Tribunals and Commissions judgments

CESTAT rules that importers who unconditionally accept and pay enhanced customs valuation without protest waive their right to challenge it later. The tribunal distinguished the Delhi HC's Niraj Silk Mills precedent, emphasizing procedural fairness in valuation disputes under the Customs Act.

CESTAT rules that supplies to SEZ units under Section 26(1)(e) of the SEZ Act are exempt from customs duty, and any penalty imposed without proper notice or evidence violates principles of natural justice. The tribunal set aside a ₹72 lakh demand, reinforcing that procedural fairness is non-negotiable in duty exemption cases affecting traders and SEZ operators.

CAT Allahabad reaffirms that under R.B.E. No. 87/2007, a widow holds statutory priority for compassionate appointment over other dependents, even where procedural notice was disputed. The ruling underscores that statutory hierarchy prevails over procedural irregularities, ensuring immediate relief for families of deceased railway employees.

NCLAT rules that a contractual obligation to pay minimum guaranteed royalty qualifies as operational debt under IBC Section 9, even in the absence of invoices, if the default is admitted and exceeds ₹1 lakh. This expands the scope of operational debt to include uninvoiced but contractually mandated payments, impacting creditors' rights in insolvency proceedings.

CAT Srinagar rules that guest faculty engaged through formal selection processes cannot be replaced by similar contractual arrangements and must continue in service until regular appointments are made. The ruling reinforces the principle of legitimate expectation and service continuity for adhoc employees in public employment.

CESTAT Kolkata rules that confiscation of goods under the Customs Act requires concrete evidence of IPR violation, not mere suspicion. The tribunal set aside arbitrary confiscation orders and reduced penalties, reinforcing that due process and reasoned adjudication are mandatory for enforcement actions under the IPR Enforcement Rules.

The ITAT Ahmedabad has ruled that companies claiming weighted deduction under Section 35(2AB) may compute the deduction on gross scientific research expenditure, without reducing it by income earned from contract research. This clarifies a long-standing ambiguity and benefits pharmaceutical and tech firms that outsource R&D, ensuring they receive full incentive for domestic innovation spending.

ITAT Ahmedabad has ruled that reassessment proceedings under Section 148A are void if the Assessing Officer relies on borrowed satisfaction rather than forming an independent opinion after issuing mandatory notice. This sets a vital precedent for taxpayers: procedural compliance is non-negotiable, and mechanical reopening without reasoned application of mind violates natural justice and renders assessments legally unsustainable.

CESTAT Kolkata rules that the transfer of a manufacturing unit to a sister concern for captive consumption does not result in revenue loss if excise duty is paid on the final output. The Tribunal emphasizes procedural compliance over ownership changes, provided the duty chain remains intact.

ITAT Ahmedabad ruled that cash deposits made during demonetization cannot be taxed as unexplained income under Section 69A if the assessee proves the funds arose from genuine, recorded sales with supporting documentation, and the corresponding profits were already offered to tax. This prevents double taxation and affirms that proper bookkeeping overrides suspicion, offering critical relief to cash-intensive businesses like jewellery retailers.

ITAT Ahmedabad rules that under Section 68 of the Income Tax Act, only the profit component (15% margin) of business receipts from land transactions can be taxed as unexplained credit, not the entire turnover. This sets a precedent for profit estimation in similar cases, shifting the burden of proof toward the revenue after the assessee establishes genuineness of transactions.

CESTAT Hyderabad clarifies that the one-year limitation period for refund claims under Rule 5 of the Cenvat Credit Rules begins from the date of foreign exchange receipt, not the quarter-end. The ruling mandates strict adherence to the Foreign Inward Remittance Certificate (FIRC) and invoice correlation, impacting exporters filing refund claims.

CESTAT Hyderabad rules that penalty charges levied for delayed payment of DEMAT account maintenance fees constitute a 'declared service' under Section 66E(e), making them taxable even if structured as penalties. This clarifies that financial intermediaries cannot evade service tax by reclassifying contractual default fees as non-taxable interest-like amounts, impacting all stock brokers and depository participants.

CESTAT Ahmedabad rules that sub-contractors remain liable for service tax even if the main contractor has discharged the liability, but directs recomputation under Section 67(2) of the Finance Act, 1994 to avoid double taxation. The ruling clarifies that CENVAT credit must be applied to prevent unjust enrichment, impacting sub-contractors and tax practitioners dealing with service tax disputes.

CESTAT Chandigarh has ruled that police-provided security services to banks constitute sovereign functions, not taxable commercial services, affirming that statutory public duties performed without profit motive fall outside the scope of service tax. This clarifies the boundaries of tax liability for state agencies performing core public safety roles, impacting hundreds of police departments across India that contract security services.

CESTAT Hyderabad rules that Rosoboronexport, a Russian state intermediary, does not qualify as a 'scientific or technical institution' under Notification 12/2003 for Reverse Charge Mechanism (RCM) exemption. The ruling clarifies that inter-governmental agreements alone do not confer such status, impacting tax liability for similar foreign entities under service tax provisions.

The ITAT Ahmedabad has ruled that agricultural land situated beyond municipal limits cannot be treated as a capital asset under Section 2(14) of the Income-tax Act, rendering capital gains tax, Section 50C adjustments, and Section 69A cash addition inapplicable. This clarifies a critical exemption for rural landowners and invalidates revenue department tactics that misapply urban property valuation norms to agricultural sales.

CESTAT holds that license and technical assistance fees paid separately under a split invoice cannot be added to customs value unless they are a mandatory condition of the sale of imported goods. This clarifies a critical boundary for importers structuring international contracts, ensuring only directly attributable costs are taxed at clearance.

CESTAT Hyderabad ruled that goods containing alkaloids cannot be classified as insecticides under the Insecticides Act solely based on chemical content; classification requires clear commercial intent, market identity, and evidence of use as an insecticide. This sets a critical precedent for agrochemical importers and customs authorities, shifting focus from composition to commercial reality.

CESTAT has ruled that redemption of mutual fund units does not constitute a 'service' under the Finance Act, 1994, and therefore cannot be classified as an exempted service. This means companies investing in mutual funds need not reverse CENVAT credit on common input services, clarifying a major ambiguity for B2B platforms and corporate investors alike.

CESTAT Hyderabad has ruled that a foreign director who orchestrates dual invoicing to suppress import values for Indian customs purposes incurs personal penalty liability under the Customs Act, regardless of territorial presence. This sets a critical precedent for global supply chain actors, confirming that facilitation of customs fraud from abroad triggers Indian enforcement jurisdiction.

CESTAT quashes penalty against an NRI businessman, ruling that uncorroborated WhatsApp messages and retracted statements cannot substitute for tangible evidence of intent or participation in customs evasion. This reinforces that suspicion alone, however plausible, is legally insufficient under Section 28 - a critical safeguard for overseas traders and importers facing speculative enforcement.

CESTAT Hyderabad rules that service tax registration is not a prerequisite for availing Cenvat credit on input services used to export services, even if registration was obtained retroactively. This empowers exporters who delayed registration but used eligible input services during the export period, clarifying a critical compliance gap in service tax refund claims.

CESTAT New Delhi ruled that the revenue cannot impose service tax on alleged residential complex construction based solely on legal notices; it must provide concrete evidence proving the nature of the construction as a taxable service. This shifts the evidentiary burden decisively to the tax authority, protecting developers from speculative assessments and reinforcing due process in indirect tax disputes.