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GST - Taxability of actionable claims arising from betting and gambling - Constitutionally validity of provisions of the CGST Act, 2017, including Sections 2(31), 2(52), 7, 9 and 15, and the Rules framed thereunder, insofar as they subject actionable claims arising from betting and gambling to GST - Whether actionable claims arising from betting and gambling fall within the ambit of "goods" and constitute taxable supplies under the statutory framework embodied in Sections 2(1), 2(31), 2(52), 7, 9 and Entry 6 of Schedule III of the CGST Act, and whether the inclusion of actionable claims within the definition of "goods" und... [Read more]

GST - Taxability of actionable claims arising from betting and gambling - Constitutionally validity of provisions of the CGST Act, 2017, including Sections 2(31), 2(52), 7, 9 and 15, and the Rules framed thereunder, insofar as they subject actionable claims arising from betting and gambling to GST - Whether actionable claims arising from betting and gambling fall within the ambit of "goods" and constitute taxable supplies under the statutory framework embodied in Sections 2(1), 2(31), 2(52), 7, 9 and Entry 6 of Schedule III of the CGST Act, and whether the inclusion of actionable claims within the definition of "goods" under Section 2(52) is constitutionally and statutorily valid – HELD – The levy of GST on actionable claims arising from betting and gambling transactions is constitutionally valid, within the legislative competence conferred by Article 246A of the Constitution, and consistent with the statutory framework embodied in the CGST Act, 2017 and the corresponding State GST enactments - The challenge to the constitutional and statutory validity of Sections 2(31), 2(52), 7, 9 and 15 of the CGST Act, 2017, the corresponding provisions of the State GST enactments, and Rules 31A and 31B of the CGST Rules, 2017, together with the notifications, circulars and executive instruments issued in furtherance thereof, fails and is accordingly rejected - The amendments introduced by the CGST (Amendment) Act, 2023, including the amendments to Entry 6 of Schedule III and insertion of Rules 31B and 31C, are clarificatory and explanatory in nature and shall operate retrospectively in the manner indicated hereinabove - Organised online gaming activities, including fantasy sports and analogous gaming formats involving pooled stakes, give rise to actionable-claim supplies exigible to GST under the statutory framework governing betting and gambling transactions - Insofar as casino transactions are concerned, recourse to Rule 31 and adoption of best judgment methodologies under the pre-amendment framework cannot be said to be impermissible in the absence of complete and reliable contemporaneous records. However, the ultimate determination and computation of taxable value shall stand governed by Rule 31C – The petitions are disposed of [Read less]

GST – Demand of GST on annuity payments - Maintainability of Writ Petition and Availability of Alternate Remedy – Petitioner is engaged in construction, operation and maintenance of highways under a build-operate-transfer (BOT) annuity model challenges a show cause notice and order demanding GST on annuity payments received from the NHAI –HELD - Merely because a challenge to Notifications or Circulars is couched in Constitutional terms does not automatically confer maintainability of the writ petition where the substance of the dispute pertains to tax assessment and classification. The central controversy concerns cl... [Read more]

GST – Demand of GST on annuity payments - Maintainability of Writ Petition and Availability of Alternate Remedy – Petitioner is engaged in construction, operation and maintenance of highways under a build-operate-transfer (BOT) annuity model challenges a show cause notice and order demanding GST on annuity payments received from the NHAI –HELD - Merely because a challenge to Notifications or Circulars is couched in Constitutional terms does not automatically confer maintainability of the writ petition where the substance of the dispute pertains to tax assessment and classification. The central controversy concerns classification of services under different SAC, applicability of exemption notifications, characterization of annuity receipts under BOT projects, and taxability of composite supplies, which are substantially matters of adjudicatory findings and interpretation of statutory provisions amenable to examination before the appellate authority - The existence of binding Circulars does not render the statutory appellate mechanism otiose or ineffective. The appellate authority is not bound to take judicial notice of Departmental orders or instructions – Further, no violation of principles of natural justice, no patent lack of jurisdiction, and no palpable injustice has been demonstrated to warrant invoking extraordinary writ jurisdiction at the assessment stage. Tax statutes constitute complete codes providing remedies through appeals and revision. The exercise writ jurisdiction is declined on the ground of availability of an efficacious alternate statutory remedy - The writ petition is dismissed with liberty granted to the petitioner to file statutory appeal under Section 107 of the CGST Act, to be considered on merits by the appellate authority – The petition is disposed of [Read less]

Service Tax on Transfer of Toll Collection Rights – The appellant, as statutory authority, transferred exclusive commercial rights to collect user fees at toll plazas to contractors through competitive bidding in exchange for a fixed lump-sum consideration payable irrespective of actual toll collection - Whether the consideration received by the authority for such transfer of rights constitutes a taxable service – Whether transfer of user fee collection rights by a statutory highway authority to contractors for consideration constitutes a taxable service under the Finance Act – HELD - The transfer of exclusive commer... [Read more]

Service Tax on Transfer of Toll Collection Rights – The appellant, as statutory authority, transferred exclusive commercial rights to collect user fees at toll plazas to contractors through competitive bidding in exchange for a fixed lump-sum consideration payable irrespective of actual toll collection - Whether the consideration received by the authority for such transfer of rights constitutes a taxable service – Whether transfer of user fee collection rights by a statutory highway authority to contractors for consideration constitutes a taxable service under the Finance Act – HELD - The transfer of exclusive commercial right to collect user fee for a predetermined lump sum consideration, irrespective of actual toll collection, constitutes a taxable service. The agreement clearly establishes that the authority does not merely authorize contractors to assist in collection but transfers valuable exploitable business rights. Such transaction possesses essential characteristics of a commercial service arrangement and is distinct from the statutory levy of toll collected from road users - The consideration received is not a statutory toll itself but a contractual consideration for assignment of commercial rights. For the period prior to 01.07.2012, this transfer falls within the definition of franchise service as it grants representational rights to collect toll in the authority's name. For the period after 01.07.2012, it constitutes a taxable service not covered under the negative list - The exclusion under Section 66D(h) of the Finance Act, which exempts access to roads on payment of toll charges, does not apply as the present case concerns consideration received for transfer of collection rights and not actual toll collected from road users. Although the authority is a statutory body, the commercial exploitation of toll collection rights through competitive bidding does not constitute an inalienable sovereign function and therefore remains subject to taxation - The reliance on the Board Circular dated 22.02.2012 regarding non-leviability of service tax on toll paid by users is misplaced as the Circular specifically addresses toll collected from road users and not compensation received for transferring collection rights to contractors – The extended period of limitation is rightly invoked as the appellant failed to obtain service tax registration, file returns, or pay tax despite receiving substantial consideration, thereby precluding acceptance of any bonafide belief plea. Interest automatically follows upon delayed payment of tax and penalties are properly imposable in the factual circumstances – The service tax demand on the consideration received for transfer of user fee collection rights is upheld and the appeal is dismissed [Read less]

Service Tax - Lease agreement for carrying out plantation activities on tea estates - The lease consideration was computed based on the quantity of green tea leaves harvested and auction price. The appellant continued to be the employer of plantation workers and facilitated their deployment to the lessee. Show cause notices were issued alleging liability under renting of immovable property service, manpower recruitment or supply agency service, and supply of tangible goods service - Whether the leasing of tea estates along with appurtenant structures, deployment of workers, and provision of machinery constitute taxable ser... [Read more]

Service Tax - Lease agreement for carrying out plantation activities on tea estates - The lease consideration was computed based on the quantity of green tea leaves harvested and auction price. The appellant continued to be the employer of plantation workers and facilitated their deployment to the lessee. Show cause notices were issued alleging liability under renting of immovable property service, manpower recruitment or supply agency service, and supply of tangible goods service - Whether the leasing of tea estates along with appurtenant structures, deployment of workers, and provision of machinery constitute taxable services under the categories of renting of immovable property service, manpower recruitment or supply agency service, and supply of tangible goods service, or whether such activities constitute a composite agricultural transaction excluded from service tax liability – HELD - The dominant nature of the activity being agricultural, all ancillary elements such as buildings, labour and machinery are integrally connected with and in relation to such agricultural operations and cannot be artificially segregated for the purpose of taxation. The expression "in relation to" used in the statutory framework is of wide amplitude and includes both direct and incidental activities having nexus with the principal subject matter. Applying this principle, core agricultural operations such as cultivation and harvesting, as well as all ancillary and incidental activities connected therewith, fall within the scope of services in relation to agriculture - The leasing of tea estates is not in the nature of commercial renting but forms part of a composite arrangement for plantation activities, and the land, along with incidental infrastructure, is used exclusively for agricultural purposes. The activity of leasing, being in relation to agriculture, falls within the scope of exemption under the applicable notifications for the pre-negative list regime and the exclusion under Section 66D of the Finance Act, 1994 for the post-negative list regime - Regarding manpower supply, the essential ingredients of the service are not satisfied as there is no independent consideration for supply of manpower. Similarly, for supply of tangible goods service, there is no evidence of transfer of possession or effective control of machinery to the lessee, and there is no separate consideration identifiable for such alleged supply. The attempt of the Department to vivisect the composite transaction into multiple taxable services is contrary to the law laid down by the Supreme Court - The demands for service tax under all categories, along with interest and penalties, are not sustainable in law - The impugned orders are set aside and the appeal is allowed [Read less]

Service Tax - Availment of CENVAT credit on common input services when abatement is claimed – Appellant claimed abatement under Notification No. 1/2006-ST on certain taxable services while simultaneously availing CENVAT credit on common input services such as management consultancy, security, and equipment hire that were utilized for both abated and non-abated output services - Whether an assessee providing both taxable and exempted services can avail CENVAT credit on common input services specified under Rule 6(5) of the CCR, 2004 while simultaneously claiming abatement under Notification No. 1/2006-ST, when such common... [Read more]

Service Tax - Availment of CENVAT credit on common input services when abatement is claimed – Appellant claimed abatement under Notification No. 1/2006-ST on certain taxable services while simultaneously availing CENVAT credit on common input services such as management consultancy, security, and equipment hire that were utilized for both abated and non-abated output services - Whether an assessee providing both taxable and exempted services can avail CENVAT credit on common input services specified under Rule 6(5) of the CCR, 2004 while simultaneously claiming abatement under Notification No. 1/2006-ST, when such common input services are not used exclusively for the exempted services but are utilized for multiple output services – HELD - The Rule 6(5) contains a non obstante clause which grants it overriding effect over conflicting provisions, and this rule permits credit of service tax paid on specified services so long as such services are not used exclusively for exempted services. The word "such" in the proviso to N/No. 1/2006-ST refers to input services used for providing the specific taxable service on which abatement is claimed and not a blanket prohibition on all CENVAT credit. The Rule must be read harmoniously with the notification, and since the common input services were utilized for both taxable and exempted output services and were not exclusively used for exempted services, the assessee qualifies for the credit - There is no one-to-one relationship between input and output in the CENVAT credit scheme and once credit is earned it can be denied only as per law - The assessee is entitled to avail CENVAT credit on common input services specified under Rule 6(5) of the CENVAT Credit Rules 2004 even while claiming abatement under Notification No. 1/2006-ST – The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Finality of refund quantification, impermissibility of re-opening Cenvat credit deduction - Appellants, engaged in manufacture of cement in Himachal Pradesh, were granted exemption from central excise duty under Notification No. 50/2003-CE - Following the Hon'ble Supreme Court order holding appellants entitled to exemption under Notification No. 67/95-CE on captively consumed clinker, the original authority sanctioned refund after deducting Cenvat credit availed on inputs used in clinker manufacture. The refund amount attained finality as no appeal was filed by the Revenue against the quantum of refund. Su... [Read more]

Central Excise - Finality of refund quantification, impermissibility of re-opening Cenvat credit deduction - Appellants, engaged in manufacture of cement in Himachal Pradesh, were granted exemption from central excise duty under Notification No. 50/2003-CE - Following the Hon'ble Supreme Court order holding appellants entitled to exemption under Notification No. 67/95-CE on captively consumed clinker, the original authority sanctioned refund after deducting Cenvat credit availed on inputs used in clinker manufacture. The refund amount attained finality as no appeal was filed by the Revenue against the quantum of refund. Subsequently, the Tribunal directed payment of the sanctioned refund instead of crediting it to consumer welfare fund - The lower authorities re-opened the quantification and increased the Cenvat credit deduction while implementing the Tribunal's order - Whether the revenue can re-quantify the refund amount and increase the deduction of Cenvat credit when the original refund quantum had attained finality and no appeal was filed by the department against the original quantification order. – HELD - Once the original authority has determined the refund quantum after due verification and the revenue has not appealed against such determination, that quantification attains finality and cannot be re-opened by the lower authorities while implementing a subsequent Tribunal order passed in appeal filed by the assessee on a different issue. If the revenue had doubts regarding the correctness of the refund quantification or the admissibility of Cenvat credit deducted, it was incumbent upon the department to file an appeal seeking re-quantification at that stage. Having allowed that opportunity to pass, the revenue cannot subsequently re-open the issue of quantification while implementing an order which was issued in consequence of the assessee's appeal against the crediting of refund to consumer welfare fund rather than payment to the assessee – Further, the Tribunal's direction to deduct Cenvat credit in the refund order was intended to restrict the assessee's claim and prevent double benefit not to confer a right on the Department to deduct the same amount again if already deducted in the original quantification – The findings of the appellate authority that the quantification had not attained finality were factually incorrect and legally untenable. The impugned orders are set aside. The refund amount as originally determined and sanctioned, after deducting the Cenvat credit already calculated and deducted therein, shall be paid to the appellants instead of being re-quantified – The appeal is allowed [Read less]

Service Tax - Liability on renting of immovable property by a religious body - Applicability of exemption notification – Appellant is a religious body registered as a charitable trust rented out commercial shopping complexes situated within its premises to tenants for business purposes and received rental income on the basis of consideration - Whether a religious body engaged in renting out commercial shopping complexes within its premises is eligible for exemption from service tax under Notification No. 25/2012-ST dated 20.06.2012, specifically under clause 4 (charitable activities) or clause 5(a) (renting of precincts ... [Read more]

Service Tax - Liability on renting of immovable property by a religious body - Applicability of exemption notification – Appellant is a religious body registered as a charitable trust rented out commercial shopping complexes situated within its premises to tenants for business purposes and received rental income on the basis of consideration - Whether a religious body engaged in renting out commercial shopping complexes within its premises is eligible for exemption from service tax under Notification No. 25/2012-ST dated 20.06.2012, specifically under clause 4 (charitable activities) or clause 5(a) (renting of precincts of a religious place meant for general public) – HELD - Under clause 4, mere registration as a charitable trust under Section 12AA of the Income Tax Act is insufficient; the entity must also be engaged in specific charitable activities as defined in the notification. No evidence was placed on record demonstrating such engagement. Under clause 5(a), the commercial shops rented to private persons for conducting their business cannot be said to be "meant for general public" as the service is rendered for the private business use of individual tenants, not for public use by the religious body. However, prior to 01.07.2012, the appellant was not liable to service tax in view of the provisions existing at that point of time – Further, the appellant acted under bona fide belief in continuing to avail the exemption and that the transactions were reflected in specified records. Therefore, while the demand for service tax post 01.07.2012 is upheld, the demand is limited to the normal period and all penalties are set aside – The appeal is partly allowed [Read less]

Service Tax - Mandatory nature of interest under Section 75 of the Finance Act, 1994, Interest liability on delayed payment of service tax by Government Department - The postal Department collected service tax on postal and courier services provided by it during the period from April 2014 to June 2017 but failed to deposit the collected service tax by the due date - Whether a government department can be exempted from paying interest on delayed deposit of service tax collected by it on the ground that the delay was caused by bureaucratic procedures and lack of intention to evade tax – HELD – The appellant remains liabl... [Read more]

Service Tax - Mandatory nature of interest under Section 75 of the Finance Act, 1994, Interest liability on delayed payment of service tax by Government Department - The postal Department collected service tax on postal and courier services provided by it during the period from April 2014 to June 2017 but failed to deposit the collected service tax by the due date - Whether a government department can be exempted from paying interest on delayed deposit of service tax collected by it on the ground that the delay was caused by bureaucratic procedures and lack of intention to evade tax – HELD – The appellant remains liable to pay interest on the delayed deposit of service tax notwithstanding its status as a government entity or the absence of fraudulent intention - The Section 75 of the Finance Act, 1994 mandatorily requires payment of simple interest at the prescribed rate for the period by which crediting of tax is delayed. Interest is compensatory in character, imposed on an assessee who has withheld payment of tax as and when it is due and payable, and differs fundamentally from penalty which is penal in character - While the delay may have resulted from bureaucratic procedures and lack of malicious intent, these circumstances cannot serve as grounds for setting aside the statutory demand for interest. The mandatory nature of the interest provision under the statute cannot be circumvented by the status of the assessee as a government department or by explanations regarding administrative difficulties in depositing taxes through prescribed modes. The fiscal statutes must be applied strictly according to their statutory language without exception based on extenuating circumstances - The demand for interest on the delayed deposit of service tax is upheld and the appeal is dismissed [Read less]

Service Tax - Construction of individual villas with common amenities in a gated community layout - Revenue sought to levy service tax treating the activity as construction of a residential complex service - Whether construction of individual villas situated in a larger layout having common amenities and a common project identity, where each villa had separate plot identification, individual approvals and separate construction agreements with individual buyers, constitutes construction of a residential complex attracting service tax liability under Section 65(105)(zzzza) read with Section 65(91a) of the Finance Act, 1994 �... [Read more]

Service Tax - Construction of individual villas with common amenities in a gated community layout - Revenue sought to levy service tax treating the activity as construction of a residential complex service - Whether construction of individual villas situated in a larger layout having common amenities and a common project identity, where each villa had separate plot identification, individual approvals and separate construction agreements with individual buyers, constitutes construction of a residential complex attracting service tax liability under Section 65(105)(zzzza) read with Section 65(91a) of the Finance Act, 1994 – HELD - The definition of residential complex under Section 65(91a) requires that a complex comprise a building or buildings having more than twelve residential units together with common area and specified facilities. The statute contemplates a residential complex as a unified project conceived and executed under a single composite construction agreement - In the present case, the foundational requirement of a single unified complex is absent as each purchaser obtained separate plan approval in their own name and entered into individual construction arrangements with the developer for construction of their respective villa. A common project name, common layout approval and the provision of common amenities are matters of commercial description and features of organized housing layouts but do not by themselves convert independent villas into a residential complex. The circumstance that individual villas form part of a gated community with shared facilities does not displace the foundational facts that plots stood identified separately, approvals were obtained individually and construction was contracted for separately by each buyer. The statutory definition cannot be expanded by inference merely because the development was marketed as a gated community - The principle established in Macro Marvel Projects Ltd. affirmed by the Apex Court and consistently applied by coordinate benches of the tribunal provides that construction of individual residential units does not amount to construction of a residential complex - The impugned order is set aside and the appeal is allowed [Read less]

Customs - Export Promotion Capital Goods Scheme - Waiver of export obligation due to force majeure and impossibility of performance - Levy of interest and imposition of penalty - Appellant obtained multiple authorisations under the Export Promotion Capital Goods Scheme for importing duty-free capital goods to be used in hotel construction, however, before completion of construction, consortium of banks initiated proceedings under SARFAESI Act and auctioned the imported capital goods and hotel premises in a public auction, making it impossible for the importer to fulfil the export obligations within the prescribed period - ... [Read more]

Customs - Export Promotion Capital Goods Scheme - Waiver of export obligation due to force majeure and impossibility of performance - Levy of interest and imposition of penalty - Appellant obtained multiple authorisations under the Export Promotion Capital Goods Scheme for importing duty-free capital goods to be used in hotel construction, however, before completion of construction, consortium of banks initiated proceedings under SARFAESI Act and auctioned the imported capital goods and hotel premises in a public auction, making it impossible for the importer to fulfil the export obligations within the prescribed period - Department subsequently encashed the bank guarantees and issued a show cause notice demanding customs duty, interest and imposing penalty for non-fulfilment of the scheme conditions - Whether interest and penalty are demandable when an importer fails to fulfil export obligations under the EPCG Scheme due to force majeure or other unforeseen circumstances beyond its control – HELD - The interest and penalty cannot be levied when the export obligation becomes impossible to fulfil due to circumstances beyond the importer's control. The Notification No. 97/2004 dated 17.09.2004 provides for waiver of export obligation in cases of force majeure or other unforeseen circumstances. The doctrine of frustration of contract applies when a specific thing essential to performance of the contract is destroyed or lost. In this case, the imported goods and premises were auctioned by banks, making it impossible for the importer to fulfil export obligations - When bank guarantees are encashed before issuance of SCN, redemption fine, penalty and interest cannot be imposed. The bona fides of the importer is evident from its attempt to fulfil fifty percent of export obligations through group companies as permitted under the scheme. Since the principal duty amount was recovered through encashment of bank guarantees prior to the show cause notice, and the impossibility of performance was established, interest and penalty are not demandable - The confiscation of goods, levy of interest and imposition of penalty are set aside. The confirmation of demand of customs duty is upheld – The appeal is allowed [Read less]

GST - Challenge to the Constitutional validity of Section 16(2)(c) of the CGST Act, 2017 – HELD – Not inclined to interfere with the impugned judgment. The issues of validity of the provisions under Section 16(2) of the CGST Act are also left open to be agitated before the appropriate fora /authority – The petition is disposed of

GST - Jurisdiction of Central and State GST Authorities, Proceedings under Section 73 and Section 74, Parallel Proceedings – Petitioner challenge an order passed by CGST Authorities under Section 74 of the CGST Act, 2017, contending that State GST Authorities had closed identical proceedings under Section 73 of the Act based on the same set of documents - The petitioner contended that having been exonerated under Section 73 proceedings, they cannot be proceeded against under Section 74 - Whether proceedings initiated by CGST Authorities under Section 74 of the Act are barred where SGST Authorities have already closed pro... [Read more]

GST - Jurisdiction of Central and State GST Authorities, Proceedings under Section 73 and Section 74, Parallel Proceedings – Petitioner challenge an order passed by CGST Authorities under Section 74 of the CGST Act, 2017, contending that State GST Authorities had closed identical proceedings under Section 73 of the Act based on the same set of documents - The petitioner contended that having been exonerated under Section 73 proceedings, they cannot be proceeded against under Section 74 - Whether proceedings initiated by CGST Authorities under Section 74 of the Act are barred where SGST Authorities have already closed proceedings under Section 73 on the same factual matrix - HELD - The Section 73 and Section 74 of the CGST Act, 2017 operate in altogether different arenas and are subject to different considerations. The mere fact that a petitioner was exonerated in proceedings under Section 73 does not preclude CGST Authorities from proceeding against the petitioner under Section 74 of the Act, as both sections function independently. The material placed on record by the petitioner in response to the Show Cause Notice remains independently available for scrutiny and appreciation by competent authorities. Appreciation and re-appreciation of evidence are vested with the competent authorities and the Appellate Authority possesses jurisdiction to reappreciate the entire evidence and permit production of additional evidence if required - The burden of statutory pre-deposit cannot give leverage to the petitioner to claim that inappropriate appreciation of evidence or non-grant of opportunity to produce additional evidence amounts to denial of personal hearing, as these matters can be adequately addressed before the Appellate Authority - The writ petition stands dismissed [Read less]

Service Tax - Supply of Tangible Goods Service - Classification of trailer hiring services - Whether hiring of trailers with crew and equipment, where possession and effective control remain with service provider, constitutes supply of tangible goods service under Section 65(105)(zzzzj) of Finance Act, 1994 or GTA service – HELD - The essential ingredients for attracting the definition of taxable service under Section 65(105)(zzzzj) are: provision of service by one person to another in relation to supply of tangible goods including machinery, equipment and appliances, with no transfer of right of possession, effective co... [Read more]

Service Tax - Supply of Tangible Goods Service - Classification of trailer hiring services - Whether hiring of trailers with crew and equipment, where possession and effective control remain with service provider, constitutes supply of tangible goods service under Section 65(105)(zzzzj) of Finance Act, 1994 or GTA service – HELD - The essential ingredients for attracting the definition of taxable service under Section 65(105)(zzzzj) are: provision of service by one person to another in relation to supply of tangible goods including machinery, equipment and appliances, with no transfer of right of possession, effective control continuing with service provider, and goods supplied for use by recipient. The term "use" does not require physical operation or technical expertise but signifies application of goods for the purpose for which they are supplied under contract terms. The work orders examined establish that the service provider supplied trailers on hire charge basis inclusive of fuel, crew, and accommodation, with service provider responsible for insurance, maintenance, repairs, crew compensation, and health and safety compliance, retaining comprehensive control over equipment throughout contract period. This constitutes license to use goods without transfer of right to use, falling within Section 65(105)(zzzzj) – The Section 65(105)(zzzzj) was enacted precisely to levy service tax on such “licence to use” that goes in tandem with the tangible goods supplied, where right of possession and effective control are not transferred to the service recipient. The Adjudicating Authority's findings that services are classifiable as supply of tangible goods service and not goods transport agency service are upheld, as requirement of consignment note under Rule 4B is not applicable where possession and control are retained by service provider. The terminology of "hire charges" versus "freight charges" in balance sheet does not alter actual nature of service when work orders clearly indicate hiring of equipment on lump sum basis without transfer of possession or control - the appellant are covered under “Supply of Tangible Goods services”, the reliance placed by the appellant on the decisions in support of its contention that it is covered under GTA service inapplicable and distinguishable - While the appellant is entitled to cum-tax benefit as well as computation of cenvat credit entitlement, it needs to be verified whether the liability has been correctly discharged - The appeal is disposed of by remandrnrnDemand invoking the extended period of limitation – HELD – The ST-3 returns were filed erratically and that too indicating partial discharge of liability is not controverted. There is no claim of bonafides nor even a plea that the liability has been declared in the ST-3 returns correctly, though discharged partly, to show that there was no intent to evade payment of service tax. Concededly the ST-3 returns itself have not been filed for the entire disputed period, save for 2012-13. There has been no contest to the findings of the Adjudicating Authority regarding invoking the extended period of limitation either in the reply of the appellant or in the grounds of the appeal preferred before us. In these circumstances, there is no substance in the claim that it was only issues of interpretation and that therefore the extended period of limitation cannot be invoked. Therefore, no reason to interdict the findings of the Adjudicating Authority on this aspect of invoking extended period of limitation - While the appellant is entitled to cum-tax benefit as well as computation of cenvat credit entitlement without invoking the bar prescribed in Rule 4(1), it needs to be verified whether the liability has been correctly discharged. [Read less]

Customs - Classification of 5G Radio Unit Device – Respondent-importer imported Airspan Air Velocity 2700 device and declared it under Customs Tariff Heading 8517 6260 (Synchronous Digital Hierarchy System - SDH) - Adjudication authority reclassified the goods under 8517 6290 (others), rejecting the original classification - Whether the Air Velocity 2700 device should be classified under Customs Tariff Heading 8517 6260 (SDH equipment) or 8517 6290 (other machines for reception, conversion and transmission of data) - HELD – From the technical specifications and functional characteristics of the device it is found that... [Read more]

Customs - Classification of 5G Radio Unit Device – Respondent-importer imported Airspan Air Velocity 2700 device and declared it under Customs Tariff Heading 8517 6260 (Synchronous Digital Hierarchy System - SDH) - Adjudication authority reclassified the goods under 8517 6290 (others), rejecting the original classification - Whether the Air Velocity 2700 device should be classified under Customs Tariff Heading 8517 6260 (SDH equipment) or 8517 6290 (other machines for reception, conversion and transmission of data) - HELD – From the technical specifications and functional characteristics of the device it is found that the Air Velocity 2700 is a 5G Radio Unit (RU) designed for 5G Radio Access Networks, functioning as a router that receives signals from the tower, synchronizes them, and routes them through enclosed areas to enhance 5G network efficiency. Though the device processes synchronization signals as part of its operational protocol, its essential character and primary function are that of a routing device within a wireless access network rather than a traditional SDH fiber optic transmission equipment - The goods must be classified based on their essential character and primary function as contemplated in the classification rules. The Commissioner (Appeals) order setting aside the reclassification is upheld and the Revenue appeal is dismissed [Read less]

Service Tax - CENVAT credit - Defective invoices lacking mandatory particulars - Whether CENVAT credit can be availed on invoices that do not contain all the mandatory particulars prescribed under Rule 4A of the Service Tax Rules, 1994 and Rule 9 of the CENVAT Credit Rules, 2004 – HELD - The Rule 9(2) of the CENVAT Credit Rules, 2004 divides the particulars in an input credit document into a core area comprising duty or service tax payable, description of goods or taxable service, assessable value, service tax registration number of the person issuing the invoice, and name and address of the provider of output service, a... [Read more]

Service Tax - CENVAT credit - Defective invoices lacking mandatory particulars - Whether CENVAT credit can be availed on invoices that do not contain all the mandatory particulars prescribed under Rule 4A of the Service Tax Rules, 1994 and Rule 9 of the CENVAT Credit Rules, 2004 – HELD - The Rule 9(2) of the CENVAT Credit Rules, 2004 divides the particulars in an input credit document into a core area comprising duty or service tax payable, description of goods or taxable service, assessable value, service tax registration number of the person issuing the invoice, and name and address of the provider of output service, and a penumbra area comprising all other details. The particulars in the core area are foundational and mandatory in nature. The discretionary jurisdiction of the proper officer is confined to the penumbra area. The burden of proof regarding the admissibility of CENVAT credit lies squarely upon the service provider claiming such credit under Rule 9(5) and (6) - The service provider cannot circumvent the statutory burden merely by producing defective invoices along with proof of payment. Where the statute prescribes that an act must be done in a particular manner and provides consequences of non-compliance, the requirement is mandatory. Therefore, demonstrating the integrity of the core area particulars of the input credit document is mandatory and beyond the subjective or discretionary jurisdiction of the proper officer - The demand pertaining to invoices lacking mandatory particulars was set aside and remanded for fresh adjudication with an opportunity to the appellant to submit all documents for verification – The appeal is disposed ofrnrnEligibility of input services - Nexus between input and output service - Whether services such as civil works for renovation, vehicle hire and repair, sales promotion, membership fees, water and food testing, public performance licence, and insurance of company-owned vehicles constitute eligible input services with real and sufficient nexus to the output service of club or association, tour operations, and related taxable services, particularly after the amendment to Rule 2(l) of the CENVAT Credit Rules, 2004 effective from 01.04.2011 which deleted the phrase "activities relating to business" – HELD - These input services are eligible for credit as they have a real and sufficient nexus with the assessee's output service and are not for personal use or consumption of employees. The definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004, even after the deletion of the phrase "activities relating to business" effective from 01.04.2011, allows credit where the service satisfies the "means" part of the definition by having a real and sufficient nexus with the assessee's output service. The test is functional and commercial nexus, not rigid direct one-to-one correlation between input and output service. Civil works used in modernization, renovation or repairs of factory or premises of provider of output service are specifically covered in the inclusive part of the definition as clarified by Board Circular. Vehicle hire and repair services used for taxable output services and not for personal use of employees are eligible. Services relating to advertisement, sales promotion, market research are included in the definition of input service. Membership fees provided by industry or business associations are not for personal consumption. Water and food testing and public performance licence are statutory or business necessities integral to hospitality services. Insurance of company-owned vehicles, where such vehicles are capital goods, falls outside the exclusion under Rule 2(l). All these services are consumed or used in relation to the output service and have a functional connection to the business activities, thus qualifying as eligible input services - The demand regarding denial of credit on these input services was set aside and credit was allowed as the services are eligible input services with real and sufficient nexus to the output service.rnrnShow Cause Notice - Whether the adjudicating authority can confirm demands and impose penalties on disputed services that were not specifically averred or detailed in the Show Cause Notice and whether the authority can go beyond the scope of the Show Cause Notice – HELD - The adjudicating authority cannot travel beyond or outside the scope of the Show Cause Notice. The principle established in Commissioner versus Toyo Engineering India Limited that the department cannot traverse beyond the show cause notice is a cardinal principle in tax adjudication. The Show Cause Notice forms the foundation of adjudication and must contain clear, evidence-based allegations. Any demand confirmed in the adjudication order must find support or clear averment in the corresponding Show Cause Notice. When the adjudicating authority confirms demands on services not specifically mentioned or detailed in the Show Cause Notice, it violates the principle of natural justice and the procedural requirements governing tax adjudication. This ensures that the assessee has a fair opportunity to respond to the specific allegations made in the notice and cannot be taken by surprise by new or additional grounds introduced during adjudication - Demands confirmed regarding courier charges, bank charges, telecommunication charges, and consultancy services without specific averment in the Show Cause Notice are set aside. [Read less]

Central Excise - Invocation of Extended Period of Limitation, Suppression with intent to evade duty - Whether the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 can be validly invoked when the Show Cause Notice is issued beyond three years from the date of discovery – HELD - The department was aware of the matter from the date of visit (12.02.2013) or at least from the date of deposit (07.03.2013), yet the Show Cause Notice came only on 26.04.2016, clearly beyond the period of limitation. The allegation of suppression with intention to evade duty is untenable since the adjudicating aut... [Read more]

Central Excise - Invocation of Extended Period of Limitation, Suppression with intent to evade duty - Whether the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 can be validly invoked when the Show Cause Notice is issued beyond three years from the date of discovery – HELD - The department was aware of the matter from the date of visit (12.02.2013) or at least from the date of deposit (07.03.2013), yet the Show Cause Notice came only on 26.04.2016, clearly beyond the period of limitation. The allegation of suppression with intention to evade duty is untenable since the adjudicating authority itself recorded that the assessee was paying central excise duty in its periodical returns, which amounts to a tacit admission and disproves any intention to evade. Furthermore, for the disputed period of 01.04.2011 to 31.03.2013, the assessee enjoyed the benefit of Small Scale Industries exemption. The tribunal also observes that the impugned appellate order is cryptic and non-speaking, mechanically confirming penalties without justifiable reasons, and the original Show Cause Notice contained no proposal to levy penalty under Rule 26 - The extended period of limitation is found to be unjustified, and consequently, the demand, interest, and penalty are not sustainable. The assessee succeeds on the ground of limitation itself [Read less]

Customs - Classification of kitchen and household items - Appellant imported various items including baskets, racks, bottle holders, plate racks, drawer systems, carousel units, and similar products designed for use in modular kitchen furniture and wardrobes – Appellant classified the items under Customs Tariff Headings 7323, 8302, and 7615, the Department subsequently reclassified all items under CTH 9403 90 00 (other furniture and parts thereof) - Whether products such as baskets, racks, holders, and drawer systems designed to be fixed within modular kitchen or wardrobe furniture should be classified under Chapter 73 (... [Read more]

Customs - Classification of kitchen and household items - Appellant imported various items including baskets, racks, bottle holders, plate racks, drawer systems, carousel units, and similar products designed for use in modular kitchen furniture and wardrobes – Appellant classified the items under Customs Tariff Headings 7323, 8302, and 7615, the Department subsequently reclassified all items under CTH 9403 90 00 (other furniture and parts thereof) - Whether products such as baskets, racks, holders, and drawer systems designed to be fixed within modular kitchen or wardrobe furniture should be classified under Chapter 73 (kitchen and household articles), Chapter 83 (base metal mountings and fittings), or Chapter 94 (furniture and parts thereof) under the Customs Tariff – HELD - While the products may be fixed within larger furniture assemblies, they retain their essential character as kitchen and household articles or as base metal mountings and fittings suitable for furniture. The Rule 3(a) of GRI provides that headings offering the most specific description must be preferred over those providing general descriptions. Chapter 73 specifically covers kitchen and household articles of iron or steel, while Chapter 83 specifically covers base metal mountings and fittings suitable for furniture. Chapter 94, by contrast, provides a general description covering furniture and parts thereof not covered by previous headings - The Tribunal in case of Commissioner of Central Excise, Surat-I versus Crystal Interior Products, held that kitchen and household articles cannot, by any stretch of imagination, be considered as furniture items, and that such articles must be classified according to their actual usage and common trade parlance - The goods possess distinct identities and individual functions independent of their ultimate placement within furniture units, and that identical products are being cleared by other importers under Chapter 73 in current practice, demonstrating consistent trade classification. The Department had not raised any classification objections during the prior many years of imports by the appellant, and the duty demand arose only after the duty rate was increased from 10% to 20% in February 2018, suggesting the objection was motivated by revenue considerations rather than genuine classification concerns – The impugned order classifying the goods under CTI 9403 90 00 is set aside and the original classification under CTH 7323/8302 is restored – The appeal is allowed [Read less]

Service Tax – Classification, Works contract service - Appellant, engaged by the Jaipur Development Authority under contracts involving construction-related work -Appellant contends that the Commissioner failed to classify the services rendered and that the JDA should bear the service tax liability as it collected the same – HELD - The Commissioner in the impugned order has appropriately examined the nature of work performed and material usage, and has correctly classified the services as works contract service, thereby confirming a reduced demand of service tax instead of the originally proposed amount. The demand per... [Read more]

Service Tax – Classification, Works contract service - Appellant, engaged by the Jaipur Development Authority under contracts involving construction-related work -Appellant contends that the Commissioner failed to classify the services rendered and that the JDA should bear the service tax liability as it collected the same – HELD - The Commissioner in the impugned order has appropriately examined the nature of work performed and material usage, and has correctly classified the services as works contract service, thereby confirming a reduced demand of service tax instead of the originally proposed amount. The demand pertains to services rendered by the appellant and not the JDA as the appellant is the service provider who received consideration for its services. The Authority, being the service recipient and not the service provider, could not have collected service tax from the appellant. The principle that taxation liability attaches to the service provider who renders the service and receives consideration applies, irrespective of any subsequent collection or remittance mechanism. The appellant's assertion regarding the Authority's role is rejected as meaningless to the service provider's direct liability - The impugned order is sustained and the appeal is dismissed [Read less]

Service Tax - Inclusion of reimbursable expenses in taxable value of services - Whether reimbursable expenses incurred on behalf of customers and recovered on actual basis are includible in the taxable value of services for the period prior to 14.05.2015 – HELD – For the period prior to amendment of Section 67 with effect from 14.05.2015, reimbursable expenditure cannot be included in the gross value of taxable services. The Delhi High Court's decision in Intercontinental Consultants and Technocrats Pvt. Ltd. vs Union of India established that Rule 5(1) of the Service Tax Valuation Rules was ultra vires Sections 66 and... [Read more]

Service Tax - Inclusion of reimbursable expenses in taxable value of services - Whether reimbursable expenses incurred on behalf of customers and recovered on actual basis are includible in the taxable value of services for the period prior to 14.05.2015 – HELD – For the period prior to amendment of Section 67 with effect from 14.05.2015, reimbursable expenditure cannot be included in the gross value of taxable services. The Delhi High Court's decision in Intercontinental Consultants and Technocrats Pvt. Ltd. vs Union of India established that Rule 5(1) of the Service Tax Valuation Rules was ultra vires Sections 66 and 67 of the Finance Act, 1994, since reimbursed expenses cannot be treated as the gross amount charged for the service. The Supreme Court upheld this ruling and clarified that only from 14.05.2015, after the amendment to Section 67 by the Finance Act, 2015, did reimbursable expenditure become includible in the taxable value - The demand on reimbursable expenses is set asidernrnGoods Transportation Agency Service - Classification of payments as goods transportation agency service without consignment note - Whether service tax can be demanded on alleged goods transportation agency service in the absence of issuance of a consignment note by the service provider – HELD - The issuance of a consignment note is an essential requirement for classification of a service provider as a goods transport agency. The absence of such evidence is fatal to the demand made. When there is no issuance of consignment note, there cannot be a goods transportation agency service and therefore no demand can be made - The demand for service tax under reverse charge on alleged goods transportation agency service is set aside.rnrnServices to SEZ Units - Whether a fresh demand for service tax can be raised for services where the tax liability has already been discharged through prior payment reflected in returns. HELD - Once service tax has already been paid, the same amount cannot be demanded again as it would result in double taxation. The appellant's case is that the duty has already been discharged, and there is no dispute regarding the exigibility of the service itself. The principle against double taxation applies, and the confirmation of the demand would unjustly require payment of the same tax twice - The demand for service tax on services rendered to SEZ units is set aside, and the appeal is allowed in favour of the appellant. [Read less]

Customs: Tariff Classification of Alkyl Ketene Dimer (AKD Wax) – Appellant- importer imported organic chemical product from China and consistently classified it under Chapter 29 from October 2007 till July 2012, with all consignments being regularly cleared by Customs authorities - Department subsequently sought to reclassify the goods under Chapter 34 as wax preparations, alleging intentional misdeclaration to evade duty – HELD - On the basis of CRCL test report, HSN explanatory notes, waxy characteristics, dropping point, viscosity parameters and fatty acid composition, the imported product merits classification unde... [Read more]

Customs: Tariff Classification of Alkyl Ketene Dimer (AKD Wax) – Appellant- importer imported organic chemical product from China and consistently classified it under Chapter 29 from October 2007 till July 2012, with all consignments being regularly cleared by Customs authorities - Department subsequently sought to reclassify the goods under Chapter 34 as wax preparations, alleging intentional misdeclaration to evade duty – HELD - On the basis of CRCL test report, HSN explanatory notes, waxy characteristics, dropping point, viscosity parameters and fatty acid composition, the imported product merits classification under Chapter Heading 34049090. However, since the goods were declared openly in all import documents, the B/E were regularly scrutinized by the department, samples were drawn and tested, and the classification under Chapter 29 had been consistently accepted over several years, the ingredients necessary for invocation of extended period under the proviso to Section 28 are not established. A mistaken or inconsistent practice followed earlier cannot prevent the Department from adopting correct classification subsequently once detailed examination and laboratory analysis revealed appropriate classification, but when the assessee had acted in good faith on the basis of departmental acceptance, the extended period cannot be invoked - While the reclassification is upheld on merits, the recovery of differential duty is restricted to the normal period under Section 28(1) of the Customs Act, 1962 along with applicable interest, and penalties and confiscation of cleared goods are set aside – The appeal is partly allowedrnrnPenalty under Section 112(a) of Customs Act, 1962 - The CHA and chief operating officer of the importer company were separately penalized under Section 112(a) for their alleged participation in preparation and filing of bills of entry containing incorrect description and classification – HELD - Mere reference to industrial application or end-use in bills of entry cannot amount to deliberate misdeclaration when the identity and nature of goods had been openly declared throughout. Since the classification under Chapter 29 had been consistently accepted by the department over several years and the dispute essentially relates to interpretation of competing tariff entries rather than deliberate suppression or fraudulent misdeclaration, no evidence establishes conscious knowledge, collusion or deliberate abetment on the part of the customs house agent or the chief operating officer - Customs House Agent and Chief Operating Officer cannot be penalized for alleged misstatement in bills of entry when no evidence establishes conscious knowledge, collusion or deliberate abetment on their part and the classification dispute essentially relates to interpretation of competing tariff entries. [Read less]

Service Tax - Cenvat Credit Entitlement under Rule 6(3B) of Cenvat Credit Rules, 2004, Demand invoking extended period of limitation – Appellant-NBFC availed input service credit on manpower services supplied by service providers, which were commonly used across all business verticals - Department alleged that such credit was ineligible as the manpower services were exclusively used for insurance auxiliary services and mutual fund distribution services on which service tax was paid by recipients under RCM or which were exempt services, thereby disqualifying them as input services under Rule 2(l) of Cenvat Credit Rules, 2... [Read more]

Service Tax - Cenvat Credit Entitlement under Rule 6(3B) of Cenvat Credit Rules, 2004, Demand invoking extended period of limitation – Appellant-NBFC availed input service credit on manpower services supplied by service providers, which were commonly used across all business verticals - Department alleged that such credit was ineligible as the manpower services were exclusively used for insurance auxiliary services and mutual fund distribution services on which service tax was paid by recipients under RCM or which were exempt services, thereby disqualifying them as input services under Rule 2(l) of Cenvat Credit Rules, 2004 - Whether a non-banking financial company (NBFC) is entitled to claim cenvat credit on input services used for providing insurance auxiliary services and mutual fund distribution services – HELD - The Rule 6(3B), which begins with a non-obstante clause, provides that notwithstanding anything contained in sub-rules (1), (2) and (3) of Rule 6, a banking company and NBFC shall pay an amount equal to fifty percent of the cenvat credit availed on inputs and input services in that month. The non-obstante clause gives overriding effect to Rule 6(3B) over contrary provisions in sub-rules (1), (2) and (3), including the prohibitions in Explanations II and III to Rule 6(3) regarding disallowance of credit on services used exclusively for exempted services or services that are not input services - The legislature has provided a presumptive mechanism under Rule 6(3B) requiring mandatory reversal of fifty percent of credit without requiring detailed determination of specific entitlements. The Larger Bench in South Indian Bank case held that once reversal of fifty percent credit is made under Rule 6(3B), banks and financial institutions are entitled to the benefit of the entire amount of service tax paid on input services having nexus with provision of output services, irrespective of whether such services are used for taxable or exempt output services - The impugned order is set aside and the appeal is allowedrnrnInvoking of extended period of limitation – HELD - The extended period of limitation cannot be invoked as the relevant facts were already known to the authorities through earlier show cause notices and tribunal orders for preceding periods, and therefore subsequent demands cannot be based on the same facts treated as suppression. Additionally, the issue involves interpretational disputes regarding cenvat credit rules, and in the absence of deliberate act or wilful suppression with intent to evade on the part of the appellant, the essential precondition for invoking extended period of limitation is not satisfied [Read less]

Customs – Refund, Compliance with Chartered Accountant Certificate Format - Whether rejection of refund claim based on alleged non-compliance with prescribed format of Chartered Accountant's certificate is sustainable – HELD - The format of Chartered Accountant Certificate as prescribed in Public Notice No. 39/2011 is only suggestive or indicative in nature and not a mandatory format for claiming refund under the relevant notification - The plain language of the Public Notice explicitly mentions "Suggested/Indicative formats" in the Enclosures section and the notification itself does not prescribe any specific format f... [Read more]

Customs – Refund, Compliance with Chartered Accountant Certificate Format - Whether rejection of refund claim based on alleged non-compliance with prescribed format of Chartered Accountant's certificate is sustainable – HELD - The format of Chartered Accountant Certificate as prescribed in Public Notice No. 39/2011 is only suggestive or indicative in nature and not a mandatory format for claiming refund under the relevant notification - The plain language of the Public Notice explicitly mentions "Suggested/Indicative formats" in the Enclosures section and the notification itself does not prescribe any specific format for the CA Certificate - The rejection of refund claims cannot be sustained merely on grounds of formal deficiencies when the genuineness of refund claim is not in doubt and the non-compliance relates only to procedural formalities rather than substantive requirements - The rejection of the Chartered Accountant Certificate by lower authority on the ground that it was not in the prescribed format is not correct and unsustainable in law. The impugned order is set aside and the appeals are allowed [Read less]

Service Tax - Refund of Unutilized CENVAT Credit - Limitation period under Section 11B of Central Excise Act, 1944 – Relevant date for computing one-year limitation in case of export of services – The appellant claimed refund of unutilized CENVAT credit for export of services under Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 27/2012-CE(NT) dated 18.06.2012 – Rejection of part of the refund claims on the ground that some export invoices were more than one year old from the date of the export invoice - Whether the one-year limitation period under Section 11B be computed from the date of export invoic... [Read more]

Service Tax - Refund of Unutilized CENVAT Credit - Limitation period under Section 11B of Central Excise Act, 1944 – Relevant date for computing one-year limitation in case of export of services – The appellant claimed refund of unutilized CENVAT credit for export of services under Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 27/2012-CE(NT) dated 18.06.2012 – Rejection of part of the refund claims on the ground that some export invoices were more than one year old from the date of the export invoice - Whether the one-year limitation period under Section 11B be computed from the date of export invoice or from the end of the quarter in which the Foreign Inward Remittance Certificate (FIRC) is received – HELD - The relevant date for computing the limitation period for refund claims under Rule 5 of CENVAT Credit Rules in respect of export of services is the end of the quarter in which the FIRC is received, not the date of export invoice. The Section 11B does not specifically cover the case of export of services and requires constructive interpretation to give effect to the objective of granting refund of unutilized CENVAT credit. Under the Service Tax Rules, 1994 and Export of Service Rules, 2005, export of services is completed only with receipt of consideration in foreign exchange, making the FIRC date relevant - The refund claim is filed on a quarterly basis, therefore the relevant date can be taken as the end of the quarter in which FIRC is received - Following the larger bench decision in Span Infotech case, which had already considered and resolved this issue, the impugned order is set aside to the extent it rejected the refund claims on grounds of Limitation – The appeal is allowed [Read less]

Service Tax - Cenvat Credit on Rent-a-Cab Services - Entitlement to input service credit on rent-a-cab services for a telecommunications service provider - Whether services provided by way of renting of a motor vehicle qualify as input services entitling the provider of output services to claim Cenvat credit - HELD - The definition of input services under Rule 2(l) of CCR, 2004 contains specific exclusions in sub-clause (B) which explicitly excludes services provided by way of renting of a motor vehicle insofar as they relate to a motor vehicle which is not capital goods. The legislature has categorically provided for cert... [Read more]

Service Tax - Cenvat Credit on Rent-a-Cab Services - Entitlement to input service credit on rent-a-cab services for a telecommunications service provider - Whether services provided by way of renting of a motor vehicle qualify as input services entitling the provider of output services to claim Cenvat credit - HELD - The definition of input services under Rule 2(l) of CCR, 2004 contains specific exclusions in sub-clause (B) which explicitly excludes services provided by way of renting of a motor vehicle insofar as they relate to a motor vehicle which is not capital goods. The legislature has categorically provided for certain services to be excluded from the definition of input services, and such specific exclusions are final and conclusive. Once the legislature manifests its intent by mandating what is excluded from the definition of input services, it shuts the avenue for any contention that such services would otherwise qualify as input services under the main part or inclusive part of the definition. The exclusions stipulated by the legislature, subject to stated exceptions, remain out of the purview of the definition regardless of whether the services might otherwise fall within the broader language of the main or inclusive parts. Therefore, the service provider is not entitled to claim Cenvat credit on rent-a-cab services - The impugned order upholding the demand on rent-a-cab services is upheld - The impugned is modified and to the extent it upholds the demand on rent-a cab services along with applicable interest, it is upheld, and to the extent it upholds the demand on housekeeping services as well as the imposition of penalty, it is set aside – The appeal is partly allowedrnrnCenvat Credit on Housekeeping Services - Whether housekeeping services provided for upkeep and maintenance of premises, including cleaning of equipment essential to the output service, qualify as input services under Rule 2(l) – HELD - The definition of input services in its inclusive part expressly includes services used in relation to premises of a provider of output service or an office relating to such premises. The expressions "includes" and "in relation to" carry wide connotations. The word "includes" is employed by the legislature to bring in, by legal fiction, something within the accepted connotation of the substantive part and must be given a wide interpretation in regard to context. The expression "in relation to" comprises words of comprehensiveness having both direct and indirect significance and ought not be construed restrictively - The fact that housekeeping services also cover general conservancy work does not detract from the reality that such services are essential and are being used for providing output services. Housekeeping services for upkeep and cleanliness of premises in compliance with environmental law and for maintaining premises in an eco-friendly manner cannot be considered inessential for providing output services. There is no bar on such services in the exclusion clauses. Therefore, the service provider is entitled to claim Cenvat credit on housekeeping services. Additionally, considering the appellant is a public sector undertaking and the period involved is immediate to the introduction of amendments in Rule 2(l) when legal confusion prevailed, the imposition of penalty is not justified as the breach flows from a bona fide belief - The impugned order is set aside to the extent it denies Cenvat credit on housekeeping services and the penalty imposed is also set aside. [Read less]

Central Excise - Cenvat credit reversal on common input services used in manufacture of exempted goods exported under DEPB scheme - While computing the value of exempted goods for reversal of attributable Cenvat credit on input services, the appellant excluded the value of export goods cleared under exemption N/No. 30/2004-CE and goods cleared to job work, instead including them under dutiable clearance - SCN proposing reversal of Cenvat credit - Whether the appellant is required to reverse the credit attributable to common input services used in or in relation to the manufacture of exempted goods without taking into cons... [Read more]

Central Excise - Cenvat credit reversal on common input services used in manufacture of exempted goods exported under DEPB scheme - While computing the value of exempted goods for reversal of attributable Cenvat credit on input services, the appellant excluded the value of export goods cleared under exemption N/No. 30/2004-CE and goods cleared to job work, instead including them under dutiable clearance - SCN proposing reversal of Cenvat credit - Whether the appellant is required to reverse the credit attributable to common input services used in or in relation to the manufacture of exempted goods without taking into consideration the value of cotton yarn cleared for export without payment of duty under DEPB scheme - Whether the value of cotton yarn cleared for job work has to be considered for reversal of credit - HELD - Relying on the precedent decision of Sri Shanmugavel Mills and the judicial pronouncement in Drish Shoes Ltd., is it held that an assessee manufacturing goods chargeable to nil duty is eligible to avail Cenvat credit paid on inputs used in the manufacture of such goods if the goods are exported, following the exception clause to the Cenvat Credit Rules - Regarding job work clearances, since the appellant has already included the value of goods cleared under the category of exempted goods for working out the quantum of credit to be reversed, including the value of goods cleared for job work would amount to double jeopardy and is not sustainable in law. The appellant has submitted ER-1 returns showing job work turnover filed regularly with the range and available in the ACES system, and verification should have been done during the initial adjudication stage rather than at the appellate level - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax – Penalty under Section 78 - Appellant paid service tax under reverse charge mechanism upon obtaining registration in 2010 – Issue of show cause notice in 2013 for alleged short-payment or non-payment of service tax - Whether appellant is entitled to benefit of Section 80 of the Finance Act, 1994 read with Explanation 2 to proviso to Section 73(3) and consequently whether penalty under Section 78 can be imposed – HELD - Section 73(3) of the Finance Act, 1994 provides that where service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a person chargeable with ... [Read more]

Service Tax – Penalty under Section 78 - Appellant paid service tax under reverse charge mechanism upon obtaining registration in 2010 – Issue of show cause notice in 2013 for alleged short-payment or non-payment of service tax - Whether appellant is entitled to benefit of Section 80 of the Finance Act, 1994 read with Explanation 2 to proviso to Section 73(3) and consequently whether penalty under Section 78 can be imposed – HELD - Section 73(3) of the Finance Act, 1994 provides that where service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a person chargeable with service tax may pay the amount on the basis of his own ascertainment before service of notice. Explanation 2 to proviso to Section 73(3) mandates that no penalty under any provision of the Act or rules shall be imposed in respect of payment of service tax under that sub-section - The Karnataka High Court in C. Ahead Info Technologies India P. Ltd. case held that once duty and interest are paid and duly intimated to authorities, Section 73(3) comes into operation mandating that authorities shall not serve any notice under sub-section (1) in respect to the amount paid and shall not initiate proceedings to recover any penalty. The lower appellate authority erroneously did not consider the statutory benefit provided under Section 73(3) read with Section 80 - Since the appellant paid service tax before issuance of SCN, the original authority fell into error in issuing the show cause notice - The imposition of penalty under Section 78 is set aside and the appeal is allowed [Read less]

GST – Gujarat AAR - Classification and exemption to Fresh Psyllium Seeds, Agricultural Produce - Whether psyllium seeds supplied in their natural, raw and unprocessed form as procured through APMC auctions directly from farmers, without undergoing any drying, freezing, crushing or other processing, qualify as fresh isabgol seeds and are exempted under Entry 87 (HSN 1211) of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 – HELD - The fresh agricultural produce refers to raw, unprocessed food items derived from farming that have not been dried, frozen, or heavily processed and remain in the same state as ha... [Read more]

GST – Gujarat AAR - Classification and exemption to Fresh Psyllium Seeds, Agricultural Produce - Whether psyllium seeds supplied in their natural, raw and unprocessed form as procured through APMC auctions directly from farmers, without undergoing any drying, freezing, crushing or other processing, qualify as fresh isabgol seeds and are exempted under Entry 87 (HSN 1211) of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 – HELD - The fresh agricultural produce refers to raw, unprocessed food items derived from farming that have not been dried, frozen, or heavily processed and remain in the same state as harvested. Applying the principles enunciated in Circular No. 169/19/2021-GST dated 06.10.2021, the psyllium seeds obtained through APMC auction mechanism on which no artificial or intentional drying, dehydration, freezing, or processing of any kind is undertaken, and which are supplied to processing units in their natural form without any change or alteration from the stage of procurement, satisfy the definition of fresh produce - The product is classifiable under Sub-heading 1211 9013 of the Customs Tariff Act as psyllium seeds are explicitly mentioned in the HSN notes to heading 1211. Since the seeds are plants or parts of plants (seeds) used primarily in pharmacy for the production of isabgol and are supplied in fresh condition, they fall squarely within the ambit of Entry 87 of Notification No. 10/2025-Central Tax (Rate), which provides exemption for plants and parts of plants used primarily in pharmacy when supplied in fresh or chilled condition - The Psyllium seeds supplied in natural, raw and unprocessed form as procured through APMC auctions directly from farmers, without undergoing any drying, freezing, crushing or other processing, are exempted from GST under Entry 87 (HSN 1211) of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 and are liable to Nil GST – Ordered accordingly [Read less]

Customs - Valuation - Rejection of Transaction Value – Appellant-Importer of apples declared values ranging from USD 10.5 to USD 12 per carton, and the Department alleged undervaluation by arranging two sets of invoices, supported by e-mails, parallel invoices, insurance documents and overseas verification - Whether rejection of declared transaction value under Section 14 of the Customs Act relying upon unsigned parallel invoices, overseas verification reports, e-mails, insurance documents and retracted statements is legally sustainable – HELD - The transaction value is the primary basis of valuation and can be rejecte... [Read more]

Customs - Valuation - Rejection of Transaction Value – Appellant-Importer of apples declared values ranging from USD 10.5 to USD 12 per carton, and the Department alleged undervaluation by arranging two sets of invoices, supported by e-mails, parallel invoices, insurance documents and overseas verification - Whether rejection of declared transaction value under Section 14 of the Customs Act relying upon unsigned parallel invoices, overseas verification reports, e-mails, insurance documents and retracted statements is legally sustainable – HELD - The transaction value is the primary basis of valuation and can be rejected only upon the existence of cogent and legally admissible evidence demonstrating that the declared price is not the price actually paid or payable. The alleged parallel invoices are unsigned computer-generated documents whose origin and authenticity remain unestablished, with no witness examined to prove these documents and no cross-examination afforded to the appellants. Overseas verification reports are selective, lack correlation with specific consignments and have not been subjected to cross-examination, constituting violation of principles of natural justice. Insurance values cannot be equated with transaction value, and e-mails remain unauthenticated and uncorroborated - The Department failed to establish any financial flowback or additional consideration, with no evidence of advance payments, parallel remittances or money trail. The allegation of additional payment rests only on statements subsequently retracted and uncorroborated. In valuation matters, suspicion, however strong, cannot take the place of proof, and absence of evidence of actual payment or financial flowback necessitates acceptance of declared transaction value - The enhancement based on unsigned parallel invoices, uncorroborated overseas data and retracted statements is unsustainable – The appeal is allowedrnrnCustoms - Whether revaluation of goods, demand of differential duty, confiscation of goods and imposition of penalties including penalty on alleged abettors are sustainable when transaction value rejection fails – HELD - When the primary basis for rejecting transaction value fails, the foundation of revaluation under Customs Valuation Rules collapses, as revaluation is merely a consequential exercise incapable of surviving independently. The adjudicating authority has not adhered to mandatory sequential application of Valuation Rules and produced no reliable evidence of contemporaneous imports at higher values, rendering revaluation legally untenable. Confiscation under Section 111(m) requires proof of misdeclaration of value, which necessarily presupposes incorrect declared value, but failure to establish undervaluation through admissible evidence defeats the charge of misdeclaration. Penalty on importer is entirely consequential upon establishment of undervaluation and suppression of facts, and absence of proof of undervaluation and additional consideration precludes penalty justification. Mere association, communication or correspondence does not establish active involvement or knowledge of alleged undervaluation. Penalty cannot be imposed merely because lawful to do so, requiring deliberate defiance or conscious disregard of legal obligations, neither of which exists in the record – The revaluation, duty demand, confiscation and all penalties set aside. [Read less]

Service Tax Liability on Sponsorship Services, Payment of tax by Service Provider - Whether the service receiver is liable to pay service tax on sponsorship services in respect of which the service tax has already been discharged by the service provider - HELD - The balance demand of service tax on sponsorship services cannot be sustained. The appellant has produced invoices with service tax amounts mentioned therein along with letters from service providers confirming tax deposits to the government. The authorities below have not indicated what further evidence or documents would be required to satisfy them. The principl... [Read more]

Service Tax Liability on Sponsorship Services, Payment of tax by Service Provider - Whether the service receiver is liable to pay service tax on sponsorship services in respect of which the service tax has already been discharged by the service provider - HELD - The balance demand of service tax on sponsorship services cannot be sustained. The appellant has produced invoices with service tax amounts mentioned therein along with letters from service providers confirming tax deposits to the government. The authorities below have not indicated what further evidence or documents would be required to satisfy them. The principle that tax cannot be demanded twice on the same service transaction, regardless of whether paid by service provider or service receiver, is well-established. The appellant's readiness to discharge dues immediately upon being pointed out before the show cause notice, combined with the production of supporting documents including service provider confirmations with their service tax registration numbers, renders the averments credible - Double taxation cannot be permitted when tax has already reached the exchequer - The balance demand for service tax on sponsorship services is set asidernrnEligibility of Cenvat Credit on Input Services - Whether input services such as coffee machine charges, club fees, and employee insurance qualify for cenvat credit eligibility when the definition of input services includes "activities relating to business" and the services have nexus or integral connection with the appellant's business activity - HELD - The definition of input services prior to April 1, 2011, included "activities relating to business, such as," which was consistently interpreted in an expansive manner by various High Courts and Tribunals to encompass all services used in relation to the business of the assessee. The show cause notice is bereft of any details explaining how and why the input services were found ineligible. The High Court decision in CCE v Ultratech Cement and tribunal decisions in Tata Teleservices for employee insurance, Imagination Technologies for coffee machine charges, and Aban Offshore for club fees demonstrate that services with nexus or integral connection to the business activity qualify for credit. Following these precedents, the cenvat credit availed by the appellant to be tenable - The demand for denial of cenvat credit is set aside. [Read less]

Customs - Provisional Release, Misclassification of Imported Goods – Respondent imported powdered latex examination gloves classified under CTH 40151900, whereas the Department contended that the correct classification should be CTH 40151200 - Whether the provisional release of goods should be denied based on alleged misclassification when there exists no differential duty liability and no restriction on the imported goods – HELD - Even if the contention of the Department regarding misclassification is accepted, there exists no differential duty involved nor any restriction imposed on the imported goods - The issue in ... [Read more]

Customs - Provisional Release, Misclassification of Imported Goods – Respondent imported powdered latex examination gloves classified under CTH 40151900, whereas the Department contended that the correct classification should be CTH 40151200 - Whether the provisional release of goods should be denied based on alleged misclassification when there exists no differential duty liability and no restriction on the imported goods – HELD - Even if the contention of the Department regarding misclassification is accepted, there exists no differential duty involved nor any restriction imposed on the imported goods - The issue in the present case relates to provisional release of the imported goods and not to the correctness of classification. The misclassification, when it does not result in duty evasion or financial loss to the exchequer, cannot constitute a ground for denying provisional release – The appeal of the Department is dismissed and the imported goods are directed to be released forthwithrnrnCompliance with Labelling Requirements under Medical Devices Rules, 2017 - Whether goods can be withheld for provisional release on the ground of non-compliance with labelling requirements when labels are found affixed on bulk packaging – HELD - Since the gloves were imported in bulk in plastic bags on which labelling was duly done, there exists no requirement for pasting any label on individual gloves. The test report relied upon by the Department was based on samples drawn from individual plastic bags where labelling was affixed. The re-examination conducted after the commissioner's order confirmed that labels were affixed on bulk packing. The contention of the Department that conditions of labelling were not fulfilled lacks merit and cannot be sustained - The labelling objection is rejected and the appeal is dismissed.rnrnRestriction on Import through Non-Notified Port under Rule 43A of Drugs and Cosmetics Rules, 1945 - Whether the restriction under Rule 43A of the Drugs and Cosmetics Rules, 1945 applies when goods, though discharged at a notified port, are cleared at a non-notified customs station – HELD - The goods imported by sea into India are to be treated as imported through the port where they entered India (Nhava Sheva), not through the inland Customs station where they are subsequently cleared - Since the bill of lading clearly indicates Nhava Sheva as the port of discharge and it is a notified port, the respondent has not violated the port restriction provided under Rule 43A. Furthermore, the alleged violation of importing goods through a non-notified port cannot constitute a ground for denying provisional release when all other statutory conditions stand fulfilled - The contention of the Department regarding import through non-notified port is rejected and the appeal is dismissed.rnrnNecessity of No Objection Certificate from CDSCO for Provisional Release - Whether goods can be withheld from provisional release solely on the ground that No Objection Certificate from CDSCO has not been obtained when all other statutory requirements are fulfilled – HELD - The test report of CDSCO has not raised or flagged any objection to the goods except for labelling, which has already been considered and addressed. Furthermore, on earlier occasions under similar bills of entry, similar goods were released for home consumption, demonstrating that the absence of No Objection Certificate when all statutory conditions are satisfied cannot be a basis for denying provisional release. The Department has failed to produce any evidence as to how the release of goods will pose risk to public health, and the goods being Class A devices fall under low risk category - The contention of the Department regarding the necessity of No Objection Certificate is rejected and the appeal is dismissed. [Read less]

Customs - Tariff classification of processed mica sheets – Appellant-importer imported goods declared as "Crude Mica Rifted into Sheets" under Tariff Item 25251090 - Department contended they were actually "Processed Mica Sheets of Regular Shapes & Sizes" classifiable under Tariff Item 68149090. Test reports from the Central Research and Calibration Laboratory indicated the samples "appear to be processed" and in one case contained polymer/additives - Whether goods classifiable under Heading 2525 (Crude Mica and Mica Rifted into Sheets) or Heading 6814 (Worked Mica and Articles of Mica), and whether Customs Test Report f... [Read more]

Customs - Tariff classification of processed mica sheets – Appellant-importer imported goods declared as "Crude Mica Rifted into Sheets" under Tariff Item 25251090 - Department contended they were actually "Processed Mica Sheets of Regular Shapes & Sizes" classifiable under Tariff Item 68149090. Test reports from the Central Research and Calibration Laboratory indicated the samples "appear to be processed" and in one case contained polymer/additives - Whether goods classifiable under Heading 2525 (Crude Mica and Mica Rifted into Sheets) or Heading 6814 (Worked Mica and Articles of Mica), and whether Customs Test Report findings on two live consignments can be mechanically applied to past imports. – HELD - The reclassification of the two live consignments under Heading 6814 is upheld as the test reports, supported by physical examination findings and admission of the importer's director regarding mechanical processing and use of resins, conclusively establish that the goods have undergone processing beyond mere rifting and trimming. The goods possess regular shapes, plain edges, and uniform thickness inconsistent with crude mica definitions in the Harmonized System Notes. However, the test results from two consignments cannot be mechanically applied to 72 past consignments as it is settled law that each B/E is a separate assessment and classification depends on physical characteristics of each consignment. The assumption that similarly described goods from the same supplier are identical in all respects cannot replace actual evidence through testing. Assumptions and extrapolation cannot substitute for empirical evidence, particularly when the test reports of the two sampled consignments themselves show variations (one contains polymer/additives while the other does not) - The differential duty for the two live consignments is upheld, but the demand for differential duty with interest in respect of the past 72 consignments is set aside – The appeal is partly allowedrnrnExtended Period of Limitation - Whether the extended period of limitation under Section 28(4) can be invoked when the dispute involves only a difference of opinion regarding classification of correctly described goods. – HELD - To invoke Section 28(4), the Department must prove collusion, wilful misstatement, or suppression of facts with intent to evade duty. In a pure classification dispute where goods are fully described and all particulars disclosed, a mere difference of opinion on which tariff heading applies does not constitute misdeclaration or suppression. The Supreme Court decisions establish that wrong classification does not amount to suppression of facts, and classification disputes do not attract the extended period of limitation. Suppression requires deliberate withholding of material facts, and when goods are fully described with disclosed source, country of origin, supplier details, and specifications following complete scrutiny by Customs, the absence of any withheld material information negates the foundation for invoking extended limitation. The principle that none of the ingredients necessary for invoking Section 28(4) are present when classification is disputed on goods that are truthfully described must be respected - The extended period of limitation under Section 28(4) cannot be invoked, and all demands based on this provision are set aside.rnrnConfiscation and Penalties in Classification Disputes - Whether confiscation under Section 111(m) and penalties under Sections 112, 114A, and 114AA are sustainable when the dispute concerns interpretation of tariff classifications rather than factual misdeclaration or use of false documents. – HELD - Section 111(m) applies only where material misdeclaration exists. Since the description provided was truthful and supplier documents matched the bills of entry exactly, no basis for confiscation exists as there was no material misstatement of facts. Penalty under Section 112 requires establishment of a conscious and deliberate act rendering goods liable to confiscation, but interpretational disputes regarding tariff entries do not warrant penalty as they involve legal questions rather than intentional misconduct. Penalty under Section 114A requires wilful misstatement or suppression, which necessarily fails when the underlying Section 28(4) ingredients are absent, as a pure classification disagreement does not constitute wilful misstatement. Penalty under Section 114AA applies only when a person knowingly uses or causes to be used false or incorrect documents - In this case, invoices were genuine, packing lists were genuine, and no document was alleged or proven to be fabricated or false, therefore the application of this section lacks foundation. The principle that penalties cannot be imposed for honest differences in interpretation of complex tariff provisions must be upheld - Confiscation of goods, redemption fines, and all penalties under Sections 112, 114A, and 114AA are set aside. [Read less]

Service Tax – Benefit of abatement on the Gross Contract Value under Notification No. 1/2006-ST dated 01.03.2006 - Denial of Abatement on Construction Services on the ground that the assessee had not claimed the abatement in its service tax returns - Whether the substantive benefit of abatement can be denied merely because the assessee failed to claim it in the returns filed – HELD - Where the facts establishing eligibility for abatement are admitted or established on record through documentary evidence such as bills, invoices, and certificates from chartered professionals, the assessee is entitled to the benefit of ab... [Read more]

Service Tax – Benefit of abatement on the Gross Contract Value under Notification No. 1/2006-ST dated 01.03.2006 - Denial of Abatement on Construction Services on the ground that the assessee had not claimed the abatement in its service tax returns - Whether the substantive benefit of abatement can be denied merely because the assessee failed to claim it in the returns filed – HELD - Where the facts establishing eligibility for abatement are admitted or established on record through documentary evidence such as bills, invoices, and certificates from chartered professionals, the assessee is entitled to the benefit of abatement regardless of whether it was formally claimed in the return. The responsibility of the proper officer is to determine the duty liability payable by the assessee after examining all abatement benefits eligible to them, whether or not specifically claimed - The Tribunal has consistently held that when material utilization is evidenced through VAT returns, purchase invoices, and professional certificates, the abatement benefit must be extended - The demand of Service Tax, along with interest, confirmed in the impugned order, is set aside - The penalty under Section 78 of the Finance Act, 1994 is also set aside. Only the penalty for non-filing of returns is upheld – The appeal is disposed of [Read less]

GST – Karnataka AAR – Eligibility to Input Tax Credit on Canteen Services – Applicant recovers a nominal subsidized amount from regular employees through salary deduction while bearing the substantial balance cost - Whether input tax credit on GST charged by canteen service providers for catering services is admissible to a company that is statutorily obligated to provide canteen facility under Section 46 of the Factories Act, 1948, and if so, whether the credit extends to the entire amount charged or only to the cost actually borne by the employer – HELD – The proviso to Section 17(5)(b) of the CGST Act, 2017 pe... [Read more]

GST – Karnataka AAR – Eligibility to Input Tax Credit on Canteen Services – Applicant recovers a nominal subsidized amount from regular employees through salary deduction while bearing the substantial balance cost - Whether input tax credit on GST charged by canteen service providers for catering services is admissible to a company that is statutorily obligated to provide canteen facility under Section 46 of the Factories Act, 1948, and if so, whether the credit extends to the entire amount charged or only to the cost actually borne by the employer – HELD – The proviso to Section 17(5)(b) of the CGST Act, 2017 permits such credit where an employer is obligatorily required to provide services to employees under any law, hence, ITC is admissible with respect to catering services provided to regular employees in discharge of statutory obligation under Section 46 of the Factories Act, 1948. However, the admissibility of ITC stands restricted to the extent of the cost of canteen services actually borne by the company - Regarding contract workers, no input tax credit is admissible since there exists no statutory obligation to provide canteen facilities to contractual workers, no direct employer-employee relationship subsists between the company and contract workers. Further, the applicant is not engaged in the business of supplying food or running canteens as its principal activity - Input tax credit of GST charged by canteen service providers is admissible only to the extent of the cost actually borne by the applicant in respect of regular employees. Input tax credit attributable to the portion recovered from regular employees and the entire amount attributable to contract workers is not admissible – Ordered accordingly [Read less]

GST – Bail Application - Whether an accused person charged with economic offence involving substantial loss to state exchequer, who has undergone custody for about four months with no prior criminal antecedents and where the evidence is purely documentary in nature, is entitled to bail despite the severity of the alleged fraud – HELD - Grant of bail is the general rule and imprisonment is the exception. The severity of offence alone cannot justify denial of bail when there is no apprehension of tampering with evidence or absconding. The fundamental right to speedy trial under Article 21 of the Constitution cannot be de... [Read more]

GST – Bail Application - Whether an accused person charged with economic offence involving substantial loss to state exchequer, who has undergone custody for about four months with no prior criminal antecedents and where the evidence is purely documentary in nature, is entitled to bail despite the severity of the alleged fraud – HELD - Grant of bail is the general rule and imprisonment is the exception. The severity of offence alone cannot justify denial of bail when there is no apprehension of tampering with evidence or absconding. The fundamental right to speedy trial under Article 21 of the Constitution cannot be denied to an undertrial prisoner. Since the investigating agency has had four months to collect documentary evidence and the trial is unlikely to conclude in the near future, continued detention serves no purpose – Further, the documentary and electronic nature of evidence means official witnesses only would testify, eliminating any concern of witness tampering or intimidation. Additionally, the arrest must proceed on belief supported by material reasons recorded in writing and not on suspicion alone, and that there is no indication on record that the petitioner would tamper with evidence or refrain from participating in trial if released on bail - The petitioner is ordered to be released on furnishing personal bond and surety bond to the satisfaction of the trial court, subject to conditions that he shall not induce or threaten any witness, shall notify any change of address to the trial court, and shall not leave the country without prior permission of the trial court - The petition for bail is allowed [Read less]

Haryana Tax on Entry of Goods into Local Areas Act, 2008 - Constitutional Competency to Levy Entry Tax after Constitutional Amendment by One Hundred and First Amendment Act, 2016 - Whether the State possesses legislative competency to make provisions facilitating the collection of Entry Tax under a repealed Act through executive order after the deletion of Entry 52 from List II of the Seventh Schedule following the 101st Constitutional Amendment – HELD - Prima facie, the court is of the opinion that once the Act stands repealed and only actions already taken under the repealed Act before its repeal stand saved, then afte... [Read more]

Haryana Tax on Entry of Goods into Local Areas Act, 2008 - Constitutional Competency to Levy Entry Tax after Constitutional Amendment by One Hundred and First Amendment Act, 2016 - Whether the State possesses legislative competency to make provisions facilitating the collection of Entry Tax under a repealed Act through executive order after the deletion of Entry 52 from List II of the Seventh Schedule following the 101st Constitutional Amendment – HELD - Prima facie, the court is of the opinion that once the Act stands repealed and only actions already taken under the repealed Act before its repeal stand saved, then after the deletion of Entry 52 from List II through the 101st Amendment, the State loses its legislative competency to make any provision facilitating collection of entry tax, whether through an Act or through an executive order. The saving clause operates only to preserve actions already taken, not to enable fresh collection mechanisms. The State's power to levy entry tax was expressly tied to Entry 52, and the deletion of this entry results in the loss of such competency. However, the issue requires further examination - The matters are adjourned for final hearing. In the interim, no coercive steps shall be taken against the petitioners – Ordered accordingly [Read less]

GST - Input Tax Credit Verification, Mismatch between GSTR-3B and GSTR - Invoices claimed as input tax credit in GSTR-3B not reflecting in GSTR-2A, resulting in excess availment of ITC – Petitioner claimed that the difference arises from incorrect disclosure of input tax credit relating to import of goods and procurements made from SEZ units, which were incorrectly reported under "All other ITC" in Table 4(A)(5) of GSTR-3B instead of Table 4(A)(1), and that this error was subsequently rectified in the annual returns filed in Table 6E - Whether the ITC claimed on import of goods and SEZ procurements can be denied solely o... [Read more]

GST - Input Tax Credit Verification, Mismatch between GSTR-3B and GSTR - Invoices claimed as input tax credit in GSTR-3B not reflecting in GSTR-2A, resulting in excess availment of ITC – Petitioner claimed that the difference arises from incorrect disclosure of input tax credit relating to import of goods and procurements made from SEZ units, which were incorrectly reported under "All other ITC" in Table 4(A)(5) of GSTR-3B instead of Table 4(A)(1), and that this error was subsequently rectified in the annual returns filed in Table 6E - Whether the ITC claimed on import of goods and SEZ procurements can be denied solely on the basis of mismatch with GSTR-2A when such items were not designed to appear in GSTR-2A during the relevant period and were properly documented through Bill of Entry and subsequently corrected in subsequent Annual Returns – HELD - The authorities failed to consider and appreciate that GSTR-2A was designed to take in only details of suppliers in India and their supplies and did not take in details relating to import of goods and services and SEZ procurements. The difference is attributable to a typographical error in disclosure classification rather than actual excess availment of credit - The import details and supplies from SEZs were not reflected in GSTR-2A by the system design itself. The assessee had correctly reported these credits in the Annual Return. The requirement to match import credits with GSTR-2A was introduced only from January 2022 through subsequent legislative amendment. Under these circumstances, the reasoning and findings recorded by the authority regarding alleged wrongful availment and utilization of excess input tax credit are erroneous and contrary to the material on record - The demand along with interest and penalty on such input tax credit are set aside [Read less]

The substance of the services must determine their classification, and once the substance is found to be healthcare services, the exemption cannot be nullified by misinterpreting contractual or revenue-sharing arrangements between the parties.

Custom - Customs Broker's Liability, Aiding in Duty Evasion - Whether a CHA can be held liable for penalty under Section 112(b) when the goods were imported against valid advance authorization licences and cleared by proper customs officers, but subsequently diverted to unauthorized premises on the instructions of the importer – HELD - The customs broker, as a customs house agent, is bound to ensure compliance with the conditions of the advance authorization licence and cannot merely claim innocence by attributing the diversion to the importer's instructions. The broker's representative had admitted in his statement that... [Read more]

Custom - Customs Broker's Liability, Aiding in Duty Evasion - Whether a CHA can be held liable for penalty under Section 112(b) when the goods were imported against valid advance authorization licences and cleared by proper customs officers, but subsequently diverted to unauthorized premises on the instructions of the importer – HELD - The customs broker, as a customs house agent, is bound to ensure compliance with the conditions of the advance authorization licence and cannot merely claim innocence by attributing the diversion to the importer's instructions. The broker's representative had admitted in his statement that he was aware of the licence conditions restricting delivery to specified factory premises, yet the goods were transported to other locations. The fact that sales tax delivery notes and transportation forms were generated by the broker and handed to the truck driver with knowledge that goods were being diverted for sale clearly established the broker's conscious participation in the illegal diversion - The importer's subsequent admission of diversion and remittance of partial duty further corroborated the fact that the goods were indeed diverted in violation of the Foreign Trade Policy and Customs Notification No. 18/2015. The broker, being a partner in the transportation company that arranged vehicles and received payment directly from the importer, had facilitated the commission of the offence by knowingly arranging transportation to premises other than those mentioned in the advance authorization licence, thereby aiding and abetting duty evasion - the Revenue having clearly established the involvement of the appellant in aiding transportation of the imported goods to the places other than the premises mentioned in the Advance Authorised Licences, hence, the provisions of Section 112(b) of the Customs Act, 1962 are attracted since the goods are liable for confiscation - The penalty imposed is sustained and the appeal is dismissed [Read less]

GST - Sealing of business premises, Attachment of bank account during search and seizure operations - Petitioner was summoned for examination but did not cooperate with the proceedings and did not appear before the authorities despite repeated summons. The petitioner instead filed a writ petition challenging the sealing of premises and attachment of bank accounts - Whether the sealing of business premises and provisional attachment of bank accounts during the course of a search and seizure operation initiated under Section 67 of the CGST Act, 2017 is valid – HELD - The sealing of premises and provisional attachment of ba... [Read more]

GST - Sealing of business premises, Attachment of bank account during search and seizure operations - Petitioner was summoned for examination but did not cooperate with the proceedings and did not appear before the authorities despite repeated summons. The petitioner instead filed a writ petition challenging the sealing of premises and attachment of bank accounts - Whether the sealing of business premises and provisional attachment of bank accounts during the course of a search and seizure operation initiated under Section 67 of the CGST Act, 2017 is valid – HELD - The sealing of premises and provisional attachment of bank accounts by the respondents are valid exercises of power conferred under Sections 67(4) and 83 of the CGST Act, 2017, respectively. The Section 67(4) confers a duty upon the authorized officer to seal premises where access is denied, and Section 83 authorizes the Commissioner to attach property to protect government revenue. The expression "reason to believe" under Section 67 contemplates objective determination based on independent care and evaluation - The seized goods can be released only upon compliance with the procedure prescribed under Section 67(6) read with Rules 140 and 141 of the CGST Rules, 2017, by filing an application with appropriate security or payment of taxes. The petitioner has failed to cooperate with the investigation, did not appear despite summons, and did not avail of the alternative and efficacious remedies provided under the Act - Where alternative and efficacious remedies are provided under the statute, a writ petition under Article 226 cannot be entertained. The petitioner should have filed an application under Section 67(6) of the Act for release of goods instead of approaching the court through a writ petition - The writ petition is dismissed [Read less]

GST – Maharashtra AAR - Construction and sale of commercial units as business activity – Applicant previously earned rental income from property held as capital asset, proposed to construct commercial units on vacant land acquired as personal capital asset using surplus funds, intending to sell some units for meeting construction costs and lease remaining units for rental income - Whether the activity of constructing and developing commercial units on vacant plot of land and selling such units to prospective buyers, as well as leasing commercial units on rental basis, amounts to supply under GST and constitutes activit... [Read more]

GST – Maharashtra AAR - Construction and sale of commercial units as business activity – Applicant previously earned rental income from property held as capital asset, proposed to construct commercial units on vacant land acquired as personal capital asset using surplus funds, intending to sell some units for meeting construction costs and lease remaining units for rental income - Whether the activity of constructing and developing commercial units on vacant plot of land and selling such units to prospective buyers, as well as leasing commercial units on rental basis, amounts to supply under GST and constitutes activity in course or furtherance of business – HELD - The activity of sale of commercial units to prospective buyers constitutes supply and is in course or furtherance of business under GST, irrespective of the source of funds used for construction, whether derived from individual savings, bank borrowings or any other source, as the source of funds is immaterial in determining whether an activity amounts to supply - Further, leasing of commercial premises on rent is also a commercial activity which amounts to supply in furtherance of business, and the scale, volume or frequency of such activity is immaterial under the definition of business under GST. However, sale of commercial units where entire consideration is received after completion certificate from competent authority would not be subject to GST – The sale of commercial units to prospective buyers prior to completion certificate and rental income from leased units are taxable supplies in course of furtherance of business – Ordered accordinglyrnrnInput tax credit eligibility for construction of immovable property leased on rental basis -Whether input tax credit is available on inputs and input services used for construction of commercial units which are leased out on rental basis – HELD - As per section 17(5)(d) of the CGST Act, no input tax credit is available on goods or services received for construction of immovable property on own account, including when such goods or services are used in course or furtherance of business - No input tax credit is available on inputs and input services used for construction of commercial units leased on rental basis.rnrnInput tax credit eligibility for construction of immovable property sold prior to completion certificate - Whether input tax credit is available on inputs and input services used for construction of commercial units sold to prospective buyers prior to receipt of completion certificate – HELD - Input tax credit is available on inputs and input services used in construction of commercial property which is sold to customers before receipt of occupation certificate or completion certificate from the concerned municipal authorities – The ITC is available on inputs and input services used for construction of commercial units sold to prospective buyers prior to receipt of completion certificate, calculated on proportionate basis. [Read less]

GST – Kerala AAAR - Classification of vegetable-based curry preparations - Whether ready-to-eat packaged vegetable curry preparations fall within the scope of Chapter 20 (preparations of vegetables, fruits, nuts) or Chapter 21 (edible preparations) – HELD - The products in question are ready-to-eat packaged food rather than mere prepared or preserved vegetables. The authority recognizes that while Chapter 20 relates to preparations of vegetables, fruits, and nuts, the nature of the final product as a complete edible curry preparation distinguishes it from the category of prepared or preserved vegetables envisaged under... [Read more]

GST – Kerala AAAR - Classification of vegetable-based curry preparations - Whether ready-to-eat packaged vegetable curry preparations fall within the scope of Chapter 20 (preparations of vegetables, fruits, nuts) or Chapter 21 (edible preparations) – HELD - The products in question are ready-to-eat packaged food rather than mere prepared or preserved vegetables. The authority recognizes that while Chapter 20 relates to preparations of vegetables, fruits, and nuts, the nature of the final product as a complete edible curry preparation distinguishes it from the category of prepared or preserved vegetables envisaged under Chapter 20. The supplementary notes to Chapter 21 specifically contemplate preparations for use either directly or after processing such as cooking, dissolving, or boiling in water, milk, or other liquids for human consumption, thereby bringing these products squarely within heading 2106 which covers food preparations not elsewhere specified or included. Applying Rule 3(a) of the Rules for Interpretation of the Tariff, the authority determines that heading 2106 provides a more specific description of ready-to-eat packaged curries than heading 2005 - The classification of items under heading 21069099 is upheld.rnrnClassification of nut-based preparations - Whether a packaged ready-to-eat coconut-based preparation falls within Chapter 20 (preparations of fruits and nuts) or Chapter 21 (edible preparations) – HELD - While the product is indeed nut-based and may technically fall within the scope of Chapter 20 headings, the nature of the final product as a complete ready-to-eat packaged item distinguishes it from preparations contemplated under Chapter 20. The authority determines that a packaged ready-to-eat item more appropriately falls under Chapter 21, which covers edible preparations suitable for direct consumption or after minimal processing, rather than under Chapter 20 which covers the prepared or preserved state of raw ingredients - The classification of the item under heading 21069099 is upheld. [Read less]

GST – Kerala AAAR - Taxability of fees for conversion of wetland to dryland under Reverse Charge - Whether the fee paid by the company for conversion of wetland to dryland by the State Government constitutes consideration for a taxable supply of service liable to GST under RCM or falls within the exemption provided under Notification No. 14/2017-Central Tax (Rate) as an activity entrusted to Panchayats under Article 243G of the Constitution read with the Eleventh Schedule – HELD - The fee paid for conversion of wetland to dryland constitutes consideration for a taxable supply of service by the State Government liable t... [Read more]

GST – Kerala AAAR - Taxability of fees for conversion of wetland to dryland under Reverse Charge - Whether the fee paid by the company for conversion of wetland to dryland by the State Government constitutes consideration for a taxable supply of service liable to GST under RCM or falls within the exemption provided under Notification No. 14/2017-Central Tax (Rate) as an activity entrusted to Panchayats under Article 243G of the Constitution read with the Eleventh Schedule – HELD - The fee paid for conversion of wetland to dryland constitutes consideration for a taxable supply of service by the State Government liable to GST under RCM as per Notification No. 13/2017-Central Tax (Rate) - The land conversion is legally and factually distinct from land improvement. While land improvement refers to enhancing the quality or productivity of existing land without changing its classification, land conversion means changing the legal classification of land itself from one category to another, such as from wetland to dryland. The Eleventh Schedule of the Constitution, read with Article 243G, expressly lists land improvement as a function entrusted to Panchayats but makes no mention of land conversion - The activity of converting land from wetland to dryland cannot be equated with any of the activities listed as entrusted to Panchayats under Article 243G of the Constitution. The fee charged represents a consideration or compensation for conferring a private benefit to the applicant at the cost of the public good of conservation of paddy land and wetland - The State Government, by exercising its statutory power to permit conversion of land for the exclusive benefit of the applicant, supplies a taxable service within the scope of Item 5 of Notification No. 13/2017-Central Tax (Rate), which subjects services supplied by State Government to business entities to GST under RCM - The ruling given by the Authority for Advance Ruling is upheld and the appeal is dismissed [Read less]