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Section 12A Renewal Can’t Be Denied on Past Search Issues | ITAT

Section 12A renewal

Case Details: Shri Guru Ram Dass Educational Society vs. Deputy Commissioner of Income-tax/ACIT, Central-2 - [2026] 185 taxmann.com 989 (Chandigarh-Trib.)

Judiciary and Counsel Details

  • Rajpal Yadav, Vice President & Manoj Kumar Aggarwal, Accountant Member
  • Rohit Kapoor, Adv. & Virsain Aggarwal, ITP for the Appellant.
  • Smt. Kusum Bansal, CIT DR for the Respondent.

Facts of the Case

The assessee was an educational society engaged in imparting education and was originally registered under section 12AA. A search under section 132 was conducted on the assessee group, and section 12AA registration was cancelled. However, the Tribunal set aside the cancellation and remanded the matter while the department’s appeals remained pending before the High Court. The Settlement Commission passed an order under section 245D(4) for earlier years and did not accept allegations of siphoning of funds. It was observed that the assessee was carrying on genuine educational activities, and exemption could be denied only to the extent of any specific violation.

Under the new regime (post Finance Act, 2020), the assessee was granted fresh registration for the assessment year 2022-23 to 2026-27 and subsequently applied for renewal under section 12A(1)(ac)(ii). The case was transferred to the Principal Commissioner Central, who obtained a report from the Assessing Officer confirming that the assessee was imparting education and that its activities were genuine, with no violation of other laws found. However, the Principal Commissioner Central issued a notice under section 12AB(4) and rejected the renewal application, relying on search material relating to assessment years 2014-15 to 2019-20 and on income disclosed before the Settlement Commission.

The aggrieved assessee filed the instant appeal before the Tribunal.

AAR Held

The Tribunal held that the assessee was engaged in imparting education and that its activities fell within the first limb of the definition of ‘Charitable Purpose’ under Section 2(15). Hence, its activities were, per se, charitable. A perusal of the provisions of section 12AB(4) indicates that it empowers the Pr. Commissioner or Commissioner to call for such document or information from the Trust or Institution or make such enquiry as he thinks necessary to satisfy himself about the occurrence or otherwise of any specified violation. If there is any specified violation, then he would pass an order in writing, cancelling the registration of such Trust, granted under sub-clause (a), clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of Section 12AA. The issue before the Tribunal was whether the assessee deserved to be granted registration under section 12A(ac)(ii) or not.

In other words, it was merely the renewal of the registration already granted to the assessee by the Department for the assessment years 2022-23 to 2026-27. As observed, while construing Section 12A(1)(ac) for the grant of registration, it has been contemplated in the Act that PCIT or the Commissioner would pass an order in writing registering the Trust or Institution for a period of 5 years on conducting an enquiry as he thinks necessary to satisfy himself about:

(a) The genuineness of activities of the Trust or Institution;

(b) The compliance of such requirements of any other law for the time being in force by the Trust or Institution as are material for the purpose of achieving its objectives.

It is further observed that, to conduct an enquiry into these aspects, PCIT has called for a report from the AO, and a copy of the report is available in the record. There is no dispute that the assessee exists for the purpose of imparting education. This fact is discernible from the record of the AO as well as the observations made by the Settlement Commission.

The PCIT has committed an error by interlinking two aspects which are independent of each other, namely: “For grant of registration/renewal of registration under section 12A(ac)(ii) vis-a-vis cancellation of such registration as contemplated in clause 12AB subclause (4).”At the cost of repetition, it is observed that PCIT has mixed up two proceedings, namely, cancellation of registration vis-à-vis renewal of registration, wherein the scope of enquiry is separate in each proceeding. The Commissioner has taken up issues that were considered earlier when the registration was cancelled, but denied the renewal. Such issues did not meet with the concurrence of the ITAT in the earlier proceedings, and the issue of cancellation is sub-judice before the High Court.

The Department itself approved the registration for the assessment year 2022-23 to 2026-27. Therefore, PCIT is not justified in rejecting the renewal application while considering the very materials considered in the first round of litigation. PCIT has not made out a case that the assessee has violated any law. The PCIT referred to the unauthorised use of land. It has been apprised that CLU has been granted by the Competent Authority for its Campus. Thus, the impugned order of the Principal Commissioner was unsustainable and was set aside. The Revenue was directed to renew the registration of the assessees under section 12A(1)(ac)(ii) and issue necessary certificates as per the procedure.

List of Cases Reviewed

  • Dera Sacha Sauda v. Pr. CIT (Central) (IT Appeal No. 21 (CHD) of 2024, dated 25-04-2025) (para 19) followed

List of Cases Referred to

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ITC Allowed Despite Supplier Default – Section 16(2)(c) Read Down | HC

ITC supplier default

Case Details: Instakart Services (P.) Ltd. vs. Union of India - [2026] 185 taxmann.com 308 (Karnataka)

Judiciary and Counsel Details

  • S.R. Krishna Kumar, J.
  • Tarun Gulati, Sr. Counsel & Pradeep Nayak, Adv. for the Petitioner.
  • Madanan Pillai, CGC, Hema Kumar, AGA & M. Unnikrishnan, Adv. for the Respondent.

Facts of the Case

The petitioner, a logistics company registered under GST, challenged the constitutional validity of Section 16(2)(c) of the CGST/KGST Act and Rule 36(4), contending that denial of input tax credit (ITC) on account of non-payment of tax by suppliers imposes an impossible burden on bona fide recipients. The petitioner argued that it had fulfilled all other conditions under Section 16(2) and that denial of ITC due to supplier default was arbitrary and violative of Articles 14, 19(1)(g), 265 and 300A of the Constitution. Alternatively, the petitioner sought reading down of the provisions to allow ITC where transactions are genuine and conditions are otherwise satisfied.

High Court Held

The High Court held that, following consistent judicial precedents, the provisions of Section 16(2)(c) of the CGST/KGST Act and Rule 36(4) are to be read down so as to not deny ITC to bona fide recipients who have complied with all other statutory conditions. It was held that a purchasing dealer cannot be penalized for the default of the supplier in depositing tax, as such requirement is beyond the control of the recipient. Accordingly, ITC cannot be denied merely on account of supplier’s lapse where transactions are genuine and there is no allegation of fraud or collusion. The petition was disposed of in favour of the assessee.

List of Cases Reviewed

  • National Plasto Moulding v. State of Assam (2024) 21 CENTAX 182 (Gau) (para 18)
  • The Judgment of the Tripura High Court in the case of M/s Sahil Enterprises v. Union of India [2026] 182 taxmann.com 144/105 GSTL 177 (TRIPURA) (para 18), followed

List of Cases Referred to

  • On Quest Merchandising India (P.) Ltd. v. Government of NCT of Delhi [2017] 87 taxmann.com 179 (Delhi)/[2017] 64 GST 623 (Delhi)/[2018] 10 GSTL 182 (Delhi) (para 5.1)
  • CTE v. Arise India Ltd. 2022 (60) GSTL 215 (SC) (para 5.1)
  • Jain Steels & Alloys Mfrs. v. CCT 2019 SCC OnLine Kar 3943 (para 5.1)
  • Gheru Lal Bal Chand v. State of Haryana [2013] 29 taxmann.com 484 (Punjab & Haryana)/[2011] 45 VST 195 (Punjab & Haryana) (para 5.1)
  • M/s. Tarapore & Co. v. State of Jharkhand 2029 SCC OnLine Jhar 1918 (para 5.1)
  • Govindan & Co v. The State of Tamil Nadu (1975) 35 STC 50 (Mad.) (para 5.1)
  • Sri Vinayaga Agencies v. Asst. Commr. (CT) 2013 SCC OnLine Mad 323 (para 5.1)
  • Bharat Steels v. Commercial Tax Officer 2015 SCC OnLine Mad 9136 (para 5.1)
  • Shree Yarns v. Asstt. Commissioner 2017 SCC Online Mad 5730 (para 5.1)
  • Lawrance Livingston v. Commercial Tax Officer 2019 SCC OnLine Mad 10993 (para 5.1)
  • R.S. Infra Transmission Ltd., v. State of Rajasthan 2018 SCC OnLine Raj 3587 (para 5.1)
  • The State of Madras v. Radio and Electricals Ltd., and Anr 1966 SCC OnLine SC 132 (para 5.1)
  • CCE v. M/s. Kay Kay Industries 2013 (295) ELT 117 (para 5.1)
  • Indsur Global Ltd. v. Union of India [2015] 53 taxmann.com 131 (Gujarat)/[2015] 49 GST 445 (Gujarat)/[2014] 310 ELT 833 (Gujarat)/[2015] 33 GSTR 103 (Gujarat) (para 5.1)
  • D.Y. Beathel Enterprises v. State Tax Officer (Data Cell), Tirunelveli [2021] 127 taxmann.com 80 (Madras)/[2021] 86 GST 400 (Madras)/[2022] 58 GSTL 269 (Madras) (para 5.1)
  • Sanchita Kundu v. Asstt. Commissioner of State Tax [2022] 142 taxmann.com 576 (Calcutta)/[2022] 63 GSTL 413 (Calcutta) (para 5.1)
  • Bright Star Plastic Industries v. Additional Commissioner of Sales Tax [2021] 132 taxmann.com 146 (Orissa)/[2021] 88 GST 886 (Orissa)/[2022] 57 GSTL 226 (Orissa) (para 5.1)
  • Indian Seamless Steel and Alloys Ltd. v. Union of India 2003 (156) ELT 945 (Bom) (para 5.1)
  • Hico Enterprises v. Commissioner of Customs, Mumbai 2005 taxmann.com 253 (Larger Bench – Cestat)/2005 189 ELT 135 (Larger Bench – CESTAT) (para 5.1)
  • SKH Sheet Metal Component v. UOI 2020 (38) G.S.T.L 592 (Del.) (para 5.1)
  • CCE v. Dai Ichi Karkaria Ltd. 1999 (112) ELT 353 (SC) (para 5.1)
  • Shabnam Petrofils (P.) Ltd. v. Union of India [2019] 108 taxmann.com 15 (Gujarat)/[2019] 75 GST 801 (Gujarat)/[2019] 29 GSTL 225 (Gujarat) (para 5.1)
  • Jayam and Co. v. Asstt. Commissioner and Anr. 2016 (15) SCC 125 (para 5.1)
  • Union of India v. Adfert Technologies (P.) Ltd. [2020] 115 taxmann.com 29 (SC) (para 5.1)
  • Adfert Technologies (P.) Ltd. v. Union of India [2019] 111 taxmann.com 27 (Punjab & Haryana)/[2020] 32 GSTL 726 (Punjab & Haryana) (para 5.1)
  • Eicher Motors Ltd v. UOI 1999(106) ELT 3 (para 5.1)
  • CCE v. Tata Motors Ltd. [2014] 42 taxmann.com 64 (Jharkhand)/[2014] 43 GST 555 (Jharkhand)/[2013] 294 ELT 394 (Jharkhand) (para 5.1)
  • CCE v. Juhi Alloys Ltd. [2014] 42 taxmann.com 51 (Allahabad)/[2014] 43 GST 519 (Allahabad)/[2014] 302 ELT 487 (Allahabad)/[2014] 25 GSTR 567 (Allahabad) (para 5.1)
  • Siddharth Enterprises v. Nodal Officer GSTL 664 (para 5.1)
  • Kunj Behari Lal Butail v. State of H.P. (2000) 3 SCC 40 (para 5.1)
  • Global Energy Pvt. Ltd, v. Central Electricity Regulatory Commissioner (2009) 15 SCC 570 (para 5.1)
  • Petroleum and Natural Gas Regulatory Board v. Indraprastha Gas Limited (2015) 9 SCC 570 (para 5.1)
  • Bimal Chadnra Banerjee v. State of M.P. 1970(2) SCC 467 (para 5.1)
  • Indian Express Newspaper (Bombay) Pvt. Ltd., v. UoI (1985) 1 SCC 641 (para 5.1)
  • Babaji Kondaji Garad v. Nasik Merchants Cooperative Bank Ltd. (1984) 2 SCC 50 (para 5.1)
  • Gupta Modern Breweries v. State of J&K (2007) 6 SCC 317 (para 5.1)
  • Cellular Operators Association of India v. T.R.A.I 2016 (7) SCC 703 (para 5.1)
  • Dy. CIT v. Pepsi Foods Limited (2021) 7 SCC 413 (para 5.1)
  • Devarsh P.Patel v. Dy. CIT 2018 (9) TMI 1635 (Guj) (para 5.1)
  • Kartik Vijay Sonavane v. Deputy Commissioner Income Tax 2021 (11) TMI 682 (Guj) (para 5.1)
  • Asstt. CIT v. Om Prakash Gattani – 242 I.T.R 638 (para 5.1).

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Govt. Amends FEM (NDI) Rules – Prior Approval for BO Changes

FEM NDI rules

Notification no. S.O. 2174(E); Dated: 01.05.2026

The Government has notified the Foreign Exchange Management (Non-Debt Instruments) (Amendment) Rules, 2026. An amendment has been made to Rule 6 relating to ‘Investments by a person resident outside India’. As per the amended norms, any subsequent change in beneficial ownership now requires prior government approval. The term ‘beneficial ownership’ has been clearly defined in the explanation & shall have the same meaning as assigned under the PMLA and shall be determined as per the criteria specified under the (Maintenance of Records) Rules, 2005. Also, reporting norms have been prescribed.

The key amendments are as follows:

1. Any Subsequent Change in Beneficial Ownership Requires Prior Government Approval

As per the amended policy, any subsequent change in beneficial ownership now requires prior Government approval. Earlier, the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, only required government approval for any such change. The amendment now clarifies that prior approval is mandatory.

2. The Term ‘Beneficial Ownership’ Has Been Clearly Defined

The term ‘beneficial ownership’ has been clearly defined in the explanation to the rules. It shall have the same meaning as assigned to it under the PMLA, 2002 and must be determined in accordance with the criteria specified under Rule 9(3) of the PML (Maintenance of Records) Rules, 2005, made under the said Act.

However, this is subject to a condition that beneficial ownership of the investment must be deemed to be vested in a country sharing a land border with India where citizens of such a country and/or entities incorporated or registered in such a country have the ability to directly or indirectly, individually or cumulatively, independently or collectively with any another citizen or entity, whether acting together or otherwise, hold rights/entitlements:

(a) In excess of the applicable thresholds prescribed under Rule 9(3) of the PML Rules over an investor entity that is incorporated or registered in a country other than a country sharing a land border with India, or

(b) That enable such citizens and/or entities to exercise control over the investor entity or

(c) that enable such citizens and/or entities to exercise ultimate effective control over the Investee entity in any manner.

Further, an explanation 3 has been added to the Rule 6(a) which states that an issue or transfer of ‘participating interest or right’ in oil fields by Indian companies to a person resident outside India would be treated as foreign investment and must comply with conditions specified in Schedule I of the Rules.

3. Revision in Government Approval Criteria for Investments Linked to Land-Border Sharing Countries

The amended Rule 6 (a) revises the Government approval framework for investments linked to countries that share a land border with India. Under the earlier provision, approval was required where the investing entity was from a land-border sharing country, or where the beneficial owner of the investment into India was situated in or was a citizen of such country.

Under the amended provision, government approval will be required where the beneficial owner of an investment into India is a citizen of a country sharing a land border with India, or where the beneficial ownership of the investment is vested in such a country.

4. Reporting Requirements for Certain Investments

Earlier, Rule 6 did not prescribe any specific reporting obligations for investments into India. However, the amended rules now prescribe reporting requirements for certain specified investments.

Accordingly, investments into India from an investor entity having any direct or indirect ownership by a citizen or entity of a country sharing a land border with India and not requiring prior Government approval, shall be subject to reporting requirements as may be specified by the Reserve Bank.

Click Here To Read The Full Notification

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No GST Demand Where ITC Reversed Before SCN | HC

ITC reversal before SCN

Case Details: Manoja Kumar Nayak vs. Commissioner Goods and Services Tax and Central Excise, Rourkela - [2026] 185 taxmann.com 501 (Orissa)

Judiciary and Counsel Details

  • Harish Tandon, CJ. & Murahari Sri Raman, J.
  • Rudra Prasad Kar, Sr. Adv., Asit Kumar Dash, Abhishek Dash & Aditya Narayan Ray, Advs. for the Petitioner.
  • Sujan Kumar Roy Choudhury & Mukesh Agarwal, Sr. Standing Counsels for the Respondent.

Facts of the Case

The petitioner, a GST-registered transporter, was issued a show cause notice under Section 74 alleging wrongful availment of IGST input tax credit (ITC) on the basis of fake invoices issued by a purportedly non-existent supplier. The proceedings were initiated largely on the basis of a DGGI alert and the supplier’s admission, without any independent verification. The petitioner had, however, already reversed the entire disputed ITC voluntarily through GSTR-3B prior to issuance of the SCN and maintained sufficient balance in the Electronic Credit Ledger. The SCN was issued for FY 2017–18 beyond the normal limitation period by invoking extended limitation.

High Court Held

The High Court held that proceedings under Section 74 were unsustainable as they were based solely on third-party statements without independent inquiry or evidence of fraud, wilful misstatement, or suppression. Invocation of extended limitation after expiry of the normal period was invalid. Further, since the petitioner had already reversed the ITC before issuance of SCN and had sufficient credit balance (with no utilisation of such ITC), no interest under Section 50 or penalty could be levied. Demand of tax equal to already reversed ITC amounted to impermissible double taxation. Accordingly, the SCN and resultant orders were quashed.

List of Cases Reviewed

List of Cases Referred to

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HC Upholds Termination of Probationer IRS Officer Without Inquiry

probationer termination without inquiry

Case Details: Chandan Prakash Pandey vs. Union of India - [2026] 185 taxmann.com 510 (HC-Patna)

Judiciary and Counsel Details

  • Mohit Kumar Shah & Alok Kumar Pandey, JJ.
  • Munna Pd Dixit, Adv. for the Appellant.
  • Dr K.N. Singh, ASG, Anshuman, SC & Shivaditya Dhari Sinha, Adv. for the Respondent.

Facts of the Case

In the instant case, the petitioner was selected as a probationer in the Indian Revenue Service (Customs and Central Excise) Group-A based on the results of the Civil Service Examination 2015. He was offered an appointment subject to the terms and conditions mentioned therein – Petitioner joined services and, after completion of training, he was posted at the Anti-Evasion Branch, CGST and CX (Headquarters), Patna.

However, in the meantime, he was caught red-handed by the CBI while taking a bribe and was consequently arrested, after which he was sent to judicial custody, leading to his being placed under deemed suspension.

His suspension was not revoked and was extended from time to time until the passing of the order terminating the petitioner’s services. The petitioner filed a writ challenging the order of termination.

It was noted that the period of eight weeks after expiry of the double normal period of prescribed probation would have ended on 12.02.2021; however, before that, the services of the petitioner had been terminated on 05.02.2021. Hence, he was admittedly a probationer, not confirmed in service as on the date of termination of his services. The petitioner was definitely governed, both by Rules 1965 and by Rules 2016.

Further, it was noted that neither was there any necessity to give a show cause notice nor was there any requirement to hold a full-fledged regular departmental inquiry in a case of termination of services of a probationer during the period of probation.

High Court Held

The High Court held that the order terminating the services of the petitioner, which was simpliciter in nature, did not suffer from either any infirmity or illegality. Further, since the petitioner was caught red-handed while taking bribe leading to CBI lodging a criminal case against the petitioner, and he was arrested and sent to judicial custody, all such instances could definitely be a premise for Controlling Authority to form an opinion that a probationer was not fit for permanent appointment, leading to the right being vested with the employer to dispense with the services of such probationer.

Thus, the order by which the services of the petitioner had been terminated had been passed in accordance with provisions contained in Rules, 1965, Rules, 2016 and O.M. dated 11.03.2019. Hence, the instant writ petition was devoid of any merit and liable to be dismissed.

List of Cases Reviewed

List of Cases Referred to

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Revenue Recognition for IP Licences Under Ind AS 115

IP licence revenue recognition

1. Facts

Silver-Frame Studios Limited, hereinafter referred to as “the company”, is engaged in the business of entertainment. The company licenses a popular movie character to a gaming company, hereinafter referred to as “the customer”, for use in an online game over a five-year period. The license grants the gaming company continuous access to the character’s evolving storyline, updates, and brand value, indicating that the nature of the promise is a right to access symbolic intellectual property.

Under the agreement, the company is entitled to a royalty of 8% of the gaming company’s yearly revenues generated from the game. However, the contract also includes a minimum guarantee of ₹50 crore over the five-year term, payable irrespective of actual game performance. Based on initial projections, the company expects that total royalties will exceed

₹50 crore, but there is uncertainty in the early years due to market volatility. Additionally, the company provides ongoing promotional support and periodic content updates, which are not separately identifiable and are bundled into a single performance obligation.

The management of the company, while preparing the financial statements, is in a dilemma as to the revenue recognition arising out of a licensing arrangement involving symbolic intellectual property with a sales-based royalty and a minimum guarantee. Further, the company wants to understand how it should determine the most appropriate method for recognising revenue over time so that it faithfully depicts the transfer of control, particularly when actual royalties are uncertain, and multiple recognition approaches appear acceptable.

2. Relevant Provisions

Ind AS 115 – Revenue from Contracts with Customers

Para 35 of Ind AS 115

An entity transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:

a) The customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs.

b) The entity’s performance creates or enhances an asset (for example, work in progress) that the customer controls as the asset is created or enhanced; or

c) The entity’s performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date

Para 39 of Ind AS 115

For each performance obligation satisfied over time, an entity shall recognise revenue over time by measuring the progress towards complete satisfaction of that performance obligation. The objective when measuring progress is to depict an entity’s performance in transferring control of goods or services promised to a customer (i.e. the satisfaction of an entity’s performance obligation).

Para B63 of Ind AS 115

Notwithstanding the requirements in paragraphs 56-59, an entity shall recognise revenue for a sales-based or usage-based royalty promised in exchange for a licence of intellectual property only when (or as) the later of the following events occurs:

a) the subsequent sale or usage occurs; and

b) the performance obligation to which some or all of the sales-based or usage-based royalty has been allocated has been satisfied (or partially satisfied)

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HC Allows Delay Condonation Due to Management Dispute

condonation delay return filing

Case Details: Teksons (P.) Ltd. vs. Chief Commissioner of Income-tax Mumbai - [2026] 185 taxmann.com 814 (Bombay)

Judiciary and Counsel Details

  • B. P. Colabawalla & Firdosh P. Pooniwalla, JJ.
  • K. Gopal & Ms Neha Paranjpe, Advs. for the Petitioner.
  • Vikas T. Khanchandani, Adv. for the Respondent.

Facts of the Case

Assessee-company filed an application under section 119(2)(b) seeking condonation of the delay of 169 days in filing the return. The delay was caused by disputes between directors, which led to NCLT proceedings and delayed the finalisation of financial statements. The revised financial statements were approved, after which the audit report was filed.

However, the time limits under sections 139(1) and 139(4) had already expired, preventing them from filing the return. The Chief Commissioner rejected the application, holding that the assessee had not established “genuine hardship” or reasonable cause for the delay. Aggrieved by the order, the assessee filed a writ petition to the Bombay High Court.

High Court Held

The High Court held that the assessee had been regularly filing the return of income for many years. Except for the year under consideration, there was no default on the part of the assessee in filing the return of income in any earlier or subsequent assessment years. The delay occurred due to disagreements among the company’s Directors regarding certain financial statement items and other management issues.

The same resulted in proceedings before the National Company Law Tribunal (NCLT). The revised financial statements were approved by a majority of the Directors in a board meeting held on 25.02.2023. With the approval of all the Directors of the Company, the tax audit report was uploaded and submitted to the Income Tax Department on 29.03.2023, with a delay of 172 days. The audit report was filed within the time prescribed under section 139(4) of the Act. However, no returns could be filed, as the time limit for filing under sections 139(1) and 139(4) had expired.

Thus, after considering the reasons for the delay, including the disputes between the Directors of the assessee company, the delay in filing the return ought to be condoned.

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No Detention by Transit State Officers Without Jurisdiction | HC

GST transit state detention

Case Details: Golden Traders vs. Deputy Assistant Commissioner of State Tax - [2026] 185 taxmann.com 569 (Andhra Pradesh)

Judiciary and Counsel Details

  • R. Raghunandan Rao & T.C.D. Sekhar, JJ.
  • P. Girish Kumar, V. Raghuraman, M.V.J.K. Kumar, Pasupuleti Venkata Prasad, Sameer Gupta & Akula Vamsi Krishna, Ld. Counsels for the Petitioner.
  • R. Kalyan Chakravarthy, Ld. Govt. Pleader for the Respondent.

Facts of the Case

The petitioners, engaged in inter-state trade and transportation of goods, challenged interception proceedings initiated by officers during transit. The officers detained the consignments invoking the Section 129 of the CGST Act, and in several instances proceeded to confiscation under Section 130, contending that they were competent ‘proper officers’ even in respect of goods merely passing through the State. It was submitted that except in one case alleging absence of invoices and e-way bills, the consignments were accompanied by requisite statutory documents, and that the proceedings were nevertheless initiated on grounds such as alleged undervaluation, mismatch in description, and minor quantity variations. The petitioners contended that, even if assumed, such discrepancies did not indicate any intent to evade tax. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the cross-empowerment mechanism under Section 6 of the CGST Act, read with Section 4 of the IGST Act, applied only in respect of taxpayers administratively assigned to the respective state authorities, and not to inter-state consignments merely transiting through a state without any tax revenue allocation. It further held that officers of an intermediary State could not assume jurisdiction to levy penalties, appropriate goods, or initiate confiscation proceedings under Section 129 or Section 130 for consignments originating and terminating outside the State. The Court observed that the role of such officers was limited to verifying documents and forwarding any discrepancies to the proper jurisdictional officers of the consignor or consignee, and that they could not undertake valuation or assessment at the interception stage. It was further held that detention or confiscation based on alleged undervaluation, description mismatch, or minor quantity variation was impermissible. Consequently, the proceedings were set aside.

List of Cases Reviewed

List of Cases Referred to

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SEBI Introduces Fast-Track PPM Processing for AIFs

SEBI AIF fast track PPM

Press Release No.29/2026, Dated: 30.04.2026

The Securities and Exchange Board of India (SEBI) has reviewed the procedure for processing Placement Memorandum (PPM) of Alternative Investment Funds (AIFs) and introduced a Fast-Track Mechanism as an Ease of Doing Business initiative.

1. Key Relaxation Introduced

  • AIFs can now:
    1. Proceed with the launch of non-LVF schemes
    2. Circulate the PPM to investors for fund mobilisation
  • This can be done:
    1. After 30 days from filing the application with SEBI
    2. Unless SEBI advises otherwise

2. Applicability

  • The fast-track mechanism applies to non-LVF (non-Large Value Fund) schemes

3. Objective of the Measure

The initiative aims to:

  • Reduce time lag in scheme launch
  • Improve fundraising efficiency
  • Streamline regulatory processing timelines

4. Regulatory Safeguard

  • SEBI retains the authority to issue observations or objections within the 30-day period
  • Ensures continued regulatory oversight

5. Impact on AIF Ecosystem

  • Accelerates capital raising process
  • Enhances ease of doing business for fund managers
  • Promotes faster deployment of investment capital

6. Conclusion

The Fast-Track Mechanism marks a shift towards a more efficient and responsive regulatory framework, enabling AIFs to launch schemes and engage investors more quickly while maintaining necessary oversight.

Click Here To Read The Full Press Release

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RBI Sets Norms for Agency Banks Handling Government Business

RBI agency banks commission norms

Notification No. CO.DGBA.GBD.No.S44/31.02.007/2026-27, Dated: 30.04.2026

The Reserve Bank of India (RBI) has laid down a comprehensive framework governing the conduct of Government business by Agency Banks, covering agency commission, operational norms, and oversight mechanisms.

1. Scope of the Framework

  • Applicable to agency Banks handling Government transactions
  • Covers:
    1. Collection and payment services
    2. Commission claims and compliance requirements

2. Key Provisions

2.1 Eligible and Ineligible Transactions

The framework clearly defines:

  • Transactions eligible for agency commission
  • Transactions excluded from commission claims

2.2 Agency Commission Structure

  • Specifies applicable commission rates for different Government transactions
  • Ensures uniformity and clarity in remuneration to banks

2.3 Timelines for Claims

  • Banks must submit agency commission claims within prescribed timelines
  • Delays may impact eligibility for reimbursement

2.4 Reporting Requirements

Banks are required to:

  • Maintain accurate records
  • Submit periodic reports to RBI

2.5 Audit and Oversight

  • The framework mandates audit checks and verification processes
  • Ensures:
    1. Proper utilisation of public funds
    2. Compliance with regulatory norms

3. Accountability and Penal Provisions

  • Banks are responsible for accuracy of commission claims
  • In case of incorrect or excess claims
  • RBI may levy penal interest

4. Objective of the Framework

The directions aim to:

  • Enhance transparency and accountability
  • Ensure efficient handling of Government transactions
  • Strengthen financial discipline among Agency Banks

5. Conclusion

The framework establishes a structured and accountable system for Agency Banks, ensuring that Government business is conducted with accuracy, compliance, and proper oversight, while safeguarding public funds.

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The post RBI Sets Norms for Agency Banks Handling Government Business appeared first on Taxmann Blog.

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