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GST - Difference between GSTR-3B and GSTR-2A - Demand created on mechanical comparison without verification - Whether entire difference can be treated as ineligible ITC without examining reconciliation and supporting evidence and whether appellant received effective opportunity of hearing - HELD - The entire difference between GSTR-3B and GSTR-2A cannot be treated as ineligible ITC without examining the appellant's reconciliation and supporting evidence - The burden under Section 155 of the CGST Act, 2017 remains upon the appellant, however, the entire difference between GSTR-3B and GSTR-2A cannot be treated as ineligible ... [Read more]

GST - Difference between GSTR-3B and GSTR-2A - Demand created on mechanical comparison without verification - Whether entire difference can be treated as ineligible ITC without examining reconciliation and supporting evidence and whether appellant received effective opportunity of hearing - HELD - The entire difference between GSTR-3B and GSTR-2A cannot be treated as ineligible ITC without examining the appellant's reconciliation and supporting evidence - The burden under Section 155 of the CGST Act, 2017 remains upon the appellant, however, the entire difference between GSTR-3B and GSTR-2A cannot be treated as ineligible ITC without examining the appellant’s reconciliation and supporting evidence - The adjudicating authority is required to undertake a category-wise and invoice-wise verification of the documents and evidence furnished by the appellant and determine the eligibility of ITC in accordance with Sections 16 and 155 of the CGST Act, 2017 -Further, the appellant was not provided an effective opportunity of hearing before the adjudicating authority, though the first appellate authority had granted multiple opportunities to appear - The order-in-original and order-in-appeal are set aside. The matter is remanded to the adjudicating authority to consider all certificates mentioned in the findings and verify these from records and examine all other issues on merits by affording an opportunity of being heard to the appellant in the interests of justice - The appeal is allowed by remand [Read less]

GST - Job Work Transaction - Value to be declared in E-way Bill for return of goods from job worker - Rule 138 of the CGST Rules, 2017 and Section 15(1) of the CGST Act, 2017 – Appellant received goods from job worker after completion of job work. Vehicle carrying goods was intercepted during movement from job worker's premises to petitioner's premises alleging goods were not accompanied by valid e-way bill and delivery challan – Levy of penalty under Section 129(3) of the CGST Act - Appellant contended that movement was governed by Section 143 relating to job work and that consignment value under Rule 138 should be th... [Read more]

GST - Job Work Transaction - Value to be declared in E-way Bill for return of goods from job worker - Rule 138 of the CGST Rules, 2017 and Section 15(1) of the CGST Act, 2017 – Appellant received goods from job worker after completion of job work. Vehicle carrying goods was intercepted during movement from job worker's premises to petitioner's premises alleging goods were not accompanied by valid e-way bill and delivery challan – Levy of penalty under Section 129(3) of the CGST Act - Appellant contended that movement was governed by Section 143 relating to job work and that consignment value under Rule 138 should be the job work service charges only, not the intrinsic value of principal's goods which were merely being returned - Whether value of goods on which job work has been undertaken is includable in the consignment value to be declared in e-way bill when goods are returned by job worker to principal after completion of job work - HELD - The invoice contains all mandatory particulars such as description, quantity and HSN of the goods, job work charges collected and GST paid on the said job work charges. Therefore, the impugned goods were accompanied by a valid tax paid invoice. Once the goods are accompanied by a valid tax paid invoice, there is no requirement of any delivery challan – As for Revenue contention that return-from-job-work movement, the e-way bill value should capture the original material value together with the job-work charges, on a conjoint reading of Rule 138 and Section 15, when goods belonging to principal are returned by job worker on completion of job work, the supply is of job work services only and not of the goods themselves. The value of the original goods on which have been subjected to job work is not includable in the consignment value of the goods which is to be reported in e-way bill. The value of the original goods which have been subjected to job work is not includable in the consignment value of the goods which is to be reported in e-way bill – Further, as per Explanation 2 to Rule 138, the consignment value of the goods is well below the threshold stipulated in Rule 138(1) for issue of e-way bill - The contention of the Dept that the e-way bill value should capture the original material value together with the job-work charges, is contrary to the statutory provisions and is not sustainable - The appellant’s contention that the present transport of job worked goods from the job worker to the principal would not be covered by the e-way bill regulations is legally correct. When issue of e-way bill itself was not mandatory in the instant case, any proceedings against the taxpayer on the grounds of defective e-way bill / lack of e-way bill are void ab initio – The impugned order is set aside and the appeal is allowed [Read less]

GST - Refund of IGST on Exports, Refund of excess tax paid – Clerical Errors in GST Returns - Appellant exported goods on payment of IGST and filed shipping bills and export invoices correctly with Customs. However, while filing GSTR-3B returns, appellant wrongly reported the export turnover and corresponding IGST in the column intended for domestic supplies instead of the column for zero-rated exports. Due to reporting error and resulting mismatch between shipping bill, GSTR-1 and GSTR-3B, the Customs automated refund system did not process the refund. Subsequently, the Appellant paid the entire IGST amount again in a l... [Read more]

GST - Refund of IGST on Exports, Refund of excess tax paid – Clerical Errors in GST Returns - Appellant exported goods on payment of IGST and filed shipping bills and export invoices correctly with Customs. However, while filing GSTR-3B returns, appellant wrongly reported the export turnover and corresponding IGST in the column intended for domestic supplies instead of the column for zero-rated exports. Due to reporting error and resulting mismatch between shipping bill, GSTR-1 and GSTR-3B, the Customs automated refund system did not process the refund. Subsequently, the Appellant paid the entire IGST amount again in a later return with correct entries in the appropriate column, which resulted in receiving the refund through Customs automated process - Appellant filed refund claim for the original IGST payment made during the earlier period. The Respondent rejected the refund applications on grounds of discrepancies in returns and claiming that the Appellant had already received the refund - Whether refund of excess IGST paid on export of goods can be denied on grounds of clerical errors in filing GSTR-3B returns when the export supplies were correctly reported in GSTR-1 returns and the amount was paid twice resulting in excess payment – HELD - Both the Assistant Commissioner, as well as the Commissioner (Appeals) did not make any efforts to understand which amount is claimed as refund and which amount was refunded through automated system of Customs - The First Appellate authority mechanically rejected the appeals without going into the details of the GST Returns. It is clear on record, that the appellant has paid IGST once in the respective months of November-2018, December-2018, and February-2019, and once again in the month of August-2019 - Since IGST was paid twice with the second payment being refunded through Customs, the original payment stands as excess paid amount. Tax cannot be collected without authority of law and therefore excess paid amount is liable to be returned to appellant. A clerical mistake of making correct entries at wrong places, subsequently explained in reconciliation statements, is a minor procedural infraction and does not warrant denial of refund - Retaining excess payment of tax is hit by Article 265 of the Constitution. The principle of restitution and unjust enrichment mandates that revenue cannot retain amounts deposited twice when taxpayer has not erred in substance - The impugned order of first appellate authority quashed and set aside – The assessee appeal is allowed [Read less]

GST - Penalty under Section 129 of CGST Act, 2017 - Detention and seizure of goods in transit – Vague show cause notice lacking details and not citing specific statutory provisions - The vehicle transporting goods intercepted on the ground that the goods were found being unloaded at premises of an entity other than the consignee mentioned in the accompanying e-way bill and invoice - An order in form GST MOV-09 was issued levying tax and penalty under Section 129 on the charge of change of destination of delivery - The Appellant challenged the order contending that the show cause notice did not specify the exact provision... [Read more]

GST - Penalty under Section 129 of CGST Act, 2017 - Detention and seizure of goods in transit – Vague show cause notice lacking details and not citing specific statutory provisions - The vehicle transporting goods intercepted on the ground that the goods were found being unloaded at premises of an entity other than the consignee mentioned in the accompanying e-way bill and invoice - An order in form GST MOV-09 was issued levying tax and penalty under Section 129 on the charge of change of destination of delivery - The Appellant challenged the order contending that the show cause notice did not specify the exact provision of the Act or Rules allegedly violated and that the original order was passed without affording a personal hearing - Whether penalty under Section 129 can be imposed without making out a specific charge of contravention of the provisions of the Act or Rules – HELD - For penalty to be imposed under Section 129, a charge of contravention of the provisions of the Act or Rules should be made and the same must be established by way of evidence. The show cause notice being vague, lacking details and not citing specific statutory provisions alleged to have been contravened, is insufficient to give proper opportunity to the Appellant to meet the allegations, thus violating basic principles of natural justice – Further, the original order was passed without affording a hearing to the appellant and without providing copies of the alleged inculpatory statements and without providing opportunity to cross-examine the persons from whom these statements were recorded, thus passing the order in complete violation of the principles of natural justice. The order in appeal did not address the valid contentions raised by the appellant and is cryptic, not providing valid reasons for upholding the original order and suffering from non-application of mind - The impugned order in appeal set aside and the appeal is allowed [Read less]

GST - Monetary threshold limit for filing appeal before the GSTAT - Whether departmental appeal for penalty amount below the prescribed monetary limit of Rs. 20 lakh can be admitted without establishing an applicable exception - HELD - A departmental appeal is governed by the monetary-limit framework prescribed for Departmental litigation. The right of appeal is a creature of statute and its exercise remains subject to the statutory and regulatory framework governing departmental litigation. The existence of an exception cannot be presumed merely because the Department desires to pursue the appeal - An exception is an exce... [Read more]

GST - Monetary threshold limit for filing appeal before the GSTAT - Whether departmental appeal for penalty amount below the prescribed monetary limit of Rs. 20 lakh can be admitted without establishing an applicable exception - HELD - A departmental appeal is governed by the monetary-limit framework prescribed for Departmental litigation. The right of appeal is a creature of statute and its exercise remains subject to the statutory and regulatory framework governing departmental litigation. The existence of an exception cannot be presumed merely because the Department desires to pursue the appeal - An exception is an exception precisely because it takes a case outside the general rule. The burden lies upon the Revenue to disclose which exception is being invoked, what facts bring the case within that exception, what statutory or administrative provision supports the invocation and where residual discretion is relied upon, the order or recorded opinion demonstrating that the statutory discretion was actually exercised in the particular case - Permission to institute an appeal is not the same as statutory compliance and a mere assertion that the appeal has been filed with the approval or authorisation of the Commissioner is insufficient - The monetary-limit principle is one of institutional discipline. The object of appellate adjudication is not to provide an unrestricted forum for Governmental disagreement with every adverse order - The Revenue has failed to establish that the present appeal falls within any recognised exception. No material has been produced demonstrating a specific, reasoned and legally cognisable exercise of the Commissioner's residual power in the present case - The appeal does not satisfy the conditions governing its admission and maintainability before this Tribunal - The appeal is dismissed at the threshold on the ground of the prescribed monetary limit [Read less]

GST - Revision jurisdiction and period of limitation under Section 108(2)(b), Applicability of Supreme Court exclusion period to departmental proceedings, Extension of limitation during COVID-19 pandemic - Revisional Authority issued notice on 11.8.2021 proposing to reverse order of Appellate Authority passed on 25.3.2021 wherein penalty imposed by proper officer was reduced. Appellant pleaded that revision order dated 31.8.2024 was barred by limitation as it was passed beyond 3 years from date of appellate order. Appellant contended that directions given by Supreme Court excluding period from 15.3.2020 to 28.2.2022 for li... [Read more]

GST - Revision jurisdiction and period of limitation under Section 108(2)(b), Applicability of Supreme Court exclusion period to departmental proceedings, Extension of limitation during COVID-19 pandemic - Revisional Authority issued notice on 11.8.2021 proposing to reverse order of Appellate Authority passed on 25.3.2021 wherein penalty imposed by proper officer was reduced. Appellant pleaded that revision order dated 31.8.2024 was barred by limitation as it was passed beyond 3 years from date of appellate order. Appellant contended that directions given by Supreme Court excluding period from 15.3.2020 to 28.2.2022 for limitation purposes do not apply to statutory authorities - Whether the proceedings of Revisional Authority reversing order of Appellate Authority are barred by period of limitation fixed under Section 108(2)(b) of the Act and whether Supreme Court exclusion period for COVID-19 lockdown applies to departmental proceedings - HELD - Section 108(2)(b) places restriction that Revisional Authority cannot exercise its powers after 3 years from passing of order - Supreme Court in Cognizance for Extension of Limitation directed that period from 15.3.2020 to 28.2.2022 shall stand excluded for purposes of limitation in all judicial and quasi-judicial proceedings. This exclusion period applies to departmental proceedings as confirmed by Supreme Court in G.R. Infra Projects Limited case which specifically applied exclusion period to departmental show cause notice. Period from 26.3.2021 to 28.2.2022 approximately 11 months has to be excluded in computing limitation. Therefore Revisional Authority could pass order under Section 108 on or before 26.2.2025. Order dated 31.8.2024 falls within extended limitation period and is not barred by limitation – The appeal is dismissed - Movement of goods without statutory documents, Invocation of detention and penalty under Section 129 - Consignment was intercepted during transit and found being unloaded at premises other than mentioned in destination address - Appellant claimed e-way bill could not be generated due to technical glitches and pleaded that transactions were genuine as all parties were registered dealers - Whether Revisional Authority was justified in reversing order of Appellate Authority which had reduced penalty and in upholding invocation of Section 129 by proper officer for transportation of goods without statutory documents - HELD - Section 68(1) requires that person in charge of conveyance must carry e-way bill and prescribed documents during transit. Rule 138(1) mandates that Part A of e-way bill must be generated before commencement of movement of goods. At time of interception goods were accompanied by documents for movement from supplier to appellant but e-way bill and tax invoice for unloading at third-party premises were generated only on 1.33 PM after interception. No evidence was furnished to support plea that e-way bill could not be generated due to technical glitches - Appellant was fully aware of procedure but had deliberately not raised documents for delivery to third-party premises. Absence of statutory documents at time of interception constitutes willful act to evade payment of taxes. Generation of e-way bill after interception was only afterthought to cover-up contravention. While distinction exists between serious substantive violations and minor procedural violations in determining penalty quantum, absence of statutory documents at time of movement itself constitutes substantive violation indicating intent to evade taxes as such documents are mandate of law - Imposition of penalty under Section 129(1) is legal and valid - The order of Revisional Authority confirming penalty imposed under Section 129 is valid and upheld - Appeal is dismissed. [Read less]

Central Excise – Rule 6 of CENVAT Credit Rules, 2004 – Classification of manufactured intermediate products – Appellants, manufacturers of sugar confectionery, manufactured processed milk which was either captively consumed in the manufacture of sugar-boiled confectionery or supplied to job workers for further use; Processed milk was exempt from duty under Notification No.03/2006-CE and the Department alleged non-maintenance of separate accounts for common input service credit, proposing recovery of duty with penalty – Whether processed milk constitutes an exempted final product for the purposes of Rule 6 of the CE... [Read more]

Central Excise – Rule 6 of CENVAT Credit Rules, 2004 – Classification of manufactured intermediate products – Appellants, manufacturers of sugar confectionery, manufactured processed milk which was either captively consumed in the manufacture of sugar-boiled confectionery or supplied to job workers for further use; Processed milk was exempt from duty under Notification No.03/2006-CE and the Department alleged non-maintenance of separate accounts for common input service credit, proposing recovery of duty with penalty – Whether processed milk constitutes an exempted final product for the purposes of Rule 6 of the CENVAT Credit Rules, 2004 – HELD – Processed milk is an intermediate product forming an integral part of the continuous manufacture of sugar-boiled confectionery and not an independent final product, as it is neither manufactured nor cleared as a separate product. The tribunal relied on the principle established in Collector of Central Excise Vs Eastend Paper Industries Ltd. that where a process is so integrally connected with ultimate production that manufacture would be commercially inexpedient without it, articles required in such process fall within the expression 'in the manufacture of goods'. Further, as per Rallis India Ltd. and Union of India Vs Hindustan Zinc Ltd., a product emerging as a technological necessity in the course of manufacture of the principal product constitutes a by-product and Rule 6 obligation is not attracted merely because such by-product is exempted. Captive consumption or removal to job workers does not alter the character of processed milk as an intermediate product. Therefore, processed milk cannot be treated as an exempted final product for invoking Rule 6 – The impugned orders are set aside and the appeals are allowed [Read less]

GST - Consideration of Reply in Adjudication Order - Omission to Reproduce Reply in Order - Section 74 and 75(6) of CGST Act, 2017 - Petitioner filed detailed reply with voluminous compilation of supporting documents and appeared through counsel for personal hearing - Adjudication Order confirmed demand against petitioner but did not reproduce the reply in the order though it referred to written submissions and personal hearing, and petitioner contended that order violates Sections 74(9) and 75(6) requiring consideration of reply and statement of relevant facts and basis of decision - Whether non-reproduction of petitioner... [Read more]

GST - Consideration of Reply in Adjudication Order - Omission to Reproduce Reply in Order - Section 74 and 75(6) of CGST Act, 2017 - Petitioner filed detailed reply with voluminous compilation of supporting documents and appeared through counsel for personal hearing - Adjudication Order confirmed demand against petitioner but did not reproduce the reply in the order though it referred to written submissions and personal hearing, and petitioner contended that order violates Sections 74(9) and 75(6) requiring consideration of reply and statement of relevant facts and basis of decision - Whether non-reproduction of petitioner's reply in adjudication order establishes that reply was not considered - HELD - Mere non-reproduction of reply in order would not establish that it was ignored. What is material is whether order notices substance of defence and discloses basis on which claim has been rejected. Conversely, a general recital that replies have been considered cannot cure an order which otherwise discloses no reasons - In present case, filing of reply and appearance of petitioner's advocate at personal hearing are not disputed and reference in order to written submissions discloses that adjudicating authority considered reply. Though reasoning was common to noticees and did not separately analyse work orders, invoices and ledgers relied upon by petitioner, it disclosed basis on which claim to ITC was rejected by finding that invoices were unsupported by actual supplies and conditions for availing ITC were not fulfilled and that noticees failed to discharge burden cast under Section 155 - Examination of contention that documents place petitioner establish facts unproved by adjudicating authority would require matching of work orders issued with subcontracts, invoices, payments and evidence of execution, which can be effectively examined in appeal - The omission to reproduce reply does not warrant setting aside adjudication in exercise of writ jurisdiction – The writ petitions are disposed of - Jurisdiction of DGGI - Adjudication of common SCN - Jurisdiction of DGGI to proceed against taxpayers administratively assigned to State tax authorities – Validity of allocation of adjudication to Additional Commissioner Delhi North when common SCN involves noticees in multiple Commissionerates - Petitioner held three separate GST registrations in Karnataka, Tamil Nadu and Telangana administratively assigned to State tax authorities - DGGI Regional Unit conducted investigation into alleged chain of invoices issued without corresponding supplies extending across several States and issued common SCN to noticees including petitioner. Adjudication was allocated to Additional Commissioner CGST Delhi North - Whether administrative allocation of taxpayers assigned to State tax authorities excludes jurisdiction of DGGI to investigate and proceed and whether Additional Commissioner Delhi North had jurisdiction to adjudicate common SCN involving noticees in multiple Commissionerates - HELD - Notification 14/2017-Central Tax appoints specified DGGI officers as Central tax officers and confers upon them powers exercisable by officers of corresponding rank throughout India. Administrative allocation of taxpayers does not exclude intelligence-based enforcement by other tax administration. Investigation arising from intelligence concerning alleged chain of transactions extending across several States is within DGGI jurisdiction. For adjudication of common SCN with noticees in more than one Commissionerate, allocation to Additional/Joint Commissioner of Commissionerate where principal place of business of noticee carrying highest tax demand falls is governed by Notification 02/2022-Central Tax dated 11.03.2022 and Circular 169/01/2022-GST dated 12.03.2022. Where highest tax demand against noticee falls within Delhi Zone, designated Commissionerate is Delhi North. Notification 27/2024-Central Tax dated 25.11.2024 and Circular 239/33/2024-GST dated 04.12.2024 do not alter this allocation - Jurisdictional objection is rejected - Applicability of Circular 171/03/2022-GST to Recovery under Section 74 - Invoices without underlying supplies - Petitioner relied upon serial No. 3 of Circular 171/03/2022-GST dated 06.07.2022 contending that where both inward and outward invoices are unsupported by supplies, recovery under Sections 73 or 74 is not required though penal action under Section 122 may follow. Adjudication Order declined to apply Circular on ground that it was issued after SCN - Whether Circular 171/03/2022-GST precludes recovery under Section 74 - HELD - The Circular distinguishes between two situations. Where person avails ITC on invoice unsupported by inward supply but uses that credit for tax on genuine outward supply, serial No. 2 contemplates recovery under Section 74. Where both inward and outward invoices are unsupported by supplies, serial No. 3 states that recovery under Sections 73 or 74 is not required though penal action under Section 122 may follow. The Circular also recognises that actual case may involve mixture of these situations - Whether situation under Circular applies and what consequence follows for demand and penalties depend upon character of inward and outward transactions. These matters fall squarely within scope of appellate examination under Section 107(11) of CGST Act which empowers Appellate Authority after making such further inquiry as may be necessary to confirm, modify or annul decision under appeal. Mere invocation of Circular does not render SCN or adjudication without jurisdiction - All grounds concerning demands, interest and penalties are left open for consideration in appeal. [Read less]

GST - Validity of Circular 31/05/2018-GST as amended - Common Adjudicating Authority for composite SCN - Highest Demand Criterion - Petitioners challenged validity of Circular 31/05/2018-GST as amended by Circular 169/01/2022-GST and 239/33/2024-GST which prescribed manner of determining Common Adjudicating Authority in respect of common SCNs issued to multiple noticees by DGGI - Petitioners contended that Circular conferring jurisdiction based on highest demand criterion was ultra vires and violated Article 14, and that assignment of functions can only be by notification under Section 167 not by Circular under Section 168... [Read more]

GST - Validity of Circular 31/05/2018-GST as amended - Common Adjudicating Authority for composite SCN - Highest Demand Criterion - Petitioners challenged validity of Circular 31/05/2018-GST as amended by Circular 169/01/2022-GST and 239/33/2024-GST which prescribed manner of determining Common Adjudicating Authority in respect of common SCNs issued to multiple noticees by DGGI - Petitioners contended that Circular conferring jurisdiction based on highest demand criterion was ultra vires and violated Article 14, and that assignment of functions can only be by notification under Section 167 not by Circular under Section 168 of the CGST Act, 2017 - Whether Circular prescribing highest demand criterion as mechanism for selecting Common Adjudicating Authority is valid - HELD - The Circular does not confer or create fresh jurisdiction but merely provides administrative allocation mechanism to select one competent officer from among several already vested with pan-India jurisdiction under Notification 2/2022 issued under Sections 3 and 5(3) of CGST Act - Section 167 is statutory vehicle for conferring jurisdiction by notification while Section 168 is confined to securing uniformity in implementation and cannot override specific mode prescribed under Sections 3, 5(3) and 167. The highest demand criterion is objective, quantifiable and uniformly applicable and bears rational nexus with legitimate object of ensuring single consistent adjudication of what is in substance one cause of action arising from one investigation and avoids possibility of conflicting findings by different officers - No impermissible sub-delegation arises as officer issuing composite SCN exercises no discretion in choosing adjudicating authority but merely applies criterion prescribed by Board - Challenge based on Article 14 fails as criterion is not arbitrary. Petitioners have not shown actual prejudice arising from exercise of jurisdiction by Common Adjudicating Authority nor established denial of proper opportunity of hearing or unfair treatment - The challenge to the jurisdiction of the Common Adjudicating Authority and to the vires of the Impugned Circular fails, such jurisdiction being traceable to Notification No. 2/2017-CT and Notification No. 2/2022-CT, validly issued under Sections 3 and 5(3) of the CGST Act - Remaining grounds including merits of demand and evidentiary issues are left to statutory Appellate Authority – The writ petitions are dismissed [Read less]

GST - Refund of ITC under inverted tax structure - Section 54(3)(ii) of CGST Act - Input and output supplies different goods – Respondent-assessee engaged in manufacturing Agarbati procured raw materials including perfumes, fragrances, chemicals and packaging materials at GST rates ranging from 12% to 18% whereas Agarbati manufactured by taxpayer was supplied at 5% GST, resulting in accumulation of ITC – Revenue aggrieved by refund sanction order whereunder inverted duty refund was allowed in favour of the respondent - Whether refund of accumulated ITC claimed on account of inverted tax structure, where rate of tax on ... [Read more]

GST - Refund of ITC under inverted tax structure - Section 54(3)(ii) of CGST Act - Input and output supplies different goods – Respondent-assessee engaged in manufacturing Agarbati procured raw materials including perfumes, fragrances, chemicals and packaging materials at GST rates ranging from 12% to 18% whereas Agarbati manufactured by taxpayer was supplied at 5% GST, resulting in accumulation of ITC – Revenue aggrieved by refund sanction order whereunder inverted duty refund was allowed in favour of the respondent - Whether refund of accumulated ITC claimed on account of inverted tax structure, where rate of tax on inputs was higher than on output supplies, was admissible under Section 54(3)(ii); and whether the CBIC circular's clarification regarding same goods applied – HELD – Section 54(3)(ii) provides that refund of unutilised ITC shall be allowed where credit has accumulated on account of rate of tax on inputs being higher than rate of tax on output supplies. In the present case, inputs (perfumes, fragrances, chemicals, packaging materials) and output (Agarbati) are commercially distinct and distinguishable goods. Inputs are defined in Section 2(59) as any goods used for or intended to be used in furtherance of business. The taxpayer's inputs fall squarely within this definition - Paragraph 3.2 of CBIC Circular No.135/05/2020-GST (as clarified by Circular No.173/05/2022-GST) applies only to cases where input and output are same goods attracting different rates at different points in time and not to cases where input and output are different goods. Further, CBIC Circulars do not have binding effect on the Tribunal but only persuasive role as they are instructions to departmental officers - The Supreme Court in VKC Footsteps India Private Limited case established that refund was admissible under clause (ii) where unutilized ITC accumulated due to disparity in tax rates between inputs and outputs - The adjudicating authority and first appellate authority had rightly interpreted and applied the law. The order of first appellate authority upholding the refund is sustained and Revenue appeal is dismissed [Read less]

GST - Penalty under Section 129 of CGST Act, 2017 - Detention and seizure of goods in transit - Violation of mandatory seven-day timeline - Order under Section 129(3) confirming the demand of tax and penalty was passed 445 days after the issuance of the notice - Appellant contended that the order passed beyond the mandatory seven-day period prescribed in section 129(3) is void and should be set aside – HELD - Section 129(3) mandatorily requires the proper officer to pass an order for payment of penalty within a period of seven days from the date of service of notice. The use of the word "shall" indicates the mandatory an... [Read more]

GST - Penalty under Section 129 of CGST Act, 2017 - Detention and seizure of goods in transit - Violation of mandatory seven-day timeline - Order under Section 129(3) confirming the demand of tax and penalty was passed 445 days after the issuance of the notice - Appellant contended that the order passed beyond the mandatory seven-day period prescribed in section 129(3) is void and should be set aside – HELD - Section 129(3) mandatorily requires the proper officer to pass an order for payment of penalty within a period of seven days from the date of service of notice. The use of the word "shall" indicates the mandatory and non-discretionary nature of this timeline. The blatant violation of the statutory time limit renders the order void ab initio and a nullity in the eyes of law. Various High Courts have consistently held that any violation of the mandated timeline vitiates the entire proceedings, and this is a well-settled legal position. The lower authority has failed to examine this basic fact which was apparent on the face of record and such failure vitiates the appellate order - The order-in-appeal is set aside and the appeal is allowed [Read less]

Central Excise - Provisions for write-off of raw materials, Reversal of Cenvat credit under Rule 3(5B) of CENVAT Credit Rules 2004, Subsequent use and re-availment – Appellant had made provisions for write-off of raw materials in the books of account but had not reversed the CENVAT credit attributable thereto as mandated under Rule 3(5B) of CENVAT Credit Rules 2004. Though the appellant claimed that provisions were proportionately released as materials were consumed and the credit was reversed only on revised provision amount, it failed to substantiate the subsequent consumption of written-off materials with supporting d... [Read more]

Central Excise - Provisions for write-off of raw materials, Reversal of Cenvat credit under Rule 3(5B) of CENVAT Credit Rules 2004, Subsequent use and re-availment – Appellant had made provisions for write-off of raw materials in the books of account but had not reversed the CENVAT credit attributable thereto as mandated under Rule 3(5B) of CENVAT Credit Rules 2004. Though the appellant claimed that provisions were proportionately released as materials were consumed and the credit was reversed only on revised provision amount, it failed to substantiate the subsequent consumption of written-off materials with supporting documentary evidence – Whether the appellant was liable to reverse CENVAT credit on provisions made for write-off of raw materials and whether the claim of subsequent use could defeat the statutory requirement of reversal – HELD – Prior to 1st March 2011, Rule 3(5B) applied only to full write-offs of inputs. The rule was amended vide Notification No. 3/2011-CE (N.T.) dated 01.03.2011, inserting the word "partially" to mandate reversal of CENVAT credit even for partial provisions made after that date. For the period under dispute, creating an accounting provision for raw materials triggered an immediate legal obligation to reverse the corresponding CENVAT credit - The plea that provisions are not equivalent to write-offs because materials remained physically intact and usable is not sustainable as the statute requires acts to be done in the particular manner prescribed. Rule 3(5B) provides that if the provisioned inputs are subsequently used in manufacturing, the credit may be re-availed, but this requires documentary evidence - The appellant's failure to furnish auditors certificate or itemized stores records linking released provisions to actual physical usage defeats the claim of subsequent use. The burden of proof regarding credit admissibility lies on the assessee. The appellant's silence and non-cooperation when requested to provide information amounts to suppression of facts satisfying the criteria for invocation of extended period of limitation. The maxim that no person can take advantage of their own wrong applies - The statutory requirement to reverse credit must be adhered to. The appeal is rejected and the demand confirmed [Read less]

GST - Invocation of extended period under Section 74, Imposition of penalty for wrongful availment of ITC, Applicability of Section 74 when tax is paid prior to show cause notice, Distinction between Section 73 and Section 74 - Appellant claimed excess input tax credit resulting from mismatch between Form GSTR 3B and Form GSTR 2A which was brought to light during verification by anti-evasion wing - Appellant admitted the excess ITC and paid tax along with interest prior to issuance of SCN. Adjudicating Authority invoked extended period under Section 74 and imposed penalty equal to amount of excess ITC alongside confirming ... [Read more]

GST - Invocation of extended period under Section 74, Imposition of penalty for wrongful availment of ITC, Applicability of Section 74 when tax is paid prior to show cause notice, Distinction between Section 73 and Section 74 - Appellant claimed excess input tax credit resulting from mismatch between Form GSTR 3B and Form GSTR 2A which was brought to light during verification by anti-evasion wing - Appellant admitted the excess ITC and paid tax along with interest prior to issuance of SCN. Adjudicating Authority invoked extended period under Section 74 and imposed penalty equal to amount of excess ITC alongside confirming the demand. - Whether the invocation of Section 74 and imposition of penalty at 100 percent is justified when entire tax and interest was paid prior to issuance of show cause notice and the excess availment resulted from mismatch due to third-party default rather than deliberate suppression of facts by taxpayer - HELD - Section 73 applies where tax is wrongly availed for reasons other than fraud, willful misstatement or suppression while Section 74 applies where such wrongful availment is due to fraud, willful misstatement or suppression of facts. Supreme Court in Tata Steel Limited has held that for invoking Section 74, the Assessing Officer must be satisfied that fraud, willful misrepresentation or suppression led to mismatch - Mere mechanical use of such language without establishing foundational facts is not sufficient. The term ‘suppression’ means non-declaration of facts or information required to be declared in returns or failure to furnish information on being asked. Mismatch arising from third-party default cannot be attributed to taxpayer to sustain charge of suppression - When tax and interest are paid pursuant to departmental verification prior to show cause notice under Section 73(5), proceedings are concluded and Section 74 would apply only if conditions stipulated in Section 73 are not met - In present case, appellant paid entire tax and interest after receiving information from proper officer during verification. No link was established between mismatch and alleged fraud or suppression as dispute did not concern genuineness of transactions. Excess availment resulted from third-party supplier default not from taxpayer's deliberate action. Therefore, Section 73 and not Section 74 applies to the case – The penalty imposed under Section 74 is set aside. The case is governed by Section 73 of CGST Act - The appeal is allowed [Read less]

GST - Imposition of penalty under Section 74, Invocation of extended period of limitation, Effect of voluntary pre-SCN payment of tax and interest, Applicability of Sections 73 and 74 - Appellant was subjected to audit under Section 65 on three distinct issues relating to excess ITC in GSTR-3B versus GSTR-2A, ineligible ITC under Section 17(5), and irregular transitional credit under TRAN-1. Appellant voluntarily deposited agreed tax and applicable interest via Form GST DRC-03, prior to issuance of Show Cause Notice - Whether the First Appellate Authority was justified in imposing penalty under Section 74 when all records ... [Read more]

GST - Imposition of penalty under Section 74, Invocation of extended period of limitation, Effect of voluntary pre-SCN payment of tax and interest, Applicability of Sections 73 and 74 - Appellant was subjected to audit under Section 65 on three distinct issues relating to excess ITC in GSTR-3B versus GSTR-2A, ineligible ITC under Section 17(5), and irregular transitional credit under TRAN-1. Appellant voluntarily deposited agreed tax and applicable interest via Form GST DRC-03, prior to issuance of Show Cause Notice - Whether the First Appellate Authority was justified in imposing penalty under Section 74 when all records were available on departmental portal, Appellant had voluntarily discharged entire agreed tax and interest prior to issuance of SCN, no positive act of deliberate suppression or misstatement was established, and the SCN failed to disclose foundational facts demonstrating conscious deliberate device to evade tax - HELD - Section 74 is extraordinary provision conditioning exercise of extended period and penal provisions of 100 percent upon existence of specific positive mens rea elements being fraud, willful misstatement or suppression of facts with intent to evade tax - Supreme Court in Tata Steel Limited has established three inviolable principles for Section 74. In present case OIO made explicit findings that all records including GSTR-3B, GSTR-2A and TRAN-1 declarations were fully available on departmental portal and there was no positive act of deliberate suppression or intentional misstatement - Appellate Authority erred in holding that original authority had no option but to impose Section 74 penalty once tax was confirmed. Section 74 requires independent satisfaction of mens rea and issuance of SCN under Section 74 does not automatically bind adjudicator to confirm penal liabilities where deliberate intent is absent - When facts are known to both parties or accessible via statutory records, non-disclosure does not amount to suppression. Appellant voluntarily discharged entire agreed tax and applicable interest months prior to issuance of SCN. Where tax and interest are fully discharged prior to SCN and allegations of fraud or suppression are unsustainable, statutory mechanism under Section 73(5) read with Section 73(8) operates and intends to grant immunity from penalty to taxpayers who settle obligations prior to formal adjudication provided there is no deliberate intent to evade - The Appellate Authority's imposition of Section 74 penalty is set aside. The credit reversed and interest paid on are held to be payments under Section 73(5) of CGST Act - The appeal is allowed [Read less]

GST - Interpretation of Section 73(2) of CGST Act, 2017 - Determination of timely issuance of Show Cause Notice - Computation of prescribed period of three months - Petitioner issued notice under Section 73(1) proposing demand for wrongful availment of Input Tax Credit; terminal date for issuing order under Section 73(10) was 28.02.2025 - Petitioner contended that notice should have been issued at least three months prior to 28.02.2025 i.e. by 28.11.2024 and notice issued on 29.11.2024 was beyond prescribed time - Whether the expression three months in Section 73(2) requires calculation using corresponding date principle w... [Read more]

GST - Interpretation of Section 73(2) of CGST Act, 2017 - Determination of timely issuance of Show Cause Notice - Computation of prescribed period of three months - Petitioner issued notice under Section 73(1) proposing demand for wrongful availment of Input Tax Credit; terminal date for issuing order under Section 73(10) was 28.02.2025 - Petitioner contended that notice should have been issued at least three months prior to 28.02.2025 i.e. by 28.11.2024 and notice issued on 29.11.2024 was beyond prescribed time - Whether the expression three months in Section 73(2) requires calculation using corresponding date principle with notice date falling exactly three calendar months before terminal date or whether the requirement is satisfied when three calendar months are available between issuance of notice and terminal date - HELD - The expression three months in Section 73(2) of CGST Act means calendar months and not a period of days. Where a statutory period is prescribed from a specified date, the date from which period commences is ordinarily excluded in accordance with Section 9 of General Clauses Act 1897. Section 73(2) prescribes the minimum interval that must be available between initiation of adjudicatory proceeding by issuance of notice under Section 73(1) and outer limit fixed for culmination under Section 73(10) and not an independent period expiring on a corresponding date calculated backward from terminal date - Application of rigid corresponding date principle whereby notice issued on 29.11.2024 would be deemed one day beyond limitation merely because calculated corresponding date was 28.11.2024 introduces unjustified rigidity into the statutory provision - Section 73(2) does not expressly provide that corresponding date arrived at by counting backward is the cut-off for issuance of notice; if that was the legislative intention language clearly fixing such date would have been employed. The statutory requirement under Section 73(2) is satisfied when three full calendar months are available after excluding date of issuance of notice and before expiry of terminal date - In the present case excluding date of issuance 29.11.2024, the intervening period comprises remainder of November and full calendar months of December, January and February ending on 28.02.2025, thereby providing the required minimum adjudicatory interval - The notice dated 29.11.2024 was validly issued within the time prescribed under Section 73(2) of CGST Act – The writ appeal is dismissed [Read less]

Service Tax - Advertising Agency Service and other taxable services, Suppression of taxable value, Invocation of extended period of limitation, Threshold exemption, Cum-tax benefit, CENVAT Credit - Appellant engaged in providing Advertising Agency Services through registered firm and also provided taxable services through unregistered firm during F/Y 2016-17, ST-3 returns showed gross receipt of Rs.15,39,884/- with claimed threshold exemption of Rs.10,00,000/- and paid service tax on remaining amount, Department through verification observed actual gross receipt was Rs.25,98,374/- from both firms with the receipts from unr... [Read more]

Service Tax - Advertising Agency Service and other taxable services, Suppression of taxable value, Invocation of extended period of limitation, Threshold exemption, Cum-tax benefit, CENVAT Credit - Appellant engaged in providing Advertising Agency Services through registered firm and also provided taxable services through unregistered firm during F/Y 2016-17, ST-3 returns showed gross receipt of Rs.15,39,884/- with claimed threshold exemption of Rs.10,00,000/- and paid service tax on remaining amount, Department through verification observed actual gross receipt was Rs.25,98,374/- from both firms with the receipts from unregistered firm not disclosed in ST-3 returns, Show Cause Notice was issued demanding service tax with interest and penalties, Appellant contended that SCN is barred by limitation under Section 73(1) of Finance Act 1994 and that extended period cannot be invoked without fraud, collusion or willful mis-statement - Whether the extended period of limitation was properly invoked by the Department and whether the appellant is entitled to threshold exemption, cum-tax benefit and CENVAT credit claim - HELD - The extended period of 5 years was correctly invoked as the appellant admitted that the correct taxable value was not disclosed in the ST-3 returns and the amount from the second unregistered firm was not shown in the returns due to oversight and clerical mistake - The failure to disclose the correct taxable value in ST-3 returns clearly establishes the appellant's intent to evade service tax - Once a person is registered with the Service Tax Department, the question of threshold limit exemption does not arise and the appellant wrongly availed the threshold exemption of Rs.10,00,000/- which the appellant themselves admitted was claimed due to mistake or oversight - The appellant claimed cum-tax benefit on receipt of Rs.8,34,550/- from the unregistered firm but has not submitted proper documentary evidence in support of the claim, the sample invoices submitted lacked required details and no documentary evidence was adduced before the Tribunal - The appellant sought CENVAT credit of Rs.59,997/- at a much later stage which was not availed within the prescribed time limit in ST-3 returns as required under Finance Act 1994 read with CENVAT Credit Rules 2004 and no fresh evidence has been submitted to establish eligibility for the credit - The impugned order is upheld - Appeal is dismissed [Read less]

GST – Validity of Show Cause Notice and Order-in-Original in the absence of Digital Signature - Department initiated scrutiny proceedings and issued Recovery notice Section 79 which resulted in petitioner's bank account being attached - Petitioner challenged proceedings asserting that neither the show cause notice nor the Order-in-Original bore any physical or digital signature, making them non est in law - Whether a show cause notice and an Order-in-Original which bear neither a digital signature nor a physical signature can be sustained in law under Rule 26(3) of CGST Rules, 2017 - HELD - Rule 26(3) of CGST Rules, 2017... [Read more]

GST – Validity of Show Cause Notice and Order-in-Original in the absence of Digital Signature - Department initiated scrutiny proceedings and issued Recovery notice Section 79 which resulted in petitioner's bank account being attached - Petitioner challenged proceedings asserting that neither the show cause notice nor the Order-in-Original bore any physical or digital signature, making them non est in law - Whether a show cause notice and an Order-in-Original which bear neither a digital signature nor a physical signature can be sustained in law under Rule 26(3) of CGST Rules, 2017 - HELD - Rule 26(3) of CGST Rules, 2017 is couched in mandatory language employing the word "shall" and admits of no exception. All notices, certificates and orders must be issued electronically through Digital Signature Certificate or E-signature as specified under the Information Technology Act, 2000, or through such other mode as notified by the Board - Issuance and authentication are distinct and cumulative requirements. Mere electronic generation of document on portal satisfies only issuance requirement, not authentication requirement. Digital signature performs function in electronic regime that physical signature performed in paper regime - What the rule requires is authentication of the document, not authentication of the officer's session on a portal. Authentication of document and login by officer are not same - An unsigned document is anonymous and anonymity and quasi-judicial authority cannot coexist. The defect is jurisdictional and not mere irregularity curable under Section 160 of CGST Act. Total absence of signature stands on entirely different footing from display defect in existing signature – The Show cause notice and Order-in-Original are non est in law and are quashed. Recovery notice issued under Section 79 and consequent attachment of petitioner's bank account stand set aside. Liberty is reserved to competent authority to pass fresh orders in accordance with law with proper physical or digital signature – The writ petition is allowed [Read less]

Central Excise – Clandestine manufacture and removal of Pan Masala and Scented Chewing Tobacco, Admissibility of third-party private documents, Burden of proof, Applicability of Section 11A, 11AA and 11AC of Central Excise Act, 1944 – The Department issued Show Cause Notice alleging that Appellant engaged in clandestine manufacture and supply of Pan Masala and Scented Jarda Tobacco, raising demands for Basic Excise duty and NCCD totaling approximately Rs.27 crores based primarily on File No.17 recovered from a third-party transporter and alleged market practices – Whether the Revenue has discharged the burden of prov... [Read more]

Central Excise – Clandestine manufacture and removal of Pan Masala and Scented Chewing Tobacco, Admissibility of third-party private documents, Burden of proof, Applicability of Section 11A, 11AA and 11AC of Central Excise Act, 1944 – The Department issued Show Cause Notice alleging that Appellant engaged in clandestine manufacture and supply of Pan Masala and Scented Jarda Tobacco, raising demands for Basic Excise duty and NCCD totaling approximately Rs.27 crores based primarily on File No.17 recovered from a third-party transporter and alleged market practices – Whether the Revenue has discharged the burden of proving by legally admissible and cogent evidence that the Appellant clandestinely manufactured and cleared Pan Masala and Scented Chewing Tobacco during December 2020 to May 2021 – HELD – File No.17, the principal document relied upon, was a third-party private record without established authenticity, authorship or evidentiary value and recovered from a person whose legal status, authority and relationship with the transporter company remained unexplored, and mere existence of an entry in a private record maintained by a third party does not ipso facto establish actual movement or delivery of goods. The Department failed to establish the essential links in the chain of evidence – delivery of alleged laminate to Appellant's factory, receipt, consumption in manufacture, actual manufacture of alleged quantity and clandestine clearance. No documentary evidence or corroborative material was placed on record to substantiate the assertion that the said pages contain details of transportation of laminates from any secret premises. The demand for chewing tobacco was computed solely on the basis of presumed market practice that pouches of Pan Masala and Chewing Tobacco are always sold in equal numbers without any direct evidence of procurement, manufacture, clearance, transportation or sale of chewing tobacco. The investigation is conspicuously silent regarding actual receipt of laminate at factory, unloading records, gate registers, weighbridge slips, inward registers or warehouse records and no transporter stated that disputed consignments were actually unloaded at Appellant's premises. The methodology adopted for determining the alleged weight of laminate from number of boxes by applying an average calculated from selected entries was arbitrary, statistically unreliable and legally unsafe for sustaining a charge as serious as clandestine manufacture and removal, more so when the Department's own data showed that identical number of boxes had different weights, establishing that uniformity of contents and weight has not been established. Clandestine manufacture cannot be alleged on basis of presumptions, general market practices or unverified third-party statements and must be supported by concrete evidence such as procurement of excess raw materials, manufacture of excess finished goods, availability of adequate infrastructure, abnormal consumption of electricity or fuel, deployment of additional labour, transportation of clandestinely manufactured goods, identification of buyers, receipt of consideration and corresponding financial flow-back. A presumption cannot be founded upon another presumption and suspicion cannot substitute legal proof. Allegations of clandestine manufacture and removal cannot be sustained on probabilities, assumptions, market perceptions or mathematical calculations but must rest upon positive, cogent and independent evidence establishing every constituent element of alleged clandestine activity. The findings recorded by Adjudicating Authority, as affirmed by Commissioner (Appeals), call for no interference – The departmental appeal is dismissed and Order-in-Original dropping the proceedings, as affirmed by Commissioner (Appeals), is upheld [Read less]

GST – Refund of IGST paid on the export of services - Application Rule 96(10) of the CGST Rules, 2017 subsequent its deletion by notification dated 08.10.2024 – Whether the deletion of Rule 96(10) applies retrospectively to refunds claimed for the earlier period and whether the proceedings can be continued under an omitted Rule – HELD – The proceedings under an omitted Rule cannot be continued. Since there was no savings clause or sunset clause in respect of Rule 96(10) of the CGST Rules when the said Rule was omitted, the Rule could not be kept alive. The omission was intended to bring to an end the unnecessary co... [Read more]

GST – Refund of IGST paid on the export of services - Application Rule 96(10) of the CGST Rules, 2017 subsequent its deletion by notification dated 08.10.2024 – Whether the deletion of Rule 96(10) applies retrospectively to refunds claimed for the earlier period and whether the proceedings can be continued under an omitted Rule – HELD – The proceedings under an omitted Rule cannot be continued. Since there was no savings clause or sunset clause in respect of Rule 96(10) of the CGST Rules when the said Rule was omitted, the Rule could not be kept alive. The omission was intended to bring to an end the unnecessary complications once and for all, and the intention cannot be to keep alive the unnecessary complications insofar as the pending proceedings are concerned - The impugned order is confirmed and the Revenue appeal is dismissed [Read less]

Customs - Train Protection and Warning System, Eligibility for concessional rate of duty, Disc Brake Units and Pole Wheels, Classification under Notification No. 50/2017-Cus - Appellant imported Disc Brake Units and Pole Wheels for manufacturing Axle Mounted Disc Brake Systems for installation in high-speed coaches supplied to Indian Railways, availing concessional Basic Customs Duty rate of 7.5% under Sl. No. 521 of Notification No. 50/2017-Cus claiming the goods constitute Train Protection and Warning System. Post-clearance audit raised objections on the exemption availment and Show Cause Notice was issued proposing dema... [Read more]

Customs - Train Protection and Warning System, Eligibility for concessional rate of duty, Disc Brake Units and Pole Wheels, Classification under Notification No. 50/2017-Cus - Appellant imported Disc Brake Units and Pole Wheels for manufacturing Axle Mounted Disc Brake Systems for installation in high-speed coaches supplied to Indian Railways, availing concessional Basic Customs Duty rate of 7.5% under Sl. No. 521 of Notification No. 50/2017-Cus claiming the goods constitute Train Protection and Warning System. Post-clearance audit raised objections on the exemption availment and Show Cause Notice was issued proposing demand of differential customs duty - Whether Disc Brake Units and Pole Wheels, as components of Axle Mounted Disc Brake Systems, constitute Train Protection and Warning System and are eligible for concessional rate of duty under Sl. No. 521 of Notification No. 50/2017-Cus - HELD - Train Protection and Warning System has a specific, well-recognised technical meaning in the railway engineering domain and is not defined by mere dictionary meanings of protection and warning. Per Indian Railways Specification RDSO/SPN/183/2016, the Disc Brake Unit is listed as interface to existing brake control system rather than as TPWS component. TPWS equipment comprises track side system with Balises, Line side Electronic Unit and communication links, and on-board system with On Board Computer, Driver Machine Interface, Balise Transmission Module and interface to existing brake control system. The impugned goods serve the function of preventing wheel lock and derailment whereas TPWS is designed to prevent Signal Passed at Danger and collision. TPWS is governed by Signal and Telecom Department while braking systems are governed by Mechanical and Rolling Stock Department, reflecting that they belong to entirely different technical and administrative domains within Indian Railways. Exemption notification must be interpreted strictly and the burden is on the claimant of exemption to prove that the goods squarely fall within the notification. Therefore, the impugned goods do not form a part of Train Protection and Warning System and are not eligible for concessional rate of duty. However, the demand for differential duty can only be upheld for Bills of Entry falling within the normal period of limitation of two years prior to the Show Cause Notice dated 18.09.2020 - Appellant is not eligible for the concessional rate of duty under Sl. No. 521 of Notification No. 50/2017-Cus. The demand for differential duty is limited to the normal period of limitation - Appeal is allowed to the extent that the impugned order stands modified accordingly [Read less]

Customs - Advance Authorization scheme, Duty exemption, Export obligation, Physical incorporation of materials, Use of packaging materials, Violation of Notification No. 96/2009-Cus - Appellant imported Vetted Malt Scotch under Advance Authorization for manufacture of Indian Made Foreign Liquor and also procured glass bottles, caps and labels domestically under Annexure-45 under Rule 19(2) of Central Excise Rules 2002. Department alleged violation of condition (viii) of Notification No. 96/2009-Cus dated 11.09.2009 by using both imported duty-free inputs and domestically procured duty-free goods in conjunction and issued S... [Read more]

Customs - Advance Authorization scheme, Duty exemption, Export obligation, Physical incorporation of materials, Use of packaging materials, Violation of Notification No. 96/2009-Cus - Appellant imported Vetted Malt Scotch under Advance Authorization for manufacture of Indian Made Foreign Liquor and also procured glass bottles, caps and labels domestically under Annexure-45 under Rule 19(2) of Central Excise Rules 2002. Department alleged violation of condition (viii) of Notification No. 96/2009-Cus dated 11.09.2009 by using both imported duty-free inputs and domestically procured duty-free goods in conjunction and issued Show Cause Notice proposing recovery of customs duty, interest and penalty - Whether the appellant violated the conditions of Advance Authorization notification by using imported inputs under Advance Authorization and domestically procured packaging materials under Annexure-45 in manufacture and export of resultant products - HELD - Advance Authorization specifically requires goods to be physically incorporated in the export product. The definition of Materials in the notification makes a differentiation between goods required for manufacture of resultant product being raw materials, components, intermediates, consumables, catalysts and parts covered under sub-clause (a) and goods used for packaging being packaging materials required for packing of resultant product covered under sub-clause (d) - In the present case, Vetted Malt Scotch was the raw material imported for manufacture of resultant product IMFL and only this material falls under the export obligation condition of the notification. Bottles, caps and labels were packaging materials procured domestically under Annexure-45 and not imported - Since the condition of the notification applies only to materials that are physically incorporated in the resultant product, and packaging materials are not physically incorporated in the product itself, the use of domestically procured packaging materials does not constitute a violation of the Advance Authorization conditions - The decision in R.P. International vs Union of India clarifies that whereas the Duty Free Import Authorization Scheme permits duty free import of inputs required for production of export product, the Advance Authorization allows duty free import of inputs which are physically incorporated in the export product. Consequently, the export of IMFL manufactured using imported Vetted Malt Scotch and domestically procured packaging materials correctly fulfills the export obligation without violating the notification - Impugned Order-in-Original dated 30.08.2019 is set aside - The findings that appellant violated the conditions of Notification No. 96/2009-Cus are liable to be set aside - Appeal is allowed [Read less]

GST - Fraudulent Input Tax Credit on goods without corresponding supplies through multiple non-existent suppliers – Imposition of penalty for alleged fraud and wilful suppression of facts – Petitioners invoked writ jurisdiction to challenge the order-in-original before exhausting statutory appeal remedy - HELD – The mere availability of an alternative statutory remedy does not oust the writ jurisdiction of the High Court, particularly where there is a breach of natural justice or want of jurisdiction. However, such exception should be invoked sparingly and not where the grievance is factual in nature and capable of b... [Read more]

GST - Fraudulent Input Tax Credit on goods without corresponding supplies through multiple non-existent suppliers – Imposition of penalty for alleged fraud and wilful suppression of facts – Petitioners invoked writ jurisdiction to challenge the order-in-original before exhausting statutory appeal remedy - HELD – The mere availability of an alternative statutory remedy does not oust the writ jurisdiction of the High Court, particularly where there is a breach of natural justice or want of jurisdiction. However, such exception should be invoked sparingly and not where the grievance is factual in nature and capable of being cured by the Appellate Authority itself - The present case concerns denial of personal hearing and service of notice, which are essentially questions of fact requiring examination of underlying notices and allied material, more appropriately undertaken by the Appellate Authority. Even if the grievance regarding personal hearing is accepted, such infirmity is curable and does not go to the root of jurisdiction so as to warrant bypassing the statutory appellate remedy. The petitioners are relegated to avail of the remedy of appeal under the CGST Act – The petitions are disposed of [Read less]

Central Excise – Refund of amount deposited during investigation, Interest payable on delayed refund – Investigation was conducted alleging incorrect availment of MODVAT credit. The appellant deposited amount in five instalments during the investigation period before issuance of Show Cause Notice. After initial confirmation of demand, the matter was remanded and after two rounds of litigation, the Tribunal vide Final Order set aside the demand on the ground that the appellant was entitled to MODVAT credit - The refund was granted but without any interest on the ground that the refund was sanctioned within three months ... [Read more]

Central Excise – Refund of amount deposited during investigation, Interest payable on delayed refund – Investigation was conducted alleging incorrect availment of MODVAT credit. The appellant deposited amount in five instalments during the investigation period before issuance of Show Cause Notice. After initial confirmation of demand, the matter was remanded and after two rounds of litigation, the Tribunal vide Final Order set aside the demand on the ground that the appellant was entitled to MODVAT credit - The refund was granted but without any interest on the ground that the refund was sanctioned within three months of the refund claim – Whether interest is payable on the amount deposited during investigation and at what rate - HELD - Once the Tribunal sets aside the demand, the deposited amount loses the colour of excise duty and becomes a revenue deposit held by the Department in custodial capacity. The Revenue has no legal claim to retain such amount and must refund it with interest - Though Sections 11B and 11BB which govern refund of duty are not applicable to investigation deposits, the principles laid down by the Supreme Court establish the foundational right of an assessee to receive interest at 12% per annum on amounts wrongly retained by the State - The fact that the amount was held for approximately 30 years constitutes unjustified withholding. Multiple High Court decisions establish that interest at 12% per annum is payable on refund of investigation deposits. The denial of interest on the ground that no statutory provision prescribes the rate is not sustainable - The applicability of Section 11BB is excluded as the deposit is not a payment of duty. The appellant is entitled to interest at 12% per annum from the date of each deposit till the date of actual refund – The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Fake invoices without physical supply of goods, Denial of credit on basis of statements recorded during investigation, Admissibility of statements under Section 9D of Central Excise Act, 1944 - Whether CENVAT credit can be denied and penalty imposed on basis of statements recorded during investigation which were retracted during cross-examination and when mandatory procedure under Section 9D of CEA was not followed – HELD – Section 9D(1)(b) of CEA prescribes a mandatory and non-derogable procedure for admitting statements recorded during investigation. The person who made the statement must first be ex... [Read more]

Central Excise - Fake invoices without physical supply of goods, Denial of credit on basis of statements recorded during investigation, Admissibility of statements under Section 9D of Central Excise Act, 1944 - Whether CENVAT credit can be denied and penalty imposed on basis of statements recorded during investigation which were retracted during cross-examination and when mandatory procedure under Section 9D of CEA was not followed – HELD – Section 9D(1)(b) of CEA prescribes a mandatory and non-derogable procedure for admitting statements recorded during investigation. The person who made the statement must first be examined as a witness before the adjudicating authority and the adjudicating authority must form an opinion that having regard to circumstances of the case, the statement should be admitted in evidence in the interests of justice, before cross-examination can occur - The rationale is that statements recorded during investigation have high possibility of being recorded under coercion or compulsion. Multiple High Courts have consistently held this procedure is mandatory and failure to comply means statements cannot be used as evidence - The adjudicating authority in the present case did not provide cross-examination opportunity to all witnesses whose statements were relied upon and admitted retracted statements without properly examining the deponents under Section 9D - The investigation had significant gaps including no physical stock verification, no inquiry from the appellant's customers, contradictory statements from transporters left unresolved. The appellant purchased only from registered dealers, made payments through banking channels, maintained complete records in books of accounts, was subject to regular departmental audit without any prior allegation, and had no knowledge of the improper dealings of the supplier - The adjudicating authority gave no specific findings on the appellant's case but merely reiterated general allegations without countering the defense submissions. Reliance on the fact that some parties opted for SVLDRS cannot constitute evidence against other parties. The impugned order proceeded with conviction that investigation was sacrosanct without properly evaluating the evidence or cross-examination results – The demand for reversal of CENVAT credit along with penalty is set aside – The appeal is allowed [Read less]

Service Tax – Income from trading/sales and renting of immovable property, Taxable service under Section 65B(44) – Appellant received income from trading/sales and renting immovable property as residential dwelling/hostel - Demand of service tax on the gross amount based on Form 26AS from income tax department – Whether income from trading/sales and renting of immovable property for residential use constitutes taxable service and whether extended period was rightly invoked – HELD – Trading or sale is outside the scope of definition of service under Section 65B(44) as it constitutes merely transfer of title in goo... [Read more]

Service Tax – Income from trading/sales and renting of immovable property, Taxable service under Section 65B(44) – Appellant received income from trading/sales and renting immovable property as residential dwelling/hostel - Demand of service tax on the gross amount based on Form 26AS from income tax department – Whether income from trading/sales and renting of immovable property for residential use constitutes taxable service and whether extended period was rightly invoked – HELD – Trading or sale is outside the scope of definition of service under Section 65B(44) as it constitutes merely transfer of title in goods or immovable property. Income from renting immovable property for being used as residential dwelling is specifically exempted under Section 66D(m) and is therefore non-taxable - The appellant was under bonafide belief that the activities were outside the ambit of taxable service and the non-payment of service tax cannot be held as act of intentionally suppressing material facts. The burden is on the department to prove mala fide conduct and mere non-payment of duties is not equivalent to wilful mis-statement or suppression of facts. Extended period was wrongly invoked in absence of positive act demonstrating intentional evasion – Further, service tax demand cannot be confirmed merely on basis of Form 26AS without clear identification of service provider, recipient and consideration paid as quid pro quo – The impugned order is set aside and the appeal is allowed [Read less]

Service Tax – Renting of vehicles fitted with Hydrogen Cylinder Skid on per-trip basis, Applicability of supply of tangible goods service, Classification as Goods Transport Agency – Appellant was engaged in renting vehicles with Hydrogen Cylinder Skid to a recipient and the department issued show cause notices demanding service tax under supply of tangible goods service category on the ground that possession and control were transferred to the recipient – Whether renting of vehicles with Hydrogen Cylinder Skid on per-trip basis is classifiable as supply of tangible goods service – HELD – The activity of renting v... [Read more]

Service Tax – Renting of vehicles fitted with Hydrogen Cylinder Skid on per-trip basis, Applicability of supply of tangible goods service, Classification as Goods Transport Agency – Appellant was engaged in renting vehicles with Hydrogen Cylinder Skid to a recipient and the department issued show cause notices demanding service tax under supply of tangible goods service category on the ground that possession and control were transferred to the recipient – Whether renting of vehicles with Hydrogen Cylinder Skid on per-trip basis is classifiable as supply of tangible goods service – HELD – The activity of renting vehicles fitted with Hydrogen Cylinder Skid on per-trip basis is not classifiable under supply of tangible goods service, as the charges are levied on per-trip basis which prima facie shows the activity is of transportation, not a taxable service under supply of tangible goods service definition which requires retention of right of possession and effective control. The Tribunal, following its earlier remand decisions, held that the appellant does not fit in the criteria of being a Goods Transport Agency and is to be classified as a provider of means of transport to GTA, which was exempted from service tax vide applicable notifications. The issue is no more res-integra following the earlier decision of the Tribunal – The appeal is allowed and the service tax demand confirmed under supply of tangible goods service is set aside [Read less]

Service Tax - Works Contract Service and Manpower Labour Supply Service, Re-quantification of demand, Compliance with Tribunal's directions, Service Tax (Determination of Value) Rules 2006 - Appellant provided Works Contract Service and Manpower Labour Supply Services for construction activities, Show Cause Notice was issued proposing service tax demand with penalty, First order was passed confirming the demand and penalty, Tribunal remanded the matter for re-quantification under Construction Services in terms of Rule 2A of Service Tax (Determination of Value) Rules 2006 and for extending benefit of Notification No. 30/201... [Read more]

Service Tax - Works Contract Service and Manpower Labour Supply Service, Re-quantification of demand, Compliance with Tribunal's directions, Service Tax (Determination of Value) Rules 2006 - Appellant provided Works Contract Service and Manpower Labour Supply Services for construction activities, Show Cause Notice was issued proposing service tax demand with penalty, First order was passed confirming the demand and penalty, Tribunal remanded the matter for re-quantification under Construction Services in terms of Rule 2A of Service Tax (Determination of Value) Rules 2006 and for extending benefit of Notification No. 30/2012-ST under reverse charge mechanism - Whether the de-novo adjudication order properly followed the Tribunal's remand directions for re-quantification of service tax demand under Construction Services and whether the Appellant remains liable for the confirmed demand after reconciling differences and depositing balance tax - HELD - The Learned Adjudicating Authority in the de-novo order failed to follow the specific and clear directions of the Tribunal for re-quantification under Construction Services in terms of Rule 2A of the Service Tax (Determination of Value) Rules 2006 - The de-novo order was merely a copy-paste of the earlier order without conducting any fresh re-quantification as mandated by the Tribunal's remand directions - The justification that no additional documentary evidence was furnished by the Appellant was not a valid reason for the Adjudicating Authority to ignore the Tribunal's specific directions for re-quantification - The Appellant has already reconciled the entire difference between Form 26AS and Books of Accounts and submitted detailed year-wise reconciliation showing the tax short-assessed - The Appellant has also deposited the balance tax and consequently no further tax remains payable. An appellate remedy or forum created by the Statute is meant to rest the dispute and not to accelerate the same for higher forum - Impugned Order-In-Original dated 27.01.2021 is set aside - Appeal is allowed [Read less]

Central Excise – Rebate claim on export of goods - Adjudicating authority's obligation to consider operative orders of appellate forums when confirming demands - Although the rebate had initially been sanctioned, the Petitioner, acting upon the advice of the Department, had repaid the rebate amount along with interest. Thereafter, the petitioner continued to pay duty on the exported goods by debiting its CENVAT account and had taken credit of the duty so paid - Vide the impugned Order the Tribunal expressly held that petitioner was entitled to refund under Rule 5 of CENVAT Credit Rules 2004 – Dept confirmed the demand ... [Read more]

Central Excise – Rebate claim on export of goods - Adjudicating authority's obligation to consider operative orders of appellate forums when confirming demands - Although the rebate had initially been sanctioned, the Petitioner, acting upon the advice of the Department, had repaid the rebate amount along with interest. Thereafter, the petitioner continued to pay duty on the exported goods by debiting its CENVAT account and had taken credit of the duty so paid - Vide the impugned Order the Tribunal expressly held that petitioner was entitled to refund under Rule 5 of CENVAT Credit Rules 2004 – Dept confirmed the demand without considering the CESTAT's decision despite being apprised of the same - Whether an adjudicating authority can confirm a demand based on an appellate order that has been subsequently set aside by a higher appellate Tribunal - HELD - An adjudicating authority exercising statutory powers is necessarily required to take into account operative orders of appellate authorities having appellate jurisdiction over it and cannot disregard a subsequent appellate determination which directly bears upon the very issue under adjudication. Once the Order-in-Appeal dated 16.12.2019 which had set aside the Refund Order dated 06.05.2019 was itself set aside by the CESTAT vide Final Order dated 01.08.2024, the same could not thereafter be treated as an operative determination adverse to the petitioner - The CESTAT did not merely set aside the Order-in-Appeal on a technical ground but examined the substantive entitlement and expressly held that the petitioner was entitled to refund under Rule 5 of CENVAT Credit Rules 2004 and had specifically considered and decided the question of limitation in favour of the petitioner - The impugned order proceeds on a legal and factual premise which was no longer available. The Additional Commissioner committed a manifest error in confirming the demand without giving effect to the CESTAT's Final Order dated 01.08.2024 despite being specifically informed about it - The Order-in-Original and the Demand-cum-Show Cause Notice are set aside; The Respondent is directed to refund the amount together with applicable interest, in accordance with law – The writ petition is allowed [Read less]

Customs - Valuation of imported goods, Transaction value, Rejection of declared value, Enhancement on basis of acceptance letter, Compliance with Rule 12(2) of CVR 2007, Right to appeal, Speaking Order - Appellant imported Polyester Knitted Fabrics from China declaring transaction value as per commercial invoice, Proper Officer enhanced the valuation based on contemporaneous import data, Appellant initially requested clearance provisionally or finally under protest but was coerced to submit letters of consent to enhanced valuation, Commissioner (Appeals) rejected appeals holding that acceptance in writing exempts issuance ... [Read more]

Customs - Valuation of imported goods, Transaction value, Rejection of declared value, Enhancement on basis of acceptance letter, Compliance with Rule 12(2) of CVR 2007, Right to appeal, Speaking Order - Appellant imported Polyester Knitted Fabrics from China declaring transaction value as per commercial invoice, Proper Officer enhanced the valuation based on contemporaneous import data, Appellant initially requested clearance provisionally or finally under protest but was coerced to submit letters of consent to enhanced valuation, Commissioner (Appeals) rejected appeals holding that acceptance in writing exempts issuance of Speaking Order under Section 17(5) and forecloses right to question assessment - Whether enhancement of valuation can be sustained when proper officer failed to follow mandate of Rule 12(2) of CVR 2007 to intimate grounds in writing and whether acceptance letter bars the right to appeal against enhancement or only exempts the procedural requirement of Speaking Order - HELD - The mandate of Rule 12(2) of CVR 2007 to intimate the importer in writing the grounds for doubting the truth or accuracy of the declared value cannot be ignored or waived. The proper officer was duty bound to communicate the reasons for rejection of transaction value in writing. The letters of acceptance were obtained under pressure and not voluntarily as the Proper Officer ignored requests for provisional assessment and the letters merely state that grounds were narrated and contemporaneous import data shown without disclosing actual details - The critical distinction between the limited procedural waiver under Section 17(5) of Customs Act relating to the requirement of Speaking Order and the independent substantive right of appeal under Section 128 of Customs Act must be maintained. Acceptance letter only exempts the requirement of Speaking Order but does not bar the statutory right to appeal against the enhancement itself - The Delhi High Court in Niraj Silk Mills vs Commissioner of Customs (ICD) Patparganj has held that the right to question the correctness of the decision of the proper officer, whether with respect to formation of opinion or on merits, is protected by statute and cannot be waived. There is no estoppel in taxation matters against assertion of statutory rights - The Allahabad High Court judgment in S.S. Overseas is confined to the narrow issue of mandamus for Speaking Order and does not foreclose the statutory right of appeal - The impugned Orders-in-Appeal are set aside - Appeals are allowed [Read less]

GST - Dismissal of appeal by First Appellate Authority on ground of limitation - Condonation of delay under Section 107 of CGST Act - Whether First Appellate Authority justified in dismissing appeal solely on ground of limitation without considering sufficient cause demonstrated through medical documents and mandatory pre-deposit - HELD - The dismissal of appeal solely on ground of limitation prescribed under Section 107(1) and 107(4) without considering sufficient cause shown by petitioner and substantial compliance with Section 107(6) amounts to hyper technical approach defeating the very purpose of appellate remedy unde... [Read more]

GST - Dismissal of appeal by First Appellate Authority on ground of limitation - Condonation of delay under Section 107 of CGST Act - Whether First Appellate Authority justified in dismissing appeal solely on ground of limitation without considering sufficient cause demonstrated through medical documents and mandatory pre-deposit - HELD - The dismissal of appeal solely on ground of limitation prescribed under Section 107(1) and 107(4) without considering sufficient cause shown by petitioner and substantial compliance with Section 107(6) amounts to hyper technical approach defeating the very purpose of appellate remedy under the statute. Once the mandatory pre-deposit stands satisfied and the amount has been debited from the petitioner's account, the appellate remedy cannot be rendered illusory by refusing to hear the appeal on the mere technical ground of delay - The petitioner had demonstrated through medical documents annexed to the writ petition that the authorized person entrusted with looking after business affairs had fallen seriously ill, which resulted in the petitioner remaining unaware of the order communicated through the portal, thereby establishing sufficient cause for the delay - The First Appellate Authority while exercising power to condone delay is required to apply principles of natural justice and balance equities to secure ends of justice rather than adopting a rigid and mechanistic approach towards limitation periods - The order dismissing the appeal is quashed and set aside; the delay in filing the appeal from the date of communication of the order is condoned - The First Appellate Authority is directed to admit and hear the appeal on merits and pass a reasoned order in accordance with law affording opportunity of hearing to the petitioner - The writ petition is disposed of [Read less]

GST – Scope of expression ‘things’ contained in Section 67(2) of the CGST Act, 2017 - Seizure of currency during search and seizure operations - Officers seized cash during search and seizure operation - Whether the respondent authorities had jurisdiction or authority to seize cash or currency in the course of search and seizure under Section 67(2) of the CGST Act, 2017 - HELD - The expression ‘things’ in Section 67(2) of the CGST Act does not include cash or currency or money found or recovered during the course of search and seizure and the respondents did not have jurisdiction or authority to confiscate or ret... [Read more]

GST – Scope of expression ‘things’ contained in Section 67(2) of the CGST Act, 2017 - Seizure of currency during search and seizure operations - Officers seized cash during search and seizure operation - Whether the respondent authorities had jurisdiction or authority to seize cash or currency in the course of search and seizure under Section 67(2) of the CGST Act, 2017 - HELD - The expression ‘things’ in Section 67(2) of the CGST Act does not include cash or currency or money found or recovered during the course of search and seizure and the respondents did not have jurisdiction or authority to confiscate or retain cash or currency money during such process. The object of Section 67(2) is examination of documents and books for purposes of enquiry or proceedings under the Act and not to unearth unaccounted wealth nor to recover tax by seizing assets when separate mechanisms exist under Sections 73, 74, 78 and 79 of the CGST Act for that purpose and consequently any seizure or retention of cash or currency would be illegal and arbitrary and in clear contravention of the provisions of Section 67(2) of the CGST Act - The seizure of cash is held to be illegal and since the cash had been illegally withheld from the date of seizure till the date of refund, the petitioner would be entitled to interest accrued on the illegally withheld sum – The writ petition is disposed of - Retention of seized articles beyond the stage of issuance of show cause notice - Scope of powers under Section 67(3) - Officers retained two mobile phones, three pen drives and bank card even after issuance of show cause notice - Whether the respondent authorities were entitled to retain the seized articles after the show cause notice had been issued to the petitioner - HELD - With the issuance of the show cause notice, the necessity for retaining the goods or articles enumerated which included mobile phones, pen drives and bank card had ended as the investigation had been completed and culminated in the demand cum show cause notice and the articles could not be retained any further and were required to have been returned at least immediately after the show cause notice had been issued or served upon the petitioner as the provisions of Section 67(3) contemplate retention only for so long as may be necessary for examination and for enquiry or proceedings under the Act - The Investigating Officer shall forthwith arrange for return of the said articles to the petitioner. [Read less]

GST – Gujarat AAR - Liability to collect GST on supply of aircrafts manufactured in India, Scope of supply under Section 7 of CGST Act - Applicant was awarded a contract for supply of 56 aircrafts out of which 40 were to be manufactured in India by Indian Aircraft Contractor at Vadodara, Gujarat and supplied to Ministry of Defence ex-works at facility in Gujarat - Whether the applicant is liable to pay GST on supplies of aircrafts made to Ministry of Defence pursuant to the contract - HELD - As per Section 7(1)(a) of CGST Act, supply includes all forms of supply of goods such as sale made for consideration by a person in... [Read more]

GST – Gujarat AAR - Liability to collect GST on supply of aircrafts manufactured in India, Scope of supply under Section 7 of CGST Act - Applicant was awarded a contract for supply of 56 aircrafts out of which 40 were to be manufactured in India by Indian Aircraft Contractor at Vadodara, Gujarat and supplied to Ministry of Defence ex-works at facility in Gujarat - Whether the applicant is liable to pay GST on supplies of aircrafts made to Ministry of Defence pursuant to the contract - HELD - As per Section 7(1)(a) of CGST Act, supply includes all forms of supply of goods such as sale made for consideration by a person in course or furtherance of business. Aircrafts fall within definition of goods under Section 2(52) as movable property. There is consideration payable by MoD for the transaction of supply of aircrafts - As per Section 7(1A) read with Entry 1(a) of Schedule II, any transfer of title in goods is a supply of goods and title and ownership transfer takes place in Gujarat upon signature of Acceptance Certificate. Transaction qualifies as supply under Section 7 of CGST Act. Notification No. 10/2025 provides exhaustive list of exempted goods and aircrafts are not covered under any entry, hence no exemption is available - Transaction of supply of aircrafts by applicant to MoD is liable to GST - The applicant is liable to pay GST on supplies of aircrafts made to Ministry of Defence – Ordered accordingly - Registration requirement under Sections 22 and 25 of CGST Act, Place of supply and application for registration in State of supply - Entire process of manufacture and supply of aircrafts to Ministry of Defence is undertaken by applicant in State of Gujarat and applicant has already obtained registration in Haryana - Whether the applicant is required to obtain GST registration in state of Gujarat for making supplies of aircrafts - HELD - As per Section 22 of CGST Act, every supplier is liable to be registered in State from where he makes taxable supply if aggregate turnover exceeds Rs. 20 lakhs. Section 25(1) mandates that every person liable for registration shall apply in every such State where liable within thirty days from date on which he becomes liable - Entire manufacture and supply of aircrafts to MoD is carried out in Gujarat. Transaction value of aircrafts to be supplied is much higher than threshold limit of Rs. 20 lakhs. Therefore applicant will be required to obtain registration in state of Gujarat for supply transaction undertaken therein - The applicant is required to obtain GST registration in State of Gujarat. [Read less]

GST - Gujarat AAR - Classification and applicable rate of GST of Papad Khar - Whether Papad Khar should be classified under HSN 2501 (Common Salts) at 5% GST or HSN 2102 (Prepared Food Additives) at 5% GST on ground that it is alkaline salt used as food ingredient, or whether it qualifies for GST exemption under Notification 2/2017-CT entries 96 or 23 as ingredient essential for manufacture of papad - HELD - Papad Khar containing 70% sodium chloride, 15% sodium carbonate and 15% sodium bicarbonate does not fall under HSN 2501 as it is not common salt or rock salt which contain pure or near-pure sodium chloride. The product... [Read more]

GST - Gujarat AAR - Classification and applicable rate of GST of Papad Khar - Whether Papad Khar should be classified under HSN 2501 (Common Salts) at 5% GST or HSN 2102 (Prepared Food Additives) at 5% GST on ground that it is alkaline salt used as food ingredient, or whether it qualifies for GST exemption under Notification 2/2017-CT entries 96 or 23 as ingredient essential for manufacture of papad - HELD - Papad Khar containing 70% sodium chloride, 15% sodium carbonate and 15% sodium bicarbonate does not fall under HSN 2501 as it is not common salt or rock salt which contain pure or near-pure sodium chloride. The product is obtained by manufacturing process involving mixing and chemical processing beyond the scope of heading 2501 which covers only products in crude state or subjected to limited mechanical or physical processing without roasting or calcining or mixing - Papad Khar does not fall under HSN 2102 as it is fundamentally different from yeasts and baking powders in chemical composition, functional use and resulting effect on dough - The product contains sodium carbonate and sodium bicarbonate as active ingredients while yeasts are living microorganisms and baking powders are leavening agents. Papad Khar correctly falls under HSN 28362090 (Carbonates and Peroxocarbonates) as the chemically active components of sodium carbonate and sodium bicarbonate form 30% of the product composition and the product is mixable derivative of carbonates and bicarbonates falling within the scope of heading 2836 - The principle that raw materials and finished products are separate items with independent HSN codes and that rates are determined by their specific tariff entries and not by position in supply chain does not support contention that raw materials should be taxed at nil rate because finished product is exempt - Papad Khar does not qualify for exemption under Notification 2/2017-CT as the exemption for papad relates only to the final product and not to raw materials or ingredients used in its manufacture - Papad Khar is classifiable under HSN 28362090 under Entry No. 35 of Schedule II of Notification 09/2025-Central Tax (Rate) and is liable to 18% GST – Ordered accordingly [Read less]

U.P. VAT Act, 2008 - Revisional Power - Jurisdiction of Joint Commissioner - Notice under Section 56(2) of UPVAT Act proposing to revise the assessment order - Joint Commissioner revised the order and enhanced taxable turnover creating additional liability - Whether Joint Commissioner (Executive), Commercial Tax, had jurisdiction to exercise revisional power under Section 56(1) of the U.P. VAT Act in the absence of any authorization from the Commissioner, Commercial Tax and whether proceedings initiated without such authorization are valid - HELD - The record shows that after implementation of U.P. VAT Act, the Commissione... [Read more]

U.P. VAT Act, 2008 - Revisional Power - Jurisdiction of Joint Commissioner - Notice under Section 56(2) of UPVAT Act proposing to revise the assessment order - Joint Commissioner revised the order and enhanced taxable turnover creating additional liability - Whether Joint Commissioner (Executive), Commercial Tax, had jurisdiction to exercise revisional power under Section 56(1) of the U.P. VAT Act in the absence of any authorization from the Commissioner, Commercial Tax and whether proceedings initiated without such authorization are valid - HELD - The record shows that after implementation of U.P. VAT Act, the Commissioner, Commercial Tax, did not authorize the Joint Commissioner (Executive), Etawah, to initiate proceedings under Section 56(1) of the U.P. VAT Act. The State could not demonstrate that such power was delegated to the Joint Commissioner by any Notification, Act or Circular. A question of jurisdiction goes to the root of the matter and can be raised at any stage even if not raised before lower authorities - The question of jurisdiction raised for the first time can be entertained and adjudicated as it goes to the root of the matter. In the absence of authorization from the Commissioner, the proceedings initiated by the Joint Commissioner in exercise of power under Section 56(1) of the U.P. VAT Act are without jurisdiction and void ab initio - The proceedings initiated by the Joint Commissioner (Executive), Commercial Tax, Etawah are set aside as void ab initio for lack of jurisdiction - Revision is allowed [Read less]

GST - Permissibility of clubbing or consolidating multiple financial years in show cause notice issued under Section 74 of CGST Act - Respondent issued SCN covering financial years 2019-20 to 2021-22, alleging suppression of taxable value and short payment of GST - Petitioner challenged notice on ground that clubbing of different financial years/tax periods in single show cause notice is not permissible - Whether authority has jurisdiction to issue consolidated show cause notice covering different financial years/tax periods - HELD - GST scheme is based on annual returns for each financial year with statute fixing five yea... [Read more]

GST - Permissibility of clubbing or consolidating multiple financial years in show cause notice issued under Section 74 of CGST Act - Respondent issued SCN covering financial years 2019-20 to 2021-22, alleging suppression of taxable value and short payment of GST - Petitioner challenged notice on ground that clubbing of different financial years/tax periods in single show cause notice is not permissible - Whether authority has jurisdiction to issue consolidated show cause notice covering different financial years/tax periods - HELD - GST scheme is based on annual returns for each financial year with statute fixing five year time limit for demanding and recovering tax from due date for furnishing annual return for that year or from date of erroneous return. Each financial year constitutes separate tax period with different due dates and different limitations - Statute treats each financial year as separate tax period for purpose of assessment and recovery – Further, the judgment of Delhi High Court in M/s Mathur Polymers permitting consolidation in fraud cases does not apply as Supreme Court declined to interfere in limine, not on merit, therefore doctrine of merger of judgment does not apply. The Bombay High Court judgments in M/s Milroc Good Earth Developers and Rite Water Solutions are binding authority – The clubbing of Show cause notice for various financial years/tax periods is not permissible. Show cause notice consolidating different financial years is quashed and set aside - Respondent at liberty to re-issue notice strictly in terms of provisions of Section 74 if no other legal impediment - The petition is disposed of [Read less]

Service Tax - Transfer of Development Rights, Nature of transaction, Immovable property, Service, CENVAT Credit, Input service, Extended period of limitation - Appellant engaged in trading of lubricants and motor vehicles, transferred development rights of land in return for specified share of built up area of project, marketed and sold share of flats and treated amount as consideration for construction services, paid service tax after availing 75% abatement under Notification No. 26/2012-ST, availed CENVAT credit on administrative charges and construction services provided by developer, Department contended that transfer ... [Read more]

Service Tax - Transfer of Development Rights, Nature of transaction, Immovable property, Service, CENVAT Credit, Input service, Extended period of limitation - Appellant engaged in trading of lubricants and motor vehicles, transferred development rights of land in return for specified share of built up area of project, marketed and sold share of flats and treated amount as consideration for construction services, paid service tax after availing 75% abatement under Notification No. 26/2012-ST, availed CENVAT credit on administrative charges and construction services provided by developer, Department contended that transfer of development rights was a service liable to service tax without abatement - Whether transfer of development rights constitutes a service liable to service tax or is a transaction in immovable property and whether CENVAT credit was rightly availed - HELD - Following Chheda Housing Development Corporation vs Bibijan Shaikh Farid, development rights are a benefit arising out of land and fall under the definition of immovable property under Section 3(26) of General Clauses Act 1897 - Transfer of development rights is a transaction in immovable property and not a service at all. It is neither construction service nor any other service. Therefore, no service tax is payable on transfer of development rights. Since the transfer of development rights was not an output service, the service tax paid by the developer on Works Contracts and Administrative charges were not input services at the hands of the appellant - Therefore, the appellant was not entitled to CENVAT credit on these amounts. The extended period of limitation cannot be invoked in this case because the appellant was of the view that it was liable to pay service tax on the transfer as construction services and for that reason availed the CENVAT credit. The appellant's position was based on a reasonable interpretation of law and there was no wilful suppression or fraud. The demand of service tax and penalties under Sections 77 and 78 and Rule 15 are liable to be set aside. The appellant can claim refund of the service tax wrongly paid on transfer of development rights with effect from the date of this order - Demand of service tax under Section 73 set aside - Penalties under Sections 77 and 78 and Rule 15 set aside - Denial and recovery of CENVAT credit upheld for normal period of limitation only - Appellant entitled to claim refund of service tax paid - Appeal partly allowed [Read less]

GST - Deposit in Electronic Cash Ledger - Discharge of Tax Liability – Demand of interest under Section 50(1) CGST Act, 2017 - Petitioner deposited tax amount in Electronic Cash Ledger on 05.01.2019 well before due date but corresponding liability declared in GSTR-1 return for December 2018 was discharged only upon filing GSTR-3B return for September 2019 on 17.10.2019 - During scrutiny officer issued demand notice under Section 50(1) for interest calculated for 273 days - Petitioner contended that once tax amount was deposited in Electronic Cash Ledger, amount was lying with Government and available for appropriation to... [Read more]

GST - Deposit in Electronic Cash Ledger - Discharge of Tax Liability – Demand of interest under Section 50(1) CGST Act, 2017 - Petitioner deposited tax amount in Electronic Cash Ledger on 05.01.2019 well before due date but corresponding liability declared in GSTR-1 return for December 2018 was discharged only upon filing GSTR-3B return for September 2019 on 17.10.2019 - During scrutiny officer issued demand notice under Section 50(1) for interest calculated for 273 days - Petitioner contended that once tax amount was deposited in Electronic Cash Ledger, amount was lying with Government and available for appropriation towards liability and could not be held liable for interest on account of subsequent delay in debiting ledger particularly when delay was attributable to technical glitches on GST portal - Whether deposit of amount in Electronic Cash Ledger prior to due date for filing GSTR-3B return, without corresponding debit towards liability, amounts to discharge of tax liability for purposes of Section 50(1) - HELD - Statutory scheme under Sections 39, 49 and 50 of CGST Act and Rule 87 of CGST Rules contemplates distinction between deposit of amount into Electronic Cash Ledger and its subsequent utilization towards discharge of particular tax liability - Mere credit in Electronic Cash Ledger does not by itself result in appropriation of amount towards particular liability. Debit towards tax liability occurs upon filing return and utilization of amount available in ledger - Electronic Cash Ledger operates as statutory ledger in which amounts are credited and from which amounts are thereafter debited towards discharge of tax liabilities. Mere availability of balance in ledger does not identify or appropriate such amount towards self-assessed tax liability. Tax liability stands discharged only when amount is debited from ledger towards liability upon filing GSTR-3B return and not upon mere deposit in ledger. Therefore intervening period between deposit and debit constitutes period of delayed discharge for which interest is payable under Section 50(1) - Existence of technical difficulties without establishing that they prevented discharge in prescribed manner cannot alter statutory consequence flowing from delayed discharge - Impugned notices do not suffer from illegality or arbitrariness - The writ petition is dismissed [Read less]

Central Excise - Eligibility of CENVAT credit for Clearing and Forwarding services, Determination of place of removal in FOR-destination transactions, Invocation of extended period - Appellant manufacturer of cement cleared cement from factory and stock-transferred to depots managed by clearing and forwarding agents. Appellant availed CENVAT credit on service tax paid for C&F services. Department disallowed credit contending services were rendered beyond place of removal which was factory or depot - Whether C&F services relating to storage, handling, loading at depots constitute eligible input services and whether services... [Read more]

Central Excise - Eligibility of CENVAT credit for Clearing and Forwarding services, Determination of place of removal in FOR-destination transactions, Invocation of extended period - Appellant manufacturer of cement cleared cement from factory and stock-transferred to depots managed by clearing and forwarding agents. Appellant availed CENVAT credit on service tax paid for C&F services. Department disallowed credit contending services were rendered beyond place of removal which was factory or depot - Whether C&F services relating to storage, handling, loading at depots constitute eligible input services and whether services for transportation and delivery at customer premises are covered under place of removal where cement sold on FOR-destination basis - HELD - Section 4(3)(C) of the CEA, 1944 includes depot and premises where excisable goods sold after clearance as place of removal. Services relating to receipt, unloading, storage, handling and loading at depots directly nexus with business of manufacture and sale and are eligible input services. For FOR-destination transactions, place of removal must be determined by examining contract terms applying principles that controlling factors include point of title passage, risk of loss, freight and insurance treatment and whether delivery at buyer premises was essential condition. Mere use of FOR-destination expression not conclusive - Matter requires limited factual verification per individual contracts. Dispute involves statutory interpretation and divergent judicial views existed. No positive fraud or deliberate suppression established. Extended period not invocable. Equivalent penalty also set aside - Eligibility of credit for transportation and delivery at customer premises remanded for verification of actual place of removal per contract terms – The appeal is allowed by remand [Read less]

GST - Jurisdiction of High Court to entertain writ petitions - Res judicata and preclusion based on Supreme Court judgment – Writ Petitions challenging the Constitutional validity of Section 16(2)(c) of CGST Act, 2017 - Supreme Court vide order in Bhandari Scrap Traders v. Union of India had already upheld constitutional validity of Section 16(2)(c) of CGST Act - Whether High Court should entertain writ petitions questioning Constitutional validity of statutory provision when Supreme Court has already upheld such validity - HELD - Once the Supreme Court has adjudicated the Constitutional validity of a statutory provision... [Read more]

GST - Jurisdiction of High Court to entertain writ petitions - Res judicata and preclusion based on Supreme Court judgment – Writ Petitions challenging the Constitutional validity of Section 16(2)(c) of CGST Act, 2017 - Supreme Court vide order in Bhandari Scrap Traders v. Union of India had already upheld constitutional validity of Section 16(2)(c) of CGST Act - Whether High Court should entertain writ petitions questioning Constitutional validity of statutory provision when Supreme Court has already upheld such validity - HELD - Once the Supreme Court has adjudicated the Constitutional validity of a statutory provision and upheld its constitutionality, the High Court cannot entertain writ petitions seeking declaration of invalidity of the same provision as relief sought is already adjudicated. The Supreme Court's judgment declaring Section 16(2)(c) of CGST Act Constitutionally valid is binding on all subordinate courts and no writ petition challenging such declaration can be entertained - Further, where an administrative order has been passed and a statutory appellate remedy is available before the Commissioner (Appeals), the High Court should not exercise extraordinary writ jurisdiction to entertain the same grievance thereby bypassing the hierarchical statutory mechanism created by the legislation. The proper course is for the aggrieved party to exhaust the statutory appellate remedy – The writ petitions are dismissed [Read less]

GST – Failure to pay GST on a bonafide belief, Invocation of Section 74(1) of CGST Act, 2017; conditions precedent for invocation - Disclosure in audited balance sheet, income tax return and GST annual return – DGGI notice under Section 74(1) demanding GST on an allegation that Petitioner, a government contractor engaged in construction of national highways, had failed to pay GST on price adjustments received for the period 2022-23 - Petitioner had executed highway construction works under agreement which contained quoted price including 5% VAT. Price adjustments were made during 2022-23. Petitioner had disclosed the r... [Read more]

GST – Failure to pay GST on a bonafide belief, Invocation of Section 74(1) of CGST Act, 2017; conditions precedent for invocation - Disclosure in audited balance sheet, income tax return and GST annual return – DGGI notice under Section 74(1) demanding GST on an allegation that Petitioner, a government contractor engaged in construction of national highways, had failed to pay GST on price adjustments received for the period 2022-23 - Petitioner had executed highway construction works under agreement which contained quoted price including 5% VAT. Price adjustments were made during 2022-23. Petitioner had disclosed the receipt of price adjustments in audited balance sheet filed with Income Tax Authorities and also in annual GST return - Petitioner sought to quash the show cause notice contending that essential pre-conditions for invoking Section 74(1) were not established – HELD - For invoking powers under Section 74(1), the proper officer must come to a clear conclusion that tax has not been paid by reason of fraud or there has been willful misstatement or suppression of facts to evade payment of tax. Suppression of facts means non-declaration of facts or information which a taxable person is required to declare in returns or documents furnished - In the present case, the Petitioner had disclosed the receipt of price adjustments in audited balance sheet filed with Income Tax Authorities on 29.09.2023, in annual GST return on 28.12.2023, and had affirmed and declared before GST Authorities per Rule 66 on 12.12.2022. Where facts are known to both parties, omission by one party to do what he might have done and not what he must have done does not render it suppression - Mere failure to pay GST on a bonafide belief that price adjustments were exempt from GST does not amount to willful suppression, especially where neither the government department nor the ministry had included GST charges in the bills for price adjustments. The Revenue invoked Section 74(1) merely to overcome the period of limitation without establishing any of the statutory pre-conditions. This constituted an exercise of jurisdiction not conferred by statute and was arbitrary and unjust – The show cause notice is quashed; all penalties, interest and surcharge are set aside – The writ petition is allowed - Maintainability of writ petition despite availability of alternative remedy under statute – HELD - In the present case, revenue authorities had wrongly assumed jurisdiction under Section 74(1) beyond what was conferred by statute by invoking extended limitation period without satisfying mandatory pre-conditions. This assumption of jurisdiction without authority and arbitrary exercise of power violated Article 14 of Constitution. Such jurisdictional error at threshold stage of show cause notice itself justified interference by writ court even before exhaustion of alternative remedies. When authorities act beyond their jurisdiction, it is permissible for High Court to intervene at initial stage to prevent abuse of authority – The Writ petition held maintainable; show cause notice quashed. [Read less]

Customs – Refund of Special Additional Duty (SAD) under Notification No.102/2007-Cus. – Correlation between imported and sold goods – Appellant, a trader in plastic granules, imported goods mentioned as specific grades (HDPE, LDPE, LLDPE) in Bills of Entry in March 2009; the appellant filed a refund claim for 4% SAD amounting to Rs.5,02,579/-; the original authority sanctioned the refund after examining Bills of Entry, sale invoices, Chartered Accountant's certificate and VAT/CST payments; Commissioner (Appeals) set aside the refund on the ground that sale invoices described the goods generically as "plastic granules... [Read more]

Customs – Refund of Special Additional Duty (SAD) under Notification No.102/2007-Cus. – Correlation between imported and sold goods – Appellant, a trader in plastic granules, imported goods mentioned as specific grades (HDPE, LDPE, LLDPE) in Bills of Entry in March 2009; the appellant filed a refund claim for 4% SAD amounting to Rs.5,02,579/-; the original authority sanctioned the refund after examining Bills of Entry, sale invoices, Chartered Accountant's certificate and VAT/CST payments; Commissioner (Appeals) set aside the refund on the ground that sale invoices described the goods generically as "plastic granules" instead of reproducing the specific grades, and that sales were made through consignment agents – Whether the difference between the specific grades mentioned in Bills of Entry and the generic expression "plastic granules" in sale invoices is sufficient to establish that the imported goods were not subsequently sold, and whether sales through consignment agents disentitle the appellant to SAD refund under the Notification – HELD – The substantive conditions of Notification No.102/2007-Cus. do not require sale invoices to reproduce verbatim every grade or specification mentioned in Bills of Entry when the imported goods were subsequently sold with payment of applicable sales tax, as recorded by the original authority after documentary verification. The absence of grade number in the domestic sale invoice does not establish that the goods sold were different from those imported, particularly when Bills of Entry, sale invoices, reconciliation statement and Chartered Accountant's certificate correlate the goods. The circular recognises sales through consignment agents and prescribes the manner of establishment which was satisfied here; the mere fact that sales were effected through consignment agents cannot defeat the refund when VAT/CST payments were certified and correlated with the sales invoices and imported quantities – The Hon'ble Madras High Court in P.P. Products Ltd. v. Commissioner of Customs held that refund cannot be rejected merely on nomenclature differences when the adjudicating authority found no evidence that goods sold were different from imported goods – The impugned order is set aside and the refund sanctioned by the original authority is restored – The appeal is allowed [Read less]

GST - Tariff classification of air and oil filters for automobiles - Chapter 84 vs Chapter 87 - Sole or principal use test - Petitioner, a manufacturer of air and oil filters for supply to automobile companies, classified these goods under Chapter 84 (Heading 8421) - Department claimed classification under Chapter 87/Section XVII (Heading 8708) - Whether the classification should be merely based on the textual entry under Heading 8421 or whether the sole or principal use test applicable to motor vehicle parts under Section XVII was required to be applied – HELD - The petitioner had raised a primary contention that the HS... [Read more]

GST - Tariff classification of air and oil filters for automobiles - Chapter 84 vs Chapter 87 - Sole or principal use test - Petitioner, a manufacturer of air and oil filters for supply to automobile companies, classified these goods under Chapter 84 (Heading 8421) - Department claimed classification under Chapter 87/Section XVII (Heading 8708) - Whether the classification should be merely based on the textual entry under Heading 8421 or whether the sole or principal use test applicable to motor vehicle parts under Section XVII was required to be applied – HELD - The petitioner had raised a primary contention that the HSN Note to Chapter 87/Section XVII lays down three conditions to be cumulatively satisfied for classification of goods under Chapter 87, but the appellate authority did not engage with this contention - Further, the appellate authority applied the sole or principal use test from Westinghouse Saxby to the exclusion of other considerations mandated by HSN Explanatory Notes and Supreme Court judgments and CBIC Instruction No.1/2022, which direct that multiple judgments should be considered in such classification issues and Westinghouse Saxby should not be relied upon exclusively - The impugned appellate orders are set aside and the matters are remanded for reconsideration by the appellate authority – The petitions are disposed of [Read less]

GST - Validity of Corrigendum rectifying Portal Order and Authentication of Unsigned Annexure in GST Adjudication - Section 161 of the CGST Act, 2017 - Petitioner received Portal Order stating that proceedings under Section 73 stand dropped for reasons stated in Annexure, but the incorporated Annexure recorded rejection of petitioner's explanation and quantified a demand with interest and penalty. Petitioner challenged the validity of subsequent Corrigendum which clarified that relief was granted on three issues while demand on fourth survived, contending that the digitally signed Portal Order recording proceedings as drop... [Read more]

GST - Validity of Corrigendum rectifying Portal Order and Authentication of Unsigned Annexure in GST Adjudication - Section 161 of the CGST Act, 2017 - Petitioner received Portal Order stating that proceedings under Section 73 stand dropped for reasons stated in Annexure, but the incorporated Annexure recorded rejection of petitioner's explanation and quantified a demand with interest and penalty. Petitioner challenged the validity of subsequent Corrigendum which clarified that relief was granted on three issues while demand on fourth survived, contending that the digitally signed Portal Order recording proceedings as dropped must prevail over the unsigned Annexure and that demand could not be sustained through unsigned Annexure or Corrigendum - Whether an unsigned Annexure expressly incorporated in a digitally signed adjudication order can be enforced and Corrigendum rectifying apparent error in Portal Order under Section 161 is valid - HELD - The digitally signed Portal Order expressly incorporates and adopts the reasons and details stated in the Annexure and discloses an internal contradiction as it records both that proceedings stand dropped and that demand is quantified on fourth issue. The Annexure stood incorporated and adopted as part of the digitally authenticated Portal Order and cannot be treated as an independent unsigned order requiring separate authentication - The composite order when read as a whole shows that the fourth issue was decided against the Petitioner, and the Corrigendum merely corrects this inconsistent portal recital by preserving the relief on three issues and repeating findings and amounts already recorded on fourth issue, neither supplementing reasons for disallowance nor enlarging demand, and therefore falls within Section 161 rectification - The Corrigendum neither withdraws any relief granted by that order nor enlarges the demand. It merely corrects the inconsistent portal statement. The rectification therefore did not adversely alter the Petitioner’s position under the original adjudication so as to attract the third proviso to Section 161 of the CGST Act - Once the Corrigendum is found to be a rectification of the original order, rather than a fresh adjudication, the expiry of the period for completing the original adjudication does not render the subsequent correction invalid - The Corrigendum issued within six-month prescribed period under Section 161 - If so advised, the Petitioner may prefer an appeal against the order, including its Annexure, read with the Corrigendum - The writ petition is dismissed [Read less]

Customs - Eligibility for exemption of Mono Ethylene Glycol Reclamation Plant under Notification No. 50/2017-Cus - S.No.404 of List 33 — Appellant imported Mono Ethylene Glycol Reclamation Plant under Bills of Entry during 03.01.2023 to 17.06.2024, classifying the same under CTH 84198990 and claiming exemption from payment of Customs duty under S.No.404 of Notification No. 50/2017-Cus. Original Authority denied exemption on the ground that the goods do not fall within heading 8430 mentioned in column 2 of List 33. Commissioner (Appeals) allowed the appeal holding that goods are eligible for exemption - Whether the impugn... [Read more]

Customs - Eligibility for exemption of Mono Ethylene Glycol Reclamation Plant under Notification No. 50/2017-Cus - S.No.404 of List 33 — Appellant imported Mono Ethylene Glycol Reclamation Plant under Bills of Entry during 03.01.2023 to 17.06.2024, classifying the same under CTH 84198990 and claiming exemption from payment of Customs duty under S.No.404 of Notification No. 50/2017-Cus. Original Authority denied exemption on the ground that the goods do not fall within heading 8430 mentioned in column 2 of List 33. Commissioner (Appeals) allowed the appeal holding that goods are eligible for exemption - Whether the impugned goods, which are equipment for specialized services meant for offshore and onshore petroleum operations but classifiable under heading 8419 instead of heading 8430, are eligible for exemption in terms of S.No.404 when the Notification extends exemption to goods as described in column 3 of the table read with List 33 and not by reference to column 2 of List 33 – HELD – The plain reading of the notification indicates that exemption is extended to goods specified in column 3 of List 33 when imported by a specified person in relation with petroleum operations - The impugned good qualifies as equipment for specialized services meant for offshore and onshore petroleum operations, which has been certified by the Directorate General of Hydrocarbons. The goods satisfy all three requirements for eligibility i.e. the description as specified in column 3 of the table read with List 33, falling within Chapter 84 as specified in column 2 of the main table, and the conditions specified in column 6 are satisfied - The headings mentioned in column 2 of List 33 are not exhaustive and do not restrict the scope of the description provided in column 3. Since the impugned goods fall within the description of goods, they are eligible for exemption notwithstanding that they fall under heading 8419 and not 8430 - The amendment in 2024 inserting a specific entry for the impugned goods operates prospectively and does not retrospectively deny the benefit available under S.No.4 during the relevant period prior to the amendment - The notification was intended to provide exemption to goods used for petroleum exploration, production and processing, therefore the entry must be construed as a beneficial exemption and interpreted liberally. No ambiguity exists in the plain reading of the notification, hence the ratio of CC (Import), Mumbai Vs Dilip Kumar & Company is not applicable - The impugned goods are eligible for exemption from customs duty under S.No.404 of Notification No. 50/2017-Cus – The appeal filed by the department is dismissed [Read less]

GST - Deletion of Rule 96(10) of CGST Rules - Applicability to Pending Proceedings - Whether the deletion of sub-rule (10) of Rule 96 of the CGST Rules, 2017 through Notification No.20/2024 dated 08.10.2024 would apply to assessees in pending proceedings or only to proceedings initiated after the date of such deletion - HELD – The issue raised is no longer res integra as the Gujarat High Court in the case of Addwrap Packaging Private Limited v. Union of India had held that the omission of sub-rule (10) of Rule 96 through Notification No.20/2024 with effect from 08.10.2024 would enure to the benefit of all assessees in pe... [Read more]

GST - Deletion of Rule 96(10) of CGST Rules - Applicability to Pending Proceedings - Whether the deletion of sub-rule (10) of Rule 96 of the CGST Rules, 2017 through Notification No.20/2024 dated 08.10.2024 would apply to assessees in pending proceedings or only to proceedings initiated after the date of such deletion - HELD – The issue raised is no longer res integra as the Gujarat High Court in the case of Addwrap Packaging Private Limited v. Union of India had held that the omission of sub-rule (10) of Rule 96 through Notification No.20/2024 with effect from 08.10.2024 would enure to the benefit of all assessees in pending proceedings also. The Supreme Court in the case of Goodluck India Limited case upheld the decision of the Gujarat High Court holding that deletion of sub-rule (10) of Rule 96 would be applicable to all pending proceedings - The deletion of sub-rule (10) of Rule 96 of CGST Rules, 2017 through Notification No.20/2024 dated 08.10.2024 would ensure and apply to all assessees in pending proceedings. All other cases where show cause notices and orders-in-original are assailed and refund is claimed shall be processed pursuant to this decision - The writ petitions are disposed of [Read less]

GST – Denial from issuance of C-Forms for the purchase of ENA from other States on the ground that the GST regime does not enable issuance of C-Forms – Vide the impugned order the Madras High Court held the indecision of the Council of GST cannot create impediments to the right of trade of the respondent and the assessee is entitled to be issued C-Forms for the purchase of ENA from other States for the period prior to the amendment excluding ENA from GST – Department in appeal – SC HELD - Not inclined to interfere with the impugned judgment of the High Court; hence, the special leave petition is dismissed

Central Excise - Cotton Waste generated from imported "Raw Cotton" - Manufactured in India – Benefit of Notification No. 8/97-CE - Assessee, a 100% EOU undertaking engaged in manufacture of ring spun cotton yarn, imported duty-free raw cotton and procured raw cotton from domestic manufacturers. Cotton waste generated during manufacture of ring spun yarn was used for manufacture of open end cotton yarn which was cleared to DTA – Demand of duty on the ground that assessee had wrongly availed benefit of concessional rate of duty under Notification No. 8/97-CE dated 01.03.1997, alleging that open end yarn was manufactured ... [Read more]

Central Excise - Cotton Waste generated from imported "Raw Cotton" - Manufactured in India – Benefit of Notification No. 8/97-CE - Assessee, a 100% EOU undertaking engaged in manufacture of ring spun cotton yarn, imported duty-free raw cotton and procured raw cotton from domestic manufacturers. Cotton waste generated during manufacture of ring spun yarn was used for manufacture of open end cotton yarn which was cleared to DTA – Demand of duty on the ground that assessee had wrongly availed benefit of concessional rate of duty under Notification No. 8/97-CE dated 01.03.1997, alleging that open end yarn was manufactured from imported raw cotton hence not eligible for exemption - Whether cotton waste generated from imported raw cotton while producing ring spun yarn and used in manufacture of open end yarn should be considered as manufactured in India for availing benefit of concessional rate of duty - HELD – The cotton waste is a distinct and separate commercial commodity covered under Chapter heading 5202 of Central Excise Tariff Act and should be considered as a separate manufactured goods. When open end yarn is manufactured from cotton waste which is produced in India, such waste constitutes ‘raw material produced in India’ for purposes of the Notification - The expression 'raw materials' means material used in manufacture of goods; open end yarn is manufactured from cotton waste and not from imported cotton. The condition stipulated in the Notification that goods shall be produced wholly from raw materials produced in India stands satisfied - The Supreme Court in Favourite Industries case held that goods manufactured in EOU is duly considered to be manufactured in India. Since cotton waste was manufactured in the appellant's factory and used for open end yarn manufacture, the Notification condition is satisfied – Further, the extended period of limitation cannot be invoked as all facts were in knowledge of department at time of issuance of first SCN and no suppression of fact or misdeclaration with intent to evade payment of duty occurred - The impugned order by the Tribunal is upheld and the appeal of the revenue is dismissed [Read less]

GST - Permissibility of blocking and negative blocking of electronic credit ledger under Section 79 of CGST Act – Validity of blocking in light of interim order keeping recovery proceedings in abeyance - Petitioner's electronic credit ledger was blocked on 04.02.2025 - Subsequently, petitioner filed writ petition challenging clubbed assessment order and interim stay was granted on 25.02.2026 keeping recovery proceedings in abeyance - Petitioner challenged blocking order on ground that it travels beyond scope of Section 79 and that negative blocking is impermissible under Section 79, particularly when compared with provis... [Read more]

GST - Permissibility of blocking and negative blocking of electronic credit ledger under Section 79 of CGST Act – Validity of blocking in light of interim order keeping recovery proceedings in abeyance - Petitioner's electronic credit ledger was blocked on 04.02.2025 - Subsequently, petitioner filed writ petition challenging clubbed assessment order and interim stay was granted on 25.02.2026 keeping recovery proceedings in abeyance - Petitioner challenged blocking order on ground that it travels beyond scope of Section 79 and that negative blocking is impermissible under Section 79, particularly when compared with provisions of Rule 86A - Whether blocking order including negative blocking of electronic credit ledger is permissible under Section 79 of CGST Act and whether interim order regarding recovery proceedings impacts the blocking order - HELD - The interim order dated 25.02.2026 which directs that recovery proceedings be kept in abeyance has no impact on blocking order issued earlier as such interim order only restricts amounts lying in electronic credit ledger from being debited for purposes of recovering dues - Blocking of credit ledger, including negative blocking, falls within scope of Section 79 which provides multiple modes of recovery - The width of Section 79(1) demonstrates that proper officer is entitled to recover amounts payable to Government by adopting one or more specified modes - Rule 86A is a provisional measure typically undertaken at pre-determination of liability stage whereas powers under Section 79 are wider measures taken at post-determination stage to recover amounts due and payable to Government - Viewed in context that blocking of credit ledger is a recovery mechanism at post-determination stage, contention that negative blocking of electronic credit ledger is impermissible under Section 79 cannot be countenanced - The blocking order is permissible under Section 79 and survives notwithstanding the interim order regarding recovery proceedings - The writ petition is disposed of [Read less]

Central Excise - Invocation of extended period of limitation under Section 11A - Appellant imported goods classified as inputs but directly sold in open market without being received in factory premises - Appellant claimed CENVAT credit on 4% Additional Customs Duty by making false entries in RG 23A register showing goods received and issued for manufacturing though goods were directly dispatched to buyers from port of import - Department issued Show Cause Notice proposing disallowance of CENVAT credit and invoked extended period of five years under Section 11A - Whether appellant made wilful misstatement and suppression o... [Read more]

Central Excise - Invocation of extended period of limitation under Section 11A - Appellant imported goods classified as inputs but directly sold in open market without being received in factory premises - Appellant claimed CENVAT credit on 4% Additional Customs Duty by making false entries in RG 23A register showing goods received and issued for manufacturing though goods were directly dispatched to buyers from port of import - Department issued Show Cause Notice proposing disallowance of CENVAT credit and invoked extended period of five years under Section 11A - Whether appellant made wilful misstatement and suppression of facts sufficient to invoke extended period of limitation under Section 11A of Central Excise Act – HELD - Clear misdeclaration exists as appellant showed imported goods as inputs in RG 23A register and issued chits and slips indicating use in manufacture when goods never reached factory premises and were directly sold to buyers from port of import. This constitutes wilful misstatement and suppression of facts sufficient to invoke extended period under Section 11A as appellant knew that goods were not eligible for CENVAT credit under Rules 3 and 4 of CENVAT Credit Rules 2004 - Plea of bona-fide belief based on Budget Speech is not tenable as the statutory requirements for claiming CENVAT credit were unambiguously prescribed in Rules 3 and 4 of CENVAT Credit Rules 2004 - The fact that Department did not query false entries during earlier audits does not absolve appellant from making misdeclaration as responsibility lay with appellant not to claim credit when not entitled. Appellant continued to claim credit knowingly till the same was found during audit conducted in 2009, when appellant immediately reversed credit, demonstrating knowledge of wrongfulness of the claim - Notification No. 102/2007 providing for refund of 4% SAD is a separate and distinct process from availing CENVAT credit and cannot be conflated to constitute a revenue-neutral exercise. The elaborate manipulation evidenced by false entries in registers, issue slips and chit numbers to indicate manufacturing use when goods were directly diverted to buyers clearly establishes wilful misstatement and fraud within the scope of Section 11A - The extended period of limitation under Section 11A of CEA, 1944 was rightly invoked - The demand confirmed is upheld and the appeal is dismissed [Read less]

GST – Tamil Nadu AAR - Appropriate classification and applicable GST rate for aerator gear boxes and spare parts used in aquaculture for prawn rearing - under chapter 8436 as agricultural machinery or under chapter 84834000 - Applicant manufactures and supplies aerator gear boxes and spare parts previously classified under HSN 84834000 attracting GST rate of 18 percent - Following GST 2.0 reforms under Notification 9/2025-Central Tax (Rate) dated 17.09.2025, Applicant proposed reclassification under HSN 84368090 as other agricultural machinery to qualify for concessional GST rate of 5 percent - Whether aerator gear boxes... [Read more]

GST – Tamil Nadu AAR - Appropriate classification and applicable GST rate for aerator gear boxes and spare parts used in aquaculture for prawn rearing - under chapter 8436 as agricultural machinery or under chapter 84834000 - Applicant manufactures and supplies aerator gear boxes and spare parts previously classified under HSN 84834000 attracting GST rate of 18 percent - Following GST 2.0 reforms under Notification 9/2025-Central Tax (Rate) dated 17.09.2025, Applicant proposed reclassification under HSN 84368090 as other agricultural machinery to qualify for concessional GST rate of 5 percent - Whether aerator gear boxes and spare parts used in aquaculture for prawn rearing merit classification under HSN 8436 (Other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery) qualifying for 5 percent GST rate - HELD - Aerator gear boxes do not merit classification under HSN 8436 as there is specific entry 84834000 describing gears, gear boxes and speed changers, and when specific entry describing goods exists, that subheading is the correct classification - Applicant is not manufacturer of agricultural machinery but only supplies gear boxes as component parts fitted into aerator machinery used in aquaculture, which does not merit classification under chapter 8436 covering only agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery - Spare parts when supplied separately including toothed wheels and transmission elements merit classification under HSN 84839000 - Aerator gear boxes attract GST rate of 18 percent under HSN 84834000 and spare parts attract GST rate of 18 percent under HSN 84839000 - Ordered accordingly [Read less]

GST - Penalty under Section 129 of CGST Act, 2017 - Detention and seizure of goods in transit as stock transfer - Timeline for passing order - Mandatory compliance with seven-day period - The appellant generated an invoice and e-way bill on 30-7-2020. On 31-7-2020, a vehicle was intercepted at a different location with goods of different variety and value. An order of detention was passed and notice in Form MOV-07 was issued on 4-8-2020 proposing tax and penalty under Section 129(3). However, an order in form MOV-09 imposing penalty was passed on 22-3-2021, which is 230 days after the notice, exceeding the mandatory seven-... [Read more]

GST - Penalty under Section 129 of CGST Act, 2017 - Detention and seizure of goods in transit as stock transfer - Timeline for passing order - Mandatory compliance with seven-day period - The appellant generated an invoice and e-way bill on 30-7-2020. On 31-7-2020, a vehicle was intercepted at a different location with goods of different variety and value. An order of detention was passed and notice in Form MOV-07 was issued on 4-8-2020 proposing tax and penalty under Section 129(3). However, an order in form MOV-09 imposing penalty was passed on 22-3-2021, which is 230 days after the notice, exceeding the mandatory seven-day period prescribed in Section 129(3) of the Act - Whether the timelines prescribed in Section 129(3) of the CGST Act for issuing notice and passing order are mandatory in nature – HELD - The timelines specified in Section 129(3) are mandatory and not directory. The word "shall" used in the provision indicates the mandatory nature of the timeline. The legislature has prescribed these timelines with the legislative intent of preventing arbitrary detention, prolonged seizure and harassment of traders - Various High Courts have consistently held that failure to adhere to the seven-day timeline vitiates the order of detention and penalty. The provision regulates exercise of coercive statutory power which affects valuable primary rights of the citizen - Even where intervening circumstances exist, the statutory timeline cannot be extended. The order passed beyond the prescribed seven-day period lacks jurisdiction and is illegal – Further there’re is no mens rea on the part of the appellant to evade the tax payment only because e-way bill was not prepared, along with delivery challan for stock transfer. The first appellate authority failed to examine this basic fact which was apparent on the record – The impugned order-in-appeal is set aside, and the respondent is directed to release the bank guarantee to the appellant forthwith – The appeal is allowed [Read less]

GST – Tamil Nadu AAR - Classification of activity of leasing of weekly market by Panchayat to tender contractors for collection of fees - functions of local authority under Article 243G - Applicant, Town Panchayat, leases right to collect fees for weekly market to tender contractors who collect entrance fees from merchants, farmers and public for usage of open space for selling fruits, vegetables, domestic animals and birds on fixed weekly market days - Consideration is determined through tender process and issuance of receipts under seal of Applicant - Whether activity of leasing of weekly market to tender contractors i... [Read more]

GST – Tamil Nadu AAR - Classification of activity of leasing of weekly market by Panchayat to tender contractors for collection of fees - functions of local authority under Article 243G - Applicant, Town Panchayat, leases right to collect fees for weekly market to tender contractors who collect entrance fees from merchants, farmers and public for usage of open space for selling fruits, vegetables, domestic animals and birds on fixed weekly market days - Consideration is determined through tender process and issuance of receipts under seal of Applicant - Whether activity of leasing of weekly market to tender contractors is activity covered under functions entrusted to Panchayat under Article 243G of Constitution as public authority and whether activity is covered under Section 7(2)(b) CGST Act, 2017 as neither supply of goods nor supply of services - HELD - The activity is covered under functions of Panchayat under Eleventh Schedule Article 243G (Markets and Fairs) - The activity is undertaken by Applicant in its capacity as public authority and is integral, incidental and ancillary to discharge of statutory functions - Engagement of tender contractors for operational convenience does not alter constitutional character or convert statutory function into independent commercial activity - The essential nexus contemplated in Section 7(2)(b) CGST Act, 2017 read with Notification 14/2017-Central Tax (Rate) dated 28.06.2017 stands established - Activity is neither supply of services nor supply of goods and falls outside ambit of GST - Ordered accordingly [Read less]

GST – Tamil Nadu AAR - Classification of semen sorting services under appropriate service code - Determination of eligibility for exemption as support services to agriculture under GST - Applicant separates X and Y chromosome bearing cells from bovine semen using proprietary technology and provides services to semen stations managing bull farms - Raw semen is received from semen station, processed using technology, and unpacked processed material returned for further processing and packing into semen straws used for artificial insemination - Whether semen sorting services are classifiable under SAC code 9986 as support s... [Read more]

GST – Tamil Nadu AAR - Classification of semen sorting services under appropriate service code - Determination of eligibility for exemption as support services to agriculture under GST - Applicant separates X and Y chromosome bearing cells from bovine semen using proprietary technology and provides services to semen stations managing bull farms - Raw semen is received from semen station, processed using technology, and unpacked processed material returned for further processing and packing into semen straws used for artificial insemination - Whether semen sorting services are classifiable under SAC code 9986 as support services to agriculture qualifying for exemption and what is appropriate classification - HELD - Semen sorting services are not classifiable under SAC 9986 (Support services to agriculture, hunting, forestry, fishing) as they do not fall within definition of support services to agriculture or intermediate production process relating to rearing of life forms for food, fibre, fuel or raw material - Services are technology-driven laboratory-based processing and separation service performed on biological material constituting value-addition and testing service independent of actual rearing, feeding, breeding management or husbandry of livestock - Services are appropriately classifiable under SAC 998349 (Other technical and scientific services nowhere else classified) as specialized technical and scientific services - Under Notification 11/2017-Central Tax (Rate) dated 28.06.2017, services falling under HSN 9983 and liable to GST rate of 18 percent - Semen sorting services are not exempt from GST and attract GST rate of 18 percent under SAC 998349 - Ordered accordingly [Read less]

GST – Tamil Nadu AAR - Eligibility to input tax credit on land survey charges incurred for the purchase of land used to meet afforestation obligations and directly linked to operation of golf course business - Applicant, a heritage golf club using forest land for golfing facilities, engaged a registered land surveyor to identify forest land utilized for golfing and evaluate suitable alternate land for afforestation purposes as part of compliance with regulatory obligations - The surveyor issued GST invoices for survey charges which were duly paid - Whether input tax credit is admissible on GST paid for land survey charge... [Read more]

GST – Tamil Nadu AAR - Eligibility to input tax credit on land survey charges incurred for the purchase of land used to meet afforestation obligations and directly linked to operation of golf course business - Applicant, a heritage golf club using forest land for golfing facilities, engaged a registered land surveyor to identify forest land utilized for golfing and evaluate suitable alternate land for afforestation purposes as part of compliance with regulatory obligations - The surveyor issued GST invoices for survey charges which were duly paid - Whether input tax credit is admissible on GST paid for land survey charges for purchase of land used to meet afforestation obligations, directly linked to operation of golf course business – HELD - Input tax credit is not admissible as the land surveyed for alternate land to be handed over to Forest Department does not represent goods or services used in furtherance of business since it does not generate independent economic benefits and does not remain in possession of the Applicant - Surveying charges incurred for golf course construction constitute services received for construction of immovable property on own account, and input tax credit is blocked under Section 17(5)(d) CGST Act, 2017. Surveying charges used for alternate land which is surrendered to Forest Department and written off in books are blocked under Section 17(5)(h) CGST Act, 2017 as goods written off or disposed – Further, land is explicitly excluded from plant and machinery, hence services related to land are not eligible for input tax credit under Schedule III CGST Act, 2017 – Input tax credit is not admissible on GST paid for land survey charges – Ordered accordingly [Read less]