The bench ruled that the Commercial Tax Tribunal’s finding that transactions were not recorded in the books of account was not right, as no inspection or verification was conducted at the assessee’s premises. The Court emphasised that penalty proceedings must be based on cogent material, not presumptions, and answered the questions of law in favour of the assessee and against the Revenue

The Tribunal held that reimbursable expenses cannot be included in taxable value under Management Consultancy Services (MCS) and that customised software supply was outside the scope of service tax before May 2008

Setting aside a wrongful order of the State Tax authorities, the Court directed recomputation of the penalty strictly on the invoice value under Section 129(1)(a)