1. ISSUES:

1. Whether the respondents are obligated to pass a final speaking order for the closure of the Capital Gain Deposit Scheme (CGDS) Account in compliance with the Court's earlier direction.

2. Whether withholding of the balance amount in the CGDS Account is arbitrary and contrary to law, particularly where the transaction resulted in a capital loss and no tax liability arises.

3. Whether the filing of revised income tax returns under Section 148 of the Income Tax Act is a prerequisite for the final closure of the CGDS Account.

2. RULINGS / HOLDINGS:

1. The Court held that the respondents must pass final orders for closure of the CGDS Account in compliance with the Court's earlier order directing disposal within a stipulated time frame.

2. The Court found that withholding the balance amount was justified as the petitioner had not fulfilled the conditions laid down in the Capital Gain Account Scheme, including the filing of revised income tax returns, and thus the partial release accorded was lawful.

3. The Court ruled that filing revised income tax returns for the relevant assessment year under Section 148 is a necessary condition before the respondents can issue final closure orders for the CGDS Account.

3. RATIONALE:

The Court applied the legal framework of the Capital Gain Account Scheme and the Income Tax Act, specifically the requirement under Section 148 for filing revised income tax returns when reassessment is initiated. The Court emphasized that the closure of the CGDS Account is contingent upon compliance with all statutory conditions, including tax assessment formalities. The judgment reflects no doctrinal shift but reaffirms the procedural necessity of tax compliance before release of funds under the CGDS. The Court directed expeditious disposal given the protracted pendency since 2019.

ISSUES:

Whether the 20% deduction under Section 32AB of the Income Tax Act, 1961 is to be computed on profits as reflected in the Profit & Loss Account finalized under Parts II and III of Schedule VI of the Companies Act, 1956, or on profits determined with reference to actual profits under the Income Tax Act.Whether additional sugarcane price paid after finalization of accounts under the Companies Act can be deducted from profits for computing the Section 32AB deduction in the relevant assessment year.Whether the Assessing Officer has jurisdiction to adjust profits computed under the Companies Act by excluding expenditures not debited in the Profit & Loss Account for the purpose of Section 32AB deduction.

RULINGS / HOLDINGS:

The Court held that the profits for the purpose of Section 32AB deduction must be computed "in accordance with the requirements of Parts II and III of Schedule VI to the Companies Act" and not as per the Income Tax Act. The deduction is to be calculated on profits "as reflected in the audited annual accounts."The additional sugarcane price paid after the finalization of accounts under the Companies Act cannot be deducted from profits for computing the Section 32AB benefit in the relevant assessment year, since it was not debited to the Profit & Loss Account prepared under Schedule VI of the Companies Act.The Assessing Officer erred in deducting the additional sugarcane price from the profits computed under the Companies Act for the purpose of Section 32AB, as the provision does not empower the Assessing Officer to re-compute profits beyond the audited accounts maintained under the Companies Act.

RATIONALE:

The Court applied the statutory framework of Section 32AB of the Income Tax Act, 1961, particularly sub-sections (1), (3), and (5), which mandate that the profits for deduction calculation be derived from profits computed in accordance with Parts II and III of Schedule VI to the Companies Act, 1956, adjusted by specified additions and deductions.The Court relied heavily on precedent, including the Karnataka High Court decision in Jindal Aluminium Ltd., which interpreted Section 32AB profits as those reflected in the audited accounts under the Companies Act, and the Supreme Court decision in Apollo Tyres Ltd., which held that the Assessing Officer cannot go behind the profits shown in the Profit and Loss Account maintained under the Companies Act for similar provisions.The Court noted consistent judicial interpretation from various High Courts that Section 32AB does not require profit computation in accordance with the Income Tax Act but strictly as per the Companies Act accounts, rejecting the Revenue's attempt to adjust profits by excluding expenses not debited in those accounts.The Court distinguished judgments cited by the Revenue (e.g., Tasgaon Taluka S.S.K. Ltd. and Parry Agro Industries Ltd.) as dealing with different legal issues not relevant to the interpretation of Section 32AB.The Court recognized the peculiar accounting situation where additional sugarcane price is determined after account finalization and accepted the Assessee's consistent practice of adjusting such expenses in subsequent years, resulting in no revenue loss and maintaining the integrity of the statutory scheme.

ISSUES:

Whether fees for Information Technology Services received from group entities constitute taxable income under Article 12(5) of the India-Netherlands Double Taxation Avoidance Agreement (DTAA) when the recipient does not "make available" technical knowledge, skills, or experience.Whether fees for Design Services received from an Indian entity are taxable under Article 12(5) of the India-Netherlands DTAA absent "making available" of technical knowledge, skills, or experience.Whether tax should be levied at a flat rate of 10% under Article 12 of the India-Netherlands DTAA, including surcharge and cess, or at a higher rate including additional surcharge and cess.Whether interest under section 234B of the Income-tax Act was rightly levied.Whether additional interest was correctly levied without assignment of provisions of the Income-tax Act.Whether refund adjustments were erroneously made by adding previously issued refunds to the demand.Whether initiation of penalty proceedings under sections 271A, 271B, and 270A of the Income-tax Act was justified.Whether fees for Support Services received from group entities in India are taxable under Article 12(5) of the India-Netherlands DTAA when no technical knowledge, skills, or experience are "made available."

RULINGS / HOLDINGS:

The taxation of fees for Information Technology Services was upheld as taxable income; the assessee failed to dislodge the findings of the Assessing Officer and Dispute Resolution Panel that the services rendered were taxable under the Act and DTAA.The taxation of fees for Design Services was upheld on similar grounds, with the court affirming that the services were taxable income under the applicable provisions.The levy of tax at rates including surcharge and cess beyond the flat 10% rate prescribed under Article 12 of the India-Netherlands DTAA was held erroneous; the Assessing Officer was directed to levy tax at the flat 10% rate excluding surcharge and cess.The levy of interest under section 234B was upheld as correct.The levy of additional interest without specifying provisions of the Income-tax Act was held to be erroneous.The adjustment of refund already issued by adding it to the demand was found to be erroneous as no such refund was granted to the assessee.The initiation of penalty proceedings under sections 271A, 271B, and 270A was upheld except where no under-reporting or misreporting of income was established, specifically under section 270A.The taxation of fees for Support Services was upheld as taxable income under the Act and DTAA, with the assessee failing to prove that technical knowledge, skills, or experience were not "made available."

RATIONALE:

The Court applied the provisions of the Income-tax Act, 1961, particularly sections 143(3), 144C(13), 234B, 271A, 271B, and 270A, alongside Article 12(5) of the India-Netherlands DTAA.The legal framework requires that for fees for technical services to be non-taxable under Article 12(5), the recipient must not "make available" technical knowledge, skills, or experience; the Court found no sufficient evidence to support non-taxability on this basis.The Court relied on precedent orders of the Tribunal in the assessee's prior years but distinguished the facts, holding that the current services rendered did not meet the non-taxability criteria.The Court recognized the binding nature of the DTAA provisions on tax rates, directing adherence to the flat 10% rate under Article 12, thus correcting the Assessing Officer's levy of surcharge and cess beyond that rate.The Court emphasized the necessity of assigning statutory provisions when levying additional interest, invalidating such levy when unsupported by law.The Court upheld the principle that penalty proceedings require factual and legal basis such as under-reporting or misreporting of income, which was absent in some instances leading to dismissal of penalty initiation under section 270A.

ISSUES:

Whether the assessment order passed under section 143(3) of the Income Tax Act, 1961, was in violation of the principles of natural justice due to non-consideration of the assessee's reply.Whether the addition made under section 14A of the Income Tax Act, 1961, read with Rule 8D of the Income Tax Rules, 1962, is justified in disallowing expenditure relating to exempt dividend income.Whether exempted dividend income was wrongly included in the total income computation by the Assessing Officer.

RULINGS / HOLDINGS:

The assessment order was not in violation of natural justice as the Assessing Officer issued a show cause notice, considered the assessee's reply, and applied section 14A read with Rule 8D; hence, the contention of denial of opportunity was dismissed.The addition of Rs. 14,32,268/- under section 14A read with Rule 8D was upheld because the assessee had substantial investments generating exempt income, and the Assessing Officer rightly determined the disallowance as "1% of the average value of investment" relating to exempt income, consistent with statutory provisions.The claim that exempted dividend income of Rs. 3,38,245/- was separately added to total income was rejected as the record did not show any such addition; thus, no relief was granted on this ground.

RATIONALE:

The Court applied the provisions of section 14A of the Income Tax Act, 1961, which empowers disallowance of expenditure incurred in relation to income exempt from tax, and Rule 8D of the Income Tax Rules, 1962, which prescribes the method for computing such disallowance.The Assessing Officer's approach of estimating disallowance as "1% of the average value of investments" was in strict compliance with Rule 8D, and the Tribunal found no error in this methodology.The principles of natural justice were held to be satisfied by issuance of show cause notice and consideration of the assessee's reply before passing the assessment order.No dissent or doctrinal shift was noted; the Tribunal affirmed the reasoned order of the Commissioner of Income Tax (Appeals) and found no merit in the appeal.

ISSUES:

Whether revisionary proceedings under section 263 of the Income Tax Act, 1961 can be initiated against an assessment order allowing deduction under section 80G of the Act in respect of Corporate Social Responsibility (CSR) expenses.Whether CSR expenditure, being statutorily mandated under the Companies Act, 2013, qualifies as a voluntary donation eligible for deduction under section 80G of the Income Tax Act, 1961.Whether the assessment order passed under section 143(3) read with section 144B of the Act is erroneous and prejudicial to the interest of the Revenue for allowing deduction under section 80G without adequate inquiry.The scope and applicability of Explanation 2 to section 37(1) of the Income Tax Act, 1961 in relation to CSR expenditure and its interplay with deductions under section 80G.

RULINGS / HOLDINGS:

The initiation of revisionary proceedings under section 263 of the Act on the issue of deduction claimed under section 80G for CSR expenses is erroneous as the issue is debatable in nature and outside the purview of revisionary powers; accordingly, the impugned order under section 263 is quashed.CSR expenditure, although statutorily mandated, can qualify as a donation under section 80G of the Act if made without any material return or quid pro quo; the voluntariness of the payment is not negated merely because it is mandated under the Companies Act, 2013.The assessment order passed under section 143(3) read with section 144B allowing deduction under section 80G without making specific inquiries on the issue is not per se erroneous or prejudicial to the interest of the Revenue when the claim is legally tenable and supported by material on record.Explanation 2 to section 37(1) disallows CSR expenditure as a business expense but does not preclude the claim of deduction under section 80G at the stage of computing total taxable income; denial of such deduction would amount to double disallowance, which is contrary to legislative intent.

RATIONALE:

The Court applied the statutory framework of the Income Tax Act, 1961, particularly sections 37(1), 80G, and 263, and the Companies Act, 2013, to examine the nature of CSR expenditure and its deductibility.Precedents from Coordinate Benches of the Tribunal were considered, including decisions holding that payments made without material return or quid pro quo constitute donations eligible under section 80G, notwithstanding their statutory mandate under the Companies Act.The Court relied on the principle that revisionary powers under section 263 are not to be exercised where the issue is debatable and the assessment order is not per se erroneous or prejudicial to the Revenue, as supported by the Bombay High Court's observations emphasizing judicial restraint in such matters.The distinction between deductions allowed under sections 30 to 36 (relating to business income) and section 80G (relating to total taxable income) was highlighted, clarifying that CSR expenditure disallowed under section 37(1) does not preclude deduction under section 80G, thereby avoiding double disallowance.The Court noted that the impugned order failed to consider the detailed submissions and relevant case law favoring the taxpayer's claim and that the issue warranted verification by the Assessing Officer rather than summary revision under section 263.

ISSUES:

Whether deduction under Section 54F of the Income Tax Act, 1961 is allowable when the assessee owns more than one residential house (including co-owned properties) on the date of acquisition of new residential property.Whether the sale proceeds of a gold bar can be treated as unexplained investment in the absence of satisfactory evidence of purchase, despite the assessee producing purchase bills and declaring capital gains.Whether additions made by the Assessing Officer during limited scrutiny can extend beyond the specific issues for which the case was selected.

RULINGS / HOLDINGS:

Deduction under Section 54F of the Act was rightly disallowed as the assessee was owner of three residential houses on the date of acquisition of the new property, and the provision requires that the assessee should not own more than one residential house other than the new asset; ownership as co-owner or rental status is immaterial.The addition of Rs. 27,77,700/- on account of unexplained investment relating to the sale proceeds of the gold bar is deleted because the assessee produced purchase evidence and declared capital gains; however, the capital gain arising from the sale of the gold bar must be taxed under the Act.The additions relating to long-term capital gains connected with the purchase of property fall within the scope of limited scrutiny, as purchase of property was one of the selected issues; therefore, the Assessing Officer was justified in making such additions.

RATIONALE:

The Court applied the statutory provisions of Section 54F of the Income Tax Act, 1961, emphasizing the Proviso which disallows deduction if the assessee owns more than one residential house other than the new asset on the date of transfer; the Court rejected the argument that co-ownership or rental status affects eligibility.Regarding unexplained investment, the Court considered the evidence submitted by the assessee, including purchase bills and bank receipts of sale proceeds, and found that rejection of such evidence solely because the jewellers did not respond to notices under Section 133(6) of the Act was not justified; however, the capital gain on sale remains taxable, consistent with the Act's provisions.The Court noted that the issue of purchase of property was explicitly selected for limited scrutiny, and the additions made were directly connected to this issue, thus no expansion of the scope of scrutiny occurred; this aligns with the procedural framework governing limited scrutiny assessments.

ISSUES:

Whether interest under Section 18(3) of the Customs Act, 1962 is payable on provisional assessments finalized prior to 13.07.2006.Whether interest under Section 28AB of the Customs Act, 1962 can be demanded for the period prior to 13.07.2006 when it was not invoked in the show-cause notice.Whether interest under Section 18(3) of the Customs Act, 1962 is payable when differential duty has been deposited prior to finalization of provisional assessment.Whether penalty under Section 117 of the Customs Act, 1962 is sustainable when no interest is payable.Whether the omission to mention specific charging provisions in the show-cause notice vitiates the adjudication proceedings.

RULINGS / HOLDINGS:

The provisions of Section 18(3) of the Customs Act, 1962, introduced on 13.07.2006, are substantive and not clarificatory, and therefore, "cannot be applied retrospectively" to provisional assessments finalized before that date; hence, no interest is payable for the period prior to 13.07.2006 under Section 18(3).Demand of interest under Section 28AB for the period prior to 13.07.2006 is not sustainable as it was not proposed in the show-cause notice; reliance on such provision beyond the scope of the notice amounts to transgression and is bad in law.No interest is payable under Section 18(3) where the differential duty has been deposited prior to finalization of provisional assessment; since the duty was paid before finalization, interest demand is not sustainable.Since no interest is payable, imposition of penalty under Section 117 of the Customs Act, 1962 is not sustainable.Omission to specify exact charging provisions in the show-cause notice does not vitiate the proceedings if the party was put on clear notice of the nature of the charge and had opportunity to defend; wrong or non-quoting of specific sections does not invalidate adjudication.

RATIONALE:

The Court applied the statutory framework of the Customs Act, 1962, specifically the amendment introducing Section 18(3) on 13.07.2006, and held that substantive provisions imposing new liabilities cannot be given retrospective effect based on established principles of statutory interpretation and precedent.Judicial precedents from various High Courts and the Tribunal were relied upon, including the principle that procedural provisions may apply to pending proceedings but substantive liabilities cannot be imposed retrospectively (e.g., decisions in M/s Century Pulp & Paper, Cisco Systems Pvt. Ltd., Sterlite Industries India Ltd., and Jaswal Neco Ltd.).The Court distinguished between the cause of action arising at importation and the liability arising upon payment of duty, emphasizing the causality ("consequent to finalization") rather than mere chronology, thereby supporting the non-applicability of interest when duty was paid prior to finalization.The Court noted the pari materia nature of Section 18(3) of the Customs Act and Rule 7(4) of the Central Excise Rules, 2002, and relied on authoritative decisions (e.g., CEAT Ltd. v. Commissioner) holding that interest liability arises only on amounts payable consequent to final assessment and not where duty is paid before finalization.The Court affirmed the settled legal position that interest demands must be grounded in the show-cause notice and that invoking provisions not mentioned therein violates principles of natural justice and statutory scheme (as held in Ballarpur Industries Ltd.).The Court rejected arguments conflating interest with tax liability, clarifying that interest is a distinct charge and can only be levied as per statutory provisions.

ISSUES:

Whether the imported goods were mis-declared in terms of quantity and classification under the Customs Tariff Heading (CTH).Whether the classification of the imported balloons should be under CTH 9503 0020 (toys) or CTH 9505 9090 (festive, carnival or other entertainment articles).Whether the valuation determined by the Revenue for the imported goods was correct and in accordance with the Customs Valuation Rules.Whether confiscation, penalty, and fine under relevant sections of the Customs Act, 1962 are warranted based on alleged mis-declaration and undervaluation.Whether the Revenue's appeal against the order allowing the appeal by the Commissioner (Appeals) is maintainable.

RULINGS / HOLDINGS:

On quantity and classification, the Court held that there was no proved mis-declaration of quantity; the quantity found was consistent with the declared quantity except minor discrepancies which were not substantiated as mis-declaration.The Court held that the imported balloons are correctly classifiable under CTH 9505 9090 as "festive, carnival or other entertainment articles" and not under CTH 9503 0020 as "toys." It emphasized that the balloons are "single use items" made of "non-durable material" intended for the Holi festival and thus fall under the specific description of heading 9505 9090, applying Rule 3(a) of the General Rules of Interpretation.Regarding valuation, the Court found that the Revenue failed to provide valid reasons to reject the declared transaction value under Rule 12 of the Customs Valuation Rules and did not follow the sequential procedure mandated by the Rules. The market enquiry was flawed, lacking participation of the importer's representative and proper identification of comparable goods. The valuation arrived at by the Revenue was therefore held to be incorrect.The Court held that "confiscation under Sections 111 (l) & (m); imposition of fine under Section 125; imposition of Penalties under Sections 112(a)(i), 112(a)(ii), 114A" are not warranted as mis-declaration and undervaluation were not established.The Revenue's appeal was dismissed for lack of merit, affirming the order of the Commissioner (Appeals).

RATIONALE:

The Court applied the Customs Tariff Act headings and HSN explanatory notes, particularly focusing on the distinction between "toys" under heading 9503 and "festive, carnival or other entertainment articles" under heading 9505. It relied on the principle under Rule 3(a) of the General Rules of Interpretation that "specific description has to be preferred to heading providing a more general description."The Court noted that the HSN explanatory notes for heading 9503 include "toy balloons," which are durable and intended for amusement, whereas the impugned goods are "fragile," "non-durable," and intended for single use during the Holi festival, thus fitting the description under heading 9505.In valuation, the Court emphasized adherence to the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, including the requirement to consider the lowest transaction value of identical or similar goods and to allow deductions for post-importation charges. The Revenue's failure to follow these rules and principles of natural justice was critical to the Court's decision.The Court referred to established jurisprudence on customs classification and valuation, rejecting the Revenue's attempt to reclassify and revalue without proper basis or procedure.No dissenting or concurring opinions were recorded.

ISSUES:

Whether penalty under section 112 of the Customs Act, 1962 can be imposed for diversion of export bound gold jewellery to the domestic market when the second proviso to Notification No. 57/2000-Cus dated 08.05.2000 had been omitted.Whether statements recorded under section 108 of the Customs Act, 1962 can be relied upon for imposing penalty under section 112 without compliance with the procedure under section 138B of the Customs Act.Whether penalty under section 114AA of the Customs Act, 1962 can be imposed for knowingly or intentionally making false or incorrect declarations when the appellant neither signed nor caused to be signed any relevant documents.

RULINGS / HOLDINGS:

Penalty under section 112 of the Customs Act cannot be imposed based on the failure to fulfill conditions of the Notification as the second proviso requiring execution of a bond was omitted by Notification No. 33/2015-Cus dated 15.05.2015, and thus the condition was not in existence.Statements recorded under section 108 of the Customs Act are not relevant or admissible for imposing penalty under section 112 unless the procedure under section 138B is followed, which requires examination of the declarant as a witness before the adjudicating authority and forming an opinion to admit the statement in evidence, followed by an opportunity for cross-examination.Penalty under section 114AA cannot be imposed in absence of evidence that the appellant knowingly or intentionally made, signed or caused to be signed any false or incorrect declaration or document; mere involvement without documentation or signing is insufficient.

RATIONALE:

The legal framework involves Notification No. 57/2000-Cus and its amendment by Notification No. 33/2015-Cus, which omitted the second proviso imposing bond execution requirements, thereby removing the condition that the appellant allegedly violated.The Court applied statutory provisions of the Customs Act, specifically sections 112, 114AA, 108, and 138B, along with judicial precedents interpreting the mandatory procedural safeguards under section 138B for admitting statements recorded during inquiry or investigation.Reliance on statements under section 108 without compliance with section 138B was held impermissible, referencing Tribunal decisions emphasizing the mandatory nature of examination and cross-examination before admitting such statements as evidence.The Court rejected imposition of penalty under section 114AA in absence of direct involvement in documentation or false declarations by the appellant, underscoring the requirement of "knowingly or intentionally" making false statements for penalty applicability.

ISSUES:

Whether the Committee of Creditors (CoC) has the authority to decide on the retention or relinquishment of possession of property by the corporate debtor during Corporate Insolvency Resolution Process (CIRP).Whether Section 14(1)(d) of the Insolvency and Bankruptcy Code (IBC) prohibits recovery of possession of property by an owner or lessor when such property is occupied by the corporate debtor during the moratorium.Whether the decision of the National Company Law Appellate Tribunal (NCLAT) to remand the matter for fresh adjudication was justified in light of the facts and statutory provisions.The extent to which the commercial wisdom of the CoC is to be respected and given primacy during CIRP.

RULINGS / HOLDINGS:

The CoC, as the collective decision-making body under the IBC, has the authority to decide not to retain possession of property by the corporate debtor, and such commercial wisdom must be given primacy during CIRP.Section 14(1)(d) of the IBC prohibits recovery of property by an owner or lessor during moratorium only where the property is occupied by or in possession of the corporate debtor; it does not bar the return of possession to appellants when the CoC and Resolution Professional decide the property is not required.The NCLAT's order remanding the matter for fresh adjudication was unwarranted because the decision to return possession was supported by the CoC and the Resolution Professional, and the opposition by the suspended director lacked merit.The order of the National Company Law Tribunal (NCLT) directing delivery of possession to the appellants is restored, and the Resolution Professional is directed to implement it expeditiously.

RATIONALE:

The Court applied the statutory framework of the Insolvency and Bankruptcy Code, 2016, particularly Sections 7, 14(1)(d), and 62, alongside established precedent emphasizing the non-justiciability of the commercial wisdom of the CoC as enshrined in K. Sashidhar v. Indian Overseas Bank.The Court recognized the primacy of the CoC's commercial decisions during CIRP, noting that the legislature intended to speed up debt recovery by limiting judicial interference in CoC decisions.The Court distinguished between recovery of possession by an owner barred under Section 14(1)(d) and the consensual relinquishment of possession by the corporate debtor on the CoC's direction, clarifying that the latter does not violate the moratorium.The Court rejected the remand by NCLAT as unnecessary given the consensus among the CoC, Resolution Professional, and other stakeholders, except the suspended director, who was not willing to bear the financial burden of retention.

ISSUES:

Whether a delay of 172 days in refiling a company appeal can be condoned based on the reasons provided by the applicant.Whether logistical difficulties arising from the geographical locations of the client, adjudicating authority, and appellate authority constitute sufficient grounds for condonation of delay.Whether financial hardship of the client can be considered a valid and sufficient reason to condone delay in filing an appeal.Whether registry objections and defects pointed out in interim applications justify a prolonged delay in refiling beyond the prescribed timeline.

RULINGS / HOLDINGS:

The court held that the applicant failed to offer "bonafide reasons which serve to amply justify the request for condoning the refiling delay" of 172 days.The registry's pointing out of defects, requiring cure within 7 days as per NCLAT Rules, does not justify a delay of 172 days; mere existence of multiple defects cannot constitute valid grounds for condonation of delay.Logistical difficulties due to geographical distance between client, adjudicating authority, and appellate authority were found to be "mindless and grotesque grounds" lacking substance and not warranting leniency.Financial hardship was not supported by sufficient details or evidence explaining how it impeded timely filing, rendering the explanation "bald, facile and one lacking substance."The delay was attributed to "disinterest, callousness and negligence" rather than circumstances beyond the applicant's control, and therefore was not condoned.Consequently, the application for condonation of delay was rejected, and the appeal along with all interim applications stood dismissed.

RATIONALE:

The court applied the procedural framework under the NCLAT Rules requiring defects in appeal filings to be cured within 7 days, emphasizing the importance of timely compliance to ensure efficient resolution of insolvency matters.The judgment underscored the purpose of the Insolvency and Bankruptcy Code to provide a "framework for timely resolution of insolvency and bankruptcy cases in a fair and transparent manner," thereby discouraging undue delays.The court rejected unsubstantiated explanations and emphasized that only unavoidable circumstances beyond the control of the litigant can justify condonation of delay.No doctrinal shift or dissent was recorded; the ruling reaffirmed strict adherence to timelines and procedural discipline in insolvency appeals.

ISSUES:

Whether input services utilized in the construction of a factory qualify for CENVAT credit under the definition of "input service" as per Rule 2(l) of the CENVAT Credit Rules, 2004.Whether the amendment to the definition of "input service" effective from 01.04.2011 excluding construction services applies retrospectively to deny credit for services used in factory construction prior to that date.Whether penalties can be imposed for the availment of CENVAT credit on such input services when the issue involves interpretation of legal provisions.

RULINGS / HOLDINGS:

The Court held that the definition of "input service" under Rule 2(l) of the CENVAT Credit Rules, 2004 "squarely covers the activity" of utilizing input services in the construction of a factory, as these services are used "directly and in any event indirectly in or in relation to the manufacture of the final product." The activity falls within both the "means part" and the "inclusive part" of the definition.The amendment to Rule 2(l) introduced in 2011, which excludes construction services from the definition of input service, is not retrospective and therefore does not apply to services utilized before 01.04.2011. Consequently, CENVAT credit is admissible only up to 31.03.2011 and not thereafter.Since the issue pertains to interpretation of provisions of law, no case for imposition of penalties was made out, and all penalties imposed were set aside.

RATIONALE:

The Court relied on the statutory definition of "input service" under Rule 2(l) of the CENVAT Credit Rules, 2004, which includes services "used for setting up of a factory and the premises of the provider of the output service," interpreting the language as inclusive and illustrative rather than exhaustive.Precedent from the Hon'ble Punjab & Haryana High Court and various Tribunals was applied, confirming that factory construction services qualify as input services prior to the 2011 amendment.The 2011 amendment to Rule 2(l), excluding construction services from input services, was recognized as prospective only, thus preserving the availability of credit for periods before its commencement.The Court emphasized the principle that amendments are not presumed retrospective unless expressly stated, and that the legislative intent was to clarify and limit credit going forward, not to disrupt settled claims.The decision reflects a doctrinal adherence to the plain language of the statute and established jurisprudence, with no noted dissent or doctrinal shift.

ISSUES:

Whether the Tribunal was justified in law in holding that Section 15A of the Bombay Sales Tax Act, 1959, is not a charging provision but merely declares the rate of tax.Whether there exists an express and independent contract for the sale of packing material (HDPE bags) separate from the sale of the cement itself.

RULINGS / HOLDINGS:

On the issue of the independent sale of packing material, the Court upheld the Tribunal's finding that there was an express and independent contract for the sale of HDPE bags separate from the cement, based on detailed factual findings and application of the Supreme Court's ruling in Raj Sheel. The Court found that the Tribunal's conclusion was "not vitiated by any perversity or even lack of sufficient material" and that the packing material was sold "separately and independently of the packed product."Regarding the interpretation of Section 15A of the Bombay Sales Tax Act, 1959, the Court held that since the second question was answered in favor of the Assessee, "there is no question of levying any sales tax at the same rate as that levied on cement," rendering the first question academic and unnecessary to decide in this case.

RATIONALE:

The Court applied the legal framework established by the Hon'ble Supreme Court in Raj Sheel, which recognizes three possible characterizations of sales involving goods and their packing materials: separate sales of product and container, integrated components of a single sale, or sale of product with transfer of container without separate consideration. The factual inquiry into the nature of the transaction is paramount.The Court emphasized that the burden lies on the Revenue to prove that a turnover is liable to tax and that the question of whether packing material was sold is a "pure question of fact," not to be decided on "fiction or surmises."The Tribunal's detailed factual findings included separate pricing, separate sale bills, variation in packing material prices independent of cement prices, separate accounting and profit margins for packing materials, and customer knowledge of separate consideration, all supporting the conclusion of an independent sale.On Section 15A, the Court noted that its title is "never conclusive" and that similar provisions in other States often contain a non-obstante clause, which Section 15A lacks. The Court referred to the Supreme Court's interpretation of a similar provision (Section 6-C of the Andhra Pradesh General Sales Tax Act) in Raj Sheel, which treats such provisions as clarificatory legal fictions applying the tax rate of goods to packing materials only when there is no independent sale of packing materials.The Court declined to rule on the constitutional or substantive nature of Section 15A as a charging provision because the factual finding of an independent sale obviated the need to apply Section 15A's deemed sale provision.

ISSUES:

Whether penalty under section 112(a)(ii) of the Customs Act can be imposed on a customs broker for acts or omissions rendering imported goods liable to confiscation under section 111.Whether penalty under section 114AA of the Customs Act can be imposed on a customs broker for knowingly or intentionally making, signing, or using false or incorrect declarations or documents.Whether a customs broker can be held liable for misclassification or misdeclaration of imported goods when Bills of Entry are filed based on import documents provided by the importer.Whether the customs broker's failure to verify classification in import documents, including certificates of origin and product catalogues, amounts to "active and willful involvement" in misdeclaration.Whether the customs broker's liability is affected by the existence of prior correct classification of identical consignments by another customs broker.

RULINGS / HOLDINGS:

Penalty under section 112(a)(ii) cannot be sustained against the customs broker where the Bills of Entry described the goods as "Water Flow Meters" consistent with import documents, and there was no evidence that the broker was aware of or deliberately ignored prior correct classifications; the broker "cannot be held responsible for any alleged mis-declaration."Penalty under section 114AA cannot be imposed on the customs broker in the absence of evidence that the broker "knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document, which is false or incorrect in any material particular."The customs broker's obligation to scrutinize import documents does not extend to questioning or verifying classification when the documents provided by the importer describe the goods, and the broker was not shown to have acted in "active and willful involvement" in misdeclaration.The existence of prior correct classification by another customs broker does not automatically impose liability on the present broker without proof of knowledge or willful omission.Penalties under sections 112(a)(ii) and 114AA of the Customs Act imposed on the customs broker are set aside.

RATIONALE:

The Court applied the statutory provisions of the Customs Act, 1962, specifically sections 111 (confiscation), 112(a)(ii) (penalty for acts or omissions rendering goods liable to confiscation), and 114AA (penalty for knowingly or intentionally making false or incorrect declarations).The Court emphasized that section 112(a)(ii) penalty requires an act or omission by the person that renders goods liable to confiscation or abets such act, and section 114AA requires knowledge or intention in making false declarations.The Court rejected the department's contention of "active and willful involvement" by the customs broker due to lack of evidence that the broker was aware of or deliberately suppressed material facts.The Court noted the absence of any mandatory obligation on the customs broker to verify classification beyond the import documents provided by the importer, especially when the description of goods was consistent.No doctrinal shift or dissenting opinion was expressed; the decision reaffirmed established principles regarding the scope of customs broker liability under the Customs Act.

ISSUES:

Whether penalty under Section 112(b) of the Customs Act, 1962 can be imposed on a person who is neither owner nor claimant of seized smuggled goods but found in possession thereof.Whether a statement recorded under Section 108 of the Customs Act, 1962, if retracted, can form the basis for penalty or conviction without corroborative evidence.Whether denial of opportunity for cross-examination under Section 138B of the Customs Act, 1962 violates principles of natural justice in penalty proceedings.Whether the burden of proving lawful importation under Section 123 of the Customs Act, 1962 lies on the person found in possession of the seized goods.Whether the quantum of penalty imposed under Section 112(b) of the Customs Act, 1962 is justified given the facts and circumstances of the case.

RULINGS / HOLDINGS:

Penalty under Section 112(b) is sustainable against a person found in possession of smuggled goods who fails to prove lawful importation as required under Section 123 of the Customs Act, 1962; ownership or claimant status is not a prerequisite for imposition of penalty.A statement recorded under Section 108, even if retracted, is admissible and can form the sole basis for penalty or conviction if it is voluntary and truthful; corroboration by other evidence is desirable but not mandatory for each detail.Denial of cross-examination under Section 138B without justification violates principles of natural justice; penalty imposed without such compliance is unsustainable and requires remand for de-novo consideration.The burden to prove lawful importation of seized goods lies on the person in possession, and failure to discharge this burden justifies confiscation and penalty under relevant provisions.The quantum of penalty imposed (Rs. 10,00,000/-) is justified considering the value of smuggled goods (over Rs. 3 crore), the appellant's admitted involvement in repeated offences, and the nature of the contravention.

RATIONALE:

The Court applied statutory provisions of the Customs Act, 1962, particularly Sections 108, 111(b), 111(d), 112(b), 119, 123, 135, and 138B, alongside established Supreme Court precedents on admissibility and evidentiary value of confessional statements under Section 108.Precedents such as K I Pavunny and related Supreme Court rulings were relied upon to affirm that voluntary confessional statements under Section 108 form substantive evidence and may be used as sole basis for penalty or conviction if found truthful.The Court emphasized that the burden of proof for lawful importation under Section 123 rests on the possessor of the seized goods, and absence of such proof leads to presumption of smuggling and confiscation.The Court recognized the necessity of compliance with Section 138B for cross-examination to uphold natural justice, setting aside penalty where such procedure was not followed and remanding for fresh adjudication.The decision reaffirmed the principle that in smuggling cases, evidence must be evaluated on the basis of probability and circumstantial evidence due to the secretive nature of the offence, and that the prosecution need not prove every link with mathematical precision.

1. Whether the show cause notices (SCNs) were valid and specific in alleging service tax liability under the correct service categories, including Commercial or Industrial Construction Service (CICS), Construction of Complex Service (CCS), and Works Contract Service (WCS).

2. Whether the value of free of cost materials supplied by the service recipient should be included in the taxable value of services.

3. Classification of composite contracts executed by the appellant prior to and after 1st June 2007 under the appropriate taxable service category for service tax purposes.

4. Whether the extended period of limitation for service tax demand is invokable in absence of willful suppression or intent to evade tax.

1. The SCNs were held to be vague and non-specific as they did not segregate the quantum of service tax liability under each service category (CICS, CCS, WCS), thus failing to provide the appellant proper opportunity to meet the allegations; such SCNs are liable to be rejected.

2. Following the Apex Court ruling in Bhayana Builders and CBIC circulars, the value of free of cost materials supplied by the service recipient cannot be included in the taxable value of services; hence, tax demand on such value is unsustainable.

3. The appellant's composite contracts prior to 1st June 2007 cannot be classified as taxable under Commercial or Industrial Construction Service; post 1st June 2007, such composite contracts are liable to be classified under Works Contract Service only, and demand under any other category cannot be sustained.

4. Extended period of limitation cannot be invoked absent willful suppression or intent to evade tax; mere failure to correctly declare or assess service tax does not amount to willful suppression.

The Court applied the statutory framework under the Finance Act, 1994, particularly definitions under Section 65(105) for taxable services and valuation provisions under Section 67. It relied on precedent from the Apex Court including the landmark Larsen & Toubro Ltd. judgment clarifying classification of composite contracts and the Bhayana Builders ruling on valuation of free materials.

The Court emphasized that the show cause notice is foundational and must specify allegations clearly to afford a fair opportunity, citing the Apex Court decision in Brindavan Beverages Pvt. Ltd.

Regarding valuation, the Court referred to CBIC circulars and prior CESTAT decisions that exclude free materials from taxable value, consistent with principles under Section 12(2)(b) of the CGST Act.

The Court noted the absence of any attempt by the department to segregate non-service elements from composite contracts, reinforcing the correct classification under WCS post 1.6.2007.

On limitation, the Court applied settled legal principles that extended period applies only where there is willful suppression or evasion, referencing authoritative Supreme Court decisions in Cosmic Dye Chemical and Anand Nishikawa Co. Ltd.

ISSUES:

Whether Cenvat Credit is admissible on Sugar Cess and the Education Cess and Secondary and Higher Education Cess levied thereon under the Sugar Cess Act, 1982 and related provisions'Whether wrongly availed Cenvat Credit on Sugar Cess can be recovered along with interest under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A and Section 11AA of the Central Excise Act, 1944'Whether penalty under Rule 15(1) of Cenvat Credit Rules, 2004 read with Section 11AC(1)(a) of the Central Excise Act, 1944 is imposable for wrongful availment of Cenvat Credit on Sugar Cess?

RULINGS / HOLDINGS:

The Cenvat Credit on Sugar Cess is admissible as Sugar Cess is characterized as a "duty of excise" under Section 3 of the Sugar Cess Act, 1982, which is levied and collected as a duty of excise under the Central Excise Act, 1944; therefore, the appellant is entitled to Cenvat Credit on Sugar Cess and the Education Cess and Secondary and Higher Education Cess thereon as per Rule 3 of Cenvat Credit Rules, 2004.The recovery of Cenvat Credit and interest under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A and Section 11AA of the Central Excise Act, 1944 is not sustainable where the credit was correctly availed in accordance with the law recognizing Sugar Cess as duty of excise.Penalty under Rule 15(1) of Cenvat Credit Rules, 2004 read with Section 11AC(1)(a) of the Central Excise Act, 1944 cannot be imposed absent any "fraud/collusion/willful mis-statement/suppression of facts/contravention of any of the provisions of this Act, Rules made there under with intent to evade payment of duty"; mere irregularity or erroneous availment without such intent does not attract penalty.

RATIONALE:

The Court applied the legal framework established under the Sugar Cess Act, 1982 and the Central Excise Act, 1944, interpreting Section 3 of the Sugar Cess Act as levying a duty of excise, which is integrated with the Central Excise Act and its rules, including the Cenvat Credit Rules, 2004.The Court relied extensively on the binding precedent set by the Hon'ble Karnataka High Court in Shree Renuka Sugars Limited (2014), which held that Sugar Cess is a duty of excise and that Cenvat Credit Rules apply accordingly; this was reinforced by the Division Bench of the Tribunal in the appellant's own case.The Court distinguished the nature of Education Cess and Secondary and Higher Education Cess, referencing the Supreme Court judgment in Unicorn Industries vs. Union of India, clarifying that Education Cess is not a duty of excise, but the Sugar Cess itself is a duty of excise, thus credit on the latter is admissible.The Court noted that penalty provisions under Section 11AC(1)(a) require an element of intent to evade duty, which was absent in the instant case, supported by Circular No. 883/3/2009-CX clarifying non-levy of Cess on sugar manufactured from raw sugar on which Cess was already paid.The Court rejected the Revenue's contention that Sugar Cess is not covered under Rule 3 of Cenvat Credit Rules, 2004, emphasizing the statutory integration of the Sugar Cess Act with Central Excise Act provisions and the consequential entitlement to credit.The Court recognized that payment of Sugar Cess through Cenvat Credit is a valid mode of discharge of liability, consistent with the self-contained scheme of Cenvat Credit Rules and Supreme Court precedent in Jayaswal Neco Limited.

The Supreme Court of India, through an order by Justices Pankaj Mithal and Prasanna B. Varale, addressed two primary contentions regarding the Central Goods and Services Tax Act, 2017 ("the Act"). The petitioner argued that Section 122(1) of the Act is inapplicable as he is a non-taxable person, and that Section 122(1A), effective from 01.01.2021, cannot be applied retrospectively to Assessment Years 2017-2020. The Court granted leave and stayed recovery of the amount subject to the petitioner depositing 25% of the demand with the GST Department via Electronic or Cash Ledger.

The Allahabad High Court, through Hon'ble Mrs. Sangeeta Chandra and Hon'ble Brij Raj Singh JJ., addressed a writ petition seeking quashing of the GST registration cancellation order dated 09.07.2025 and restoration of the petitioner's GST registration (GSTIN No. 09AMEPV7468D2ZI). A preliminary objection on maintainability was raised, citing the availability of a statutory appeal under Section 107 of the C.G.S.T. Act or Rule 23 of the C.G.S.T. Rules. The Court noted that earlier proceedings under Rule 29(2)(e) were dropped, but new proceedings under Rule 21(b) & 21(e) were initiated. Emphasizing the statutory appeal remedy, the Court held that the writ petition was not maintainable and directed the petitioner to file an appeal within one week. The Court further directed that if the appeal is filed timely, it "shall be considered and disposed of as expeditiously as possible say within a period of three months," subject to the petitioner's cooperation.

ISSUES:

Whether penalty under section 129(3) of the GST Act can be imposed solely on the ground of non-filling of Part B of the e-way bill.Whether the absence of intention to evade payment of tax affects the imposition of penalty under section 129(3) of the GST Act.Whether a technical glitch causing non-filling of Part B of the e-way bill absolves the petitioner from penalty liability under section 129(3) of the GST Act.Whether the authorities are required to record a finding of intention to evade tax before imposing penalty under section 129(3) of the GST Act.

RULINGS / HOLDINGS:

The Court held that "non-filling of e-way bill will not attract penalty under section 129(3) of the GST Act" in the absence of any intention to evade payment of tax.The Court found that the petitioner's failure to fill Part B of the e-way bill was due to a "technical glitch" and that there was "no intention to evade payment of tax," which is a necessary element for imposing penalty under section 129(3) of the GST Act.The Court noted that "none of the authorities below has recorded any finding with regard to intention to evade payment of tax," and therefore the penalty orders could not be sustained.The impugned orders imposing penalty under section 129(3) of the GST Act were quashed as legally unsustainable.

RATIONALE:

The Court applied the legal framework under section 129(3) of the GST Act, which contemplates penalty for unauthorized movement of goods without proper documentation, but requires a finding of intention to evade tax.The Court relied on precedents from the Division Bench and Single Judge Bench of the same High Court, including rulings that non-filling of e-way bill alone, without evasion intent, does not attract penalty under section 129(3).The Court emphasized that "intention to evade payment of tax" is a critical factor for penalty imposition and mere technical errors do not suffice.This judgment aligns with the established judicial interpretation reaffirming that procedural lapses due to technical glitches cannot be equated with tax evasion under GST law.