Km 295+000 to km 398+ in Maldah District, West Bengal and from M/s. PACL India Ltd. for the period 2009-10 for agricultural land levelling work at National Highway and site formation, clearance, excavation, earthmoving and demolition work in relation to construction of road - These facts are available on record. Conclusion - It cannot be said that the ld. adjudicating authority has not examined the documents before allowing the benefit of the aforesaid Notifications. In these circumstances, there are no merit in the appeal filed by the Revenue and therefore, the Revenue s appeal is dismissed. Appeal dismissed.

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• Central Excise

• 2025 (4) TMI 1535
  Recovery of Central Excise duty with interest and penalty - alleged default in payment of duty beyond the stipulated due dates by violating Rule 8(3A) of the Central Excise Rules, 2002 - HELD THAT:- The issue is similar to the relevant findings of the jurisdiction High Court of Punjab Haryana in the case of Sandley Industries [ 2015 (10) TMI 2455 - PUNJAB HARYANA HIGH COURT] , wherein the jurisdiction High Court of Punjab Haryana has held that Rule 8(3A) of the 2002 Rules to the extent it contains the words without utilizing the Cenvat credit is held to be arbitrary and unreasonable and is struck down. In other words, the unamended Rule 8(3A) of 2002 Rules whereby the benefit of Cenvat credit for all the period till the actual payment was made, stands disallowed in the event of a minor default also is arbitrary and unreasonable. Conclusion - The portion of sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002, that prohibits utilization of CENVAT credit during default is declared unconstitutional and invalid. The appellant is entitled to utilize CENVAT credit for payment of duty even during the default period, subject to payment of outstanding amounts and interest as per law. The impugned order is not sustainable in law, and is set aside - appeal allowed.

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• 2025 (4) TMI 1534
  Evasion of Central Excise duty - non-inclusion of the amount of VAT/Sales Tax collected and retained by them in the assessable value in violation of Section 4 of the Central Excise Act, 1944 - HELD THAT:- The facts are not in dispute. The appellant was eligible for remission under the State VAT scheme. Therefore, while the appellant were charging 100% VAT on their customers, they were retaining 99% of the VAT and paying only the balance 1% VAT to the State Govt. There is nothing on record that this 99% was required to be paid subsequently in instalments. Thus, it gets clarified that this amount is simply retained by the appellant. This very issue was considered by the Hon ble Supreme Court in the cited case of Commnr. Of Central Excise, Jaipur vs M/S. Super Synotex (India) Ltd. Ors [ 2014 (3) TMI 42 - SUPREME COURT] wherein it has been held that As is seen from the facts, 25% of the sales tax collected has been paid to the State exchequer by way of deposit. The rest of the amount has been retained by the assessee. That has to be treated as the price of the goods under the basic fundamental conception of transaction value as substituted with effect from 1.7.2000. Therefore, the assessee is bound to pay the excise duty on the said sum after the amended provision had brought on the statute book. It is found that the issue had reached the Apex Court, which has held that the retained portion of VAT is required to be treated as additional consideration and hence the same is to be added to the Assessable Value. The appellant is required to pay the differential Excise Duty for the normal period along with interest. However, considering the factual details of the case, all the penalties are set aside. The demand of central excise duty for the normal period of limitation, along with interest upheld. No penalty imposable on the appellant. The demand confirmed for the extended period of limitation is set aside. The issue is remanded back to the adjudicating authority only for the limited purpose of verifying the correctness of duty payment for the normal period along with interest by the appellant. Conclusion - VAT remission or sales tax incentives retained by the manufacturer and not paid to the State Government constitute additional consideration and must be included in the assessable value for Central Excise duty under Section 4 of the Central Excise Act, 1944. Appeal disposed off by way of remand.

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• 2025 (4) TMI 1533
  Evasion of Central Excise Duty by resorting to undervaluation - clearance of finished products through related unit viz., M/s. H.D. Consortium India Ltd. at a price which was lower than the price at which the said product was subsequently sold by M/s. H.D. Consortium India Ltd. to unrelated buyers - revenue neutrality - HELD THAT:- In the appellant s own case [ 2024 (6) TMI 1320 - CESTAT KOLKATA] , this Tribunal has examined the very same issue and observed that the Appellant has adopted a higher value addition and duty was paid at a higher side. Thus, we find that there is no evidence available on record to substantiate the allegation that the appellant has undervalued the finished goods sold to M/s. H.D. Consortium India Ltd. Accordingly, we hold that the demand confirmed in the impugned order on the allegation of undervaluation of the final product is without any basis and liable to be set aside. Conclusion - As the issue has already been decided by this Tribunal in the appellant s own case for an earlier period, no demand is sustainable against the appellant, as also being revenue neutral. Appeal allowed.

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• 2025 (4) TMI 1532
  Irregular availment of CENVAT Credit - denial of credit on the ground that the process undertaken does not amount to manufacture - HELD THAT:- he appellant has been availing CENVAT Credit of duty paid on inputs viz. PP/HDPE/LLDPE Granules, Calcium Compound, Master Batch and PP/HDPE Woven Fabrics. The said inputs were used in the manufacture of their final products. The appellant was clearing their finished goods on payment of duty and was submitting their Returns regularly. The Department has not raised any dispute against availment of credit by the appellant. It is also observed that when the appellant paid duty on the finished goods, the Department has accepted the same. If the finished products attract duty, then the CENVAT Credit availed on the inputs used in the manufacture of the said finished goods cannot be denied, even if the process does not amount to manufacture. Reliance placed in the case of Commissioner of C.Ex. Cus., Surat-III v. M/s. Creative Enterprises [ 2008 (7) TMI 311 - GUJARAT HIGH COURT] . In this case, initially, the Tribunal had granted the benefit of MODVAT Credit despite the final product not being dutiable as the activity did not amount to manufacture. The CENVAT Credit availed by the appellant on the said inputs cannot be denied on the allegation that the process undertaken by the appellant did not amount to manufacture and no new product emerged - the demands confirmed in the impugned order are not sustainable - Appeal allowed.

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• 2025 (4) TMI 1531
  Irregular availment of Cenvat Credit - violation of the provision of Rule 11 of Central Excise Rules, 2002 and Rule 10 of Cenvat Credit Rules, 2004 - HELD THAT:- It is quite clear that in the instant matter there is no aspect of unutilized credit in consideration, as evident from the language of the letter dated 12.01.2010 issued by M/s Henkel India Ltd., referred to in para-4 above. The impugned matter, therefore cannot be construed to be a case within ambit of Rule 10 of the said Rules. Thus, we are of the view that the Revenue has misdirected themselves by referencing the present issue within the ambit of Rule 10 on Cenvat Credit Rules, 2004. The fact of the appellant stating to the audit query, of availment of the credit in terms of Rule 10 ibid cannot be so held against them, when the facts on records stand out clearly duly demarcated and distinguishable. It is an undisputed fact on record that there is no physical removal of any goods as the entire factory as a whole, lock stock and barrel, was purchased by the appellant and there is no shift of the premises involved. It is also not disputed that due duty was paid in respect of goods that were transferred to the appellant by reversing cenvat credit availed. The question that the goods were already in possession is therefore rendered futile and has no ramification with the availability of the credit, till a legal title in the good accrues in favour of the appellant. The argument of the Revenue is therefore baseless. No credit can be denied if there is no dispute regarding the receipt of such inputs or capital goods and its utilization in the manufacture of final products. It is not disputed that the appellant had received the goods under consideration on which Cenvat Credit has been availed from M/s Henkel India Ltd., in accordance with the Asset Purchase Agreement entered between the two parties and as it is a clear that the title in goods only passed onto the appellant upon issuance of invoices and payment of duty as applicable on the said goods. The denial of credit therefore to the appellant is clearly erroneous and the argument of delay in issuance of the invoices, without disputing the validity of transference of goods, duty payment thereon and their ultimate utilization is at cross/contradicting purposes. The Asset Purchase Agreement is privy between the parties entering thereto and when they mutually decide to cast aside a delay of 1-2 days, in issuance of the invoice, it is not open for a third party to question the same on grounds of delay and presumed invalidation thereof. It is between the two consenting parties to overlook any such variation of the terms of contract, to which both the sides have no qualms and reportedly agreed to. Extended period of limitation - HELD THAT:- Once the agreement has been implemented and the goods come into possession and title of the appellant, their duty payment not questioned, their consumption and utilization in manufacture of goods not doubted, all payment including duty payment made by the appellant, the department cannot hold that such invoices were irregular and inadmissible for availment of credit. For reasons foregoing, there are no justification in the department s stance of invoking extended period of limitation and charging the appellant with willful suppression more so when there are proper communications on record, intimating the department from time to time. Conclusion - The appellant is entitled to avail Cenvat credit on the capital goods and inputs purchased from the transferor company, as the invoices were valid and duty was duly paid. Appeal allowed.

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• Indian Laws

• 2025 (4) TMI 1530
  Contempt of Court - Non-payment of arrears of use and occupation charges for period between 20.09.2021 and 31.11.2022 in six monthly instalments - Respondent-Contemnor s plea of financial incapacity to comply with the Court s order is a valid defense against the charge of contempt or not - HELD THAT:- All throughout, the Respondent-Contemnor had been in possession of the said Property and had been utilising the income generated from running of the said resort. Acceptance on the part of the Respondent-Contemnor with regard to the viability of the project is apparent from the Order dated 07.11.2022 and his conduct. This would not permit the Respondent-Contemnor to now turn around and state that he is unable to make payment of not only the monthly dues for use and occupation charges after passing of the Order dated 07.11.2022 but also the arrears as per which terms and conditions were fixed by this Court in accordance with the prayer made by him. Non - fulfilment of the mandate and direction of this Court which were at the request of the Respondent-Contemnor himself reflects the intent on the part of the Respondent- Contemnor to not to comply with the order rather to violate with the same with impunity. The conduct clearly reflects that the intention of the Respondent-Contemnor was to gain the benefit by running the resort in the subject property without paying the current liability, what to say of the arrears. The malafide is therefore writ large and reflect the misuse of the process of the Court. After seeking an order from this Court where benefit has been conferred on the basis of the submissions of the Respondent-Contemnor, not complying therewith amounts to contempt of Court - The power and jurisdiction of this Court to initiate and punish for its contempt has not been disputed. It is well settled by now and it is apparent from the provisions of the Contempt of Court Act that Civil contempt means wilful Contempt Petition (C) No. 712 of 2023 Page 14 of 19 disobedience of judgment, decree, or direction, order, writ or other process of the Court or wilful breach of an undertaking given to the Court. A party, misguiding the Court to pass an order which was never intended to be complied with, would constitute an act of overawing the due process of law and, thus, commit contempt of Court. In the instant case, the opportunity having been availed, time having been sought and granted by the Court further reflects the intent on the part of the Respondent-Contemnor to discard and tarnish the judicial process by polluting it. Disobedience of the order of the Court in such circumstances would be the only result and thus, civil contempt. The Respondent-Contemnor cannot be allowed to go scot free after having taken this Court at a stage where his conduct leaves this Court with no option but to take strict action and to punish him for the contempt committed by him, i.e., non-compliance of the directions issued by this Court vide Order dated 07.11.2022. Shaji Augustine-Respondent is guilty of Civil Contempt and impose punishment of Simple Imprisonment for three months along with fine of INR 20,000/- to be deposited in two weeks, and in case of default, further Simple Imprisonment for one month - Giving one more opportunity to the Respondent- Contemnor to purge the contempt, 30 days time is granted to him to comply with the Order dated 07.11.2022 and submit compliance report to the Registrar Judicial of this Court a week thereafter. Conclusion - The Respondent-Contemnor is found guilty of civil contempt for wilful and deliberate disobedience of the Court s order dated 07.11.2022. The contempt proceedings are disposed of.

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• 2025 (4) TMI 1529
  Dismissal of appellant s petition under Section 482 of the Code of Criminal Procedure - appellant, who was not the authorized officer at the relevant time of the auction and issuance of sale certificate under the SARFAESI Act, can be held criminally liable for the alleged cheating and forgery in relation to the sale of mortgaged property or not - HELD THAT:- It is evident that the sale certificate was issued by the appellant s predecessor and, at the relevant time, the appellant was not the authorized officer empowered to issue the certificate. In fact, right from the initiation of the auction process to the issuance of sale certificate, no direct involvement of the appellant can be seen as he was not the authorized officer during the said period and assumed the office of Manager only in November, 2014. Therefore, it becomes clear as day that the appellant had no role to play in the transaction leading to the FIR as he was not a signatory to the sale certificate. Since the appellant was neither the authorized officer at the relevant time nor responsible for the auction process or issuance of the sale certificate, the allegations against him are baseless and do not attract criminal liability. The continuation of the instant criminal proceedings against the appellant shall lead to abuse of process of law, cause nothing but miscarriage of justice and inordinately harass the appellant who has been implicated without due cause. Conclusion - The criminal proceedings against the appellant are quashed as he was not the authorized officer or involved in the auction or sale transaction at the relevant time, and continuation of proceedings would constitute abuse of process and miscarriage of justice. Appeal allowed.

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• 2025 (4) TMI 1528
  Rejection of Interim Application filed by the petitioner herein under Section 5 of the Limitation Act, 1963 - declination to condone the delay of 301 days in filing the main appeal under Section 13(1-A) of the Commercial Courts Act, 2015 - HELD THAT:- One of the avowed objects of the provisions of the Commercial Courts Act read with amended provisions of CPC applicable to the Commercial Courts is to ensure that there is no unnecessary delay in disposal of the commercial suit. Once specific time lines are fixed and there is a strict procedure provided in terms of the Commercial Courts Act, parties are by the statute put to notice that they have to very carefully contest the suits filed as commercial suits and that failing to comply with statutory timelines and a strict procedure, certain adverse consequences may flow on account of lack of application by a contesting party. Merely because Order XX Rule I enjoins a duty upon the commercial courts to provide the copies of the judgment that does not mean that the parties can shirk away all responsibility of endeavoring to procure the certified copies thereof in their own capacity. Any such interpretation would result in frustrating the very fundamental cannons of law of limitation and the salutary purpose of the Act, 2015 of ensuring timely disposals. Conclusion - The High Court did not err in rejecting the condonation of delay application. The limitation period for filing the appeal commenced from the date of pronouncement of the judgment, irrespective of whether the certified copy was provided or not. The petitioners failure to apply for the certified copy within the limitation period and their inaction for over 300 days constituted negligence. Petition dismissed.

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• 2025 (4) TMI 1527
  Demolition of the appellants residential structures by the Prayagraj Development Authority (PDA) under Section 27 of the Uttar Pradesh Urban Planning and Development Act, 1973 - HELD THAT:- As noted by this Court in the order issuing notice, against an order of demolition made under sub-section (1) of Section 27 of the 1973 Act, an appeal has been provided under sub-section (2) of Section 27. The demolition order passed on 8th January, 2021, was not served upon the appellants. It was allegedly served by affixing only. What was served was a subsequent communication dated 1st March, 2021. Within 24 hours of the service of the said communication, an action of demolition was taken on a Sunday. This deprived the appellants of their opportunity to avail of the remedy of appeal under sub-Section (2) of Section 27 of the 1973 Act. Therefore, the demolition action is completely illegal, which violates the appellants right to shelter guaranteed by Article 21 of the Constitution of India. The action is completely arbitrary. Moreover, carrying out demolition of residential structures in such a highhanded manner shows insensitivity on the part of the statutory development authority. This is one more case of bulldozer justice. The officers of the PDA have forgotten that the rule of law prevails in our country. Unfortunately, the State Government has supported the PDA. Today, the learned senior counsel and the learned counsel appearing for the appellants, on instructions, stated that the appellants are not in a position to reconstruct the structures. In view of this statement, there is now there is no occasion to direct the planning authority to follow the due process of law in these cases. However, considering the inhuman and illegal action of demolition carried out, the planning authority must be saddled with costs. The costs of Rs. 10,00,000/- quantified in each case. Conclusion - The demolition carried out by PDA was illegal, arbitrary, and violative of constitutional rights. Appeal allowed.

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• 2025 (4) TMI 1526
  Seeking quashing/setting aside of order of cognizance as well as summoning order - Criminal conspiracy - Whether a public servant against whom sanction for prosecution under the Prevention of Corruption Act, 1988 has been expressly declined by the competent authority, where the denial of sanction has not even been challenged by the prosecuting agency and who is not charged with any independent or substantive offence under the Indian Penal Code can nonetheless be prosecuted solely for criminal conspiracy u/s 120-B IPC, when the sole object of that conspiracy is the commission of an offence under the PC Act? HELD THAT:- In the present case, the foundation of the alleged conspiracy rests entirely on an offence under the PC Act. With sanction expressly refused by the competent authority, to which no challenge has been made by the prosecuting agency, any attempt to prosecute the petitioner for conspiracy alone when the object of that conspiracy is itself legally non-prosecutable amounts to a colourable exercise of power. It constitutes a clear attempt to achieve indirectly what the law prohibits directly, thereby undermining the statutory mandate and rendering the protection under Section 19 illusory. This Court has perused the material placed on record, including the transcripts of telephonic conversations. On a prima facie evaluation, there is no cogent or credible material to suggest any express or tacit agreement between the petitioner and the co-accused to demand or accept illegal gratification. In fact, the charge sheet itself, particularly paragraph 16.44 which stands extracted hereinunder, records that the petitioner declined the request made on behalf of the associate of the complainant and proceeded with lawful enforcement action. Such conduct negates, rather than supports, the inference of a conspiratorial understanding. Thus, the central question whether the petitioner, a public servant not charged with any substantive offence under the PC Act and against whom sanction has been expressly refused, can be prosecuted for conspiracy alone must be answered in the negative when admittedly no other distinct IPC offence has been alleged against the petitioner. The attempt to invoke Section 120-B IPC in such a scenario amounts to a colourable exercise of power intended to circumvent the statutory protection under Section 19 of the PC Act. It is a well-settled principle of law that what cannot be done directly cannot be done indirectly. Allowing the prosecution of a public servant under Section 120-B IPC for conspiracy to commit an offence under the PC Act, despite the denial of sanction, would effectively render the provision of Section 19 of the PC Act nugatory. Such an approach would circumvent the legislative safeguards designed to protect public servants by enabling a colorable prosecution under Section 120-B IPC, bypassing the procedural requirement of sanction. Conclusion - i) This Court is of the considered view that a public servant, in respect of whom sanction to prosecute has not been granted under Section 19 of the PC Act, and who is, therefore, not charged with any substantive offence under the said Act, cannot be proceeded against solely under Section 120-B of the IPC, when the alleged object of the conspiracy is the commission of offences under the PC Act. ii) The charge of conspiracy under Section 120-B of the IPC, in such circumstances, is legally unsustainable, as it amounts to an indirect prosecution for an offence which is otherwise barred by statute. Petition allowed.

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• 2025 (4) TMI 1525
  Constitution of the Selection Committee for appointment of the Vice-Chancellor of the Himachal Pradesh Krishi Vishwavidalaya (HPKV) - compliance with the mandatory provisions of Section 24 of the Himachal Pradesh University of Agriculture, Horticulture and Forestry Act, 1986 - HELD THAT:- The nomination can only be made by the Chancellor and the Chairman, University Grants Commission, whereas the Director General, ICAR, is mandatorily required to be one of the members of the Selection Committee, to be constituted by the Chancellor. The constitution of the Selection Committee is clearly in contravention and breach of the provisions as contained in Section 24 of the Act and the same, therefore, cannot be said to be a legal constituted Committee as it is the cardinal rule of interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. Once this Court concludes that the constitution/ composition of the Selection Committee is against the law i.e. Section 24 of the Act, any action taken by such committee in furtherance thereof, is obviously a nullity or nonest. Conclusion - The constitution of the Selection Committee is clearly in contravention and breach of the provisions as contained in Section 24 of the Act and the same, therefore, cannot be said to be a legally constituted Committee. Petition allowed.

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