2026-VIL-257-GSTAT-BLR
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SGST Tribunal

GST - Compensation Cess - Measurement of ground clearance under Entry 52B of Notification No. 01/2017-Compensation Cess (Rate) for supplies made before 26.07.2023 – Appellant sold three models of vehicles on which cess was charged at 20% under Entry 52A - Respondent alleged that they fell under Entry 52B attracting 22% as their unladen ground clearance exceeded 170 mm, relying on the Explanation added by Notification No. 03/2023 - Whether, for supplies made before 26.07.2023, ground clearance under Entry 52B was to be measured in laden or in unladen condition - HELD - Entry 52B applied only when all four conditions were met, and a vehicle failing any one fell in Entry 52A. Neither the Cess Act nor the Rate Notification defined ground clearance, and a vehicle has no single ground clearance until the law says how it is to be measured - A word left undefined in a fiscal entry is read in the sense understood by those who deal in the goods, and ground clearance is a technical term of automobile engineering whose measurement is fixed by the standard under which vehicles are type-approved. No Indian standard measures ground clearance in unladen condition, and the Respondent's own SCN recorded that the certified figure is the laden figure - The distinction between minimum ground clearance and ground clearance is not supported by Clause 5.8, as the word minimum points to the place where the distance is taken and the load is dealt with separately - For supplies made before 26.07.2023, ground clearance under Entry 52B was to be measured in laden condition - The orders of the FAA and the adjudicating authority are set aside, and the appeal is allowed - Prospective operation of the substituted Entry 52B and its Explanation on unladen ground clearance - Notification No. 03/2023-Compensation Cess (Rate) and Circular No. 247/04/2025-GST - Notification substituted Entry 52B to cover all utility vehicles by whatever name called and added an Explanation that ground clearance means ground clearance in unladen condition - Whether the substituted entry with its Explanation operates retrospectively for supplies made before the amendment - HELD - The notification did more than add an Explanation, as it substituted the whole entry, widened the class of vehicles and fixed the unladen measure, thereby bringing into the entry vehicles that were outside it and enlarging the burden of cess, which is a change in the law and not a clarification - A provision that imposes a new burden or enlarges an existing one is presumed to be prospective unless it provides otherwise expressly or by necessary implication - An Explanation which changes the law does not operate retrospectively merely because it is so called - The Board's Circular issued under Section 168(1) clarifies that the amendment applies on or after 26.07.2023, such circulars bind the Department - The substituted entry with its Explanation operates only from 26.07.2023 and does not apply to earlier supplies - The issue is decided in favour of the Appellant - Evidence of ground clearance and burden of proof - Appellant produced certificates issued by the Automotive Research Association of India for the three models recording laden ground clearance below 170 mm - Respondent relied on the website of a foreign subsidiary of the manufacturer - Whether the Respondent proved that the vehicles had ground clearance of 170 mm and above in the applicable measure - HELD - The certificates are issued after statutory testing of the very models sold in India - The foreign figures relate to vehicles made for another market, nothing shows that they share the specifications of the Indian variants. The burden of proving that goods fall under the entry invoked lies on the Revenue, and both authorities erred in placing it on the Appellant by faulting it for not proving the unladen figure - The Respondent had the power under Section 70(1) to summon the manufacturer for declared specifications and to obtain test reports from the certifying agency but used neither, and no vehicle was examined on the only contested condition. A computer printout may be admissible under Section 145, but admissibility is not proof, and a finding resting on suspicion, conjecture or surmise cannot stand - Where the rate turns on a physical measurement, the Revenue must prove it by evidence that can be tested. Even if the unladen figures were correct they would not matter for earlier supplies, and payment at the higher rate after the amendment shows only that the new entry was obeyed and cannot corroborate a demand for the earlier period - The certificates are the reliable evidence, the vehicles did not satisfy the fourth condition of Entry 52B during the disputed period - The issue is decided in favour of the Appellant - Demand, interest and penalty under Sections 50 and 73(9) of the CGST Act, 2017 read with Section 11 of the Cess Act - SCN covered supplies up to 31.07.2023, which includes supplies after 26.07.2023 to which the substituted entry applies - Appellant contended that with no short payment there can be no interest, and that a penalty cannot rest on a failed demand - Respondent accepted that a penalty resting solely on a demand that finally fails ordinarily cannot survive - Whether the demand, interest and penalty can be sustained - HELD - The demand rests on reading the unladen measure into the period before 26.07.2023, and that reading fails. For supplies from 26.07.2023 the Respondent did not separate them, did not quantify any short payment and did not show that cess was charged at the lower rate, as its own notice and submissions record that the higher rate was charged after the amendment, and a demand must rest on proof of short payment. The figures in the SCN also do not reconcile, as the computation did not match the stated taxable value and the amount confirmed did not match the computation on which it rested - Interest is compensatory and geared to the tax actually withheld, so with no tax unpaid no interest is due. A penalty under Section 73(9) can be imposed only on a person from whom tax is determined to be due, so it falls with the demand, and the reference to Section 122(2)(a) does not arise as the penalty was imposed under Section 73(9) alone - The demand of differential Compensation Cess, the interest and the penalty are set aside.
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