CESTAT Chennai Holds Sub-Contractor Not An Independent GTA, Sets Aside ₹90 Lakh Service Tax Demand

On 2 June, the Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside a service tax demand of Rs.90.26 lakh against Vinoth Shipping Services, holding that a sub-contractor who only arranges transportation for a principal contractor cannot be treated as an independent Goods Transport Agency (GTA) liable to tax under the reverse charge mechanism. Technical Member Vasa Seshagiri Rao and Judicial Member Ajayan T.V. allowed the appeal and quashed the demand,...

CESTAT Sets Aside ₹70 Lakh Penalties In Cigarette Smuggling, Faults DRI For Incomplete Investigation

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 2 June held that a penalty for abetment under Section 112(a) of the Customs Act cannot be sustained without identifying and establishing the liability of the actual importer. Judicial Member P. Dinesha set aside the penalties of Rs.35 lakh each, imposed on B.A. Suresh Kumar, proprietor of Arunachalam Shipping, and C. Solomon Selvaraj, proprietor of Thivya Agencies in an alleged cigarette smuggling case...

Customs Broker's Failure Of Due Diligence May Attract Penalty, Not Licence Revocation: CESTAT Chennai

On 2 June, the Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that authorities may penalise a customs broker for failing to exercise proper supervision and due diligence, but cannot revoke a customs broker licence in the absence of evidence showing deliberate involvement in fraud. Technical Member Vasa Seshagiri Rao and Judicial Member Ajayan T.V., while hearing appeals arising from a Directorate of Revenue Intelligence (DRI) investigation into alleged...

LiveLawBiz Indirect Tax Weekly Round-Up: May 25 - May 31, 2026

SUPREME COURTReliance Industries' n-Hexane Import Cannot Be Classified As Motor Spirit Merely For Low Flash Point: Supreme CourtCase Title : Commissioner of Customs, Kandla, Gujarat v. M/s Reliance Industries Limited Case Number : CIVIL APPEAL NO. 569 OF 2012 CITATION : 2026 LLBiz SC 199The Supreme Court has ruled in favour of Reliance Industries Ltd. in its long-running customs classification dispute, holding that imported n-Hexane cannot be treated as motor spirit merely because its flash...

LiveLawBiz Direct Tax Weekly Round-Up: May 25 - May 31, 2026

SUPREME COURTSupreme Court Refuses To Interfere With Relief To Karnataka Bank In HTM Investment Income Tax DisputeCase Title : THE PR. COMMISSIONER OF INCOME TAX & ANR. VERSUS M/S KARNATAKA BANK LTD. Case Number : Petition(s) for Special Leave to Appeal (C) No(s). 18972/2026 CITATION : 2026 LLBiz SC 198The Supreme Court on Monday declined to interfere with Karnataka Bank Ltd's tax relief in a dispute over deduction for diminution in the value of its held-to-maturity (HTM) investments,...

CESTAT Principal Bench Sets Aside Interest, Penalty On EPCG Defaulter After Lenders Auction Imported Goods

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at Delhi has set aside the confiscation of imported capital goods and the levy of interest and penalty imposed on Rajdarbar Heritage Venture Ltd. The tribunal found that the company could not fulfill its export obligation under the Export Promotion Capital Goods (EPCG) Scheme because the imported goods and hotel premises were auctioned by lenders. A bench of President Justice Dilip Gupta and Technical Member P.V. Subba...

ITAT Ahmedabad Deletes ₹3.88 Crore Transfer Pricing Adjustment, Upholds TNMM Consistency

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) on 27 May held that in the absence of any change in facts or functional profile, tax authorities must consistently follow transfer pricing positions accepted in earlier years, and deleted a transfer pricing adjustment of Rs.3.88 crore in the case of Inductotherm (India) Pvt. Ltd. Vice-President Dr. B.R.R. Kumar and Judicial Member T.R. Senthil Kumar rejected the Revenue's attempt to replace the Transactional Net Margin Method...

Partner Cannot Claim Deduction On Interest Paid For Capital Invested In Firm: Kerala High Court

The Kerala High Court on 20 May held that a partner cannot claim deduction under Section 36(1)(iii) of the Income Tax Act for interest paid on funds borrowed and contributed as capital to a partnership firm, since the borrowed capital was not used for the partner's own business. A Division Bench of Justices Devan Ramachandran and Basant Balaji dismissed the appeal filed by Alice Arun Thomas and upheld the order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. It held: "The provisions...

ALP Of Intra-Group Services Cannot Be Fixed At Nil Once Receipt Of Services Is Proven: ITAT Ahmedabad

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) on 27 May held that tax authorities cannot determine the arm's length price (ALP) of intra-group services at nil merely on a subjective perception of benefit once the taxpayer proves receipt of services and substantiates them with evidence. Vice-President Dr. B.R.R. Kumar and Judicial Member T.R. Senthil Kumar allowed an appeal by Roquette India Pvt. Ltd. and deleted transfer pricing adjustments for Assessment Years 2017–18 and...

ITAT Ahmedabad Grants Relief To Milacron India, Says CSR Donations May Qualify For Section 80G Deduction

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) on 27 May held that tax authorities cannot deny a deduction under Section 80G of the Income Tax Act merely because a company made the donation to fulfil its Corporate Social Responsibility (CSR) obligations. Vice-President Dr. B.R.R. Kumar and Judicial Member T.R. Senthil Kumar partly allowed an appeal filed by Milacron India Private Limited for Assessment Year 2020-21 and remanding the matter to the Assessing Officer for fresh...

ITAT Delhi Allows PNB Housing Finance's CSR Deduction Claim, Deletes ₹3.36 Crore Penalty On Cash EMI Repayments

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has granted relief to PNB Housing Finance Ltd. by allowing its claim for deduction in respect of eligible CSR-related donations and deleting a ₹3.36 crore penalty imposed for accepting cash EMI repayments from borrowers. A bench of Judicial Member Satbeer Singh Godara and Accountant Member Naveen Chandra passed the order while deciding a batch of appeals filed by the housing finance company for assessment years 2017-18 to 2020-21. The...

CESTAT Upholds Classification of AKD Wax Imported by Arjun Chemicals as Wax Product

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has upheld the Customs Department's classification of Alkyl Ketene Dimer (AKD Wax) imported by Arjun Chemicals Pvt. Ltd. under the tariff entry applicable to wax products. However, the Tribunal held that Customs authorities could not invoke the extended limitation period because they had accepted the importer's classification of the product for several years. It therefore restricted recovery of differential...