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2026-VIL-906-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs – Valuation, Includability of Franchise Fee in assessable value - Appellant entered into licensing agreements with foreign franchisors whereby it paid franchise fees comprising minimum and percentage-based fees, while procuring goods from unrelated third-party suppliers - Department demanded differential duty contending that franchise fees must be included in the assessable value as they constitute a condition of sale under Rule 10(1)(c) of the Customs Valuation Rules, 2007 - Whether franchise fees paid by the buyer to foreign franchisors under separate licensing agreements constitute a condition of sale of imported goods and are therefore includible in the assessable value of goods imported from unrelated suppliers – HELD – The Rule 10(1)(c) of the Valuation Rules requires that the royalty or licence fee must be a condition of the sale of the imported goods itself. The franchise fee in the present case is paid for obtaining the right to sell, distribute and promote goods in India, which is a post-import activity distinct from the procurement of goods from overseas suppliers. The absence of these rights would prevent the importer from selling goods in India but would not prevent importation. Moreover, the non-payment of the franchise fee does not give the foreign supplier any right to repudiate the supply contract, establishing that the franchise fee is not a condition imposed by the seller for the sale of imported goods but rather relates to distribution rights thereafter - The franchise fee is independent of imports as the buyer is liable to pay minimum franchise fees even without any imports. The pricing arrangement between the buyer and overseas supplier is entirely separate from the licensing agreement with franchisors, with no nexus between the import transaction and franchise payment - The demand for franchise fee inclusion is set aside. The impugned order is set aside and the appeal is allowed - Includability of Advertisement, Marketing and Promotional Expenses (AMP) and Corporate Marketing Fee (CMF) - The appellant incurred advertisement, marketing and promotional expenses in India and paid corporate marketing fees to the franchisors as per the licensing agreements, all relating to licensed eyewear brands - Whether advertisement, marketing and promotional expenses incurred by the importer on its own account in India and corporate marketing fees paid to foreign franchisors constitute payments made as a condition of sale of imported goods includible under Rule 10(1)(e) – HELD - The Rule 10(1)(e) requires that payments be made as a condition of sale either to the seller or to a third party to satisfy an obligation of the seller. These expenses were incurred by the importer on its own account for its own business purposes and are post-importation costs bearing no nexus with the import transaction. The expenses are undertaken to promote the importer's own sales and safeguard brand value in the domestic market rather than to satisfy any obligation of the foreign supplier. There exists no enforceable legal right in the foreign supplier to compel these expenditures, which distinguishes them from genuine conditions of sale - The activities undertaken by the buyer on its own account, even if beneficial to the seller, are not indirect payments to the seller. Even if the importer chose not to import branded goods and instead sourced locally, these marketing expenses would still be necessary for business operations, establishing their independence from the import transaction - The demand for inclusion of advertisement, marketing and promotional expenses is set aside - Extended Period of Limitation - Whether the extended period of limitation under the Customs Act is invokable when the goods were provisionally assessed and their importation was already within the knowledge of revenue authorities – HELD - Since the goods were provisionally assessed in 2011 with execution of provisional duty bonds and extra duty deposits, the importation of goods was within the knowledge of the revenue authorities at that time. The provisional assessment itself demonstrates that the department had notice of these importations. The subsequent finalization of assessments accepting the declared values and cancellation of bonds in 2018 further establishes that the issue had been considered by the authorities. The extended period of limitation cannot be invoked merely on the ground that certain details or agreements relating to the imported goods came to light during investigation if the basic fact of importation was already on record with the authorities – The extended period of limitation cannot be invoked, restricting the demand to the normal period of two years from the relevant date. [Read less]

2026-VIL-112-AAR | Advance Ruling Authority SGST

GST – West Bengal AAR - Classification of Laundry Soap in the form of bar, weighing less than 500 grams – Applicability of concessional tax rate - Whether the revised GST rate of 5 percent applicable to toilet soap under Schedule I of Notification No. 09/2025 – Central Tax (Rate) dated 17.09.2025 also applies to laundry soap, or whether laundry soap attracts the 18 percent rate under Schedule II – HELD - The toilet soap is primarily intended for cleansing the human body and is formulated with gentle and moisturizing ingredients, while laundry soap is specifically designed for cleaning clothes and fabrics - Dictionary definitions and BIS standards establish that toilet soap is formulated for gentle cleansing of the human body with specific ingredients providing moisturizing effects, while laundry soap is specifically designed for removing tough stains and dirt from fabrics with surfactants, enzymes, and builders - Despite a single common ingredient falling within a matching numeric range, the two products possess significant differences in chemical composition, with distinct requirements for ingredients such as unsaponified fatty matter, glycerol, and lather that distinguishes one from the other – The consumers, regardless of locality or economic position, distinguish toilet soap from laundry soap and use each for its specific purpose and the personal choice to use the same product for both purposes does not render the two products identical. The Customs Tariff Act specifically classifies toilet soap under sub-heading 340111 for toilet use and laundry soap under separate tariff items 34011919 and 34011942, thereby establishing them as distinct products under tariff classification - The laundry soap does not qualify as toilet soap and therefore does not attract the concessional 5 percent GST rate. The laundry soap weighing less than 500 grams falls under tariff item 34011942 and attracts 18% GST under Schedule II of the rate notification – Ordered accordingly [Read less]

2026-VIL-111-AAR | Advance Ruling Authority SGST

GST – West Bengal AAR - Classification of Plastic Packing Boxes – Supply of lids, caps and closures supplied either separately or along with the boxes - Whether the polypropylene packing boxes and their accessories fall under HSN code 392390 – HELD - The subject goods qualify under Chapter 39 of the Customs Tariff as they are made of plastics (polymers of propylene) and are subjected to moulding and extrusion processes as envisaged in the chapter notes – The Tariff heading 3923 specifically covers articles for the conveyance or packing of goods made of plastics, and the manufactured product, being of the nature of ... [Read more]

2026-VIL-900-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Admissibility of Third Party documents in Excise Proceedings - Clandestine Removal of Goods - Whether a demand for duty on alleged clandestine removal of goods can be sustained solely on the basis of third party documents and statements recorded without the maker of the statement being examined as a witness and without being afforded an opportunity for cross-examination – HELD - The third party documents and statements cannot form the sole basis for raising a demand of duty in clandestine removal cases. Even authentic entries in third party records cannot fix liability upon a person without independent corroborating evidence of their trustworthiness. Before relying upon statements recorded before an officer, the strict procedure prescribed under section 9D of the Central Excise Act, 1944 must be followed, which requires the person making the statement to be examined as a witness before the adjudicating authority with an opportunity for cross-examination. Where this statutory procedure is not followed, the statements become irrelevant and cannot be relied upon for proving the truth of their contents – Further, the charge of clandestine removal requires multiple layers of corroborative evidence including verification of procurement of excess raw materials from independent sources, evidence of electricity consumption, proof of actual buyers and transporters, physical stock verification, and production capacity assessment. The mere entries in a third party's rough notebooks containing vehicle numbers and quantities, without any supporting documentary evidence, without identification of buyers or transporters, and without any statement recorded from the actual transporter who engaged the contractor, cannot sustain a demand – The Revenue had the burden to prove the manufacture of goods and clandestine removal through clinching evidence rather than relying on surmises, conjectures or mere suspicions - The impugned order confirming the demand of duty and imposition of penalties is set aside and the appeals are allowed [Read less]

2026-VIL-48-SC-CU | Supreme Court CUSTOMS

Customs - Tariff Classification of n-Hexane - Petroleum Product or Organic Chemical Compound – Respondent-assessee imported n-Hexane classifying is under Customs Tariff Heading 2901.10 and Central Excise Tariff Heading 2901.90 as a saturated acyclic hydrocarbon existing as a separate chemical compound - Revenue issued notice contending that the product should be classified under Customs Tariff Heading 2710.00 and Central Excise Tariff Heading 2710.12 as petroleum oil/motor spirit - Whether n-Hexane should be classified as a petroleum oil under Chapter 27 or as a pure hydrocarbon under Chapter 29 of the Customs and Central Excise Tariff Acts – HELD - The n-Hexane is correctly classifiable under Chapter 29 (Customs Tariff Heading 2901.10 and Central Excise Tariff Heading 2901.90) as a separate chemically defined organic compound. The burden of proof rests upon the Appellate-Revenue to demonstrate classification under Chapter 27, and the revenue has failed to discharge this burden. Revenue has not provided cogent evidence that the imported product is used as motor spirit suitable for spark ignition engines, which requires satisfaction of three conditions: the product must be a hydrocarbon oil, possess a flash point below 25°C, and be suitable for use as fuel in spark ignition engines - The n-Hexane, being a saturated acyclic hydrocarbon and possessing a definitive linear structural diagram distinct from its isomers, satisfies the definition of a separately chemically defined compound under Chapter 29 of the HSN Notes. The presence of impurities such as other hexane isomers and sulfur compounds does not alter this classification as these constitute unconverted starting materials arising from the fractional distillation manufacturing process and are not deliberately added or left behind to make the product suitable for specific use – Further, the DGFT Policy Circular dated 14.07.2004 authoritatively clarified that imports of hexane fall under Chapter 29 of the Indian Trade Classification. Applying Rule 3(a) of the General Rules of Interpretation, the Chapter 29 provides a more specific description for n-Hexane as a separately defined chemical compound compared to the general classification under Chapter 27, thereby requiring the application of the specific heading – The impugned CESTAT order upholding classification under Chapter 29 is affirmed and the Revenue appeal is dismissed [Read less]

2026-VIL-904-CESTAT-KOL-ST | CESTAT SERVICE TAX

Service Tax - Difference between ST-3 Returns and Financial Statement Turnover – Appellant filed service tax returns on a realization/receipt basis during the relevant period when service tax liability arose only upon actual receipt of consideration and not on an accrual basis - Department raised a demand based on the difference between amounts shown in ST-3 returns and book turnover shown in financial statements, treating the entire book turnover as taxable value without excluding unrealized income – HELD – The Financial Statements are prepared on an accrual basis whereas service tax returns for the said period were filed on a realization basis, making it settled legal position that service tax is not payable on amounts charged in bills/invoices but only on amounts actually received. The adjudicating authority violated principles of natural justice by non-consideration of relevant material evidence - The demand is set aside as unsustainable - Service Tax Liability on Goods Transport Agency Services under Reverse Charge Mechanism – Appellant provided transportation services to persons falling under specified categories and issued consignment notes qualifying as a Goods Transport Agency. Department raised a demand for service tax liability against the service provider, ignoring the statutory provision under Rule 2(1)(d)(v) of the Service Tax Rules, 1994 – HELD – The appellant had primarily provided transportation services to body corporates falling under specified categories who paid freight, the liability to discharge service tax rests upon the service recipient and not the service provider. Further, an abatement of 75 percent of the gross value of taxable service is available for GTA services under Notification No. 13/2008-ST dated 01.03.2008, and the benefit of such abatement was not extended by the adjudicating authority, resulting in inflated and unsustainable demand. The demand on this ground is set aside - Service Tax Liability on Export Cargo Handling Activities – Appellant engaged in handling export cargo belonging to a pharmaceutical company performing various activities - Department, relying merely on the title of the agreement described as contract for clearing and forwarding agency, concluded that the services fell under clearing and forwarding agent service category and raised a demand based on amounts representing reimbursement of actual expenses – HELD - The classification of taxable services must be determined based on actual nature and substance of activities performed and not merely on nomenclature or title of agreement. Since the activities were essentially connected with export cargo handling and the goods were export consignments meant for shipment outside India, the services rendered fall outside the ambit of taxable service. The amounts do not represent consideration towards any taxable service but constitute pure reimbursement of actual expenses incurred on behalf of the client such as port charges, freight and statutory levies, recovered at actuals without any element of profit, commission or value addition. Accordingly, such reimbursements cannot form part of taxable value for levy of service tax. The demand is set aside - Service Tax Liability on Advances Received – Department raised a demand for service tax on two categories of advances received by the service provider: an amount received as unsecured loan from a trading company and an amount received as advance for providing GTA service – HELD - The unsecured loan amount creates no service tax liability as there is no provision of taxable service, supported by confirmation and ledger account produced by the appellant. Regarding the advances for Goods Transport Agency service, these advances pertain to services covered under the Reverse Charge Mechanism under Rule 2(1)(d)(v) of the Service Tax Rules, 1994, wherein the liability to discharge service tax rests upon the service recipient. Accordingly, no service tax liability can be fastened upon the service provider in respect of these advances - Service Tax Liability on Detention Charges – HELD - The detention charges collected by the service provider are not liable to service tax as the same are in the nature of penal charges and do not constitute consideration for any taxable service. The demand is set aside - Denial of Cenvat Credit on Invoices not in appellant's name – HELD - The denial of Cenvat credit merely on account of procedural or clerical discrepancies in the names appearing on invoices is contrary to settled legal position. The substantive benefit of Cenvat credit cannot be denied when receipt of input services, payment of service tax by service provider and utilization of such services for output taxable services are not in dispute. Since it is not disputed that the services were duly received and the expenditure was properly recorded in the books of account, and the divisions were subsequently brought under centralized registration, the substantive benefit of Cenvat credit stands established. The demand is set aside - Denial of Cenvat Credit on Photocopy of Invoices or Non-production of Invoices – HELD - The department has nowhere disputed the actual receipt and use of the services in the course of business. The substantive benefit of Cenvat credit cannot be denied when the availment of credit and its utilization stand established. The allegation that Cenvat credit has been irregularly availed solely on the basis of photocopies of invoices is unsustainable both in law and on facts. The CA certification and submission of sample invoices establish the availability of original invoices. The demand is set aside - Double Demand on same Taxable Period in Overlapping Show Cause Notices – HELD - Once material facts were already within the knowledge of the department from earlier proceedings, records, returns and disclosures made by the appellant, issuance of a subsequent notice on the very same set of facts without any fresh tangible evidence indicating fraud, collusion, wilful misstatement or suppression of facts with intent to evade tax is not permissible in law, as upheld by the Supreme Court in Nizam Sugar Factory. The department was fully aware of the relevant facts and no new evidence was presented to justify re-examination of the same issues. The demands raised in the second show cause notice are not sustainable on the ground of limitation itself. The demand is set aside - Sundry Debtors not constituting Taxable Value for Service Tax Purpose – Demand treating the entire amount reflected as sundry debtors as on a particular date as consideration allegedly received during a specific financial year – HELD - The mere reflection of an amount under the head sundry debtors in the books of accounts does not ipso facto establish actual receipt of consideration during the relevant period. Since service tax liability under the Finance Act, 1994 was governed by the receipt-based system prior to the introduction of the Point of Taxation Rules, service tax liability could be fastened only upon actual receipt of consideration. The assumption treating sundry debtors as taxable value is entirely without any cogent basis, documentary evidence or independent verification and is made merely on conjectures and surmises. The demand confirmed on this presumptive basis is not sustainable - Denial of Abatement Benefit due to availment of Cenvat Credit – HELD – The conditions of Notification No. 1/2006-ST dated 01.03.2006, as amended provide that credit on input services used for providing the service on which abatement is claimed is denied, but the notification does not preclude the right to avail credit on input services used for providing other taxable output services. Since the service provider had not availed credit on input services exclusively used for providing services on which abatement was claimed, the benefit of abatement availed is not in violation of notification terms and conditions. The allegation is baseless and the [Read less]

2026-VIL-907-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Validity of Service of Show Cause Notice through WhatsApp - Revenue issued a SCN dated 15.10.2018 demanding service tax, but this notice was communicated to the appellant through WhatsApp on 19.10.2019, without any prior attempt at service through statutory modes - Whether service of a Show Cause Notice through WhatsApp constitutes valid service in accordance with Section 37C of the Central Excise Act, 1944, as made applicable to the Finance Act, 1994 – HELD - The service of notice through WhatsApp does not constitute valid service under the statutory framework. The Section 37C of the Central Excise Act, 19... [Read more]

2026-VIL-526-CAL | High Court SGST

GST - Effect of omission of Rule 96(10) of CGST Rules, 2017 on pending proceedings - Refund of IGST on exports made under Advance Authorisation licenses between October 2017 and March 2022 - Authorities issued notice alleging contravention of Rule 96(10) of the CGST Rules, 2017, which prescribed restrictions on claiming refund of integrated tax paid on exports for persons who had availed exemption notifications on procurement of inputs. Subsequently, the Notification No. 20/2024 dated 08.10.2024, omitting Rule 96(10) from the statute - Whether pending proceedings initiated under Rule 96(10) of the CGST Rules can be continu... [Read more]

2026-VIL-890-CESTAT-DEL-CST | Tribunal VAT

Central Sales Tax Act, 1956 - Stock Transfer vs Inter-State Sale - Movement of goods from manufacturing unit to buffer and satellite depots in other States pursuant to distribution and consignment agreement – Transfer of goods under stock transfer notes and lorry receipts - Whether the movement of goods from the State of Maharashtra to buffer and satellite depots in other States constitutes inter-State sale liable to Central Sales Tax under Section 3(a) of the CST, 1956 or merely constitutes stock transfer by the manufacturer to its own depots – HELD - For a transaction to be inter-State sale under section 3(a), there must be a sale of goods and such sale should occasion the movement of goods from one state to another. The agreement and MoU merely provide a broad framework and constitute a standing offer, not a binding contract of sale. The agreement does not mandate purchase of any specified quantity, specify product specifications, or determine price. Appropriation of goods occurs only at depot level upon placement and acceptance of purchase orders from the distributor and other buyers - The several precedents relied upon by the State are distinguished as in those cases there were binding agreements specifying quantity and destination prior to movement, whereas here goods moved for inventory replenishment based on market estimation without linkage to any prior purchase order - An open purchase orders lacking specified quantity do not constitute contracts of sale but are standing offers, and movement of goods to depots constitutes mere stock transfer. The goods at satellite depots form a common indistinguishable stock comprising goods manufactured at different units, and source cannot be traced with certainty, further supporting that appropriation occurs only at depot level upon specific purchase order - The Form F submitted by the appellant cannot be rejected for minor procedural defects when the manufacturer possessed lorry receipts constituting valid proof of dispatch under section 6A of the Central Sales Tax Act - The impugned orders passed by Maharashtra Sales Tax Tribunal are set aside and the appeals are allowed [Read less]

2026-VIL-892-CESTAT-CHD-ST | CESTAT SERVICE TAX

Service Tax - Refund claim for service tax paid on manpower supply services, claiming exemption under Mega Exemption Notification No. 25/2012-ST – Rejection of refund on the ground that it was barred by limitation - Whether the refund claim filed beyond one year from the date of deposit of service tax is barred by the time limit prescribed under Section 11B of the Central Excise Act, 1944, and whether such limitation applies even when the service tax was not legally payable in the first place – HELD - The provisions of Section 11B of the Central Excise Act, 1944 are applicable to the present case. Refund is a statutory... [Read more]

2026-VIL-899-CESTAT-ALH-CU | CESTAT CUSTOMS

Customs - Valuation and Reassessment – Appellant-importer of polyester knitted fabrics filed Bills of Entry with self-assessed duty based on negotiated invoiced prices from foreign suppliers – Authorities sought to enhance the declared transaction value based on data from the NIDB and obtained written acceptance letters from the importer under pressure to avoid delays in clearance of consignments - Whether an importer who submits a letter of acceptance regarding enhancement of assessable value under Section 17(5) of the Customs Act, 1962 and Rule 12(2) of the Customs Valuation Rules, 2007, can subsequently challenge the reassessment by filing appeals before the Commissioner (Appeals) – HELD - The Section 17(5) confines the waiver or concession to the speaking order which the proper officer is obliged to frame in affirmation of the provisional opinion formed under Section 17(4). The concession made in respect of the opinion harbored by the proper officer cannot be construed as detracting from or depriving the importer of the statutory right to question the correctness of the decision of the proper officer – The Rule 12(2) does not contemplate any concession or waiver in explicit terms and merely stipulates that the proper officer would intimate to the importer the grounds for doubting the declared value at its request. The exchange of communications between the importer and the proper officer, including letters of acceptance obtained under duress or to avoid delays in clearance, cannot amount to a waiver or abandonment of the right to question and assail the reassessment in further proceedings in accordance with the procedure prescribed under the Act. An importer cannot be said to have abandoned the statutory right to question the valuation merely by submitting an acceptance letter; and that valuation addition based solely on NIDB data would be wholly unwarranted and any reassessment would have to be shored by independent and cogent evidence - The impugned orders rejecting the importer's appeals are set aside and the appeals are allowed [Read less]

2026-VIL-893-CESTAT-DEL-CE | CESTAT CENTRAL EXCISE

Central Excise - Reversal of CENVAT credit on inputs and input services attributable to electricity sold to sister concerns – applicability of Rule 6 of CENVAT Credit Rules, 2004 - Appellant reversed the proportionate CENVAT credit in respect of inputs and input services attributable to power sold to sister concerns and informed the department of all reversals from time to time through defence replies and show cause responses – Dept confirmed the demand for payment at the rate of 5-6% of the value of electricity wheeled out, invoking Rule 6(3A) of CENVAT Credit Rules, despite acceptance of one such reversal payment in ... [Read more]

2026-VIL-905-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Actual production determination; Admissibility of statutory documents – Appellant, manufacturer of M.S. Ingots, opted to pay duty on actual production and clearance instead of Annual Capacity of Production – Denial of claim for determination of actual production on the ground that the manufacturer could not produce RT-12 Returns and RG-1 Register - Whether the demand of central excise duty can be confirmed on the ground that the manufacturer failed to produce RT-12 Returns and RG-1 Register when the Department itself has these statutory documents on record and the manufacturer had submitted detailed in... [Read more]

2026-VIL-901-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Establishment of Shortage of Raw Materials and Finished Goods - Stock Verification Based on Eye Estimation - During investigation, physical stock taking is not undertaken by authorities and stocks are recorded on the basis of mere eye estimations without any physical weighment - Whether shortage of raw materials or finished goods can be established on the basis of eye estimation alone in the absence of proper physical weighment and weighment slips – HELD - It is a settled principle of law that shortage of raw materials or finished goods cannot be established on the basis of eye estimation alone. The demand raised on account of shortage of raw materials and finished goods found during the investigations is not sustainable in law as the stock verification does not meet the requirement of proper physical verification. The mere signature of the employees on the stock verification report is not sufficient proof of shortage when no actual weighment has been conducted and no weighment slips are available on record - The demands raised on account of shortage of raw materials and finished goods are set aside and the appeal is allowed - Denial of SSI Exemption - Manufacture of Branded Goods - Appellants are denied the benefit of SSI Exemption on the ground that they were manufacturing branded goods with the brand name Essel embossed on the products. The brand name Essel is owned by a different company for different products - Whether the benefit of SSI Exemption available under Notification No. 09/2001-CE dated 01.03.2001 and Notification No. 09/2003-CE dated 01.03.2003 can be denied to manufacturers solely on the ground that they have used brand name markings on their products when no evidence shows that the appellants actually used the brand name – HELD - No corroborative evidence has been brought on record by the Revenue in support of their allegations that the appellants have used the brand name of others. The brand name Essel is owned by a different entity for different goods and not for the goods manufactured by the appellants - Mere markings or embossing of brand names do not constitute use of another's brand in a manner that would disentitle the appellants from the benefit of Small Scale Exemption. The condition in the notification regarding use of brand name does not apply to the facts of the case - The demands raised on account of manufacture of branded goods and denial of Small Scale Exemption are set aside - Allegation of Clandestine Removal of Goods - Absence of Corroborative Evidence - Whether a charge of clandestine removal of goods can be sustained when no buyer of finished goods or supplier of raw materials is brought out by investigation and it is not established how much raw materials were used for manufacture of the allegedly clandestinely removed goods – HELD - The allegation of clandestine removal of goods is not supported by the investigation. No buyer of finished goods or supplier of raw materials has been identified during investigation, nor have transporters been investigated. Critically, the revenue has failed to establish how much raw materials were actually used by the appellants for manufacture of the goods allegedly removed clandestinely. The difference in rough records and statutory records alone, without corroborative evidence, cannot sustain the charge of clandestine removal - The demand raised on the ground of clandestine removal of goods is set aside - Maintenance of Parallel Invoices - Absence of Verification - The appellants are alleged to have maintained parallel invoices with the same serial numbers but showing different values to effect duty evasion - Whether a demand based on the allegation of parallel invoices can be sustained when these invoices have not been verified to establish against whom they were actually issued or whether the recipients received them – HELD - The parallel invoices have not been verified to establish against whom they were actually issued or whether those persons have received the invoices. In the absence of any evidence on record verifying the actual issuance and receipt of parallel invoices, the demand raised based on this allegation cannot be sustained. The mere existence of invoices with similar serial numbers showing different values is insufficient to establish duty evasion without verification of actual issuance and receipt -The demand raised on account of parallel invoices is set aside - Disallowance of CENVAT Credit - Demand is raised for disallowance of CENVAT Credit on the allegation that inputs were availed without actual receipt of goods - Whether CENVAT Credit can be disallowed when the appellant has availed credit on the basis of computerised statements upon receiving the goods and the revenue has not established that the goods were not actually received by the appellant for manufacture – HELD - The appellant has availed CENVAT Credit on the basis of computerised statements on receiving the goods. The Revenue has not made out a case that the said goods were not received by the appellant for manufacture of their final goods. The discrepancy between computerised records at head office and seized private records alone cannot establish that goods were not received. Since the revenue has failed to prove non-receipt of inputs, the denial of CENVAT Credit is without any basis and is not sustainable in law - The CENVAT Credit cannot be denied and the demand for disallowance is set aside - Disallowance of CENVAT Credit on Shortage of Raw Materials - Whether CENVAT Credit can be disallowed on account of shortage of raw materials when the shortage itself has not been clearly established by the revenue – HELD - Since the shortage of raw materials has not been clearly established by the revenue through proper physical verification and weighment, the denial of CENVAT Credit based on such unestablished shortage is not sustainable. The foundation for denying CENVAT Credit fails when the underlying fact of shortage is itself not proven through acceptable methods - The demands for disallowance of CENVAT Credit on account of shortage of raw materials are set aside - Imposition of Penalty Under Central Excise Rules - Condition Precedent Not Satisfied - Whether penalty can be imposed on individual proprietors and Directors under Rule 26 of Central Excise Rules 2002 when the underlying allegations against the companies on which the penalty is based are not sustainable - HELD - When the allegations against the companies are not maintainable and the underlying charges of duty evasion are set aside, the condition precedent for imposing penalty under Rule 26 on the individuals cannot be satisfied. The findings in respect of imposition of penalty on the individuals are based on vague allegations and baseless findings in respect of allegations against the companies. When the primary charges fail, the derivative liability for penalty cannot stand - No penalty is imposable on the individual proprietors and Directors as the condition precedent for penalty imposition is not satisfied. [Read less]

2026-VIL-903-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Cenvat Credit on Outward Freight Charges for the period April 2005 to December 2009 - Whether the appellant is entitled to claim Cenvat Credit for Service Tax paid on outward freight charges when goods are cleared and delivered to the customer's premises with the manufacturer bearing freight and insurance costs – HELD - For the period till March 31, 2008, the manufacturer is eligible for full Cenvat Credit for Service Tax paid on outward freight charges without any restriction, as the statutory provisions of Rule 2(l) of CCR, 2004 permitted credit for clearance of final products "from the place of remova... [Read more]

2026-VIL-902-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs - Admissibility of statements under Section 108 of the Customs Act - Show cause notice imposing a penalty under section 112 of the Customs Act based solely on a statement made by the assessee under Section 108 of the Customs Act, recorded during the course of inquiry - Whether a statement made under section 108 of the Customs Act can be considered as relevant if the procedure contemplated under section 138B of the Customs Act has not been followed – HELD - The provisions of Section 108 of the Customs Act enable officers to summon any person whose attendance they consider necessary to give evidence in any inquiry,... [Read more]

2026-VIL-23-GSTAT-DEL-NAPA | Tribunal SGST

GST - Anti-profiteering - Limitation under Rule 128 of the CGST Rules, 2017 - Whether a delay in referring a matter to the investigating authority beyond the statutory timeline prescribed under Rule 128 vitiates the entire proceedings – HELD - The time limits prescribed under Rule 128 for the Standing Committee to refer a matter are directory and not mandatory in nature. Anti-profiteering provisions constitute beneficial legislation enacted to protect consumer interests, and beneficial statutes must receive liberal construction that favors the consumer. Since the Rules do not provide any prescribed consequence for lapse of such timelines, procedural delays by a statutory authority cannot defeat the substantive rights of consumers – The procedural delays by statutory functionaries do not render proceedings invalid in the absence of an express statutory consequence - The objection regarding limitation is rejected, and the proceedings are not barred by limitation - Anti-profiteering - Inclusion of GST in profiteered amount - Whether the GST component corresponding to the profiteered amount should be excluded from the total amount to be refunded to consumers – HELD - The profiteered amount is part of the higher consideration that the supplier collected from buyers inclusive of GST. By not passing on the benefit of additional input tax credit, the supplier has effectively retained the GST component as well, which rightfully belongs to the recipients. Both the Central and State Government had no intent of collecting additional GST on the higher price as they had sacrificed their revenue in favor of the buyer. Compelling buyers to pay additional GST on a higher price defeats the intent of the governments and acts against consumer interests. Therefore, the GST collected on the additional realization has rightly been included in the profiteered amount - Anti-profiteering - Levy of interest on profiteered amount - Whether interest under Rule 133(3)(b) of the CGST Rules, 2017 is leviable on the profiteered amount, and whether it can be applied retrospectively to conduct preceding the amendment – HELD – The Section 171 of the CGST Act, 2017 is broad enough to empower the Central Government to prescribe penalty and interest to ensure that suppliers are deterred from retaining benefits meant for consumers. The width and amplitude of the section encompasses the power to ensure that conduct leading to profiteering does not take place. Rule 133(3)(b) providing for interest at eighteen percent per annum is a valid and enabling provision that gives effect to the mandate of the parent statute. The provision for interest was already in existence prior to the cited amendment date. Therefore, the interest liability is not a new provision being applied retrospectively - The respondent is liable to pay interest at 18% per annum on the profiteered amount from the respective dates of collection of the higher amount from each eligible buyer - Anti-profiteering - Penalty under Section 171(3A) - Whether penalty under Section 171(3A) of the CGST Act is attracted in anti-profiteering cases – HELD - Penalty under Section 171(3A) applies where the authority, after holding examination, concludes that any registered person has profiteered. Since the period of contravention extends beyond the date when the provision came into force, penalty is attracted for the period from that date onwards. However, the proviso to the section provides that no penalty is leviable if the profiteered amount is deposited within thirty days of the date of passing the order. This provision grants an opportunity to the supplier to avoid penalty by depositing the entire amount within the prescribed period - The respondent is liable to pay penalty equivalent to ten percent of the profiteered amount for the applicable period, provided the entire profiteered amount is not deposited within thirty days from the date of the order. [Read less]

2026-VIL-534-HP | High Court SGST

GST - Parallel adjudicatory proceedings - Scope of Section 6(2)(b) of CGST Act, 2017 – Petitioner received show cause notices and intimation of liability notices from both the State Tax Authority and the Central GST Authority relating to denial of Input Tax Credit claims on purchases made from a supplier whose registration was subsequently cancelled - Whether parallel adjudicatory proceedings can be initiated by both Central and State GST authorities on the same subject matter concerning denial of ITC – HELD – The principles laid down by the Supreme Court in Armour Security case establishes that Section 6(2)(b) of th... [Read more]

2026-VIL-889-CESTAT-DEL-CE | CESTAT CENTRAL EXCISE

Central Excise - Refund of Duty, Bar of Unjust Enrichment - Whether the bar of unjust enrichment applies to refund claims where the assessee has booked excise duty as expenditure in profit and loss account but produced documentary evidence through Chartered Accountant certificate establishing that the duty incidence was not passed on to customers and goods were sold below cost of production – HELD - Mere booking of duty elements as revenue expenditure in the profit and loss account does not establish that the duty incidence has been passed on to customers. The accounting treatment in the books of accounts is immaterial a... [Read more]

2026-VIL-897-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Refund claim, Limitation period - Refund applications under Rule 5 of CCR, 2004 on export of services. The applications were initially rejected on the ground that the services did not qualify as exports. The appellant challenged these orders, and the Tribunal in its final order accepted that the services rendered constituted export of services and allowed the appeal. Subsequently, the appellant submitted a letter requesting processing of the refund claims – Dept treated this letter as a fresh refund application and rejected it on the ground of limitation, computing the period from the Tribunal's final order... [Read more]

2026-VIL-895-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Invocation of Extended Period of Limitation - Whether the extended period of limitation can be invoked for issuing a subsequent show cause notice for the following periods when an earlier show cause notice for the preceding period, based on the same set of facts relating to suppression of facts, has already been decided in favor of the assessee – HELD - The extended period of limitation cannot be invoked for issuing a second show cause notice for subsequent periods when a prior show cause notice for the preceding period on the same or similar set of facts has already been decided by the tribunal in favor of... [Read more]

2026-VIL-884-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs - Classification of Optical Network Terminals/Units (ONT/ONU) and Optical Line Terminals (OLT) under Customs Tariff – Appellant classified Optical Network Terminals/Units and Optical Line Terminals under Customs Tariff items relating to subscriber end equipment and claimed exemption from duty, whereas the revenue authority classified them under machines for reception, conversion and transmission of data - Whether the ONT/ONUs and OLTs imported by the appellant are classifiable under CTI 8517 62 90, as held in the impugned order or under CTI 8517 69 50 (OLT), as asserted by the appellant - HELD - Since the function and purpose of the disputed goods is to receive broadband internet connection through optical fiber and transmit it to various devices of the subscriber, they constitute machines for reception and transmission of data. The Customs tariff sub-heading covering subscriber end equipment is a residual category that can only apply to goods not falling under more specific headings relating to machines for transmission and reception of data - Even though subscriber end equipment is a specific heading, it cannot override the more specific classification if the goods clearly perform the function of receiving and transmitting data. Once it is accepted that the ONTs/ONU are meant for reception and transmission of data, the irresistible conclusion is that they fall under CTI 8517 62 and, therefore, they cannot be fall under CTI 8517 69. Accordingly, the classification of both Optical Network Terminals/Units and Optical Line Terminals deserve to be classified CTHS 8517 62 and cannot be classified under CTHS 8517 69 which is the residual category - the appeal is partly allowed and partly remanded – Ordered accordingly - Classification of optical line terminal (OLT) – HELD - These are the equipment which are installed at the end of the internet service providers and they provide the link between the ISP and the subscriber to provide the broadband. These are also machines which receive and transmit data and, therefore, they deserve to be classified under six digit CTSH 8517 62. Only goods which are not machines for reception or transmission of data will fall under the residual category of “others” (CTSH 8517 69). The appellant’s claim of classification of these OLTs under CTI 8517 69 90 cannot be accepted - Whether the appellant was entitled to the benefit of the Notification No. 24/2005-Cus as amended (S.No. 13A) on ONT/ONU and Notification No. 57/2017-Cus (S.No. 20) on OLT – HELD - Denial of exemption notification No. 24/2005-Cus dated 01.03.2005 (as amended) (Sr. No. 13B) on the ground that the goods were Optical Transport Network Products is remanded back to the Commissioner to consider the report of the Telecom Expert submitted by the appellant which specifically states that the ONT/ONU were not optical transport network products. The Commissioner may examine/ cross examine the expert and decide this question - Invocation of Extended Period of Limitation under Section 28(4) of the Customs Act – HELD - The extended period of limitation cannot be invoked merely because the importer changed the classification of goods under different bills of entry. The court reasons that although the importer had initially classified goods under one tariff item and subsequently changed the classification in disputed bills of entry, this change by itself does not prove collusion, willful misstatement or suppression of facts, which are the essential ingredients for invoking the extended period of limitation. Claiming a particular classification or notification based on the importer's understanding, even if later found to be incorrect, does not amount to willful misstatement or suppression of facts. Accordingly, the extended period of limitation is set aside and the demand is restricted to the normal period of limitation - Imposition of Penalties under Sections 114A and 114AA of the Customs Act - Whether penalties under sections 114A and 114AA can be sustained when the extended period of limitation has been found to be incorrectly invoked – HELD - Since the elements required for imposing penalty under Section 114A are identical to those required for invoking extended period of limitation, and the extended period of limitation has been found to be unjustifiable, the penalty under section 114A cannot be sustained. With respect to section 114AA, the penalty cannot be imposed because classification of goods is a matter of opinion and interpretation, not a statement of fact - Misstatement requires declaration of wrong facts, whereas classification differences represent differing interpretations of the correct Customs tariff item. Accordingly, penalties under both sections are set aside. [Read less]

2026-VIL-533-DEL-CU | High Court CUSTOMS

Customs - Validity of Demand Notice – Investigation alleging misclassification of imported goods (screw washer/gasket). During investigation, the petitioner expressed willingness to pay differential duty and requested that a letter be issued to that extent. Subsequently, a communication indicating differential customs duty was issued by an Assistant Commissioner. The petitioner paid the demanded amount under protest - Whether a communication issued by an Assistant Commissioner without following the statutory procedure mandated under Section 28 of the Customs Act, 1962, and without issuing a formal show cause notice, can be treated as a valid demand notice and whether amounts paid under protest during investigation can be appropriated towards eventual demand raised in adjudicatory order – HELD - The impugned communication is not a formal demand notice but rather a letter issued as a follow-up to the petitioner’s own statement expressing willingness to pay differential duty. Although the petitioner admitted to an error in calculation of differential duty and voluntarily recomputed and paid the amount, this admission does not bar the petitioner from its entitlement to the statutory process of adjudication of its liability - The amounts paid during investigation, whether under protest or otherwise, may be appropriated towards the final liability of the assessee at the time of passing of an adjudicatory order. The impugned communication, though issued without following formal Section 28 procedure, does not preclude the respondents from issuing a proper show cause notice to adjudicate the petitioner's actual liability - The impugned communication is quashed and set aside. The respondents are directed to issue SCN regarding the petitioner's liability, if any. The amount already paid by the petitioner shall be appropriated towards any demand eventually raised in the adjudicatory order. No further demands or recovery shall be made against the petitioner in the interim - The petition is partly allowed [Read less]

2026-VIL-527-HP | High Court SGST

GST - Binding nature of Advance Ruling, Validity of Show Cause Notice issued in conflict with Advance Ruling, Classification of “Roof Mounted AC Package Unit” – The Advance Ruling Authority order classified “Roof Mounted AC Package Unit” manufactures as per the specifications provided by the Railways and supplied to the Indian Railways under Chapter 86.07 of the GST Tariff – The AAR Order was never assailed or questioned by the Department and thus attained finality – Respondents issued notice demanding GST in contradiction to the AAR Order - Whether the show cause notice issued in conflict with a settled and ... [Read more]

2026-VIL-885-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs - Levy of Customs duty on supply of MS scrap to SEZ unit –Whether Customs duty can be levied and collected on goods supplied to an authorized unit operating in SEZ – HELD – The Division Bench of the Tribunal in Cummins Turbo Technology vs. Commissioner of Customs, Central Excise & Central Tax, Indore has held that no Customs duty can be levied on goods supplied to an authorized SEZ unit as the charging sections under the Customs Act are overridden by the Special Economic Zone Act, 2005 - Once the duty demand is set aside, interest cannot be charged and penalties under sections 114 and 114AA cannot be imposed ... [Read more]

2026-VIL-888-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs - Estoppel through unconditional acceptance of enhanced assessable value, challenge enhancement after voluntary acceptance and payment of duty - Whether an importer can challenge the enhancement of assessable value before the appellate authority after having unconditionally accepted the enhanced value, paid the duty without protest, and cleared the goods – HELD - It is not open to an importer to challenge the enhanced value after unconditionally accepting it. The principles established in Niraj Silk Mills are distinguishable because in that case, the importer had registered multiple protests, sought expeditious c... [Read more]

2026-VIL-887-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs – Imposition of Penalty on the basis of Third-Party Documents and Statements - Penalty under section 112(b) of the Customs Act for alleged clandestine purchase of goods – Appellant alleged to have received M.S. Ingots from a SEZ unit without payment of Customs duty - Based on ledger entries and statements of transporters recovered from third-party premises during search operations, Dept imposed penalty without recovering any incriminating evidence from the appellant's factory premises - Whether penalty under section 112(b) of the Customs Act can be imposed on the basis of third-party documents and statements - ... [Read more]

2026-VIL-886-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs - Penalty under Customs Act for alleged duty evasion – Reliance on statements recorded without following procedure under Section 138B and third-party records – HELD - The Commissioner's order relied upon statements recorded under section 108 of the Customs Act without following the mandatory procedure prescribed under section 138B of the Customs Act, which renders such statements inadmissible and unreliable as evidence. Further, the order also placed reliance on ledger entries and computer print-outs belonging to a third party which neither belonged to nor were maintained by the appellant, and in the absence of... [Read more]

2026-VIL-898-CESTAT-AHM-CE | CESTAT CENTRAL EXCISE

Central Excise - Delayed Payment of Excise Duty - Department invoked Rule 8(3A) of the Central Excise Rules, 2002, which provided that manufacturers failing to pay duty within 30 days from the due date must pay excise duty on a consignment basis without utilizing Cenvat credit. The company had utilized Cenvat credit for subsequent months following the delayed payment - Whether the demand for recovery of duty and consequential penalty can be sustained when Rule 8(3A) of the Central Excise Rules, 2002 has been declared ultra vires – HELD - The issue is no longer res integra as the Gujarat High Court has already held that the provisions of Rule 8(3A) are ultra vires. Subsequently, the appeal filed by the Union of India against this judgment was dismissed by the Apex Court - When the provision itself has been declared ultra vires, the demand cannot sustain on the basis of that provision. The appellant has relied on various judicial precedents establishing that Cenvat credit utilization was equivalent to account current payment, making the transaction revenue neutral - The demand for recovery of duty is set aside along with the equal penalty under Section 11AC. However, liability of interest due to delayed payment of excise duty, if any, sustains – The appeal is partly allowed - Penalty for Late Filing of Returns - Whether the levy of penalty for late filing of excise returns under Rule 27 is justified – HELD - The appellant delayed the filing of the two returns. The Rule 27 of the Central Excise Rules, 2002 provides that breach of Rules shall be punishable with a penalty which may extend to five thousand rupees. The adjudicating authority has rightly imposed the penalty for the breach of the filing obligation, as the returns were filed beyond their due dates - The penalty imposed by the adjudicating authority under Rule 27 for late filing of returns is upheld - Personal Penalty on Authorized Signatory for Misstatement in Returns - Whether a personal penalty can be imposed on an authorized signatory acting in his capacity as an employee of the company for deliberate misstatement and suppression of information in monthly returns – HELD - The authorized signatory was fully aware that the amount had not been paid on the date claimed in the return. His own statement clearly establishes that he intentionally misdeclared the payment particulars and that the misstatement was made purposefully to mislead the department about the payment of duty, with the intention to continue utilizing the Cenvat account and evade the requirement of paying duty on a consignment basis during the default period. This constitutes a deliberate act of misrepresentation and suppression with knowledge and intent, which distinguishes this case from situations where an employee acts merely in an official capacity without personal culpability. The adjudicating authority was justified in imposing the penalty under Rule 26. [Read less]

2026-VIL-896-CESTAT-CHD-CE | CESTAT CENTRAL EXCISE

Central Excise - Excisability of waste/residual products generated during manufacture - During the manufacture of barley malt and malt extract, certain waste and residual products such as wet bhoosi, chilka, dundli, and malt sprouts are generated and sold in the market - Whether these waste/residual products are liable to excise duty and Rule 6 of the CENVAT Credit Rules, 2004 applies to them, requiring reversal of proportionate CENVAT credit or payment of duty amount – HELD - Waste and residual products generated during the manufacturing process are not manufactured products and therefore are not liable to excise duty. ... [Read more]

2026-VIL-523-PAT | High Court SGST

GST – Refund of penalty paid in concluded proceedings, Penalty for transportation of goods with an expired e-way bill - The person-in-charge makes payment of the proposed tax and penalty on the same date the notice is served, following which a release order is issued and proceedings are concluded – Petitioner seeking quashing of the penalty notice and refund of the penalty amount, claiming violation of principles of natural justice and absence of opportunity of hearing, and contending that the e-way bill had merely expired due to technical reasons without any intention to evade tax – HELD – The writ application is ... [Read more]

2026-VIL-524-MP-ST | High Court SERVICE TAX

Service Tax - Maintainability of Writ Petition - Service tax liability under Reverse Charge on payments made towards rural infrastructure and road development tax and forest transit fee charged by State Government - Show cause notice proposing service tax demand on payments, contending that such payments constitute consideration for services rendered by the Government and are thus liable to service tax under RCM – HELD - The Madhya Pradesh Gramin Avsanrachna Tatha Sadak Vikash Adhiniyam, 2005 enacted by the State Government provides for additional financial resources for development of infrastructure and roads in rural a... [Read more]

2026-VIL-894-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Reimbursable Expenditure – Appellant received legal and professional services for trademark registration/renewal from foreign service providers and made payments in foreign currency, but excluded reimbursable amounts from the taxable value - Whether service tax under RCM can be levied on reimbursable expenditure and costs incurred by the service provider for legal and professional services received from places outside India in respect of trademark registration and renewal, for the period prior to May 2015 – HELD – The reimbursable expenditure can be included in the value of taxable services only after the amendment in May 2015. Prior to May 2015, the decision of the Delhi High Court applies, which has been affirmed by the Supreme Court, that Rule 5(1) of the Service Tax (Determination of Value) Rules 2006 is repugnant to Sections 66 and 67 of the Finance Act, 1994 - The Section 67 mandates that only the consideration for the taxable service itself can be evaluated and charged to service tax, and nothing more and nothing less. By including reimbursable expenditure and costs, the Rule goes beyond the charging provisions. Since the period in dispute is prior to May 2015, service tax on the reimbursable amount has wrongly been confirmed - The issue stands decided in favour of the appellant to the extent of setting aside the confirmation of short-paid service tax on reimbursable amounts – The appeal is partly allowed - Proportionate CENVAT Credit Denial for Common Input Services - Whether the appellant is eligible for CENVAT credit on common input services used in both taxable output services (franchise service) and exempted output services (trading activity), without maintaining separate accounts or reversing proportionate credit – HELD - Although the appellant maintained separate records under Rule 6 of CENVAT Credit Rules 2004, it took credit of entire service tax paid on the common input service under reverse charge mechanism without following the provisions of Rule 6(3). In terms of Rule 2(e), trading is an exempt service, and Rule 6(1) explicitly provides that CENVAT credit shall not be allowed on input services used for provision of exempted services. The composite credit cannot be granted for activities subject to different tax regimes. The appellant, being conscious of its trading activities and its liability to service tax, deliberately availed full CENVAT credit without proportionate reversal, demonstrating suppression of material facts with intent to evade tax liabilities - The reversal of proportionate CENVAT credit is upheld, and the issue stands decided in favour of the revenue/department - Invocation of Extended Period of Limitation and Penalty - Whether the extended period of limitation is invokable and whether penalties imposed are sustainable when a service provider with knowledge of both taxable and exempted activities suppresses material facts regarding the exempted activity – HELD - The appellant was well aware of its trading activities and the fact that CENVAT credit proportionate to the exempted non-taxable activity should not have been availed. The deliberate failure to include amounts earned from trading business in returns while availing full CENVAT credit on input services used for both activities constitutes suppression of material facts with an intent to evade tax liabilities. This conscious omission and selective reporting of activities demonstrates a deliberate attempt to circumvent tax obligations, thereby justifying invocation of extended period and imposition of penalties - The issue stands decided in favour of the revenue/department, with both the extended period invocation and penalties being upheld. [Read less]

2026-VIL-113-AAR | Advance Ruling Authority SGST

GST – Tamil Nadu AAR – Meaning of term "namely - Classification of Rose Water for religious use - Applicant contends that the product qualifies as "puja samagri" and exempt from GST – HELD – The statutory language of Notification 2/2017-Central Tax (Rate) dated 28.06.2017 uses the word "namely" to list specific puja items. The word "namely" in legal lexicon means "particularly, especially, to wit" and "by name or particular mention," thereby confining the exemption to the ten items expressly enumerated. Other items predominantly used for religious purposes, such as agarbattis and dhupkathi, which were discussed dur... [Read more]

2026-VIL-114-AAR | Advance Ruling Authority SGST

GST – Tamil Nadu AAR - GST Liability on License Fees for collection of Human Hair from temple premises - Whether the auction amount collected by the temple authorities for collection of human hair falls within the ambit of Supply under Section 7 of the CGST Act, 2017 – HELD - The activity of issuing a license to collect human hair from the temple premises constitutes a supply of service under section 7 of the CGST Act, 2017, as it involves transfer of rights for a consideration in the course or furtherance of business, regardless of the fact that it is a place of worship, since commercial activities undertaken by any ... [Read more]

2026-VIL-110-AAR | Advance Ruling Authority SGST

GST – Tamil Nadu AAR - Import of services, Applicability of GST under reverse charge mechanism on Commission paid to foreign national Director for marketing and sourcing of orders – Applicant pays commission at 15% of invoice value to its Director who is a foreign national located outside India for marketing and sourcing of orders. The Director owns 99% shares of the company and is not paid any separate salary - Whether GST is payable on commission paid to a foreign national director for providing marketing and sourcing services – HELD - The supplier of service, being the Director, is located outside India and the recipient, being the applicant company, is located in India, satisfying the conditions under Section 2(11) of the IGST Act, 2017 for import of services. The place of supply of services is India as per Section 13(2) of the IGST Act, 2017, being the location of the recipient. As the supplier is located in a non-taxable territory and the recipient is located in a taxable territory, the conditions laid down in Notification No. 10/2017-Integrated Tax (Rate) dated 28.6.2017 are fulfilled, making the services supplied attract GST under RCM - The applicant is liable to pay GST under reverse charge on commission paid to the foreign national Director – Ordered accordingly - Commission paid to foreign marketing agents for sourcing orders, Intermediary services – Place of supply – Applicant pays commission at 20% of invoice value to foreign marketing agents who facilitate sourcing of orders. These agents are not employees or directors of the applicant and invoices are raised in the name of the buyer only - Whether GST is payable on commission paid to foreign marketing agents for facilitating supply of goods - HELD - GST is not payable on commission paid to foreign marketing agents as they constitute intermediaries as defined under Section 2(13) of the IGST Act, 2017. While the supplier is located outside India and the recipient is located in India, the third condition for import of services is not satisfied. For intermediary services, Section 13(8) of the IGST Act, 2017 stipulates that the place of supply shall be the location of the supplier of services, not India. Therefore, the services do not fall within the definition of "import of services" under Section 2(11) of the IGST Act, 2017, and consequently do not attract RCM - GST is not payable on commission paid to foreign marketing agents - Charges paid to foreign clearing and forwarding agents for logistics services – Applicability of GST under reverse charge mechanism – The Applicant utilizes clearing and forwarding agents in foreign countries for further shipment of goods in instances of multiple consignors in a single export shipment. The foreign agents charge for various services including arrival charges, customs clearance charges, and terminal handling charges - Whether GST is payable on charges paid to foreign clearing and forwarding agents for logistics services performed outside India – HELD - The clearing and forwarding agents supply logistics services on their own account in non-taxable territory, constituting import of services as per Section 2(11) of the IGST Act, 2017. The supplier is located outside India, the recipient is located in India, and the place of supply is India as per Section 13(2) of the IGST Act, 2017. The conditions specified in Notification No. 10/2017-Integrated Tax (Rate) dated 28.6.2017 are satisfied, making these services liable to tax under RCM - The applicant is liable to pay GST under reverse charge on charges paid to foreign clearing and forwarding agents. [Read less]

2026-VIL-24-GSTAT-DEL-NAPA | Tribunal SGST

GST – Anti-Profiteering - Failure to pass on Input Tax Credit Benefit - Whether the Respondent is liable to pass on the additional Input Tax Credit benefit derived consequent to introduction of GST to homebuyers by way of commensurate reduction in prices in terms of Section 171 of the CGST Act, 2017, and if so, what is the quantum of such benefit required to be passed on along with applicable interest – HELD - The builder has derived additional benefit of Input Tax Credit consequent to introduction of GST and is statutorily obligated under Section 171 of the Act to pass on such benefit to recipients by way of commensur... [Read more]

2026-VIL-891-CESTAT-MUM-ST | CESTAT SERVICE TAX

Service Tax - Exemption under General Notification - Demand based on income tax returns indicating unreported taxable services - Appellant claimed eligibility for exemption under Notification No. 33/2012-S.T. dated 20.06.2012, which provides general exemption from service tax on aggregate value of taxable services not exceeding Rs. 10,00,000 in any financial year, subject to certain exclusions and conditions. The lower authorities rejected the exemption claim on the presumption, without substantiation or evidence, that the appellant had already availed the benefit of exemption for the year in which service tax registration... [Read more]

2026-VIL-529-MAD-CU | High Court CUSTOMS

Customs - Customs Notification 32/97 – Job Work Import – Diversion of Duty-Free Goods – Willful Suppression of Material Facts – Respondents imports betel nuts under job work scheme claiming duty exemption under Customs Notification 32/97 for manufacturing and exporting betel nut tannin - The investigation reveals that the goods were diverted to local market instead of being utilized for the stated purpose, the shipping bills for export were filed under wrong scheme code to evade EDI system scrutiny, waste disposal permission was obtained but not properly acted upon, and false claims were made regarding waste percentage and tannin content extraction – Whether the onus lies on the Department to prove that the permission for destruction of waste material was not acted upon by the importer in respect of the claimed wastage – HELD - The importers have violated the post-import conditions stipulated in Notification 32/97, particularly the condition that goods shall be utilized only for discharge of export obligation and none thereof shall be sold, loaned, transferred or otherwise used or disposed of - The Tribunal's reliance on mere permission granted for waste destruction without establishing actual compliance with the procedure is superficial and insufficient; the deliberate filing of shipping bills under wrong scheme code to circumvent the EDI system intervention, coupled with the absence of even a single correct shipping bill transaction, demonstrates wilful suppression of material information and not a bona fide mistake - The Tribunal erred in treating the consistent misrepresentation of scheme codes across all transactions as an inadvertent mistake by the Customs House Agent, when the Commissioner specifically found that the importer failed to produce even a single transaction with the correct scheme code, demonstrating a pattern rather than an isolated error - The importer's deliberate use of wrong scheme code enabled evasion of duty by deceiving the Government and preventing legitimate departmental checks and scrutiny through the EDI system's built-in intervention mechanism. The Tribunal's casual treatment of this willful suppression and its reliance on waste disposal permission to offset the incriminating materials regarding fraud is unsustainable without proper examination of both the order-in-original and SCN – The appeals filed by the Dept are allowed, the Tribunal's order is set aside, and the order-in-original passed by the Commissioner is restored [Read less]

2026-VIL-528-MAD-CE | High Court CENTRAL EXCISE

Central Excise - Penalty for Suppression of facts, Payment of duty component before the issuance of show cause notice. The assessing authority imposed penalty, which was upheld by both the appellate authority and the Tribunal - Applicability of proviso to Section 11AC(1)(a) applies to exempt the assessee from penalty when duty was paid before the show cause notice and interest was paid after the adjudicating authority's order - Whether the penalty imposed on the assessee for wrongly availing CENVAT credit can be considered bad on the ground that the show cause notice did not specify under which limb of Section 11AC of the Central Excise Act 1944 the penalty was being imposed – HELD - The case does not fall within Section 11AC(1)(a) but squarely falls within Section 11AC(1)(c) which pertains to penalty for suppression of facts. Although the show cause notice did not explicitly mention the specific limb of Section 11AC, reading of the entire show cause notice, adjudicating authority's order, appellate authority's order, and the Tribunal's order clearly indicates that the penalty was sought to be imposed on the ground of suppression of facts - The assessee was aware throughout the proceedings that it was facing proceedings for suppression of facts and misrepresentation, as evidenced by its own action of paying the duty component upon being informed of the violation - The reference to Rule 15(2) of CENVAT Credit Rules read with Section 11AC in the SCN makes it evident that penalty was sought for suppression of facts. The fact that only the duty component was paid before the issue of SCN while the interest was paid only after the adjudicating authority's order means that the conditions for the proviso to Section 11AC(1)(a) are not satisfied. The proviso applies only when both duty and interest are paid either before the show cause notice or within thirty days of its issuance. When a case falls within Section 11AC(1)(c), the proviso to Section 11AC(1)(a) does not apply. The applicable provision in such cases is Section 11AC(1)(d), which provides for a reduced penalty of fifteen percent of the duty demanded if the duty and interest are paid within thirty days of the SCN. The assessee cannot take advantage of an incorrect reference to Section 11AC(1)(a) made by the Tribunal and must be judged on the actual content and substance of the order - The imposition of penalty by the assessing authority, as confirmed by the appellate authority and the Tribunal, stands upheld. The appeal is dismissed [Read less]

2026-VIL-530-KAR-ST | High Court SERVICE TAX

Service Tax - Cenvat Credit on Deposit Insurance Premium – Eligibility Cenvat credit of Service Tax paid on the premium amount for the Insurance Service received from ‘Deposit Insurance and Credit Guarantee Corporation’ - Whether Respondents-banks are eligible to avail Cenvat credit of service tax paid on the premium amount for insurance services received from the deposit insurance and credit guarantee corporation – HELD – The High Court of Kerala answered the questions in favour of the assessee and against the Revenue by affirming the order of the Larger Bench of the CESTAT holding that banks are entitled to tre... [Read more]

2026-VIL-519-GAU-ST | High Court SERVICE TAX

Service Tax – Exemption to Health Care Services - Determination of Tax Liability must precede Assessment - Petitioner, a diagnostic centre and hospital, provided health care services which were expressly exempted under Notification No. 25/2012-Service Tax dated 20.06.2012 - Dept issued a show cause notice alleging suppression of taxable value based solely on information collected from Form 26AS - Demand by invoking the extended period of limitation under section 73(1) of the Finance Act, 1994 – HELD - Before any assessment can be made and tax demanded, there must first be a declaration of liability under the statute. The determination of whether a service is taxable or exempted is a threshold question that must be conclusively decided before invoking extended period of limitation. Form 26AS merely reflects income tax deducted at source and cannot ipso facto determine service tax liability, as a receipt liable to income tax may not be liable to service tax due to exemptions granted under the Finance Act or because the liability may rest on the recipient under reverse charge mechanism - The revenue authorities' action in levying service tax based solely on Form 26AS without examining the nature of services and applicability of exemption was contrary to law and amounted to assumption of jurisdiction - The extended period of limitation under section 73(1) can be invoked only when the preconditions prescribed in the proviso are satisfied, namely: fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions with intent to evade payment of service tax. These are not mere procedural requirements but substantive conditions that demand conclusive findings by the revenue authorities based on facts and circumstances - The assumption of jurisdiction by the authorities without fulfilling the mandatory preconditions prescribed by the statute itself was unauthorized and colourable - The impugned demand cum show cause notice and order-in-original are set aside and quashed - The writ petition is allowed [Read less]

2026-VIL-532-KAR | High Court VAT

Karnataka Value Added Tax Act, 2003 - Joint Development Agreement and Works Contract – In terms of JDA, the owner has agreed to convey or transfer to the developer or its nominees 65% of the undivided right, title and interest of the schedule property and the Developer as consideration has agreed to construct and deliver to the owners 35% of the salable super built-up area, together with 35% of the car parking spaces for the absolute use, benefit and ownership of the landowner - Whether a joint development agreement between a landowner and developer constitutes a Works Contract liable to tax under the Karnataka VAT Act, 2003 – HELD - A JDA between a landowner and a developer is held to be a composite arrangement involving both elements of transfer of immovable property and works contract. However, the construction activity undertaken by the developer constitutes a Works Contract only from the stage at which the developer enters into agreements with flat purchasers and not from the stage of the JDA itself. The construction undertaken by the developer in respect of the landowner's share under the Joint Development Agreement does not amount to a Works Contract as there is no monetary consideration involved and the transaction is in the nature of barter or exchange - The Supreme Court's decision in Larsen and Toubro Limited versus State of Karnataka makes it clear that the activity of construction undertaken by the developer would constitute a works contract only from the stage at which the developer enters into a contract with the flat purchaser, and only the value addition to the goods transferred after such stage can be subjected to tax by the State - Therefore, the JDA between the landowner and the developer is not taxable as a Works Contract under the Act, and only the subsequent transactions between the developer and flat purchasers can be taxed. Accordingly, question of law is answered in favour of the assessee and against the Revenue - Barter and Exchange versus Sale - Whether a transaction involving transfer of undivided share in land in exchange for constructed built-up area amounts to a sale within the meaning of Section 2(29) of the KVAT Act, 2003 – HELD - In a JDA where the landowner transfers an undivided share in land to the developer in exchange for a corresponding proportion of constructed built-up area, the transaction does not amount to a sale within the meaning of Section 2(29) of the Act. The essential ingredients of a sale under the definition is the presence of price in the form of money or monetary value as consideration. The Supreme Court in Dhampur Sugar Mills Limited versus Commissioner of Trade Tax, Uttar Pradesh has clarified that barter or exchange is distinct and different from a sale, and the consideration for a sale must be in the form of money or monetary payment. In the absence of monetary consideration and where the transaction involves exchange of one form of property for another form of property without monetary payment, the transaction partakes the character of barter or exchange. Therefore, the contention of the Revenue that the cost of construction of the landowner's share constitutes consideration for transfer of undivided share in land cannot be accepted, and such transaction falls outside the definition of sale under the Act. Accordingly, question of law is answered in favour of the assessee and against the Revenue - State Legislative Competence and Transfer of Immovable Property - Whether the State Legislature has the competence to levy tax on transfer of immovable property in the context of a joint development agreement under Entry 54 of List II of the Seventh Schedule to the Constitution of India – HELD - The State Legislature lacks the legislative competence under Entry 54 of List II of the Seventh Schedule to levy tax on the transfer of immovable property. However, the State is competent to levy sales tax on the sale of goods component in an agreement for sale of flats, which includes a deemed sale of goods in the execution of a works contract, provided the levy is confined to the value of the goods and does not extend to the transfer of immovable property. Since the subject matter of a JDA is primarily the transfer of immovable property, any levy of tax thereon would fall outside the legislative competence of the State - The Supreme Court's decision in Larsen and Toubro Limited clarifies that while Article 366(29A)(b) of the Constitution permits taxation of the sale of goods element in a works contract even after incorporation of goods, such taxation is permissible only to the extent of the value of goods involved in the execution of the works contract, and the levy cannot extend to the transfer of immovable property itself. Accordingly, question of law is answered in favour of the assessee and against the Revenue - Statutory Mechanism for Levy and Computation - Whether a Circular can prescribe the method for valuation and computation of taxable turnover in the absence of statutory machinery provisions in the Act or Rules – HELD - The Circular No.121/2009-10 dated 07.12.2009, insofar as it seeks to introduce a mechanism for valuation of undivided share in land and to include the value of land in the taxable turnover, lacks statutory backing and cannot override or supplement the provisions of the Act. The Supreme Court in Commissioner of Central Excise and Customs, Kerala versus Larsen and Toubro Limited and the Punjab and Haryana High Court in Dhingra Jardine Infrastructure Private Limited versus State of Haryana have established that once a charging provision is provided under a statute, the machinery for its computation must also be provided under the statute itself. In the absence of any enabling provision under the Act or Rules prescribing the computation mechanism, a circular cannot introduce or prescribe such mechanism. Therefore, the Circular without statutory authority cannot be enforced and is not binding on assessees. In the absence of a statutory mechanism to determine the value of goods involved in the execution of works contract in the context of a JDA, the levy, to that extent, is unenforceable. Accordingly, question of law is answered in favour of the assessee and against the Revenue - Composition Scheme and Deduction of Land Value - Whether under the composition scheme any deductions beyond those expressly permitted under the statute can be allowed, particularly the deduction of land value from taxable turnover – HELD - Under the Composition Scheme, tax cannot be levied on elements attributable to transfer of immovable property. The Supreme Court's decision in Larsen and Toubro Limited clarifies that a works contract arises only from the stage at which the developer enters into a contract with the flat purchaser, and the levy is confined to the value addition to the goods transferred thereafter. Once it is held that the value of land is not liable to be included in the taxable turnover, the question of granting or denying deductions from the total turnover in the context of the composition scheme does not arise. Therefore, even under the composition scheme, tax cannot be levied on the value of land attributable to transfer of immovable property, and the statutory restrictions on permissible deductions apply only to the extent that land value has been wrongfully included in the taxable turnover. Since land value should be excluded from the turnover itself, the issue of deduction does not become relevant. This question of law is answered accordingly [Read less]

2026-VIL-521-J&K | High Court SGST

GST - Budgetary Support Scheme under GST - Eligibility of By-products - Scrap arising from manufacturing process qualifies as specified goods – Petitioner engaged in production of TMT bars applies for reimbursement of State taxes under the budgetary support scheme notified under GST regime – Rejection of claim on the ground that M.S. scrap does not fall within the category of "specified goods" as the unit is registered only for manufacture of TMT bars and not scrap - Whether non-standard sized pieces of the principal product (TMT/CTD Bars) that are sold as scrap fall within the definition of specified goods for purposes of claiming budgetary support under the State notifications when the unit is registered only for manufacturing the principal product – HELD - Where a manufacturing unit is registered for production of a particular item and the scrap in question is an inherent and necessary residue of that manufacturing process, having undergone the identical manufacturing process and retaining the essential character of the primary product, such scrap qualifies as specified goods under the Scheme – The scrap constituting non-standardized lengths of the principal product retains the essential character of such product and has undergone the identical manufacturing process as the standard-sized finished products for which the unit is registered - The exclusionary list in the notification is intended to disentitle only those units manufacturing goods specifically enumerated therein, and since scrap is not enumerated in the exclusionary list and is an inevitable byproduct of the authorized manufacturing process, the exclusion does not apply – The respondent's refusal to grant reimbursement solely on the ground that the unit is registered for manufacturing specified products and not scrap is not justified in law. Accordingly, the order refusing reimbursement is quashed and the Respondent is directed to reconsider the claim afresh in accordance with applicable regulations – The writ petitions are disposed of [Read less]

2026-VIL-22-GSTAT-DEL-NAPA | Tribunal SGST

GST - Anti-profiteering – Passing on of benefit of Input Tax Credit in Construction Services - Whether the respondent contravened the provision of Section 171 of the CGST Act, 2017, by not passing on the benefit of Input Tax Credit to home-buyers upon introduction of GST – HELD – The DGAP report concludes that while the company initially benefitted from additional Input Tax Credit of 4.19 percent in the post-GST period as compared to the pre-GST period, resulting profiteering. The company has substantially passed on a total benefit of Input Tax Credit to home-buyers. Since the complainants have received their calcula... [Read more]

2026-VIL-45-SC | Supreme Court SGST

GST - Natural Justice – Vide the impugned order the High held these issues such as, denial of opportunity to respond, non-supply of relied upon documents (RUDs), by their very nature, fall within the appellate framework. Mere dissatisfaction with the manner in which the adjudicating authority has dealt with the record cannot, by itself, furnish a ground to bypass the statutory remedy and invoke the extraordinary jurisdiction. The High Court held that there is no cause to interfere with the impugned OIO and the petitioner is granted liberty to avail of such remedies as may be available to it in accordance with law. The pe... [Read more]

2026-VIL-525-MAD-ST | High Court SERVICE TAX

SVLDRS, 2019 - Credit of deposits made under different accounting heads – Petitioner filed a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 claiming credit for deposits made in various instalments towards outstanding tax dues - Designated Committee rejected the claim on the ground that such payments were recorded under different accounting heads (interest and other receipts) instead of duty - Whether deposits made towards tax dues but recorded under different accounting heads during enquiry, investigation or audit must be credited while computing the amount payable under the Scheme – HELD -... [Read more]

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