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Service Tax - Service of Order-in-Original by affixture on registered premises and date of receipt for computing limitation for appeal - Adjudicating authority confirmed demand of service tax with interest and penalties, and the order sent by registered post to the registered address was returned undelivered, after which it was served by affixture on the registered premises under a panchnama - Appellant contended that the order was never received, that it became aware of the order only on a later date when it visited the office and obtained an uncertified copy, that the date of receipt should be that date, and that the cop... [Read more]

Service Tax - Service of Order-in-Original by affixture on registered premises and date of receipt for computing limitation for appeal - Adjudicating authority confirmed demand of service tax with interest and penalties, and the order sent by registered post to the registered address was returned undelivered, after which it was served by affixture on the registered premises under a panchnama - Appellant contended that the order was never received, that it became aware of the order only on a later date when it visited the office and obtained an uncertified copy, that the date of receipt should be that date, and that the copy of the panchnama was not provided - Whether the order was duly served on the Appellant on the date of affixture so as to reckon limitation from that date - HELD - The Appellant had a registered premises and the same address was mentioned in the appeal memos before the FAA and the Tribunal, in the challans for payment of pre-deposit and in the orders sent to it, and even the subsequent order in appeal sent by post was returned undelivered. The letter of the jurisdictional officer reporting service by affixture under a panchnama is an admissible piece of evidence, and the FAA cannot be faulted for presuming the correctness of the facts stated therein. As the order was served by affixture on the registered premises which the Appellant continued to hold, there is no reason to believe that the order was not served or received - The contention of non-receipt is rejected and the order is held to be served on the date of affixture - Condonation of delay in filing appeal before the FAA beyond the period prescribed under Section 85(3A) of the Finance Act, 1994 - Appeal against the order was filed several months after the date of service of the order, and the FAA dismissed it as time barred since the proviso permits condonation only for a further period of one month - Appellant contended that the appeal should be allowed on the ground of non-supply of the panchnama - Whether the delay beyond the further period of one month can be condoned - HELD - Section 85(3A) requires the appeal to be presented within two months from the date of receipt of the order, and the proviso empowers the FAA to allow presentation within a further period of one month on sufficient cause. The Hon'ble Supreme Court has held that the appellate authority, being a creature of statute, has no power to condone delay beyond the period provided in the proviso, and that Section 5 of the Limitation Act is completely excluded. The Hon'ble Supreme Court has further held that a liberal approach cannot be used to defeat the substantial law of limitation, and that no indulgence is warranted where the appeal is filed long after the statutory period without substantiating the plea of inability to file within time - The appeal being filed much beyond the condonable period was rightly dismissed as time barred, there is no merit in the appeal and it is dismissed. [Read less]

GST – Audit by tax authorities - Limitation for completion of audit under Section 65(4) of the CGST Act, 2017, Determination of commencement of Audit – Petitioner received notice in Form GST ADT-01 for audit of three financial years, furnished the documents by personal appearance and by email - While the audit was conducted at its place of business about two years after the first notice and the audit report was issued within about six weeks thereafter - SCNs under Section 74 were issued on the basis of the audit and Petitioner contended that the audit report was prepared beyond the period of three months from commencem... [Read more]

GST – Audit by tax authorities - Limitation for completion of audit under Section 65(4) of the CGST Act, 2017, Determination of commencement of Audit – Petitioner received notice in Form GST ADT-01 for audit of three financial years, furnished the documents by personal appearance and by email - While the audit was conducted at its place of business about two years after the first notice and the audit report was issued within about six weeks thereafter - SCNs under Section 74 were issued on the basis of the audit and Petitioner contended that the audit report was prepared beyond the period of three months from commencement of audit and that the SCNs were consequently time-barred - Respondent contended that the Petitioner did not furnish all the documents and delayed the audit, so that the audit commenced at its place of business and was completed within three months - Whether the audit report was issued within the period prescribed under Section 65(4) of the CGST Act - HELD - The Explanation to Section 65(4) provides two alternative events for determining commencement of audit, namely the date on which the records called for are made available or the actual institution of audit at the place of business, whichever is later. Even if the Petitioner's contention that it furnished all the documents in time is accepted, furnishing of documents cannot override the requirement of reckoning the later of the two events - Since there is a dispute of fact whether all documents were furnished, the Respondent cannot be compelled to treat the date of submission of documents as commencement. Where a registered person furnishes documents under a notice and some remain outstanding, the tax authorities are required to inform the person of the missing documents within a reasonable time so that the audit can be completed early, and the Respondent failed to do so despite three notices, which contributed to delay. The Court cannot, however, set aside the audit merely because three notices were issued, as the statute provides an alternative basis - Audit report held to be prepared within the period of three months from commencement of audit – Ordered accordingly - Challenge to SCNs under Section 74 of the CGST Act, 2017 in writ jurisdiction on merits - Petitioner challenged the SCNs issued consequent to audit and contended that the invocation of Section 74 alleging wilful misstatement and suppression was mechanical - Whether the SCNs should be set aside at the stage of show cause - HELD - The Court is not inclined to set aside the SCNs on merits at this stage, as the Petitioner may respond to the notices and also has the remedy of appeal under Section 107 of the CGST Act - The writ petition fails. [Read less]

GST - Refund - Relevant date under Explanation 2(d) to Section 54 of the CGST Act, 2017 where tax becomes refundable consequent to appellate order and summary in Form GST APL-04 was uploaded later - Petitioners deposited tax and penalty under Section 129 for goods in transit, the demand was set aside by the Appellate Authority which directed refund, the physical copy of the order was handed over to the authorised person soon thereafter – The summary in Form GST APL-04 was uploaded on the portal over two years later, and the refund application filed the next day was rejected as barred by limitation - Petitioners contended... [Read more]

GST - Refund - Relevant date under Explanation 2(d) to Section 54 of the CGST Act, 2017 where tax becomes refundable consequent to appellate order and summary in Form GST APL-04 was uploaded later - Petitioners deposited tax and penalty under Section 129 for goods in transit, the demand was set aside by the Appellate Authority which directed refund, the physical copy of the order was handed over to the authorised person soon thereafter – The summary in Form GST APL-04 was uploaded on the portal over two years later, and the refund application filed the next day was rejected as barred by limitation - Petitioners contended that the order was communicated only on the date of uploading of the summary - Respondent contended that the relevant date is the date of communication of the order and that Form GST APL-04 is only a summary - Whether the date of uploading of Form GST APL-04 is the relevant date - HELD - Under Explanation 2(d), the relevant date is the date of communication of the order of the Appellate Authority, which was the date of handing over the physical copy. Rule 113 shows that Form GST APL-04 is only a summary of the order indicating the final amount of demand confirmed. Neither Rule 89 nor Form GST RFD-01 requires a taxpayer to await uploading of the summary, as the form provides for refund on account of an order including an appeal, and a taxpayer holding a physical copy could file the application without waiting - The relevant date is ordinarily the date of communication of the physical order and the contention of the Petitioners on this aspect is not rejected - Whether refund directed by the Appellate Authority can be denied solely on the ground that the application was filed beyond two years under Section 54(1) - Appellate Authority set aside the demand and directed refund of the amount deposited, but the amount remained unrefunded and the refund application was rejected as time-barred, the summary of the order having been uploaded only after departmental instructions issued later - Whether the claim can be defeated by the procedural requirement relating to the relevant date - HELD - Once the demand is set aside and refund is directed, continued retention of the amount raises a serious question of legality, as no tax can be collected except by authority of law, a refund is property protected by Article 300A, and denial of refund affects the right under Article 19(1)(g). Procedural law is a servant and not a tyrant, and procedural requirements should facilitate and not frustrate substantive rights - The State is under a Constitutional obligation to act fairly, and the authorities are expected to ensure timely implementation of appellate orders, including by intimating the taxpayer to resort to the statutory process, as retention of the amount would indirectly revive the set aside order. The word ‘may’ in Section 54(1) does not make limitation optional, but a rigid interpretation cannot validate an illegal action - In the peculiar circumstances, the date of uploading of Form GST APL-04 is treated as the relevant date for the limited purpose of this case, the refund application is held to be within two years, the orders rejecting it are quashed - The Respondents are directed to process the application, with liberty to file a fresh offline application if the portal does not permit – The petition is allowed - Interest on delayed refund under Section 56 of the CGST Act, 2017 where refund arises from an appellate order - Petitioners claimed interest at the higher rate under the proviso to Section 56 but restricted their claim to the lower rate, although they did not file the refund application on receipt of the physical appellate order and the prayers did not specify rate or date - Whether interest is payable on the refund and from which date - HELD - The proviso to Section 56 provides for interest at a higher rate where refund arising from an order of the Appellate Authority which has attained finality is not made within sixty days from receipt of the application filed consequent to such order, and thus interest is linked to the filing of the application. Since the Petitioners were supposed to file the application on receipt of the physical copy of the order and did not do so, they are not entitled to interest from the date of that order. Treating the date of application as the date of upload of the summary, the sixty days would end on the date computed under the proviso, and in order to balance equities and since the Petitioners themselves restricted their claim - Petitioners held entitled to interest at the lower rate from the date fixed by the Court till actual payment, and if the refund is not made within twelve weeks, interest at the higher rate on the refund thereafter. [Read less]

Service Tax - Taxability of supply of food within hospital premises as Outdoor Catering Service - Appellant supplied food to patients, their relatives, doctors and staff of a hospital from premises provided by the hospital, paid VAT on the sales treating them as sale of goods, and was not registered with the service tax authorities - SCN was issued for the period from March 2006 to September 2010 and the demand was confirmed with penalties - Appellant contended that payment of VAT indicates a sale of goods and that service tax is not leviable on such a transaction - Respondent contended that the activity was a catering arr... [Read more]

Service Tax - Taxability of supply of food within hospital premises as Outdoor Catering Service - Appellant supplied food to patients, their relatives, doctors and staff of a hospital from premises provided by the hospital, paid VAT on the sales treating them as sale of goods, and was not registered with the service tax authorities - SCN was issued for the period from March 2006 to September 2010 and the demand was confirmed with penalties - Appellant contended that payment of VAT indicates a sale of goods and that service tax is not leviable on such a transaction - Respondent contended that the activity was a catering arrangement and that payment of VAT does not bar levy of service tax on the service aspect - Whether the activity is classifiable as Outdoor Catering Service and whether payment of VAT bars the demand of service tax - HELD - Outdoor caterer under Section 65(76a) means a caterer providing services in connection with catering at a place other than his own, including a place provided by the person receiving such services, and caterer under Section 65(24) includes any person who supplies food directly or indirectly. The definition was expanded to cover all types of canteen contractors with effect from 16.06.2005 and it is admitted that the Appellant supplied food from the hospital premises, so the plea that the activity is only sale of food is not tenable. Payment of VAT shows only that the goods component suffered VAT, and as statutory abatements on the value of goods were already extended, the demand pertains only to the service portion. The exemption earlier available to outdoor caterers in medical establishments was rescinded with effect from 01.03.2006 - The activity is classifiable as Outdoor Catering Service and the Appellant is liable to pay service tax for the normal period - Invocation of extended period of limitation and imposition of penalty on an unregistered outdoor caterer - Demand for the entire period was confirmed by invoking the extended period along with penalties - Respondent contended that failure to register and file returns amounts to suppression with intent to evade tax - Whether the extended period is invocable and whether penalties are sustainable - HELD - The entire demand was made on the basis of the records maintained by the Appellant. Following the Hon'ble Supreme Court, mere failure to declare facts does not amount to wilful suppression, and the extended period cannot be invoked unless the omission is deliberate to escape payment of duty with intention to evade proved. Penalty is not imposable where non-payment is on account of reasonable cause under Section 80 of the Finance Act, 1994 - The extended period and penalties are unsustainable, the demand is confirmed only for the normal period with interest as applicable, and all penalties are set aside. [Read less]

Service Tax - Refund of service tax paid on exempt service and applicability of bar of unjust enrichment under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - Appellant provided erection, commissioning and installation service to Government undertakings, paid service tax during pendency of proceedings as a matter of abundant caution and filed a refund claim within time claiming exemption under a Notification - Original authority rejected the claim on the ground that the Appellant had charged and collected service tax from the service recipients, and the Commissioner (Appeals) hel... [Read more]

Service Tax - Refund of service tax paid on exempt service and applicability of bar of unjust enrichment under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - Appellant provided erection, commissioning and installation service to Government undertakings, paid service tax during pendency of proceedings as a matter of abundant caution and filed a refund claim within time claiming exemption under a Notification - Original authority rejected the claim on the ground that the Appellant had charged and collected service tax from the service recipients, and the Commissioner (Appeals) held the Appellant eligible for the benefit of the Notification but upheld rejection on unjust enrichment as no documents were produced to contradict the finding of collection - Appellant contended that unjust enrichment was not alleged in the SCN, that the contract price was inclusive of all applicable taxes, and that no service tax was charged in the invoices - Respondent contended that every refund claim must undergo scrutiny under Section 11B - Whether the refund claim was rightly rejected on the ground of unjust enrichment - HELD - The plea that unjust enrichment was not part of the SCN is misplaced, since it is settled by the Hon'ble Supreme Court that all refund claims have to be processed to examine the element of unjust enrichment. Once the Appellant was held not liable to pay service tax under the exemption Notification, no presumption can be drawn that it collected service tax while receiving the gross amount, and the records produced show no evidence of such collection. However, these documents were not placed before the original authority and it cannot be identified that they relate to the same transactions for which refund is claimed, so the question needs further verification - The Appellant is directed to produce all necessary documents along with a Chartered Accountant certificate for the relevant period, the impugned order is set aside and the appeal is allowed by way of remand to the original authority to decide the issue of unjust enrichment only [Read less]

GST - Denial of input tax credit on supplies from suppliers whose registrations were cancelled retrospectively – Validity of SCN and Order-in-Original that are cryptic and non-speaking - Violation of principles of natural justice – Appellant availed input tax credit on inward supplies from registered suppliers later categorised as non-genuine taxpayers whose registrations were cancelled ab initio - SCNs under Section 73 issued solely on supplier-side cancellations stated only ‘As per attachment under the brief facts and grounds’ - The Appellant did not reply and ex-parte orders confirming tax, interest and penalty ... [Read more]

GST - Denial of input tax credit on supplies from suppliers whose registrations were cancelled retrospectively – Validity of SCN and Order-in-Original that are cryptic and non-speaking - Violation of principles of natural justice – Appellant availed input tax credit on inward supplies from registered suppliers later categorised as non-genuine taxpayers whose registrations were cancelled ab initio - SCNs under Section 73 issued solely on supplier-side cancellations stated only ‘As per attachment under the brief facts and grounds’ - The Appellant did not reply and ex-parte orders confirming tax, interest and penalty were passed describing the issue in a single line - Whether denial of input tax credit under Section 16 through SCNs and orders that are cryptic, non-speaking and devoid of independent reasoning violates the principles of natural justice - HELD – Though the burden of proving eligibility to input tax credit lies on the claimant under Section 155, the revenue authorities are equally bound to afford a fair opportunity to discharge it, which begins with a valid, detailed and speaking SCN - The SCNs showed a glaring lack of substantive reasoning and did not elaborate any specific finding or the nature of the alleged contravention. The Adjudicating Authority confirmed substantial demands without recording any independent analysis or factual findings. Every quasi-judicial authority must pass a speaking order and recording of reasons is an essential facet of natural justice. The Department cannot rely solely on retrospective cancellation of the suppliers' registrations to confirm a demand without independently verifying the facts and giving the Appellant a fair and transparent opportunity of being heard - The orders of the adjudicating authority are vitiated for violation of natural justice and are set aside - The matter remanded for fresh adjudication without expressing any opinion on the merits of admissibility of credit - The appeals are allowed by way of remand to the adjudicating authority - Dismissal of appeal by First Appellate Authority on the ground of non-prosecution without deciding the merits - Section 107(11) and 107(12) of the CGST Act, 2017 - The FAA rejected the appeals on merits for want of transport documents such as lorry receipts and toll receipts and also on the ground of non-prosecution for non-attendance at the scheduled hearings - Whether the FAA can dismiss a statutory appeal for non-prosecution or default in appearance without independently adjudicating the documentary evidence on record - HELD - Section 107(11) requires the Appellate Authority, after making such further inquiry as may be necessary, to pass such order as it thinks just and proper confirming, modifying or annulling the order appealed against. Section 107(12) requires the order to be in writing stating the points for determination, the decision thereon and the reasons for such decision - The Appellate Authority has a statutory duty to examine the merits and the grounds raised even if the appellant is not present. Dismissal of an appeal for non-prosecution amounts to abdication of statutory powers and is legally unsustainable. As the adjudication orders had no legal or factual reasoning and the appellate orders failed to cure the defect, there was gross violation of the principles of natural justice - The orders of the FAA are set aside and the appeals are allowed by way of open remand to the adjudicating authority for fresh adjudication. [Read less]

GST - Partial rejection of refund of accumulated input tax credit without issuing notice in FORM GST RFD-08 and without opportunity of being heard – Violation of mandatory procedure under Rule 92(3) of the CGST Rules, 2017 – Appellant-EOU exporting its products without payment of tax, filed refund claims of accumulated ITC under Section 16(3)(a) of the IGST Act, 2017 - The adjudicating authority sanctioned the refund in part and rejected the remaining portion in FORM GST RFD-06 on the sole ground of Mismatch of ITC - The FAA recorded that Rule 92(3) was not followed but still confirmed the rejection - Whether the parti... [Read more]

GST - Partial rejection of refund of accumulated input tax credit without issuing notice in FORM GST RFD-08 and without opportunity of being heard – Violation of mandatory procedure under Rule 92(3) of the CGST Rules, 2017 – Appellant-EOU exporting its products without payment of tax, filed refund claims of accumulated ITC under Section 16(3)(a) of the IGST Act, 2017 - The adjudicating authority sanctioned the refund in part and rejected the remaining portion in FORM GST RFD-06 on the sole ground of Mismatch of ITC - The FAA recorded that Rule 92(3) was not followed but still confirmed the rejection - Whether the partial rejection of a refund claim under Section 54 without issuing the notice in FORM GST RFD-08 and without an opportunity of being heard violates the principles of natural justice and Rule 92(3) - HELD - The language of Rule 92(3) is unambiguous and mandatory. The use of the word ‘shall’, combined with the absolute embargo in the proviso that no application for refund shall be rejected without giving the applicant an opportunity of being heard, leaves the adjudicating authority with no jurisdiction or discretion to reject a refund claim wholly or partially without first issuing FORM GST RFD-08 and affording a hearing - It is an admitted and undisputed fact that the order in FORM GST RFD-06 was issued directly. The Appellant is thereby deprived of the right to know the precise grounds of the alleged mismatch and to furnish a document-backed reply in FORM GST RFD-09. An order passed in defiance of a mandatory statutory procedure is void ab initio, in line with the principle that quasi-judicial authorities must follow prescribed procedure and pass reasoned orders - The rejection of refund without compliance with Rule 92(3) is bad in law and the orders of the adjudicating authority and the FAA are set aside - The matters are remanded to the Adjudicating Authority keeping all the issues open for fresh, de novo processing of the refund applications – The appeals are allowed by remand - Whether a hearing at the appellate stage cures the non-issuance of notice in FORM GST RFD-08 at the adjudication stage - Whether a foundational procedural defect of bypassing the original adjudication procedure can be cured by affording a hearing at the appellate stage - HELD - The right to a notice and a hearing before an adverse civil consequence is a fundamental statutory right rooted in the principle of audi alteram partem. A post-decisional hearing at the appellate stage cannot serve as a substitute for a pre-decisional statutory notice. The FAA, having noted the violation of Rule 92(3), ought to have remanded the matter instead of demanding documents and deciding the case on merits. [Read less]

GST - Bail - Grant of regular bail to accused in prosecution under Section 132(1) of the CGST Act, 2017 for passing of input tax credit on fake invoices - Applicant, an advocate who had filed GST returns on behalf of companies, was alleged to be involved in creation of fake companies and passing of input tax credit on the basis of fake invoice - Applicant contended that he only filed returns, had no criminal history and would cooperate in trial, whereas the Respondent opposed bail without disputing the factual matrix - Whether the applicant is entitled to bail - HELD - Personal liberty under Article 21 includes speedy tria... [Read more]

GST - Bail - Grant of regular bail to accused in prosecution under Section 132(1) of the CGST Act, 2017 for passing of input tax credit on fake invoices - Applicant, an advocate who had filed GST returns on behalf of companies, was alleged to be involved in creation of fake companies and passing of input tax credit on the basis of fake invoice - Applicant contended that he only filed returns, had no criminal history and would cooperate in trial, whereas the Respondent opposed bail without disputing the factual matrix - Whether the applicant is entitled to bail - HELD - Personal liberty under Article 21 includes speedy trial, there is a presumption of innocence before conviction, and the object of bail is to secure attendance at trial and not to punish. Even where a prima facie case exists, bail can be denied only in exceptional cases, and bail is the rule and jail the exception - Following the Hon'ble Apex Court in cases under Section 132 of the CGST Act, the maximum punishment is five years, the offences are triable by a Magistrate, the evidence is essentially documentary and electronic, and there is no apprehension of tampering. The Respondent did not show any criminal antecedents, any exceptional circumstance, any likelihood of tampering with evidence or intimidating witnesses, or any chance of fleeing from justice. The trial would not conclude within a year even if it commenced soon - Applicant held to have made out a case for bail and bail allowed [Read less]

GST - Refund - Provisional reversal of Input Tax Credit disclosed in Table 4(B)(2) of GSTR-3B whether amounts to discharge of self-assessed liability - Respondent, a manufacturer of edible oils, reversed Input Tax Credit in its return for the month of August 2018 following a reported stock shortage in a search by the Income Tax Department, and by a contemporaneous letter described the reversal as provisional while reserving the right to seek restoration - Refund claim was rejected on the ground that the reversal was voluntary and formed part of self-assessment - Rejection was set aside by the FAA - Department preferred app... [Read more]

GST - Refund - Provisional reversal of Input Tax Credit disclosed in Table 4(B)(2) of GSTR-3B whether amounts to discharge of self-assessed liability - Respondent, a manufacturer of edible oils, reversed Input Tax Credit in its return for the month of August 2018 following a reported stock shortage in a search by the Income Tax Department, and by a contemporaneous letter described the reversal as provisional while reserving the right to seek restoration - Refund claim was rejected on the ground that the reversal was voluntary and formed part of self-assessment - Rejection was set aside by the FAA - Department preferred appeal contending that reversal in a statutory return acknowledges liability under Section 59 - Whether the reversal constituted discharge of a self-assessed GST liability disentitling the Respondent from refund - HELD - Under Section 39 read with the prescribed return format, particulars of outward supplies and tax liability are distinct from particulars of Input Tax Credit availed and reversed. The amount was disclosed in Table 4(B)(2) with no liability on account of stock shortage declared in Table 3.1 - Section 59 provides for self-assessment, but the mere furnishing of a return does not mean that every amount disclosed in every table constitutes an admitted tax liability. Where an amount is expressly disclosed as a provisional reversal, the legal character must be determined from the nature of the entry, the statutory provisions and the contemporaneous documents - The letter issued at the time of reversal is consistent with the stand that the reversal was not intended to acknowledge a finally determined liability, and no contrary material showed an unequivocal admission - The Department did not establish that a demand under Section 73 or Section 74 had been determined at that time or that a quantified liability was admitted - The original rejection order did not establish that the amount was reversed towards a self-assessed GST liability. The Department's appeal on this ground is rejected - Refund - Effect of subsequent adjudication order and grounds beyond the scope of SCN on refund proceedings - Show cause notice for rejection of refund proposed rejection on the grounds that the reversal was voluntary and formed part of self-assessment, whereas the Department in appeal relied on a later Order-in-Original confirming demand on the alleged stock shortage, passed after the impugned Order-in-Appeal and under challenge in separate appellate proceedings - Whether the Department can rely on the subsequent Order-in-Original and fresh grounds to sustain rejection of refund and whether the earlier reversal can be treated as payment towards the subsequently confirmed demand - HELD - The SCN is the foundation of the Department's case, the allegations must enable the noticee to understand and answer the case. The legality of the impugned order must ordinarily be examined on the material existing when it was passed, and a subsequent order cannot cure a defect in the original reasoning - The demand confirmed later is the subject matter of separate proceedings whose merits cannot be conclusively determined in the refund appeal. The separate dispute on Input Tax Credit from a particular supplier arises from different transactions and does not determine entitlement to this refund - Reliance on the subsequent Order-in-Original is not accepted to restore the rejection - Retention of amount reversed during investigation on the basis of alleged stock shortage reported by another department, Article 265 of the Constitution and Section 54 of the CGST Act, 2017 - Department contended that the refund was premature as investigation was pending, that the book stock and physical stock difference established clandestine removal under Section 74, and that refund would cause loss to revenue - Respondent contended that an allegation by another department cannot by itself justify retention of tax without determination of liability - Whether refund can be rejected merely because the reversal was voluntary and an investigation or adjudication on the alleged stock shortage was pending - HELD - Article 265 requires that retention of an amount as tax be supported by statutory provisions and legally established liability, though it does not dispense with the requirements for refund claims. Information from another department may be an investigative lead, but a difference in stock valuation does not without further examination establish clandestine removal - Department must establish the taxable event, tax period, taxable value and rate of tax. Pendency of an investigation is not equivalent to determination of tax liability, cannot convert a provisional reversal into an established liability, and does not authorise indefinite retention. Initiation of proceedings under Section 74 does not by itself establish the alleged liability, and a later confirmation of demand does not show that the liability was admitted in the earlier return. - Rejection solely on the basis that the reversal was voluntary or the investigation was pending is not sustainable, the order of the First Appellate Authority is upheld subject to verification that the claim satisfies the requirements of Section 54 - The Department's appeal is dismissed - Pre-deposit for appeal before the Appellate Tribunal where the dispute pertains only to a refund claim - Appellant, being the Department, challenged an order of the First Appellate Authority which set aside rejection of a refund claim for provisionally reversed Input Tax Credit - Whether pre-deposit under Section 107(6) of the CGST Act, 2017 is required for the present appeal - HELD - Since the matter pertains to a refund claim and no amount of tax or duty is involved in the appeal, there is no need of pre-deposit under Section 107(6) of the CGST Act, 2017 - The appeal was entertained without pre-deposit. 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Central Excise - Admissibility of CENVAT credit of service tax paid by job workers on exempted job work under Notification No. 25/2012-ST - Rule 2(l)(ii) of CENVAT Credit Rules, 2004 read with Section 5A(1A) of Central Excise Act, 1944 – Appellant took CENVAT credit of service tax charged by job workers on job work charges. The Department held that the job work was exempt from the whole of the service tax under Notification No. 25/2012-ST, and so could not be an input service under Rule 2(l)(ii) - Whether the Appellant can be denied CENVAT credit of the service tax paid by its job workers on the ground that the job work ... [Read more]

Central Excise - Admissibility of CENVAT credit of service tax paid by job workers on exempted job work under Notification No. 25/2012-ST - Rule 2(l)(ii) of CENVAT Credit Rules, 2004 read with Section 5A(1A) of Central Excise Act, 1944 – Appellant took CENVAT credit of service tax charged by job workers on job work charges. The Department held that the job work was exempt from the whole of the service tax under Notification No. 25/2012-ST, and so could not be an input service under Rule 2(l)(ii) - Whether the Appellant can be denied CENVAT credit of the service tax paid by its job workers on the ground that the job work was exempt and the tax ought never to have been paid - HELD - The case of the Revenue holds only if the law compels the provider of an exempt service to avail the exemption. Section 5A(1A) of the Act, which forbids a manufacturer to pay duty where an exemption has been granted absolutely, does not travel into the Finance Act, 1994. Section 83 of the Finance Act, 1994 takes in only sub-section (2A) of Section 5A. The omission of sub-section (1A) must be taken to be deliberate and cannot be supplied by construction. A provider of a taxable service is therefore under no obligation to avail an exemption, and tax paid by it is not tax paid without the authority of law - Nothing in Rule 2(l)(ii) makes the character of a service as an input service depend on whether the service is taxable in the hands of its provider. The SCN did not doubt that the job work was used in or in relation to the manufacture of the final products, and the objection therefore reads into the definition a condition which it does not contain - Further, the tax paid by the job workers was accepted by the Department without demur, and nothing on record showed that their assessments were reopened or that the tax was refunded. The Revenue cannot retain the tax as validly paid at the end of the provider and treat it as tax which ought not to have been paid when the recipient claims credit - The credit having been rightly availed, the demand fails. Interest, being accessory to the demand, cannot survive. The penalty under Rule 15(1) presupposes that credit has been wrongly taken or utilised and becomes untenable - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Exemption to works contract services for construction provided to Railways - Entry 14(a) of Notification No. 25/2012-ST - Adjudication beyond the scope of remand - Appellant provided works contract services for construction of a training school and a hostel to Railways - Whether the services provided to Railways are liable to service tax and whether the Adjudicating Authority could re-open the issue in de novo proceedings - HELD - The services are exempt under Entry 14(a), which covers construction of original works pertaining to railways. The Railways Act, 1989 defines railway to include stations, offices, h... [Read more]

Service Tax - Exemption to works contract services for construction provided to Railways - Entry 14(a) of Notification No. 25/2012-ST - Adjudication beyond the scope of remand - Appellant provided works contract services for construction of a training school and a hostel to Railways - Whether the services provided to Railways are liable to service tax and whether the Adjudicating Authority could re-open the issue in de novo proceedings - HELD - The services are exempt under Entry 14(a), which covers construction of original works pertaining to railways. The Railways Act, 1989 defines railway to include stations, offices, hostels and other works constructed for the purpose of or in connection with a railway. The training school and the hostel fall within that definition. By confirming the demand, the Adjudicating Authority acted beyond the scope of the remand directions. An authority acting on remand is bound by the directions of the Appellate Authority and cannot revisit settled issues. The finding of exemption, not having been challenged by the Department, had attained finality, and the Department is barred by estoppel from re-agitating it - The demand is set aside and the appeal is allowed - Exemption to works contract services for construction of government buildings provided to State Government corporations - Entries 12/12A and 29(h) of Notification No. 25/2012-ST - Section 102 of Finance Act, 1994 - Contracts entered prior to 01.03.2015 - Appellant provided works contract services to State Government undertakings for construction of Government clinical and educational establishments, offices and residential buildings for Government staff. The lower authorities denied the exemption on the ground that mere Government ownership does not make the entity a Governmental Authority and that the entities did not carry out functions entrusted to a municipality - Whether exemption under Entry 12A can be extended to these works contract services for contracts awarded prior to 01.03.2015 - HELD - The State Government undertakings having over 90% equity are a Governmental Authority as defined in the Notification. The services were for construction of non-commercial Government buildings, which are covered by Entry 12/12A read with the retrospective validation under Section 102. The Appellant is also eligible for exemption as a sub-contractor under Entry 29(h), as the main contractors provided exempt services to the Government. Taxability has to be decided according to the service rendered to the client, whether rendered directly by the main contractor or through a sub-contractor. The Hon'ble Supreme Court has held that the exemption cannot be restricted to authorities carrying out functions entrusted to a municipality, as plain and unambiguous provisions must be interpreted as they stand - The demand on these services is set aside and the appeal is allowed - Cum-tax benefit under Section 67(2) of Finance Act, 1994 - Works contract services under contracts awarded after 01.03.2015 - The first Adjudicating Authority allowed cum-tax benefit on the strength of a certificate from the service recipient and the work orders and payment certificates, which showed that no service tax was paid. The Department did not challenge this. In the de novo proceedings, the benefit was denied on the ground that the Appellant failed to conclusively establish that the amounts received were inclusive of service tax - Whether the Appellant is entitled to cum-tax benefit - HELD - The Appellant had not collected any service tax separately from its clients, and the Department failed to produce any document showing that service tax was charged or received. The gross amount received must therefore be treated as inclusive of service tax in terms of Section 67(2). The benefit, having been correctly allowed in the first Order-in-Original and not challenged by the Department, had attained finality and could not be denied in the de novo proceedings - The Appellant is entitled to cum-tax benefit and the appeal is allowed on this issue - Demand on differential between receipts as per Income Tax Return and Form 26AS - Determination of value of services - The Adjudicating Authority in de novo proceedings treated the gross receipts declared in the ITR as higher than the receipts in Form 26AS and confirmed demand at the full rate on the differential. The FAA had earlier recorded the gross receipts in the ITR as a lower figure - Whether service tax is leviable on the alleged differential between the ITR and Form 26AS - HELD - The ITR for the relevant year shows a total gross receipt lower than the figure adopted by the Adjudicating Authority, as already noted by the FAA. The alleged differential does not exist, as the ITR figure was wrongly quoted by the Department. The demand on the differential is improper and illegal - The demand is set aside and the appeal is allowed on this issue - Threshold exemption under Notification No. 33/2012-ST for the financial year 2016-17 - The FAA denied the threshold exemption on the ground that it is not available once the taxable turnover exceeds the prescribed limit. The Appellant contended that its services in the preceding year were entirely exempt - Whether the Appellant is entitled to threshold exemption in the financial year 2016-17 - HELD - Eligibility for the exemption is determined based on the taxable turnover of the preceding financial year. In the preceding year, the Appellant's services were entirely exempt and the aggregate value of taxable services was nil. The Appellant is therefore entitled to the threshold exemption. The authorities below failed to grant this statutory exemption without any valid reason - The appeal is allowed on this issue - Invocation of extended period of limitation and imposition of penalties under Sections 77, 78 and 70 of Finance Act, 1994 - Bona fide belief on exemption - The exemption under Entry 12(a) for works contract services of construction of Government buildings was omitted by Notification No. 6/2015-ST and reinserted by Notification No. 9/2016-ST as Entry 12A with retrospective effect, subject to a condition regarding contracts entered into prior to 01.03.2015. The Appellant did not take registration or file ST-3 returns, believing its services to be exempt, but declared all its receipts in its financial statements and ITRs. The SCN invoked the extended period and proposed penalties, and a late fee under Section 70 was also imposed - Whether the extended period and penalties can be sustained - HELD - The SCN was issued without any tangible evidence of fraud, collusion, willful misstatement or suppression of facts with intent to evade tax. It merely reproduces statutory language, and the burden of proving willful intent lies on the Department. Suppression of facts must be construed strictly and requires a deliberate and willful act to evade tax, not mere omission or non-payment. The withdrawal and reinstatement of the exemption created an impression that the exemption was still available, and the case is one of bona fide belief arising from an interpretational dispute. The extended period and penalty under Section 78 cannot be invoked in such a case. Penalties under Section 77 are also not imposable. The late fee under Section 70 read with Rule 7C of the Service Tax Rules, 1994 is illegal, as Rule 7C prescribes a penalty for delay in filing returns and not for non-filing of returns - The extended period is not invocable, the penalties and late fee are set aside, and the appeal is allowed - Validity of SCN issued without pre-SCN consultation - Board Instruction and Master Circular - SCN proposed a demand above the monetary threshold prescribed in the Board's instructions and circulars, for which pre-SCN consultation is mandatory. The record did not show that any consultation was held. The FAA held that pre-SCN consultation was not necessary, as the Board had excluded fraud and collusion cases from the process - W [Read less]

GST - Excess Input Tax Credit alleged on comparison of GSTR-3B with GSTR-2A without determining net Input Tax Credit position – ex parte order confirmed the demand, which was upheld ex parte by the FAA owing to non-appearance - Appellant contended that the Input Tax Credit reversals already made in GSTR-3B were ignored and that the Department's own figures showed lower availment under CGST and SGST heads - Whether the demand of excess Input Tax Credit can be raised merely by matching GSTR-3B with GSTR-2A, without considering reversals made in the returns - HELD - The law does not permit the Revenue to look at return figu... [Read more]

GST - Excess Input Tax Credit alleged on comparison of GSTR-3B with GSTR-2A without determining net Input Tax Credit position – ex parte order confirmed the demand, which was upheld ex parte by the FAA owing to non-appearance - Appellant contended that the Input Tax Credit reversals already made in GSTR-3B were ignored and that the Department's own figures showed lower availment under CGST and SGST heads - Whether the demand of excess Input Tax Credit can be raised merely by matching GSTR-3B with GSTR-2A, without considering reversals made in the returns - HELD - The law does not permit the Revenue to look at return figures in isolation. Once an amount has been accounted for or adjusted through reversal of Input Tax Credit within the statutory returns, a duplicate demand cannot be raised without giving credit for such reversal. The adjudicating authority must determine the net credit position and evaluate whether any actual revenue loss has occurred - The Table in GSTR-3B showed substantial Input Tax Credit reversed; the lower authorities failed to examine whether the alleged excess claim was already neutralised by such reversals. The demand suffers from patent factual and legal error and total lack of verification - The orders of both the lower authorities are set aside and the matter is remanded to the Proper Officer for fresh adjudication after verification – The appeal is allowed by remand - Demand based on difference between tax figures in Table 9 of GSTR-9 and Table 9P of GSTR-9C - Appellant contended that the difference was not unpaid tax since one field reflected tax paid through returns including the effect of Input Tax Credit reversal while the other reflected tax payable on outward supplies, and that this explanation was disclosed in Table 10 of GSTR-9C - Revenue treated the variance as an unreconciled shortfall in output tax as the Appellant gave no explanation before the lower authorities - Whether a tax demand can be confirmed merely on a mismatch between the two statutory returns - HELD - The Proper Officer failed to scrutinise the flow of entries and treated a balancing reconciliation figure as short-paid tax. Determination of tax liability requires independent verification of sales ledgers, tax invoices and financial books rather than a simplistic comparison of two fields on the portal, and confirming a demand purely on system-generated discrepancies without one-to-one financial reconciliation violates the spirit of law and fairness. Thorough re-verification by the Proper Officer is essential - The impugned orders are set aside and the matter is remanded for de novo adjudication - Alleged short reversal of Input Tax Credit under Rules 42 and 43 of the CGST Rules, 2017 - Revenue alleged short reversal of Input Tax Credit attributable to exempt supplies, while the Appellant demonstrated by documentary records that the reversal shown in GSTR-9 and in Table 4(B) of GSTR-3B was substantially higher than the amount alleged to be short-reversed - Whether the demand under Rules 42 and 43 raised by treating the entire Input Tax Credit as common credit is sustainable - HELD - The Department raised the demand by treating the entire Input Tax Credit as common credit, discarding the mandatory requirement of identifying and segregating the actual common credit from specific credit. A valid determination under Rules 42 and 43 cannot be made without first segregating specific credit from common credit and then mapping the ratio of exempt to taxable turnover against the common input tax pool, and this statutory exercise was entirely omitted. The reversals already made were also not reconciled - The demand was raised without proper verification and suffers from non-application of mind, the impugned orders are set aside and the appeal is allowed by way of remand for fresh verification. [Read less]

GST - Compensation Cess - Condition of being popularly known as SUV under Entry 52B of Notification No. 05/2017-Compensation Cess (Rate) – Respondent-assessee supplied motor vehicles of Heading 8703 having engine capacity exceeding 1500 cc, and discharged Compensation Cess at 20% - The Department alleged liability at 22% under Entry 52B of Notification No. 05/2017-Compensation Cess (Rate) dated 11.09.2017 for the period from 11.09.2017 to 14.03.2024 - The Order-in-Original confirming the differential cess was set aside by the FAA - Whether the disputed models are motor vehicles popularly known as SUVs for the purposes of... [Read more]

GST - Compensation Cess - Condition of being popularly known as SUV under Entry 52B of Notification No. 05/2017-Compensation Cess (Rate) – Respondent-assessee supplied motor vehicles of Heading 8703 having engine capacity exceeding 1500 cc, and discharged Compensation Cess at 20% - The Department alleged liability at 22% under Entry 52B of Notification No. 05/2017-Compensation Cess (Rate) dated 11.09.2017 for the period from 11.09.2017 to 14.03.2024 - The Order-in-Original confirming the differential cess was set aside by the FAA - Whether the disputed models are motor vehicles popularly known as SUVs for the purposes of Entry 52B - HELD - The taxpayer supplied vehicles falling under Heading 8703. The relevant entry prescribing the higher rate of Compensation Cess applies where the vehicle satisfies the specified conditions relating to engine capacity exceeding 1500cc, length exceeding 4000 mm, ground clearance of at least the prescribed threshold, and being popularly known as an SUV - The taxpayer has contended that all these conditions must be satisfied cumulatively and that its vehicles do not fulfil the prescribed ground-clearance requirement. However, the taxpayer's contention that the vehicles are not covered by the higher rate cannot be accepted merely on the basis of its own classification or the rate of Cess charged by the manufacturer - The expression used in the pre-amendment Entry 52B is popularly known as Sports Utility Vehicles, and hence commercial identity and the manner in which the manufacturer presents the product to consumers are directly relevant. The models were represented and marketed by the manufacturer itself as SUVs, and brochures, press releases, advertisements and specifications constitute relevant evidence for determining how a product is understood in commercial and common parlance. The Respondent cannot contend that the models are outside Entry 52B merely because some technical document employs a different description - On the material placed on record, the Creta, Alcazar and Tucson satisfy the condition of being popularly known as SUVs, which however is not by itself sufficient as the prescribed ground clearance requirement must independently be satisfied - Levy of Compensation Cess - Measurement of ground clearance in laden or unladen condition for the period prior to Notification No. 03/2023-Compensation Cess (Rate) - Evidentiary value of ARAI certificates - The FAA held that for the period prior to 26.07.2023 ground clearance was to be examined in laden condition, whereas the Department relied on the manufacturer's specifications showing ground clearance above 170 mm and contended that ARAI certification is meant only for safety compliance - Whether ground clearance for the pre-amendment period is to be determined in laden or unladen condition and whether the demand is sustainable - HELD - The earlier Entry 52B did not expressly employ the words laden or unladen, and the Explanation defining ground clearance as ground clearance in unladen condition was inserted by the amendment effective 26.07.2023. The CBIC Circular only clarifies that the amendment applies on or after 26.07.2023 and does not validate a laden standard for the earlier period - Taxing statutes are strictly construed, no words can be added by implication, and any claim of a lower rate within a classification entry must be construed strictly against the assessee, so that in the absence of explicit words directing laden measurement, the unladen condition, being the default state in which a vehicle is delivered from the factory, is the only sustainable baseline - ARAI certificates are issued for safety compliance under the Central Motor Vehicles Rules and cannot be treated as conclusive for tariff classification, though they remain relevant technical evidence of physical measurement. The manufacturer's own specifications showing ground clearance above the threshold cannot be discarded as irrelevant - The Respondent's explanation that it followed the rate in the manufacturer's invoices does not absolve it of its independent statutory responsibility to determine the correct tax liability - The vehicles are liable to Compensation Cess at the higher rate and the differential cess is recoverable - Compensation Cess - Invocation of Section 74 for short payment of cess - Respondent contended that the dispute was one of interpretation of the notification, that supplies were disclosed in statutory records and that fraud, wilful misstatement or suppression was not established, while the Department alleged that a lower rate was charged to reduce tax liability and the discrepancy came to light only after investigation - Whether the differential cess is recoverable along with interest and penalty under Section 74 read with Section 11 of the Compensation to States Act - HELD - The allegations of lower rate being charged to reduce tax liability must be supported by evidence establishing the requisite intent. It was found that the Department has established that the differential Compensation Cess was short paid by reason of suppression of facts with intent to evade tax - The Order-in-Appeal passed by the FAA is quashed and set aside - The Order-in-Original confirming the differential Compensation Cess demand is fully restored – The appeal filed by the Revenue is allowed [Read less]

Service Tax - Validity of SCN issued on reconciliation of figures in ST-3 returns and permissibility of grounds raised by Revenue in appeal - SCN was issued on the basis of short payment noticed on scrutiny of the returns, including an amount deposited as arrears without clarification of the payment or period to which it related - Respondent was asked by letter and reminder to furnish information but did not reply - Adjudicating authority confirmed the demand only in part and dropped the rest, and Revenue appealed - Respondent contended that SCN contained no allegation regarding the nature, place, manner or taxability of a... [Read more]

Service Tax - Validity of SCN issued on reconciliation of figures in ST-3 returns and permissibility of grounds raised by Revenue in appeal - SCN was issued on the basis of short payment noticed on scrutiny of the returns, including an amount deposited as arrears without clarification of the payment or period to which it related - Respondent was asked by letter and reminder to furnish information but did not reply - Adjudicating authority confirmed the demand only in part and dropped the rest, and Revenue appealed - Respondent contended that SCN contained no allegation regarding the nature, place, manner or taxability of any transaction and that Revenue was building a new case in appeal - Whether the SCN is valid and whether the grounds urged by Revenue travel beyond the SCN - HELD - The impugned order itself records that the Respondent did not reply to the information sought by the jurisdictional office. In view of such lack of cooperation, with documents on the nature of services not furnished, the contention that the SCN does not contain specific allegations or that the grounds taken by Revenue were not taken in the SCN cannot be accepted - The SCN is held to be valid - Taxability of services rendered in alleged non-designated areas beyond twelve nautical miles and services rendered to an oil company at a centre in India - Demand on services provided to contractors of an oil company at installations under agreements for cementing and well stimulation, and on services under a contract for operating an optimisation centre located in India, was dropped on the ground that the wells were in non-designated areas beyond twelve nautical miles - Revenue contended that the earlier Circular stood superseded by a Notification under which areas of the continental shelf and exclusive economic zone where installations are situated are designated areas, that services at the centre in India were taxable irrespective of the location of wells, and that the Respondent had itself charged and collected service tax in the invoice - Whether the services are outside the levy on the ground that they were rendered beyond the designated areas - HELD - Other than the bare assertion that services were provided beyond the designated area, no evidence was placed to establish the claim, and the adjudicating authority accepted the submissions without documents. There is no discussion on the service agreements with the contractors and the impugned order failed to notice the invoice wherein service tax was charged and collected, which is contrary to the claim of non-liability - The Respondent is to be given an opportunity to submit relevant documents before the adjudicating authority to substantiate that the services were provided beyond the designated area - Liability on training services provided partly in India and partly overseas and claim of payment by the service recipient under reverse charge - Training programme for managers of a recipient company ran for seven weeks, of which six weeks were classroom training in the taxable territory of India and the seventh week was an overseas visit, with consideration received for the whole programme - Adjudicating authority held the recipient liable under reverse charge on the strength of its email, and Revenue contended that the nature of services in the first six weeks and the remuneration for them were not examined and the emails were not cross-checked with challans - Whether the demand on training services can be dropped on the ground that the recipient paid the tax - HELD - The liability for the initial six weeks conducted in the taxable territory has to be examined, and the impugned order failed to discuss the nature of services rendered in that period and the remuneration received. No evidence was led to show payment under reverse charge and the veracity of the emails was not verified against the payment challans - All the issues need to be relooked into by the adjudicating authority, who shall give the Respondent an opportunity to submit documents and be heard in person, the impugned order is set aside and the appeal is allowed by way of remand. [Read less]

Central Sales Tax, 1956 - Concessional rate of tax under Section 8 of the CST Act on inter-State sales against Form C where original Form C is not produced and the procedure under Rule 12(2) and 12(3) of the Central Sales Tax (Registration and Turnover) Rules, 1957 is not followed - Appellant, whose head office had submitted the original Form C before the sales tax authorities of another State, could not produce the original Forms C before the Assessing Officer for part of the inter-State sales - Assessing Officer levied tax at the higher rate with penalty on such sales, the FAA accepted the forms verified online but rejec... [Read more]

Central Sales Tax, 1956 - Concessional rate of tax under Section 8 of the CST Act on inter-State sales against Form C where original Form C is not produced and the procedure under Rule 12(2) and 12(3) of the Central Sales Tax (Registration and Turnover) Rules, 1957 is not followed - Appellant, whose head office had submitted the original Form C before the sales tax authorities of another State, could not produce the original Forms C before the Assessing Officer for part of the inter-State sales - Assessing Officer levied tax at the higher rate with penalty on such sales, the FAA accepted the forms verified online but rejected the mere photocopies - Appellant contended that certified photocopies should be accepted since the genuine forms were available with the sales tax authorities of the other State and there was no intention of tax evasion - Whether the benefit of concessional rate of tax can be extended on the basis of photocopies of Form C when the original Forms C were not produced before the Assessing Officer - HELD - It is not in dispute that the Appellant had not followed the procedure prescribed under Rule 12(2) and 12(3). Where a Form C is lost or incapable of being produced before the Assessing Officer, the procedure of furnishing an indemnity bond or obtaining a duplicate form with the prescribed declaration has to be followed - The Hon'ble Supreme Court has held that the Rules are intended to prevent misuse of Forms C and are mandatory and not a mere formality or technicality - A dealer making no attempt to comply with them even after rejection of the claim is disentitled to the concessional rate under Section 8 irrespective of the genuineness of the transactions. Since Section 8 read with Rule 12 requires strict compliance and the Appellant failed to follow the prescribed procedure, the concessional rate was rightly denied by the Tribunal in upholding the order of the FAA - The appeal is dismissed [Read less]

Customs - Applicability of Notification amending import policy of studded platinum jewellery from Free to Restricted under Foreign Trade Policy to goods which arrived in India before publication of the Notification but for which Bills of Entry were filed after publication - Petitioner imported goods under Airway Bills dated 30th and 31st March 2026, which arrived in India prior to publication of the Notification in the Official Gazette on 2nd April 2026, while the Bills of Entry were filed after the Notification - Respondent refused release on the ground that the goods were restricted and pending clearance for home consump... [Read more]

Customs - Applicability of Notification amending import policy of studded platinum jewellery from Free to Restricted under Foreign Trade Policy to goods which arrived in India before publication of the Notification but for which Bills of Entry were filed after publication - Petitioner imported goods under Airway Bills dated 30th and 31st March 2026, which arrived in India prior to publication of the Notification in the Official Gazette on 2nd April 2026, while the Bills of Entry were filed after the Notification - Respondent refused release on the ground that the goods were restricted and pending clearance for home consumption - Whether the date of import for applicability of restriction is to be reckoned as per the Foreign Trade Policy or the Customs Act, 1962 and the Notification applies to goods which arrived before its publication - HELD - Paragraph 1.05(b) of the Foreign Trade Policy defines the date of import for the purpose of policy, and provides that import already made before the date of such restriction will not be affected. Paragraph 2.17(a) read with paragraph 11.11 of the Handbook of Procedures reckons the date of import with reference to the date of shipment or dispatch from the supplying country, which in case of import by air is the date of the relevant Airway Bill, and not the date of arrival or of clearance for home consumption - Once the date of import is defined under the Foreign Trade Policy, the date of import under the Customs Act cannot be applied, otherwise the date defined in the policy would be redundant and meaningless - The Hon'ble Apex Court decisions relied upon by the Respondent dealt with the rate of duty under Section 15 of the Customs Act and are distinguishable. The date of filing of B/E or the clearance post the restriction is wholly irrelevant to applicability of a change in the Foreign Trade Policy - The Notification, which is admittedly not retrospective, can be applied only to goods dispatched after its publication - The Notification is declared not applicable to goods arrived in India before its publication, the Respondent is directed to release the goods expeditiously and to permit submission of the Bill of Entry without insisting on Import Authorisation - The writ petition is allowed - Validity of Office Memorandum issued by the DGFT after filing of the writ petition clarifying that any import consignment not cleared before the date of Notification is governed by the Restricted policy irrespective of date of arrival of goods or filing of Bills of Entry, and effect of Import Authorisation issued thereunder - Respondent relied on the Office Memorandum dated 13th May 2026 to contend that the restriction applies irrespective of arrival of goods, and Import Authorisations were issued to the Petitioner on an interim basis pursuant to directions of the Hon'ble Apex Court - Whether the Office Memorandum can override the Foreign Trade Policy and the definition of date of import therein, and whether the Import Authorisation redresses the grievance of the Petitioner - HELD - The Office Memorandum is contrary to the Foreign Trade Policy and in the teeth of the decisions of the Gujarat and Delhi High Courts. It has no statutory force, is not even subordinate legislation, and no authority of law was pointed out for its issue. Relying on the Hon'ble Apex Court, a clarification contrary to statutory provisions or to law declared by the Courts is not binding and has no existence in law - The Foreign Trade Policy can be amended only by the Central Government in exercise of powers under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, and the purported clarification would literally amount to amending the policy and giving retrospective effect to the Notification, which is beyond the jurisdiction of the issuing authority - The Import Authorisation cannot be treated as redressal of the grievance of the Petitioner, since the conditions imposed therein were beyond the jurisdiction and authority of the Director General of Foreign Trade - The Office Memorandum is held to be of no effect on the goods. The writ petitions are allowed. [Read less]

GST - Penalty under Section 125 of the CGST Act, 2017 imposed for delayed furnishing of return in FORM GSTR-3B - Penalty exceeding the maximum limit provided under Section 125 - Whether the show cause notice and the penalty order imposing the maximum general penalty under Section 125 can be sustained where the return was filed and late fee paid - HELD - The Petitioner had already filed the return and paid the late fees in accordance with law. The impugned penalty order was for a sum which exceeded the maximum limit provided under the Act - The impugned show cause notice and the penalty order are quashed and set aside and t... [Read more]

GST - Penalty under Section 125 of the CGST Act, 2017 imposed for delayed furnishing of return in FORM GSTR-3B - Penalty exceeding the maximum limit provided under Section 125 - Whether the show cause notice and the penalty order imposing the maximum general penalty under Section 125 can be sustained where the return was filed and late fee paid - HELD - The Petitioner had already filed the return and paid the late fees in accordance with law. The impugned penalty order was for a sum which exceeded the maximum limit provided under the Act - The impugned show cause notice and the penalty order are quashed and set aside and the writ petition is disposed of [Read less]

GST – Validity of Remand order by the First Appellate Authority directing the adjudicating authority to verify reconciliation statements and delete the demand - Violation of Section 107(11) of the CGST Act - The adjudicating authority confirmed the demand of ITC along with interest and imposed penalty - The FAA partially allowed assessee's appeal and directed it to submit reconciliation statements and workings for the relevant financial years before the adjudicating authority – Appellant-Revenue contended that the order contravenes Section 107(11) of the CGST Act and Rule 113 of the CGST Rules, 2017 - Whether the FAA c... [Read more]

GST – Validity of Remand order by the First Appellate Authority directing the adjudicating authority to verify reconciliation statements and delete the demand - Violation of Section 107(11) of the CGST Act - The adjudicating authority confirmed the demand of ITC along with interest and imposed penalty - The FAA partially allowed assessee's appeal and directed it to submit reconciliation statements and workings for the relevant financial years before the adjudicating authority – Appellant-Revenue contended that the order contravenes Section 107(11) of the CGST Act and Rule 113 of the CGST Rules, 2017 - Whether the FAA can remand the matter back to adjudicating authority for verification of the reconciliation statements - HELD - Section 107(11) empowers the FAA, after making such further inquiry as may be necessary, to pass such order as it thinks just and proper confirming, modifying or annulling the decision or order appealed against. It expressly prohibits referring the case back to the adjudicating authority that passed the decision or order. The statute gives the FAA enough powers to make further inquiry, which was not done, instead the FAA embarked on a course of action expressly forbidden - There was no dispute on the merits of the need for verification of the reconciliation statements. The dispute was only that the verification should have been done by the FAA himself - The order in appeal is set aside and the matter is remanded to the Appellate Authority for fresh consideration - The appeal is allowed [Read less]

GST - Assignment of leasehold rights in industrial plot - Petitioner acquired leasehold rights in an industrial plot and assigned the same to its wholly owned subsidiary for consideration, collected GST and deposited it with the Government – Respondent-Dept issued SCN under Section 74 of the CGST Act, 2017 alleging that input tax credit availed on the leasehold rights acquired was inadmissible - Whether the SCN proceeding on the footing that GST was leviable on such assignment is sustainable - HELD - The issue is no longer res integra, as the Court has held that assignment by sale or transfer of leasehold rights of a plo... [Read more]

GST - Assignment of leasehold rights in industrial plot - Petitioner acquired leasehold rights in an industrial plot and assigned the same to its wholly owned subsidiary for consideration, collected GST and deposited it with the Government – Respondent-Dept issued SCN under Section 74 of the CGST Act, 2017 alleging that input tax credit availed on the leasehold rights acquired was inadmissible - Whether the SCN proceeding on the footing that GST was leviable on such assignment is sustainable - HELD - The issue is no longer res integra, as the Court has held that assignment by sale or transfer of leasehold rights of a plot allotted by an industrial development corporation to a third party for consideration is a transfer of benefits arising out of immovable property - Section 7(1)(a) read with Clause 5(b) of Schedule II and Clause 5 of Schedule III is not applicable to such a transaction, which is not subject to levy of GST under Section 9. When the charging provision itself does not apply, any amount collected or retained by the Department, whether as tax or by way of reversal of input tax credit and interest, has no legal sanctity. The question of utilisation of ITC to discharge GST liability on such assignment does not arise - The proceeding premised on GST being leviable on the transaction does not survive - Blocked credit under Section 17(5)(d) and invocation of Section 74 of the CGST Act, 2017 - Respondent alleged that input tax credit on leasehold services received was blocked credit as it related to construction of immovable property, and invoked Section 74 alleging wrongly availed credit - Petitioner contended that it had not undertaken any construction activity and had collected and deposited GST on the onward assignment - Whether Section 17(5)(d) and Section 74 are attracted - HELD - Section 17(5)(d) presupposes the existence of a taxable inward supply on which tax is lawfully leviable and paid, and when the transaction is neither a supply under Section 7 nor chargeable under Section 9, the blocking provision does not arise. The bar on credit under Section 17(5)(d) applies exclusively to goods or services received for construction of immovable property, and the Respondent did not establish that the Petitioner undertook any construction activity - Following the Court's earlier decision on identical facts, the allegation of blocked credit is misconceived and shows non-application of mind. The question of fraud, wilful misstatement or suppression of facts does not arise to invoke Section 74(1) where the Petitioner collected GST from the assignee and deposited it in the return - The impugned SCNs are quashed and set aside. The petitions are allowed [Read less]

GST - Cancellation of registration with retrospective effect - Order travelling beyond the scope of SCN - SCN proposing cancellation of registration under Rule 21(a) on the ground that no business was conducted from the declared place of business – Cancellation of registration retrospectively from the date of registration - Earlier, an SCN on the same ground had led to cancellation which was revoked - Whether the order cancelling registration retrospectively, when the SCN did not propose retrospective cancellation, can be sustained - HELD - The SCN nowhere referred to the inclination of the authorities to cancel the regi... [Read more]

GST - Cancellation of registration with retrospective effect - Order travelling beyond the scope of SCN - SCN proposing cancellation of registration under Rule 21(a) on the ground that no business was conducted from the declared place of business – Cancellation of registration retrospectively from the date of registration - Earlier, an SCN on the same ground had led to cancellation which was revoked - Whether the order cancelling registration retrospectively, when the SCN did not propose retrospective cancellation, can be sustained - HELD - The SCN nowhere referred to the inclination of the authorities to cancel the registration with retrospective effect, hence the impugned order travelled beyond the scope and contents of the SCN. For the very same period, the earlier cancellation was restored upon being satisfied with the reasons in the revocation application - In the proceedings for penalty under Section 122, it was observed that the Input Tax Credit availed by the Petitioner was genuine, and the material indicated that the Petitioner may not be a fake supplier, the absence from the place of business being due to proceedings initiated by the lender bank. In such circumstances an opportunity needed to be given to the Petitioner to respond to the SCN in the interest of justice - The impugned order is quashed and set aside and the petitioner is directed to appear with reply and documents - Respondent is directed to adjudicate the SCN afresh on its own merits and the registration of the Petitioner stands revived - The Writ Petition is allowed [Read less]

Service Tax - Exclusion of value of goods from works contract service on the ground that VAT was not paid on the material used - Appellant, an unregistered individual service provider, undertook civil work for companies and received consideration, and SCN was issued on the basis of information received from the Income Tax Department in Form 26AS demanding service tax on the gross amount received - Adjudicating authority, on remand, dropped part of the demand and confirmed the remaining demand with interest and penalties under Sections 77 and 78 of the Finance Act, 1994, which was upheld by the FAA - Appellant contended tha... [Read more]

Service Tax - Exclusion of value of goods from works contract service on the ground that VAT was not paid on the material used - Appellant, an unregistered individual service provider, undertook civil work for companies and received consideration, and SCN was issued on the basis of information received from the Income Tax Department in Form 26AS demanding service tax on the gross amount received - Adjudicating authority, on remand, dropped part of the demand and confirmed the remaining demand with interest and penalties under Sections 77 and 78 of the Finance Act, 1994, which was upheld by the FAA - Appellant contended that the services were rendered along with material and that if the value of material is excluded on actual or presumptive basis, the aggregate value of services in each financial year falls below the threshold for registration and payment of service tax - FAA rejected the contention on the ground that the Appellant provided no evidence of payment of VAT on the material, that no VAT was charged in the invoices even after crossing the threshold under the State VAT law, and that transfer of property in goods was not established - Whether service tax can be charged on the goods component of a works contract merely because VAT was not paid on the goods used - HELD - The undisputed position is that the services rendered were works contracts, and the value of the goods has to be excluded either on actual or on presumptive basis, since service tax can be levied only on the service component. Whether VAT was paid or not paid on the goods is not relevant to determine the service component of a works contract. If VAT was chargeable but not paid, it is for the State Government to take action, and non-payment of VAT cannot justify charging service tax on the goods component - The impugned order is set aside and the appeal is allowed [Read less]

GST - Penalty under Section 129(1)(a) of the CGST Act, 2017 for goods transported after expiry of e-way bill - The vehicle was intercepted about three days after the e-way bills had expired and a notice in FORM GST MOV-09 was issued - Penalty equal to twice the amount of tax was imposed - The Appellant contended that the documents were produced, the vehicle was only about four kilometres short of the destination and there was no evidence of intent to evade tax - Whether penalty under Section 129(1)(a) is not attracted in absence of intent to evade tax - HELD - A taxing statute is to be construed strictly and its intention ... [Read more]

GST - Penalty under Section 129(1)(a) of the CGST Act, 2017 for goods transported after expiry of e-way bill - The vehicle was intercepted about three days after the e-way bills had expired and a notice in FORM GST MOV-09 was issued - Penalty equal to twice the amount of tax was imposed - The Appellant contended that the documents were produced, the vehicle was only about four kilometres short of the destination and there was no evidence of intent to evade tax - Whether penalty under Section 129(1)(a) is not attracted in absence of intent to evade tax - HELD - A taxing statute is to be construed strictly and its intention is gathered from the words used. Section 129(1) does not provide that intent to evade tax is mandatory for invoking the provision or imposing penalty, unlike Section 130 of the Act. Mens rea is an essential element only for criminal offences and is not an essential element for imposing penalty for breach of civil obligations or liabilities - Proceedings under Section 129 are adjudicatory in nature and determine a civil liability. The Circular No. 64 dated 14.09.2018 does not provide that no proceeding under Section 129 be initiated where the e-way bill has expired, and the case of the Appellant does not fall in any of its exceptions - For invoking the of provision of section 129(1) or/and imposing penalty under this section the proof or facts, circumstances or material on record which shows intent to evade tax are not required – Ordered accordingly - Movement of goods after expiry of e-way bill on plea of vehicle breakdown - Rule 138(10) of the CGST Rules, 2017 - Evidentiary value of GPS report, repair bills and FORM GST DRC-03 - The Appellant contended that the e-way bills expired because the vehicle broke down on three occasions and relied on GPS records, vehicle repair bills and a mention of breakdown in FORM GST DRC-03 - Whether the Appellant established a genuine circumstance justifying movement of goods after expiry of the e-way bill - HELD - Documents were produced at the time of inspection and there was no discrepancy in description, quantity, value or names of the parties. The Appellant did not amend or extend the validity of the e-way bill, which under the third proviso to Rule 138(10) may be extended within eight hours from the time of its expiry. The disclaimer in the GPS report was not a correct reason for disbelieving it. However, the GPS report did not pertain to the vehicle involved and was generated after the interception, so it was not relevant - The Tribunal, being the final authority of fact finding, examined the repair bills. Some were estimates and not cash memos, one was a credit memo without signature of an authorised person and one was a simple paper. These bills have no evidentiary value. The breakdown was first mentioned in FORM GST DRC-03 nine days after interception, without mentioning three breakdowns, and no explanation was given for the silence. The Appellant could have obtained the statement of the driver under the RTI Act, 2005 or filed an affidavit of the driver, but did not - The plea of breakdown is not established and the order of the FAA is upheld - The appeal is disallowed [Read less]

Customs - Refund of interest paid on Bill of Entry owing to technical glitch in the ICEGATE portal - Waiver of interest under the Customs (Waiver of Interest) 3rd Order dated 17.04.2023 - Appellant remitted customs duty on time through the bank on the date of filing of the Bill of Entry on 20.04.2023, which was not reflected on the Customs portal owing to technical glitches, and was forced to pay interest - The waiver order covered B/E filed up to 13.04.2023 and an Advisory was issued on 27.07.2023 on the system inability - Refund of the interest was rejected by the lower authorities on the sole ground that the B/E was fil... [Read more]

Customs - Refund of interest paid on Bill of Entry owing to technical glitch in the ICEGATE portal - Waiver of interest under the Customs (Waiver of Interest) 3rd Order dated 17.04.2023 - Appellant remitted customs duty on time through the bank on the date of filing of the Bill of Entry on 20.04.2023, which was not reflected on the Customs portal owing to technical glitches, and was forced to pay interest - The waiver order covered B/E filed up to 13.04.2023 and an Advisory was issued on 27.07.2023 on the system inability - Refund of the interest was rejected by the lower authorities on the sole ground that the B/E was filed after the cut-off date of 13.04.2023 mentioned in the waiver order - Whether the Appellant is eligible for waiver and refund of interest on a Bill of Entry filed after the cut-off date mentioned in the waiver order - HELD - The issue is no longer res integra, as the Hon’ble High Court at Rajasthan considered the very same issue and held that, as per the Advisory, the date of removal of system inability in context of the waiver order is the date of issue of the Advisory, which shows that the technical glitches existed till 27.07.2023. No interest is demandable for delay in crediting to the Government account where the delay is due to technical glitches. The rejection order was held inconsistent with the conjoint reading of Section 47 of the Customs Act, 1962, the waiver order, the Advisory and the efforts of the taxpayer to make payment successfully on the date of filing of the B/E. Since the only ground on which the refund was rejected is the date mentioned in the waiver order, the decision of the High Court squarely applies - The impugned order is set aside, the appeal is allowed [Read less]

Service Tax - Eligibility to CENVAT credit of input services used for both taxable and exempted output services - Rule 6(5) of CENVAT Credit Rules, 2004 - Period from 16.06.2005 to 01.06.2007 - Respondent, engaged in development and maintenance of an IT Park, was registered for Management, Maintenance and Repair Service (MMR) and Renting of Immovable Property Service (RIP). It did not maintain a bifurcation of credit and availed the credit in toto under Rule 6(5). SCN proposed to disallow and recover the credit with interest and penalty on the ground that the credit related to RIP, which was exempt for the period. The Trib... [Read more]

Service Tax - Eligibility to CENVAT credit of input services used for both taxable and exempted output services - Rule 6(5) of CENVAT Credit Rules, 2004 - Period from 16.06.2005 to 01.06.2007 - Respondent, engaged in development and maintenance of an IT Park, was registered for Management, Maintenance and Repair Service (MMR) and Renting of Immovable Property Service (RIP). It did not maintain a bifurcation of credit and availed the credit in toto under Rule 6(5). SCN proposed to disallow and recover the credit with interest and penalty on the ground that the credit related to RIP, which was exempt for the period. The Tribunal allowed the Respondent's appeal against the order disallowing the credit - Whether the Respondent was entitled to credit of the whole of the service tax under Rule 6(5) when it was also engaged in exempted services - HELD - Rule 6(5) is a code by itself and allows credit of the whole of the service tax paid on the specified taxable services, including MMR. Credit is available unconditionally, barring a situation where the services have been used exclusively in relation to provision of exempted services. The RIP services were admittedly exempt for the period. However, the credit was used for all output services including MMR and RIP, and not exclusively for RIP. As the Respondent is engaged in rendition of taxable services as well, the condition of exclusivity is not attracted - The High Court concurred with the Tribunal and answered the question in favour of the Respondent-assessee - Eligibility to CENVAT credit of input services used for Renting of Immovable Property Service - Reliance on Board Circular - Period post 01.06.2007 - Respondent availed credit of input services for the output service of renting of immovable property, which became taxable post 01.06.2007. The credit was denied on the basis of a Board Circular, which clarified that credit cannot be taken as immovable property is subject neither to Central Excise duty nor to Service Tax. The Tribunal rejected the reliance on the Circular and allowed the credit - Whether the Tribunal erred in treating the Board Circular as erroneous and irrelevant for the period post 01.06.2007 - HELD - The Circular erroneously focussed on the eligibility of input services for immovable property, whereas it should have addressed their eligibility for the output service of Renting of Immovable Property. The clarification has therefore to be disregarded and is in any case not binding on the Tribunal. What is required to be seen is whether the input services have the necessary nexus with the output service and fall within the definition of input services in Rule 2(l) of the CENVAT Credit Rules, 2004, as it existed during that period - The High Court concurred with the Tribunal and answered the question in favour of the Respondent - Liability to service tax on fit-out charges forming part of consideration for renting of immovable property - Payment of VAT on fit-outs - Respondent, engaged in management of an IT Park, provided fit-outs such as work stations, cabins and meeting rooms along with the office space rented to its clients under lease agreements. The Respondent contended that VAT had been paid on the fit-outs and service tax was therefore not payable. The authority held that the fit-outs form part of the value of the immovable property rented out. The Tribunal reversed the order on the ground that the fit-outs were movable items on which VAT was remitted, and that VAT and service tax are exclusive - Whether the erroneous payment of sales tax on fit-out charges would immune the Respondent from liability to service tax - HELD - There are both factual and legal errors in the conclusion of the Tribunal. On facts, the fit-outs did not relate only to movables but also to other infrastructure such as work stations, which formed part of the lease agreements, so a portion of the consideration has necessarily to be earmarked to them. On law, mere payment of VAT does not lead to the conclusion that no service tax is payable. The Hon'ble Supreme Court has held that service tax and VAT assessments are both possible in respect of the same transaction, if the foundational requirements for such assessments are justified on the facts. Further, no proof was produced that VAT had been paid on the fit-outs - The question is answered in favour of the Appellant-Department and the Tribunal's order on this issue is reversed. [Read less]

GST – Validity of Paragraph 4.6 of the Circular No. 197/09/2023 GST dated 17.07.2023, Refund of interest paid under Rule 96A of the CGST Rules, 2017 on delayed realisation of export proceeds where the tax so paid is refunded - Petitioner could not realise the export consideration in convertible foreign exchange within one year and deposited tax with interest under Section 50 as required by Rule 96A(1)(b) - When the consideration was realised later, the refund of tax was allowed but the refund of interest was rejected - Appellate Authority affirmed the rejection relying on paragraph 4.6 of the Circular dated 17.07.2023, w... [Read more]

GST – Validity of Paragraph 4.6 of the Circular No. 197/09/2023 GST dated 17.07.2023, Refund of interest paid under Rule 96A of the CGST Rules, 2017 on delayed realisation of export proceeds where the tax so paid is refunded - Petitioner could not realise the export consideration in convertible foreign exchange within one year and deposited tax with interest under Section 50 as required by Rule 96A(1)(b) - When the consideration was realised later, the refund of tax was allowed but the refund of interest was rejected - Appellate Authority affirmed the rejection relying on paragraph 4.6 of the Circular dated 17.07.2023, which provides that no refund of interest paid in compliance of Rule 96A(1) is admissible - Whether interest paid under Rule 96A can be retained by the Revenue solely on the strength of paragraph 4.6 of the Circular after the tax deposited has been refunded upon subsequent realisation of export proceeds - HELD - Section 54(1) expressly contemplates refund not only of tax but also of interest paid on such tax and any other amount paid. Rule 96A requires payment of tax with interest on failure to realise proceeds, but does not provide the consequence where proceeds are realised later and the tax is refunded, and does not provide that the interest shall be retained, the restriction being found only in paragraph 4.6 of the Circular. Having accepted subsequent realisation and refunded the tax, the Revenue cannot justify retention of interest merely by relying on the Circular in the absence of independent statutory basis. A Circular may clarify the manner of administering a provision but cannot override or alter the statute - Interest is compensatory and ordinarily follows the principal amount, and the contention that subsequent realisation cannot undo the default is not accepted – Further, the Rule 96B operates in a different field of recovery of refund already granted on export of goods and its silence on interest cannot be imported into Rule 96A or restrict Section 54(1) - Paragraph 4.6 of the Circular is declared bad in law and quashed to the extent that it denies refund of interest paid under Rule 96A(1) where the tax is subsequently refunded upon realisation of export proceeds - The order of the Appellate Authority rejecting refund of interest is set aside, the Respondents are directed to refund the interest corresponding to the tax already refunded - The writ petition is allowed. [Read less]

Central Excise - Denial of Cenvat Credit on the allegation of receipt of invoices without goods from first stage and second stage dealers - Reliance on statements recorded during investigation without following Section 9D of Central Excise Act, 1944 – Appellant availed Cenvat Credit on invoices issued by two second stage dealers. On the basis of an investigation, it was alleged that the dealers were non-existent and had issued fake invoices without supplying goods - Whether Cenvat Credit can be denied to the Appellant on the basis of statements of the dealers, recorded during investigation, when the procedure under Secti... [Read more]

Central Excise - Denial of Cenvat Credit on the allegation of receipt of invoices without goods from first stage and second stage dealers - Reliance on statements recorded during investigation without following Section 9D of Central Excise Act, 1944 – Appellant availed Cenvat Credit on invoices issued by two second stage dealers. On the basis of an investigation, it was alleged that the dealers were non-existent and had issued fake invoices without supplying goods - Whether Cenvat Credit can be denied to the Appellant on the basis of statements of the dealers, recorded during investigation, when the procedure under Section 9D was not followed and no other evidence was produced to show that the goods were not received - HELD - The Appellant is a manufacturer of dutiable goods paying duty on its finished goods. If the allegation is that the inputs were not received, the investigation could not find out from where the inputs used for manufacture of the finished goods were procured. No investigation was conducted with the transporters who could have brought out from the records whether the goods were transported or not - The allegation that the first stage and second stage dealers were non-existent is controverted by the SCN itself, as the dealers appeared before the investigating team and their statements were recorded. The only evidence being the statements of the dealers that they had not supplied goods and had issued fake invoices, the provisions of Section 9D of Central Excise Act were required to be followed to rely on them. As that was not done, the statements recorded during investigation are not reliable. The Revenue produced no other evidence to allege that the Appellant had availed Cenvat Credit without receiving the goods. The impugned proceedings are therefore not sustainable against the Appellant - The impugned order is set aside and the appeal is allowed [Read less]

GST – Maharashtra AAR - Taxability of maintenance services provided by a promoter under the Maharashtra Ownership Flats Act before formation of a co-operative housing society, company or resident welfare association - Applicant, a developer, maintained the building by paying for common area electricity, housekeeping, security, garden, gym and other services without a formal maintenance agreement with flat owners - Whether maintenance provided by the promoter as a statutory duty is a taxable supply under Section 7 of the CGST Act, 2017 - HELD - GST is a supply-based tax, and whether an activity is mandated by law is irrel... [Read more]

GST – Maharashtra AAR - Taxability of maintenance services provided by a promoter under the Maharashtra Ownership Flats Act before formation of a co-operative housing society, company or resident welfare association - Applicant, a developer, maintained the building by paying for common area electricity, housekeeping, security, garden, gym and other services without a formal maintenance agreement with flat owners - Whether maintenance provided by the promoter as a statutory duty is a taxable supply under Section 7 of the CGST Act, 2017 - HELD - GST is a supply-based tax, and whether an activity is mandated by law is irrelevant if it falls within the definition of supply, which requires supply of goods or services, a consideration and the course or furtherance of business. Maintenance of common areas, utilities and facilities is a service supplied in the course of business, and the charges collected from flat purchasers constitute consideration under Section 2(31) - The decision rendered in the context of taxable service under the Finance Act, 1994, a framework that no longer exists, and under GST all goods and services are taxable unless specifically exempted, with no exemption for activities performed under statutory obligation - The Maharashtra Ownership Flats Act governs civil obligations while GST governs taxability of supply, and Schedule III provides no exemption for promoters. The exemption under Entry 77 of Notification No. 12/2017-Central Tax (Rate) is not available as the Applicant is a promoter and not a resident welfare association or society - Maintenance services provided by the Applicant constitute supply under Section 7 and are taxable even though undertaken pursuant to statutory obligation – Ordered accordingly - Levy of GST on advance maintenance collected for eighteen months at the time of agreement for sale - Applicant collected advance maintenance from flat purchasers along with GST and contended that no tax could be levied since it was discharging a statutory obligation before formation of a society or association - Whether GST can be levied on the advance maintenance collected from flat owners - HELD - The advance maintenance is not a refundable deposit but an advance against identifiable future services such as security, housekeeping, electricity for common areas and repairs, and is appropriated periodically for maintenance. It is therefore advance consideration for supply of maintenance services, taxable under Section 13 of the CGST Act at the time of receipt - The Applicant is liable to charge GST on the advance maintenance collected - Levy of GST on monthly maintenance charges collected by the promoter before formation of a co-operative housing society, company or resident welfare association - Whether GST can be levied and collected on monthly maintenance charges paid by flat owners - HELD - Monthly charges are recurring consideration for maintenance services supplied in the course of business. The absence of a society, company or association and the statutory nature of the duty under the Maharashtra Ownership Flats Act do not affect taxability. The principles laid down under the service tax regime cannot be applied to exempt such services under GST - Monthly maintenance charges collected by the promoter constitute consideration for supply of services and are liable to GST. [Read less]

GST – Maharashtra AAR - Reversal of Input Tax Credit on goods damaged by flood under Section 17(5)(h) of the CGST Act, 2017, Scope of expression "goods lost" in Section 17(5)(h) - Stock stored in the warehouse was partly damaged by flood water, resulting in broken terminals, corrosion, spoiled packing, loss of supplier warranty and reduction in market value, though the goods remained saleable as batteries and cells at reduced price - Applicant received insurance compensation assessed without considering tax and contended that Input Tax Credit reversal is required only where goods are lost, stolen, destroyed, written off ... [Read more]

GST – Maharashtra AAR - Reversal of Input Tax Credit on goods damaged by flood under Section 17(5)(h) of the CGST Act, 2017, Scope of expression "goods lost" in Section 17(5)(h) - Stock stored in the warehouse was partly damaged by flood water, resulting in broken terminals, corrosion, spoiled packing, loss of supplier warranty and reduction in market value, though the goods remained saleable as batteries and cells at reduced price - Applicant received insurance compensation assessed without considering tax and contended that Input Tax Credit reversal is required only where goods are lost, stolen, destroyed, written off or gifted, and that a mere write-down of value is not covered - Whether the Applicant is obligated to reverse Input Tax Credit on the damaged goods to the extent of reduction in value - HELD - The expression ‘goods lost’ is not defined in the CGST Act and must be understood in its ordinary commercial sense. Goods may be regarded as lost when they suffer damage or impairment such that their intended commercial value and utility are substantially diminished by an unforeseen event such as flood. The provision is not restricted to total annihilation or conversion into scrap; the term written off in commercial and accounting practice covers diminution in value recognised due to damage. This was not a normal market-driven price reduction or obsolescence but a specific identifiable loss for which insurance compensation was claimed and received - Legislative intent behind Section 17(5)(h) intends to deny ITC where goods do not ultimately contribute fully to taxable outward supply due to loss or destruction. Allowing ITC on goods that have lost substantial value due to flood would defeat the legislative intent of linking ITC to effective use in business. Flood is an extraneous and abnormal event, and losses arising therefrom cannot be equated with normal business depreciation or market-driven price reduction – Further, the applicant has effectively recovered the value of damaged goods through insurance. Allowing retention of full ITC would result in unjust enrichment, which is not the intent of GST law - Applicant is required to reverse Input Tax Credit attributable to the damaged goods under Section 17(5)(h) to the extent of reduction in value – Ordered accordingly - Liability to GST on insurance compensation received for damaged stock - Applicant contended that the insurance claim amount is an actionable claim excluded under Entry 6 of Schedule III and is a pure financial transaction of claim settlement - Whether GST is payable on the insurance claim amount received - HELD - Insurance claim settlement represents monetary compensation for loss/damage to goods. The receipt of an insurance claim does not fall under the definition of "supply" as defined in Section 7 of the CGST Act - Quantum and timing of reversal of Input Tax Credit under Section 17(5) of the CGST Act, 2017 - Whether the reversal is to be made in the period of claim settlement or in another period - HELD - The eventuality in clause (h) arises usually after ITC has already been availed, and reversal is required in the return for the month in which the eventuality arises. Where the event happens over a period of time or its time is not known, reversal is required when the event is recognised or becomes known to the taxpayer. Documentation such as a damage assessment report prepared for submission to the insurer establishes that the event is known - ITC attributable to the value of inputs damaged, to the extent of reduction in value, is required to be reversed in the tax period in which such ineligibility arises, being the period in which the event of loss is known or recognised in the books of account, whichever is earlier. [Read less]

GST - Maharashtra AAR - Section 2(68) of CGST Act, 2017 - Classification of body building activity on chassis supplied by the principal, Job Work or Composite supply - Applicant carried out fabrication of load bodies, tippers and special purpose bodies using its own materials, mounted them on chassis owned and supplied by customers and charged a lump-sum consideration - Whether body building activity on the chassis owned and provided by the principal qualifies as job work and supply of services falling under SAC 998881 - HELD - The activity can be called 'job work' only in cases where the activity is confined to treatment ... [Read more]

GST - Maharashtra AAR - Section 2(68) of CGST Act, 2017 - Classification of body building activity on chassis supplied by the principal, Job Work or Composite supply - Applicant carried out fabrication of load bodies, tippers and special purpose bodies using its own materials, mounted them on chassis owned and supplied by customers and charged a lump-sum consideration - Whether body building activity on the chassis owned and provided by the principal qualifies as job work and supply of services falling under SAC 998881 - HELD - The activity can be called 'job work' only in cases where the activity is confined to treatment or processing of goods belonging to another person - In the present case, the Applicant contributes substantial goods of its own and brings into existence a new and distinct commodity, namely a motor vehicle body, and therefore the activity clearly transcends the scope of job work and falls within the ambit of supply of goods. The statutory fiction of job work under Section 2(68) of the CGST Act, 2017 is not attracted where the activity results in the emergence of a new commodity distinct from the goods supplied by the principal - The Applicant procured steel, sheets, fittings, paint and other materials on its own account, undertook design, fabrication, assembly, mounting and finishing, and brought into existence a new and distinct commodity, with the chassis merely serving as a base. The purchase orders specified supply of body assemblies in units at a fixed price per finished unit, with inspection, rejection and replacement risk borne by the supplier, and contained no job work clause. Clause 3 of Schedule II applies only to pure processing activity that does not result in a new and distinct commodity - The activity is not job work and is not a supply of services under SAC 998881 - The Applicant's activity constitutes a composite supply comprising the supply motor vehicle body independently classifiable as goods under HSN 8707 and mounting of the same on chassis and incidental finishing activities. Therefore, in terms of Section 8(a) of the CGST Act, 2017, the entire composite supply is required to be treated as a supply of motor vehicle body which is principal supply and determine tax liability based on the principal supply. Consequently, as the principal supply is the motor vehicle body, the entire transaction is taxable as a supply of goods under HSN 8707 at the rate of 28% GST – Ordered accordingly - Applicability of CBIC Circular dated 09.08.2018 and Notification No. 26/2019-Central Tax (Rate) to body building on customer-owned chassis - Whether the Circular and the Notification convert the Applicant's activity into a supply of services taxable under Serial No. 26 of Notification No. 11/2017-Central Tax (Rate) - HELD - The Notification operates in the field of classification of services and presupposes that the activity is otherwise a supply of service, and it cannot expand the statutory definition of job work under Section 2(68) or dilute Section 8 relating to composite supply. Its applicability depends on the substance of the transaction, including the extent of goods supplied by the body builder, the emergence of a new commercially distinct product, the dominant intention of the parties and the character of the supply. The Circular concerns transactions where the object of the contract is fabrication of a bus body, whereas here the object of the contract is the supply of vehicle bodies - Reliance on the Circular and the Notification is misplaced and they do not apply to the facts of the case - Composite supply of vehicle bodies with mounting on customer-supplied chassis, classification under Heading 8707 and applicable rate - Applicant supplied vehicle bodies fabricated with its own materials, mounted on the chassis and finished, for a consolidated lump-sum consideration - Whether the supply is a composite supply - HELD - The fabrication, assembly and finishing activities cannot be rendered independently of the goods, and the goods cannot be supplied without such processes, so that the supplies are naturally bundled in a single continuous activity culminating in delivery of a finished body mounted on the chassis, constituting a composite supply under Section 2(30). The predominant element under Section 2(90) is the vehicle body, while fabrication, fitment and documentation are ancillary and incidental. Under Section 8(a), tax liability is determined as that of the principal supply, which is classifiable under Heading 8707 as bodies for motor vehicles of headings 8701 to 8705 - The supply is a composite supply of vehicle bodies and incidental services with the principal supply being vehicle bodies, to be regarded as supply of goods under Heading 8707 attracting 28% GST and with effect from 22.09.2025, 18% GST. [Read less]

GST – Maharashtra AAR - Nature of activity of preparing ready-mix concrete from inputs supplied free of cost by a registered recipient, Scope of Job work under Section 2(68) of the CGST Act, 2017 - Applicant set up a ready-mix concrete batching plant at the recipient's project site and carried out weighing, batching, mixing, chemical treatment and primary transportation – The inputs supplied free of cost by the recipient, ownership of which never passed to the Applicant, while the Applicant bore only operational expenses such as power, fuel, labour and maintenance - Work orders and invoices described the activity as mi... [Read more]

GST – Maharashtra AAR - Nature of activity of preparing ready-mix concrete from inputs supplied free of cost by a registered recipient, Scope of Job work under Section 2(68) of the CGST Act, 2017 - Applicant set up a ready-mix concrete batching plant at the recipient's project site and carried out weighing, batching, mixing, chemical treatment and primary transportation – The inputs supplied free of cost by the recipient, ownership of which never passed to the Applicant, while the Applicant bore only operational expenses such as power, fuel, labour and maintenance - Work orders and invoices described the activity as mixing and primary transportation with rates stated to be without material - Whether the activity is a supply of goods or a supply of services and whether it qualifies as job work under Section 2(68) of the CGST Act, 2017 - HELD - Under Section 7(1A) read with Para 3 of Schedule II, any treatment or process applied to another person's goods is a supply of services, and the taxable event under GST is supply and not manufacture. Even if a distinct product emerges, the statutory deeming fiction prevails and the reliance on excise jurisprudence only establishes emergence of a new product without altering the classification of the activity as a service - Job work under Section 2(68) requires a treatment or process, on goods belonging to another person, who is a registered person. All three ingredients were satisfied since the recipient is a registered person, ownership of the inputs and resultant concrete remained with it, and substantial processing was undertaken. Following the Circular dated 26.03.2018, use of the job worker's own consumables such as power and fuel does not take the activity outside job work, and job work may or may not amount to manufacture - The documents on record showing rates without material and invoices only for mixing and primary transportation sufficiently addressed the objection of the jurisdictional officer - Applicant held not to be supplying ready-mix concrete as goods, and the activity held to be a supply of service qualifying as job work – Ordered accordingly - Classification of job work service of preparing ready-mix concrete on inputs owned by a registered recipient under Heading 9988 and SAC 998853 - Applicant claimed classification as other non-metallic mineral product manufacturing services within manufacturing services on physical inputs owned by others - Whether the activity is classifiable under Heading 9988 and, more specifically, under SAC 998853 - HELD - Heading 9988 covers services performed on physical inputs owned by units other than the service provider, characterised as outsourced portions of a manufacturing process or a complete outsourced manufacturing process, where the output is not owned by the service provider and the value is based on the service fee and not on the value of goods manufactured. This description exactly matches the Applicant's arrangement. SAC 998853 expressly includes concrete, cement and plaster article manufacturing services and other non-metallic mineral product manufacturing services, and ready-mix concrete being a form of concrete produced by a specialised automated process is directly relatable to it. No separate exclusion or more specific competing entry applies - Activity held classifiable under Heading 9988 and specifically under SAC 998853 as other non-metallic mineral product manufacturing services - Rate of tax on job work services relating to ready-mix concrete under Sl. No. 26(id) and Sl. No. 26(iv) of Notification No. 11/2017-Central Tax (Rate) and effect of substitution by Notification No. 15/2025-Central Tax (Rate) - Rate of tax for the periods before and after the substitution of Sl. No. 26 with effect from 22.09.2025 - HELD - As clarified by Circular dated 22.11.2019, there is a clear demarcation between the two entries, with Sl. No. 26(id) covering only job work as defined in Section 2(68) undertaken on goods belonging to another registered person, and Sl. No. 26(iv) being a residual entry excluding services covered by item (id) and therefore covering services on goods owned by persons other than registered persons. Since the recipient is a registered person and the activity qualifies as job work, the activity falls under Sl. No. 26(id) and recourse to the residual entry is not permissible. As the question concerns an ongoing continuous supply and the rate changed during pendency of the proceedings, the ruling is required to reflect the rate for both periods - GST is payable at 12% up to 21.09.2025 under Sl. No. 26(id) and at 18% from 22.09.2025 under Sl. No. 26 as substituted by Notification No. 15/2025-Central Tax (Rate). [Read less]

GST - Maharashtra AAR - Taxability of unconditional donations received by a charitable trust imparting yoga knowledge free of cost - Applicant, a public charitable trust registered under Section 12AA of the Income-tax Act, 1961, imparted yogic knowledge free of cost through volunteers at its centres and received donations from some of the participants - Whether unconditional donations received by the applicant attract GST - HELD - Supply under Section 7(1)(a) of the CGST Act, 2017 requires a supply of goods or services made for a consideration, and consideration under Section 2(31) requires a direct and clear nexus between... [Read more]

GST - Maharashtra AAR - Taxability of unconditional donations received by a charitable trust imparting yoga knowledge free of cost - Applicant, a public charitable trust registered under Section 12AA of the Income-tax Act, 1961, imparted yogic knowledge free of cost through volunteers at its centres and received donations from some of the participants - Whether unconditional donations received by the applicant attract GST - HELD - Supply under Section 7(1)(a) of the CGST Act, 2017 requires a supply of goods or services made for a consideration, and consideration under Section 2(31) requires a direct and clear nexus between the payment and a supply. A purely voluntary donation where no benefit or service is provided to the donor is not taxable, whereas a donation linked to a service, facility or benefit extended to the donor is treated as consideration. Taxability depends on the substance of the transaction and not on the label assigned to it - In the present case, yoga knowledge is imparted free of cost through volunteers, the donations are voluntary and unconditional, and no obligation exists on the trust to provide any identifiable service to the donor - Such voluntary and unconditional donations do not qualify as consideration and do not fall within the scope of supply, hence GST is not leviable, though any amount described as donation but linked directly or indirectly to participation, entry, training or any identifiable benefit would be liable to GST – Ordered accordingly - Exemption under Entry No. 1 of Notification No. 12/2017-Central Tax (Rate) for fees charged for structured yoga training, examination and certification courses - Applicant, a trust registered under Section 12AA of the Income-tax Act, 1961 and accredited by the Yoga Certification Board under the Ministry of AYUSH, conducted curriculum-based courses, examinations and certification for fees, which enabled students to secure employment as yoga trainers - Whether the fees for such training, examination and certification are exempt as charitable activities - HELD - Entry No. 1 of Notification No. 12/2017-Central Tax (Rate) requires both registration under Section 12AA or 12AB of Income Tax Act and that the service qualify as a charitable activity as defined in the notification. Mere registration as a charitable trust does not grant exemption. The phrase ‘advancement of yoga’ is intended to cover activities such as free yoga camps, public awareness programmes, spiritual yoga dissemination and non-commercial yoga promotion. Structured, curriculum-based courses for a prescribed fee, culminating in examination, certification and a professional qualification, assume the character of a formal training or coaching service provided for consideration, which remains commercial for GST purposes even when carried out by a charitable trust. The consideration charged is directly linked to the services provided - Activity held to be a supply of training or coaching services for consideration, exemption under Entry No. 1 is not available and the services are liable to GST - Exemption for supply of certified yoga instructors to hospitals on contractual terms - Applicant supplied AYUSH certified yoga instructors to hospitals under memoranda of understanding on a continuous basis for an agreed monthly consideration and claimed exemption under Entry No. 1 of Notification No. 12/2017-Central Tax (Rate) as an entity registered under Section 12AA engaged in advancement of yoga - Whether such supply of instructors is exempt as a charitable activity - HELD - The arrangement involves deployment of trained personnel under contractual arrangements for periodic consideration in the course of an organised activity, and satisfies all elements of supply of services under Section 7(1)(a). In substance, it is provision of trained manpower, classifiable as support services under SAC 9985 in the nature of manpower supply. The exemption is conditional and depends on the nature of the service qualifying as a charitable activity and not merely on the status of the service provider. The trust is not directly providing free public health services to beneficiaries, the hospitals pay consideration, and the service is commercially structured through memoranda of understanding - The mere fact that the services relate to health or wellness does not alter the taxable nature of the transaction in the absence of a specific exemption - Services held not to be charitable activities, exemption held not available and the services are liable to GST - Exemption under Entry No. 3 of Notification No. 12/2017-Central Tax (Rate) for pure services to a local authority in relation to public health function under Article 243W of the Constitution - Applicant provided trained yoga instructors on an hourly basis to a Municipal Corporation for a public programme of training citizens in yoga to enable them to practise preventive health care, without supplying any goods or materials - Whether the services qualify as pure services provided to a local authority in relation to a function entrusted to a Municipality under Article 243W - HELD - Entry No. 3 requires three cumulative conditions, namely that the service be a pure service without supply of goods, that it be provided to the Government, a local authority or a governmental authority, and that it relate to a function entrusted to a Municipality under Article 243W read with the Twelfth Schedule - The Applicant supplied only instructors without any goods, and the consideration pertained solely to the service component, so the pure service condition stands satisfied. A Municipal Corporation is a local authority under Section 2(69) of the CGST Act - Though the arrangement bears characteristics of manpower supply, exemption notifications must be interpreted strictly having regard to the true nature and substance of the transaction. The instructors are the means through which the Municipal Corporation implements a public health and wellness programme in discharge of its constitutional functions. The dominant objective is execution of a civic health initiative and not commercial manpower supply, which has a direct nexus with public health falling within the Twelfth Schedule - All conditions of Entry No. 3 held fulfilled and the services held exempt as pure services provided to a local authority. [Read less]

GST - Maharashtra AAR - Taxability of supply of laboratory testing services rendered by a State agricultural university for fees - Supply in the course or furtherance of business under Section 7(1)(a) of the CGST Act, 2017 - Applicant, a statutory agricultural university substantially funded by the State Government, carried out soil, water, seed, plant pathology and feed testing and product testing for students, farmers, government departments, private companies and the public for nominal fees - Whether the laboratory testing services amount to supply for consideration in the course or furtherance of business - HELD - The ... [Read more]

GST - Maharashtra AAR - Taxability of supply of laboratory testing services rendered by a State agricultural university for fees - Supply in the course or furtherance of business under Section 7(1)(a) of the CGST Act, 2017 - Applicant, a statutory agricultural university substantially funded by the State Government, carried out soil, water, seed, plant pathology and feed testing and product testing for students, farmers, government departments, private companies and the public for nominal fees - Whether the laboratory testing services amount to supply for consideration in the course or furtherance of business - HELD - The definition of business under Section 2(17) is inclusive, covers any trade, commerce, profession, vocation or similar activity whether or not for pecuniary benefit, and also covers activities incidental or ancillary thereto, irrespective of volume, frequency, continuity or regularity. The services of testing and providing test reports are therefore covered by the definition of business. The fees charged are monetary consideration for the services rendered - Both the criteria of business and consideration were held to be met and the laboratory testing services held to be a supply of services under Section 7(1) – Ordered accordingly - Exemption under Entry Nos. 4 and 5 of Notification No. 12/2017-Central Tax (Rate) for services by a governmental authority in relation to functions entrusted to a Municipality or Panchayat - Applicant claimed that laboratory testing for private companies, farmers and government departments fell within agriculture including agricultural extension under the Eleventh Schedule and education under the Twelfth Schedule - Whether the laboratory testing services are in relation to functions entrusted to a Panchayat or Municipality under Article 243G or Article 243W of the Constitution - HELD - Exemption under these entries requires that the services be provided by a governmental authority and that they be in relation to a function entrusted to a Municipality or Panchayat, and both conditions must be satisfied simultaneously. Agriculture in the Eleventh Schedule covers activities related to cultivation, and laboratory testing services given to private companies or other recipients for fees are not covered by it - Agricultural extension is in the nature of training and education to farmers, and laboratory testing cannot be categorised as agricultural extension. Since the second condition is not met, it is unnecessary to examine whether the Applicant is a governmental authority - Services held not covered by Entry Nos. 4 and 5 and not exempt - Exemption under Entry 54 of Notification No. 12/2017-Central Tax (Rate) for agricultural operations and agricultural extension services and classification and rate of laboratory testing services - Applicant claimed exemption for testing directly related to production of agricultural produce and for agricultural extension services - Whether the laboratory testing services are classifiable under SAC 9986 and covered by Entry 54(a) or 54(f), and if not, the applicable classification and rate - HELD - Entry 54(a) covers services classifiable under SAC 9986 by way of agricultural operations directly related to production of agricultural produce. The firms whose products were tested are not carrying out cultivation, while testing for students and research scholars is part of academic curriculum and not directly related to production of agricultural produce - The tests of products did not lead directly to production of agricultural produce, being for commercial purposes. Agricultural extension is defined as application of scientific research and knowledge to agricultural practices through farmer education or training, and laboratory testing does not provide such education or training. The services are akin to technical testing and analysis of chemical and biological properties of materials such as soil, water and food, and are appropriately classifiable under SAC 998346, and the exemption available only to services under Heading 9986 is not available - Services held classifiable under SAC 998346 as technical testing and analysis services and liable to 18% GST - Exemption under Entry 66(a) of Notification No. 12/2017-Central Tax (Rate) for laboratory testing charges collected by a university from its students, research scholars and faculty - Applicant, a state university recognised by the University Grants Commission, conducted undergraduate, postgraduate and doctoral programmes in agriculture and related disciplines and collected laboratory testing charges from students, research scholars and faculty as part of academic curriculum and research activities - Whether the Applicant is an educational institution and whether such charges are exempt - HELD - An educational institution under the notification includes an institution providing education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force. The Applicant offers degree programmes recognised by law and is a public university with recognition, and therefore qualifies as an educational institution. Entry 66(a) exempts services provided by an educational institution to its students, faculty and staff - Laboratory testing charges collected from students, research scholars and faculty members as part of academic curriculum and research activities held exempt under Entry 66(a). [Read less]

GST – Maharashtra AAR - Eligibility to concessional rate of 5% on marine engines and their parts supplied as parts of fishing vessels of heading 8902, Sl. No. 252 of Schedule I of Notification No. 1/2017-Central Tax (Rate) - Applicant proposed to import marine propulsion engines of heading 8407 and 8408 and their spare parts of heading 8409 and to sell them to fishermen for use in fishing boats - Whether marine engines and their parts attract the concessional rate of 5% when supplied as parts of fishing vessels of heading 8902 - HELD - The word part is not defined in GST law, so its meaning was examined as understood in ... [Read more]

GST – Maharashtra AAR - Eligibility to concessional rate of 5% on marine engines and their parts supplied as parts of fishing vessels of heading 8902, Sl. No. 252 of Schedule I of Notification No. 1/2017-Central Tax (Rate) - Applicant proposed to import marine propulsion engines of heading 8407 and 8408 and their spare parts of heading 8409 and to sell them to fishermen for use in fishing boats - Whether marine engines and their parts attract the concessional rate of 5% when supplied as parts of fishing vessels of heading 8902 - HELD - The word part is not defined in GST law, so its meaning was examined as understood in common parlance through dictionary definitions and judicial decisions. A marine engine is an essential part of a ship or vessel without which the vessel would not be complete and cannot sail, as it is essential for main propulsion and for providing auxiliary power. Sl. No. 252 covers parts of goods of heading 8902 falling under any chapter. Hence any goods, irrespective of classification, must satisfy the condition of being a part of a vessel of the specified headings - Circular No. 52/26/2018-GST also clarifies that marine engines supplied for fishing vessels attract 5% GST by virtue of Sl. No. 252. The concessional rate is conditional upon use as a part of such vessels and is not available if the goods are used in goods other than those of the specified headings. A supplier must demonstrably know and prove the end-use at the time of supply. Mere possibility of use or a buyer's declaration is insufficient unless supported by verifiable documentation - GST at 5% is applicable only when marine engines or their parts are supplied as parts of fishing vessels of heading 8902 and the applicant establishes such end-use through verifiable documentary evidence. In absence of such evidence, the normal rate applicable to heading 8407, 8408 and 8409 remains applicable – Ordered accordingly - Eligibility to concessional rate of 5% on marine engines and their parts supplied for vessels used for defence, patrolling, flood relief and rescue operations under Sl. No. 252 of Schedule I of Notification No. 1/2017-Central Tax (Rate) - Whether 5% GST can be charged on marine engines and their parts supplied for use in vessels of heading 8901, 8904, 8905, 8906 and 8907 for defence, patrolling, flood relief and rescue operations - HELD - Entry at Sl. No. 252 covers parts of goods of the specified headings falling under any chapter. Any goods, irrespective of classification, must therefore satisfy the condition of being a part of a vessel of the said headings. Marine engines are essential parts of a ship or vessel as a vessel cannot sail without them - Engines of heading 8407 and 8408 and their parts therefore attract 5% GST when supplied as parts of vessels of heading 8901, 8904, 8905, 8906 and 8907. The benefit is not available if the goods are used in goods other than those of the specified headings. The concessional rate is conditional upon proof of end-use. Mere possibility of use or a buyer's declaration is insufficient unless supported by verifiable documentation - GST at 5% is applicable only when the marine engines or their parts are supplied as parts of vessels used for defence, patrolling, flood relief or rescue operations of heading 8901, 8904, 8905, 8906 and 8907 and the applicant adequately establishes such end-use through verifiable documentary evidence. In absence of verification or clear end-use evidence, the normal rate applicable to heading 8407, 8408 and 8409 remains applicable. [Read less]

GST – Maharashtra AAR - Liability to pay GST on transfer of reward goods against redemption of reward points under a dealer incentive scheme - Applicant launched a scheme under which dealers and retailers earn reward points on purchases and redeem them through an app for goods such as mobile, refrigerator and television - The Applicant purchases these goods from suppliers and transfers them under delivery challan without issuing a tax invoice or realising any monetary consideration - Whether the Applicant is liable to discharge GST on supply of reward goods to dealers and retailers against redemption of points under the ... [Read more]

GST – Maharashtra AAR - Liability to pay GST on transfer of reward goods against redemption of reward points under a dealer incentive scheme - Applicant launched a scheme under which dealers and retailers earn reward points on purchases and redeem them through an app for goods such as mobile, refrigerator and television - The Applicant purchases these goods from suppliers and transfers them under delivery challan without issuing a tax invoice or realising any monetary consideration - Whether the Applicant is liable to discharge GST on supply of reward goods to dealers and retailers against redemption of points under the scheme - HELD - The scheme is a sales promotional scheme meant to promote sale of the Applicant's products and is not mandatory, as participation is left to the discretion of dealers and retailers. The reward points are not in the nature of an actionable claim. They are only a mechanism to identify the persons to be rewarded commensurate with their purchases - The scheme terms provide that the Applicant is not liable for compensation or damages, that rewards may change with or without notice, and that the Applicant's decision is final. No contract is signed that bestows an actionable claim on dealers and retailers. The goods are given voluntarily on fulfilment of criteria decided solely by the Applicant and are in the nature of gifts – The supply of promotional goods against redemption of reward points, cannot be said to be against any actionable claim or extinguishment of such claim against the applicant. As there is not monetary or valuable consideration in the transaction of supply of promotional goods, these transactions cannot be considered as supply under Section 7 of the CGST Act - The Applicant is not liable to discharge GST on transfer of reward goods against redemption of points – Ordered accordingly - Eligibility to input tax credit on promotional goods given as rewards against redemption of points - Blocked credit under Section 17(5)(h) of the CGST Act, 2017 - Applicant purchased goods from suppliers on which GST was charged and transferred them to dealers and retailers against redemption of reward points under its scheme - Whether the Applicant is eligible to avail input tax credit of tax charged by suppliers on goods subsequently given as rewards under the scheme - HELD - Section 17(5) begins with a non obstante clause. Even if Section 16(1) allows credit, Section 17(5)(h) blocks it in respect of goods disposed of by way of gift or free samples - The linking of reward points to the extent of purchases is an incentive scheme for promoting sales and brand loyalty, and the products are clearly in the nature of gifts. The Madras High Court has held that credit on goods purchased for sales promotional activity is not available under Section 17(5)(h) - The promotional goods that are transferred by the applicant to various persons against redemption of points under 'Dhan Barse Scheme' of the applicant, are 'gifts' and are covered by section 17(5)(h) of GST Act and not eligible for input tax credit. [Read less]

GST – Maharashtra AAR - Classification of long-term leasing of electric vehicles without operator - Financial leasing services under heading 9971 or leasing or rental services without operator under heading 9973 - Applicant, engaged in leasing electric vehicles, entered into a Vehicle Lease Agreement with a lessee for leasing e-bikes without operator for a period of forty eight months - The lessee uses the vehicles for renting out to its customers, bears maintenance, repairs, insurance and statutory compliance and has an option to purchase the vehicles on expiry of the lease - Whether leasing of electric vehicles without... [Read more]

GST – Maharashtra AAR - Classification of long-term leasing of electric vehicles without operator - Financial leasing services under heading 9971 or leasing or rental services without operator under heading 9973 - Applicant, engaged in leasing electric vehicles, entered into a Vehicle Lease Agreement with a lessee for leasing e-bikes without operator for a period of forty eight months - The lessee uses the vehicles for renting out to its customers, bears maintenance, repairs, insurance and statutory compliance and has an option to purchase the vehicles on expiry of the lease - Whether leasing of electric vehicles without operator is classifiable under heading 9973-Leasing or rental services without operator under Sl. No. 17 of Notification No. 11/2017-CT (Rate) - HELD - The arrangement between the Applicant and the lessee does not merely involve short-term rental of vehicles. Instead, the agreement creates a structured leasing arrangement extending over a substantial period of forty-eight months, during which the lessee utilizes the vehicles for its commercial operations. Further, the lessee assumes substantial responsibilities relating to operation of the vehicles. Such features indicate that the arrangement goes beyond mere rental of goods. Therefore, the present transaction does not fit squarely within the typical scope of Heading 9973 – The arrangement is in substance a finance lease where the lessor finances the acquisition of equipment and recovers the cost through lease rentals. If the agreement is Financial Lease agreement, then it would be squarely falls under Heading 9971 - Financial and related services Sl. No. 15(ii)- Financial leasing services including equipment leasing and hire purchase of Notification No. 11/2017-CT (Rate) dated 28.06.2017 and the applicable rate of tax shall be the same rate of tax as applicable on supply of like goods involving transfer of title in goods – The leasing of Electric Vehicles (E-Bikes/EVs) without operator by the Applicant is classifiable under SAC 9971 - Financial and related services and covered under Sl. No. 15(ii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 20/2019-Central Tax (Rate) dated 30.09.2019 and the applicable rate of tax will be the same rate as applicable on supply of like goods involving transfer of title in goods – Ordered accordingly [Read less]

GST – Maharashtra AAR - Rate of tax on maintenance, repair and overhaul services of Reverse Osmosis plant installed on warships and other vessels - Entry 25(ib) and entry 25(ii) of Notification No. 11/2017-Central Tax (Rate) - Applicant executed contracts with the Indian Navy and Indian Coast Guard for maintenance and repair of RO plants installed on board ships, involving preventive and routine maintenance, inspection of safety controls, supply of consumables and replacement of parts wherever required - Whether maintenance, repair and overhaul services of RO plant installed on ships fall under entry ‘services in respe... [Read more]

GST – Maharashtra AAR - Rate of tax on maintenance, repair and overhaul services of Reverse Osmosis plant installed on warships and other vessels - Entry 25(ib) and entry 25(ii) of Notification No. 11/2017-Central Tax (Rate) - Applicant executed contracts with the Indian Navy and Indian Coast Guard for maintenance and repair of RO plants installed on board ships, involving preventive and routine maintenance, inspection of safety controls, supply of consumables and replacement of parts wherever required - Whether maintenance, repair and overhaul services of RO plant installed on ships fall under entry ‘services in respect of ships and other vessels, their engines and other components or parts’ - HELD - An earlier ruling of the Authority has held that RO plants are independent machinery used for purification of water, classifiable under HSN 8421, and are not integral parts of ships as ships can exist and function without them - The expression ‘in respect of used’ in entry 25(ib) has a wide connotation but cannot be read in isolation. The service must still be in respect of the ship, its engines or its components or parts. As the RO plant is not a component or part of the vessel, its maintenance is maintenance of independent machinery. The mere location of the RO plant on a vessel does not alter the essential character of the supply - The doctrine of noscitur a sociis applies only where the statutory expression is ambiguous and is of limited application here. Where spare parts are supplied along with maintenance, the transaction is a composite supply with maintenance of machinery as the principal supply and the entire supply is taxable at the rate applicable to such principal supply. The activity cannot be treated as works contract as RO plants installed on ships are movable machinery - The RO system is a separate plant and not a component or part of the vessel. The services of repair, maintenance and overhaul of RO plant do not fall under entry 25(ib) and are liable to GST at 18% under entry 25(ii) of Notification No. 11/2017-Central Tax (Rate) – Ordered accordingly [Read less]

Central Excise - Determination of Annual Capacity of Production and applicable rate of duty under compounded levy scheme - Rule 96ZP(3) of Central Excise Rules read with Section 3A of Central Excise Act, 1944 - Appellant's Unit II opted to pay duty under Rule 96ZP(3) for re-rolled products of non-alloy steel and furnished the re-measured parameters, which were verified by the officers of the Department. The Appellant calculated the capacity on that basis, with the 'd' measurement within 160mm, and sought final determination at the lower rate. The Commissioner nevertheless finalised a much higher capacity without any break-... [Read more]

Central Excise - Determination of Annual Capacity of Production and applicable rate of duty under compounded levy scheme - Rule 96ZP(3) of Central Excise Rules read with Section 3A of Central Excise Act, 1944 - Appellant's Unit II opted to pay duty under Rule 96ZP(3) for re-rolled products of non-alloy steel and furnished the re-measured parameters, which were verified by the officers of the Department. The Appellant calculated the capacity on that basis, with the 'd' measurement within 160mm, and sought final determination at the lower rate. The Commissioner nevertheless finalised a much higher capacity without any break-up and confirmed the demand at the higher rate - Whether the Annual Capacity of Production was correctly determined and the Appellant was liable to duty at the rate applicable under Rule 96ZP(3) - HELD - The determination of Annual Capacity of Production was not made correctly by the Commissioner. It is required to be made on the basis of the verification made by the Assistant Commissioner and the Technical Expert, and on that basis the capacity of the rolling mill comes to the figure computed by the Appellant. Since the measurement of 'd' was within 160mm and the Appellant had declared to pay duty under Sub-rule (3) of Rule 96ZP, the lower rate specifically provided in that Sub-rule applies instead of the higher rate. As the determination of capacity by the Commissioner was not correct, the demand founded on it is not sustainable - The impugned order is set aside and the appeal is allowed - Liability to duty for the period of closure of factory and entitlement to refund of excess payment under compounded levy scheme - Rule 96ZP of Central Excise Rules - Unit II of the Appellant did not run after February, 1999 and the Unit I rolling mill ran only up to March, 1999, after which the factory was permanently closed with no production in either rolling mill. The demand was raised for a period of 31 months, whereas the Appellant contended that the factory had run for a shorter period and that excess duty had been paid - Whether duty is payable for the period when the factory was closed and whether the Appellant is entitled to refund of the excess payment - HELD - The rolling mills and the factory ran only for the period from 01.09.1997 to 31.03.1999, and thereafter the factory was permanently closed with no production. The demand for the entire period of 31 months, which includes the period of closure, is therefore not sustainable. The Appellant, having paid duty in excess of the amount payable for the period of actual running on the correct capacity and rate, is eligible for refund of the excess payment - The impugned order is set aside and the appeal is allowed - Adjudication beyond the scope of Show Cause Notice - Confirmation of demand on a capacity figure not proposed in SCN - The SCN proposed the demand on the basis of a particular Annual Capacity of Production finally determined by the Department. The Adjudicating Authority, without considering the reply to the SCN, arrived at a new figure of Annual Capacity of Production which was not mentioned in the SCN and confirmed the demand for 31 months - Whether the Adjudicating Authority could confirm the demand on a basis different from that set out in the SCN - HELD - The Adjudicating Authority has travelled beyond the scope of the SCN, which is not permissible in law. The demand confirmed on a figure of capacity that was not part of the SCN cannot be sustained, and on this ground alone the impugned order cannot be sustained. The impugned order is set aside and the appeal is allowed - Interest and penalty under Rule 96ZP of Central Excise Rules - Validity of provisions relating to interest and penalty under compounded levy scheme - Interest and penalty were imposed on the Appellant under Rule 96ZP in the proceedings relating to the compounded levy scheme - Whether interest and penalty can be sustained under Rules 96ZO, 96ZP and 96ZQ - HELD - The Hon'ble Supreme Court has declared the provisions pertaining to interest and penalty contained in Rules 96ZO, 96ZP and 96ZQ of the Rules to be ultra vires. Interest and penalty imposed under Rule 96ZP therefore cannot be sustained - The impugned order is set aside and the appeal is allowed. [Read less]

Service Tax - Issuance of SCN where Cenvat credit is reversed and tax under Reverse Charge Mechanism is paid with interest before SCN - Section 73(3) of Finance Act, 1994 - Audit of the Appellant's books for the relevant period revealed inadmissible Cenvat credit availed on car hire and health insurance charges and non-payment of Service Tax under Reverse Charge Mechanism on certain services - Whether the SCN was required to be issued when the Appellant had reversed the credit and paid the tax with interest before its issuance - HELD - The Appellant had taken Cenvat credit wrongly and reversed the same along with interest ... [Read more]

Service Tax - Issuance of SCN where Cenvat credit is reversed and tax under Reverse Charge Mechanism is paid with interest before SCN - Section 73(3) of Finance Act, 1994 - Audit of the Appellant's books for the relevant period revealed inadmissible Cenvat credit availed on car hire and health insurance charges and non-payment of Service Tax under Reverse Charge Mechanism on certain services - Whether the SCN was required to be issued when the Appellant had reversed the credit and paid the tax with interest before its issuance - HELD - The Appellant had taken Cenvat credit wrongly and reversed the same along with interest before issuance of the SCN. The tax liability under Reverse Charge Mechanism was likewise discharged and intimated to the Department before the SCN. In these circumstances the SCN was not required to be issued to the Appellant in terms of Section 73(3) of the Finance Act, 1994. The impugned proceedings are therefore not sustainable against the Appellant and are void ab initio - The impugned order is set aside and the appeal is allowed - Imposition of penalty under Section 78 of Finance Act, 1994 where payment is made under Section 73(3) before SCN - Absence of willful misstatement or suppression of facts - The Appellant paid the Service Tax and interest at the instance of the Department before the issue of SCN and intimated such payment to the Department. Penalty under Section 78 was nevertheless imposed on the ground of deliberate suppression of facts with intent to evade payment of Service Tax - Whether penalty under Section 78 can be imposed on the Appellant - HELD - For the removal of doubts, it is declared that no penalty under any of the provisions of the Act or rules made thereunder shall be imposed in respect of payment of Service Tax under Section 73(3) and interest thereon. If payment is made under Sub-section (3) of Section 73, whether suo motu or at the instance of the Department before issue of the SCN, and such payment is intimated to the Department, no penalty under Section 76, Section 77 or Section 78 can be imposed. Further, no evidence of deliberate short payment was adduced in the SCN, and no conclusive findings were recorded in the Order-in-Original and the impugned order with respect to willful misstatement or suppression of facts. Imposition of penalty under Section 78 is therefore unwarranted and bad in law - The penalty is set aside and the appeal is allowed - Invocation of extended period of limitation - Suppression of facts - The adjudicating authority invoked the extended period of limitation under the proviso to Section 73(2) of the Finance Act, 1994 to confirm the demand of Service Tax under Reverse Charge Mechanism and the recovery of Cenvat credit on the allegation of suppression of facts - Whether the allegation of suppression and the invocation of the extended period can be sustained - HELD - The issue is covered by the decision of the Hon'ble Supreme Court, which held that the allegation of suppression and invocation of the larger period cannot be sustained when all relevant facts are well within the knowledge of the Authority. The issue is also squarely covered by a decision of this Tribunal, which has been affirmed by the Hon'ble Calcutta High Court. No evidence of willful misstatement or suppression of facts is adduced in the SCN or recorded in the impugned order - The impugned order is set aside and the appeal is allowed. [Read less]

Customs - Entitlement to interest on refund of amount deposited during investigation, from the date of deposit till realisation - Appellant cleared the imported goods on payment of duty and deposited an amount during investigation, after which the demand confirmed by the adjudicating authority was set aside by the Commissioner (Appeals) and the appeal of the Department was dismissed by the Tribunal in remand proceedings - Appellant thereafter claimed refund of the deposit in terms of the Board Circular, and the refund was sanctioned within three months of filing the claim, but interest was disallowed on the ground that it ... [Read more]

Customs - Entitlement to interest on refund of amount deposited during investigation, from the date of deposit till realisation - Appellant cleared the imported goods on payment of duty and deposited an amount during investigation, after which the demand confirmed by the adjudicating authority was set aside by the Commissioner (Appeals) and the appeal of the Department was dismissed by the Tribunal in remand proceedings - Appellant thereafter claimed refund of the deposit in terms of the Board Circular, and the refund was sanctioned within three months of filing the claim, but interest was disallowed on the ground that it is payable only after three months from the date of filing of the refund claim - Appellant relied on the decision of the Hon'ble High Court of Orissa allowing interest from the date of deposit till realisation - Whether the Appellant is entitled to interest on the refunded amount from the date of deposit till its realisation - HELD - The Hon'ble High Court of Orissa held that where the refund results from a finding that the amount ought not to have been collected in the first place, interest on the refunded amount should run from the date on which the claimant parted with the money and was restrained from using it. In the present case the customs duty was admittedly not payable by the Appellant in the first place, as the demand stood set aside - Following the decision of the Hon'ble High Court, the contention of Revenue that interest is payable only after three months from the date of filing of the refund claim is not accepted - The Appellant is entitled to interest from the date of payment till its realisation and both the appeals are disposed of accordingly [Read less]

Customs - Maintainability of demand of Anti-Dumping Duty under Section 28 of the Customs Act, 1962 on goods cleared on self-assessment without challenge to the assessment - Appellant imported cold rolled flat products of stainless steel from China under CTH 7219 and cleared them on self-assessment without paying Anti-Dumping Duty leviable under the relevant Notification - Revenue issued SCN under Section 28(1) proposing recovery with interest and penalty, which was confirmed and upheld by the FAA - Appellant contended that self-assessment, being an assessment order not appealed against or modified, cannot be reopened by SC... [Read more]

Customs - Maintainability of demand of Anti-Dumping Duty under Section 28 of the Customs Act, 1962 on goods cleared on self-assessment without challenge to the assessment - Appellant imported cold rolled flat products of stainless steel from China under CTH 7219 and cleared them on self-assessment without paying Anti-Dumping Duty leviable under the relevant Notification - Revenue issued SCN under Section 28(1) proposing recovery with interest and penalty, which was confirmed and upheld by the FAA - Appellant contended that self-assessment, being an assessment order not appealed against or modified, cannot be reopened by SCN, relying on the decision of the Hon'ble Supreme Court on refund of duty paid on self-assessment - Whether Revenue can demand duty under Section 28 without first challenging the self-assessment - HELD - The decision relied upon dealt with a refund claim under Section 27, where the Hon'ble Supreme Court held that refund cannot be entertained unless the self-assessment is modified in accordance with law. The present matter involves non-payment of duty during self-assessment and is governed by Section 28 for recovery of duties not levied or not paid, which is entirely different from the refund provisions. The Hon'ble Supreme Court in an earlier decision held that a clearance order under Section 47 cannot debar issuance of an SCN, and a coordinate Bench of the Tribunal followed it to reject the same contention - There is no bar on issuing an SCN under Section 28 without challenging the self-assessment, and the contention is rejected - Recovery of IGST on Anti-Dumping Duty and interest under Sections 28 and 28AA of the Customs Act, 1962 - Appellant contended that IGST is levied under the IGST Act, is not a duty of customs as defined in Section 2(15), and cannot be demanded under Sections 28 and 28AA - Whether IGST on the unpaid Anti-Dumping Duty is recoverable under Section 28 along with interest under Section 28AA - HELD - Section 3(7) of the Customs Tariff Act, 1975 makes imported articles liable to integrated tax, and Section 3(8) includes in its value any duty of customs chargeable under Section 12 of the Customs Act. Anti-Dumping Duty under Section 9A of the Customs Tariff Act is a duty of customs, since Section 2(15) read with Section 12 shows that duties of customs include all duties levied under the Customs Tariff Act. IGST is therefore leviable on the Anti-Dumping Duty not paid at self-assessment, following a coordinate Bench of the Tribunal - The demand of Anti-Dumping Duty and IGST thereon along with interest is affirmed - Quantum of penalty under Section 117 of the Customs Act, 1962 for non-payment of Anti-Dumping Duty - Goods were imported in the year 2019, and penalty was imposed at the enhanced maximum introduced with effect from 01.08.2019 by the Finance (No.2) Act, 2019 - Whether the penalty imposed under Section 117 is sustainable in quantum - HELD - Imposition of penalty under Section 117 is discretionary, and no question of law arises in the absence of any allegation of arbitrary or mala fide exercise, as held by the Hon'ble High Court of Karnataka. However, at the time of these imports the maximum penalty prescribed was lower than the enhanced maximum introduced later - The penalty is reduced to the maximum prevailing at the material time, the impugned order is upheld with this modification and the appeal is partly allowed. [Read less]

Central Excise - Abatement of appeal of corporate debtor on approval of resolution plan by the National Company Law Tribunal - Appellant company, which was held to be the real manufacturer of fabrics processed in the leased process-house and was saddled with duty, interest and penalty on the basis of SCN, had its resolution plan approved by the NCLT, which took note of the confirmed demands and provided for payment of a specified sum towards Government dues - Appellant contended that all proceedings stand settled in terms of the resolution plan and the appeal should abate under Rule 22 of the CESTAT Procedure Rules, 1982 -... [Read more]

Central Excise - Abatement of appeal of corporate debtor on approval of resolution plan by the National Company Law Tribunal - Appellant company, which was held to be the real manufacturer of fabrics processed in the leased process-house and was saddled with duty, interest and penalty on the basis of SCN, had its resolution plan approved by the NCLT, which took note of the confirmed demands and provided for payment of a specified sum towards Government dues - Appellant contended that all proceedings stand settled in terms of the resolution plan and the appeal should abate under Rule 22 of the CESTAT Procedure Rules, 1982 - Whether the appeal of the corporate debtor abates in view of the approved resolution plan - HELD - The NCLT order approving the resolution plan was passed after taking note of the confirmed demands along with interest and penalties, and the Hon'ble Supreme Court has held that claims not forming part of the approved resolution plan stand extinguished - In view of the approval order read with the decisions of the Hon'ble Supreme Court, the appeal is to be abated under Rule 22 of the CESTAT Procedure Rules, 1982 - The appeal filed by the corporate debtor is abated - Liability to pay duty of lessee company held not to be the manufacturer under Section 2(f) of the Central Excise Act, 1944 - Appellant, the lessee company which took over the process-house on lease from a related company, cleared processed fabrics on payment of duty after claiming deductions in the price declarations, and SCNs were issued demanding differential duty - The impugned order held that the lessor company was the manufacturer and the lease arrangement was a colourable device, and also held that the Appellant did not hold the position of a manufacturer and revoked its registration, whereas the demand was nevertheless confirmed against the Appellant - Appellant contended that once it is held not to be the manufacturer under Section 2(f), the demand against it is bad in law - Whether duty can be demanded from the Appellant who is held not to be the manufacturer - HELD - Though the incidence of duty arises on activities covered by the definition of manufacture, the duty is determined and payable at the time of clearance, and the statutory scheme distinguishes between the person who manufactures the goods and the person legally bound to pay duty upon clearance. Section 3 of the Act charges duty on goods manufactured, but the responsibility of payment is placed on the person who removes or clears the goods, and the Hon'ble Supreme Court has held that the taxable event is manufacture while the liability to pay duty is postponed till removal. Any person who presents the goods for clearance from the premises assumes the obligation to pay duty. The impugned order does not hold that the Appellant was not liable to pay duty on the goods cleared by it, and the Appellant cannot dispute this position since it cleared the goods on payment of duty by issuing invoices - The contention of the Appellant is rejected and the liability to pay duty on goods cleared by it is upheld - Admissibility of deductions towards grading expenses, cartage, handling charges, brokerage and interest on stock in determining assessable value under erstwhile Section 4 of the Central Excise Act, 1944 - Appellant claimed these deductions as post-clearance expenses in the price declarations, and the adjudicating authority allowed only the deduction towards value loss and denied the rest - Appellant contended that the expenses relate to activities after clearance and relied on decisions concerning packing and repacking and valuation on the basis of comparable goods - Whether the deductions claimed are admissible while arriving at the assessable value - HELD - The sale transaction between the lessee company and the lessor company was held by the adjudicating authority to be a colourable device, so that the goods entered the course of wholesale trade only when they were finally cleared to independent buyers. Expenses incurred up to the stage when goods enter the stream of wholesale trade, even if incurred after manufacture, are includible in the assessable value, as held by the Hon'ble Supreme Court in the decisions on storage charges, handling expenses and interest on stocks carried after clearance. The decision relied upon by the Appellant dealt with packing and repacking and the other decision determined value on the basis of comparable goods and not on the expenses claimed as deductions, so that both are distinguishable. The reasons recorded in the impugned order for allowing value loss and denying the other deductions are in agreement with the settled law - The demand of differential duty along with interest in respect of the SCNs is upheld - Liability of person taking over premises along with stock of processed fabrics to pay duty and imposition of penalty under Section 11AC - Appellant took over the process-house along with stock of processed fabrics from the lessee company and cleared the same for home consumption, and SCN demanded short paid duty with penalty - Appellant contended that it is not the manufacturer of the goods taken over - Whether the Appellant is liable to pay duty on the stock cleared by it and whether penalty under Section 11AC is imposable on the lessee company and on the Appellant - HELD - The observations that the duty is payable by the person who clears the goods apply equally to the clearances effected by the Appellant of the stock taken over along with the premises, so that the demand of duty with interest is upheld. In respect of the SCNs against the lessee company, the demand was made within the normal period of limitation and the impugned order recorded no finding that the Appellant was responsible for any of the acts specified in Section 11AC with intent to evade duty. Mere claim of deductions which as per Revenue were inadmissible cannot justify penalty, following the decision of the Hon'ble Supreme Court - The demand of duty with interest is upheld, while penalty under Section 11AC imposed in respect of these SCNs is not sustainable and is set aside - Penalty under erstwhile Rule 209A of the Central Excise Rules, 1944 on directors and officers in the absence of finding of confiscation - Penalty was imposed under Rule 209A on the Appellants who were directors, managing director, general managers and proprietors connected with the companies, in proceedings where the manufacturing company had been held liable to pay duty, interest and penalty - Appellants contended that penalty under Rule 209A requires that the excisable goods be held liable to confiscation and no such finding existed - Whether penalty under Rule 209A is sustainable against the Appellants - HELD - The proceedings against the manufacturing company stand abated, and the prerequisite for penalty under Rule 209A is that the person should be found guilty of the acts of omission and commission specified in the Rule in respect of excisable goods held liable for confiscation, which was not satisfied. However, each of the Appellants had played a part in the acts leading to evasion of a huge amount of duty, which is an undisputed fact - The penalty under Rule 209A is not sustainable, and a general penalty as prescribed by Rule 210 of the Central Excise Rules, 1944 is imposed upon each Appellant. [Read less]

Customs - Classification of Protector Tube of brake hose assemblies under CTH 40091100 or CTH 39172310 - Appellant imported brake hoses and other automobile brake components and declared Protector Tube under CTH 40091100 - Final Audit Report proposed classification under CTH 39172310, and the demand of differential duty was confirmed - Department relied upon the catalogue and photographs of the supplier showing that the Protector Tube is made of 100% PVC, while the Appellant contended that no testing report was produced - Whether Protector Tube is classifiable under CTH 40091100 as declared by the Appellant or under CTH 39... [Read more]

Customs - Classification of Protector Tube of brake hose assemblies under CTH 40091100 or CTH 39172310 - Appellant imported brake hoses and other automobile brake components and declared Protector Tube under CTH 40091100 - Final Audit Report proposed classification under CTH 39172310, and the demand of differential duty was confirmed - Department relied upon the catalogue and photographs of the supplier showing that the Protector Tube is made of 100% PVC, while the Appellant contended that no testing report was produced - Whether Protector Tube is classifiable under CTH 40091100 as declared by the Appellant or under CTH 39172310 as held by the Department - HELD - The controversy in classification disputes must be resolved by relying upon the Harmonised System of Nomenclature and the Explanatory Notes, which are binding guidance unless a contrary finding is found within the First Schedule of the Tariff Act, as held by the Hon'ble Supreme Court. Under both the headings, the constituent material of the goods is the relevant criterion, since a tube made of PVC is classifiable under CTH 39172310 and a tube made of vulcanized rubber falls under CTH 40091100. The reliance of the Department on the catalogue and photographs was never disputed by the Appellant, and those documents sufficiently deal with the constituents and other details and declare the product to be a 100% PVC tube. The absence of a testing report does not affect the Department adversely, as the Appellant produced no other document to falsify the catalogue - The impugned order rightly held mis-declaration, the Protector Tube is classifiable under CTH 39172310 and the demand of differential duty is upheld - Denial of benefit of Notification issued pursuant to the ASEAN Trade Agreement on reclassification of Protector Tube - Appellant availed the benefit of the Notification on the strength of a Certificate of Origin declaring the goods under CTH 40091100, and the benefit was denied after the goods were held classifiable under CTH 39172310 - Whether the benefit of the Notification can be extended to goods held classifiable under CTH 39172310 - HELD - The Appellant had claimed the benefit by declaring the goods under CTH 40091100. Since the goods have been held to be classifiable under CTH 39172310, the benefit of the Notification cannot be extended to these goods - The benefit has rightly been denied and the order to that extent is upheld - Classification of Bracket used in manufacture of brake hose assemblies under CTH 83025000, CTH 73269099 or CTH 87089900 - Appellant declared the Bracket as parts of automobile under CTH 83025000 and CTH 73269099, whereas the Department proposed classification under CTH 87089900 on the ground that it forms an integral part of the brake assembly used in motor vehicles - Appellant did not contest that the goods are not of general purpose use, and had itself declared the goods as parts of automobile in the import documents - Whether the Bracket is classifiable under CTH 83025000 or CTH 73269099 as declared by the Appellant or under CTH 87089900 as held by the Department - HELD - Heading 8302 covers base metal mountings and fittings, Heading 7326 is a residuary entry for other articles of iron or steel, and Heading 8708 covers parts and accessories of motor vehicles of Headings 8701 to 8705. Section Note 1(g) of Section XV excludes articles of Section XVII from its ambit, and Section Note 3 of Section XVII provides that references to parts or accessories in Chapters 86 to 88 apply only to parts suitable for use solely or principally with the vehicles of those Chapters. As per General Rule 3, a part answering to a description in two or more headings is to be classified under the heading corresponding to its principal use. There was no evidence that the goods are excluded by the provisions of Section XVII, and both conditions of the Explanatory Notes to Chapter 87 stand fulfilled, namely that the goods be suitable for use solely or principally with motor vehicles and that they not be excluded by the Section Notes - The Bracket is classifiable under CTH 87089900, the Appellant had wrongly declared the goods under CTH 83025000 and CTH 73269099, and the demand of differential duty is upheld - Classification of Connector used in brake hose assemblies under CTH 3917 or CTH 8708 - Appellant declared the Connector under CTH 3917, whereas the Department held that it is a part of motor vehicles classifiable under CTH 8708 - Connectors are admittedly used in brake hose assemblies to regulate the flow of brake fluid and are specifically designed for integration into automobile brake systems - Whether the Connector is classifiable under CTH 39174000 as fittings of plastics for tubes, pipes and hoses or under CTH 87089900 as parts and accessories of motor vehicles - HELD - Chapter Note 2(t) to Chapter 39 expressly excludes parts of vehicles of Section XVII. Irrespective of the constituent material of the goods, if the goods are admittedly parts of motor vehicles, they stand excluded from Chapter 39, and this observation is sufficient to hold the declaration under CTH 3917 to be a mis-declaration. The Connectors are not generic plumbing fittings, so that even on the common parlance test they cannot be classified under CTH 39174000 - The classification under CTH 3917 is rejected and the order of the Department to that extent is upheld - Invocation of extended period of limitation under Section 28(4) of the Customs Act, 1962 and imposition of penalty on mis-classification of imported goods - Appellant contended that the documents were verified and the goods were physically examined by Customs officers so that everything was within their notice, and that a claim of classification is a mistake of understanding and belief and cannot amount to suppression - Appellant had admitted the alleged mis-declaration for all other products and voluntarily paid the differential duty, and the Department showed that the Appellant had earlier declared the goods under the same tariff headings claimed by the Department and later changed to the classifications declared in the impugned Bills of Entry - Whether the extended period was rightly invoked under Section 28(4) and whether the penalties were rightly imposed - HELD - The present being an era of self-assessment, Section 46(4) of the Customs Act, 1962 casts an obligation upon the importer to make a true and correct classification. The wrong declaration resulted in customs duty benefit to the Appellant and the outcome of the act was non-payment or short payment of customs duty. The Appellant was earlier declaring the tariff headings claimed by the Department and later changed to the alleged ones, which supports the conclusion that the wrong classification was intentional and resulted in evasion of customs duty - The extended period under Section 28(4) was rightly invoked, there is no infirmity in the penalties imposed for the same reasons, the order under challenge is affirmed and the appeal is dismissed. [Read less]

Central Excise – Admissibility of statements recorded during investigation under Section 14 of the Central Excise Act, 1944 in the absence of compliance with Section 9D – Appellant company, a manufacturer of sponge iron and charcoal, was alleged on the basis of searches to have cleared finished goods clandestinely without invoices and duty, the allegation resting on statements of its manager, plant-in-charge and assistant accountant together with data retrieved from seized computers, and duty, interest and equal penalty were confirmed on the company with personal penalty on its director under Rule 26 of the Central Exc... [Read more]

Central Excise – Admissibility of statements recorded during investigation under Section 14 of the Central Excise Act, 1944 in the absence of compliance with Section 9D – Appellant company, a manufacturer of sponge iron and charcoal, was alleged on the basis of searches to have cleared finished goods clandestinely without invoices and duty, the allegation resting on statements of its manager, plant-in-charge and assistant accountant together with data retrieved from seized computers, and duty, interest and equal penalty were confirmed on the company with personal penalty on its director under Rule 26 of the Central Excise Rules, 2002 – Appellants contended that the statements were never tested by cross-examination and some were recorded under coercion – Whether the statements are admissible as evidence in the absence of compliance with the procedure under Section 9D – HELD – The statements relied upon by Revenue were never tested by examination-in-chief before the adjudicating authority or by cross-examination. Following the Hon'ble High Court of Punjab and Haryana, Section 9D(1) is mandatory, and unless the circumstances in clause (a) exist, the maker of the statement must be examined as a witness before the adjudicating authority who must then form the opinion that the statement should be admitted in the interests of justice, failing which the statement is to be eschewed from consideration as not relevant for proving the truth of its contents. The Tribunal in earlier decisions has taken the same view – The statements recorded during investigation are inadmissible as evidence - Admissibility of data retrieved from seized CPUs and pen drives without compliance with Section 36B of the Central Excise Act, 1944 – Department relied upon data and printouts retrieved from computers and a pen drive seized from the factory, office and residence of the director to allege clandestine clearance – Appellants contended that the printouts were not accompanied by the certificate under Section 36B(4) and that the persons who made the entries, some being ex-employees, were not examined – Whether the data retrieved from CPUs and pen drives is admissible as evidence – HELD – The data was never tested in terms of Section 36B(2) and Section 36B(4). Section 36B(4) mandatorily requires a certificate identifying the document, describing the manner of its production and the particulars of the device, signed by a person in a responsible official position in relation to the operation of the device, on the same footing as the corresponding provision of the Evidence Act as laid down by the Hon'ble Supreme Court. Pen drives being floating devices, the data cannot be relied upon unless the persons who entered it are identified and the certificate is produced – The data and printouts are not admissible evidence to sustain the charge of clandestine clearance - Sustainability of demand for clandestine manufacture and clearance and consequent penalties on the company and its director – Demand was confirmed along with equal penalty under Section 11AC and personal penalty on the director under Rule 26 – Appellants contended that there was no tangible corroborative evidence such as stock discrepancy, excess electricity consumption, statements of buyers, transport documents or proof of movement of goods – Whether the charge of clandestine clearance is sustainable and whether penalties can be imposed – HELD – Clandestine manufacture and removal requires tangible evidence and not inferences or assumptions, such as excess raw materials, actual removal of unaccounted goods, sale to identified parties, receipt of sale proceeds, excess use of electricity, statements of buyers and proof of transportation. Neither the manufacturing capacity of the Appellant was examined nor was any proper investigation conducted of the buyers, the suppliers of raw materials, the labour required or the electricity needed for such production. Once the statements and the computer data are held inadmissible and no other evidence remains, the charge is not sustainable – The demand is set aside, no penalty can be imposed on the company or its director, and the appeals are allowed. [Read less]

Central Excise – Applicability of Rule 6(3) of the Cenvat Credit Rules, 2004 to electricity generated from bagasse and to press-mud emerging as by-products in the manufacture of sugar and molasses – Appellant, a manufacturer of sugar and molasses on which duty was paid, used bagasse to produce electricity, part of which was used within the factory and part sold to the State power distribution company, and distributed press-mud free of cost to cane growers as manure, without maintaining separate accounts of inputs and input services used for dutiable and non-dutiable goods – SCN proposed recovery under Rule 6(3) on th... [Read more]

Central Excise – Applicability of Rule 6(3) of the Cenvat Credit Rules, 2004 to electricity generated from bagasse and to press-mud emerging as by-products in the manufacture of sugar and molasses – Appellant, a manufacturer of sugar and molasses on which duty was paid, used bagasse to produce electricity, part of which was used within the factory and part sold to the State power distribution company, and distributed press-mud free of cost to cane growers as manure, without maintaining separate accounts of inputs and input services used for dutiable and non-dutiable goods – SCN proposed recovery under Rule 6(3) on the value of electricity sold and on press-mud, which was confirmed by the Commissioner with interest and penalty – Appellant contended that Revenue cannot choose one of the options under Rule 6 and demand recovery under it, that bagasse is agricultural waste not resulting from manufacture so that Rule 6 does not apply, and that proportionate Cenvat credit had anyway been reversed – Whether demand under Rule 6(3) is sustainable in respect of electricity generated from bagasse and press-mud – HELD – The facts are identical to those decided by the Hon'ble Supreme Court, which held that bagasse is only agricultural waste or residue not resulting from any process of manufacture, that it does not fall within the definition of manufacture under Section 2(f) even after the 2008 amendments as no process in respect of it is specified in the Section or Chapter Notes, and that Rule 6 consequently has no application, the denial of credit on electricity having been based only on the erroneous premise that bagasse attracts duty. On this ground alone the impugned order deserves to be set aside. The contention that Revenue cannot raise a demand under Rule 6(3) of its own choice among the options available to the assessee also has force in view of the decision of the jurisdictional High Court, and reversal of proportionate Cenvat credit is as good as not availing the credit at all, as held by the Hon'ble Supreme Court – The demand, interest and penalty are not sustainable, the impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Invocation of extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 where classification of services was disputed - Respondent rendered IT facility management services under agreements with clients and claimed that the services were business auxiliary services and not taxable, whereas the Commissioner held them taxable as management consultant service and invoked the extended period alleging suppression, as the nature of services was not disclosed - The Tribunal upheld the classification on merits but held the extended period not invocable as there was no suppression, the Depar... [Read more]

Service Tax - Invocation of extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 where classification of services was disputed - Respondent rendered IT facility management services under agreements with clients and claimed that the services were business auxiliary services and not taxable, whereas the Commissioner held them taxable as management consultant service and invoked the extended period alleging suppression, as the nature of services was not disclosed - The Tribunal upheld the classification on merits but held the extended period not invocable as there was no suppression, the Department being aware of the services through trial balance, audit report and the explanation furnished earlier, and restricted the demand to the normal period - Revenue preferred appeal under Section 35G of the Central Excise Act, 1944 - Whether the Revenue was entitled to invoke the extended period of limitation - HELD - A notice beyond one year from the relevant date can be sustained only if the short payment is by reason of fraud, collusion, wilful mis-statement, suppression of facts or contravention with intent to evade payment of tax. The allegation in the SCN that claiming the services as business auxiliary services amounted to suppression has no merit, as the controversy involves only classification of services. The Tribunal found that the services rendered were clearly discernible from the accounts, the audit report and the explanation furnished, and the Revenue did not contest that these documents failed to disclose the services - No infirmity found in the decision of the Tribunal that the extended period was not available and the appeal is dismissed [Read less]

Customs - Confiscation, redemption fine and penalty on goods imported in a container where the supplier mistakenly loaded different goods than ordered - Appellant imported goods including children's garments, and on examination the goods were found to be men's under garments in larger quantity than declared, the declaration having been made as per the supplier's invoice and import documents - Department alleged misdeclaration, misclassification and undervaluation, and the goods were confiscated under Sections 111(d), 111(l) and 111(m) with redemption fine and penalty under Section 112(a), which was upheld by the Commission... [Read more]

Customs - Confiscation, redemption fine and penalty on goods imported in a container where the supplier mistakenly loaded different goods than ordered - Appellant imported goods including children's garments, and on examination the goods were found to be men's under garments in larger quantity than declared, the declaration having been made as per the supplier's invoice and import documents - Department alleged misdeclaration, misclassification and undervaluation, and the goods were confiscated under Sections 111(d), 111(l) and 111(m) with redemption fine and penalty under Section 112(a), which was upheld by the Commissioner (Appeals) - Appellant contended that the supplier had admitted that goods meant for another buyer were mistakenly loaded and sought to take them back - Whether confiscation, redemption fine and penalty are sustainable where the change in goods occurred due to supplier's mistake - HELD - There was a mix-up of goods in the container beyond the control of the Appellant, and the resultant change in classification cannot be treated as misclassification. The goods were declared as per the supplier's invoice and import documents, the Department produced no other evidence of misdeclaration, and there is no material to show fraud, suppression, wilful misstatement or intent to evade duty. A coordinate Bench has held that wrongly shipped goods could be released on the strength of bona fides, and the Board Circular on re-export of goods imported under bona fide mistake requires such cases to be considered on merits. Since the goods were free of azo dyes, they can be cleared on payment of appropriate duty - The bona fides of the Appellant having been proved, there is no ground for redemption fine on goods other than non-releasable goods or for penalty, and the impugned order to this extent is set aside - Confiscation of imported goods for non-compliance with BIS requirements and Legal Metrology (Packaged Commodities) Rules - Amplifiers not registered with the Bureau of Indian Standards by the foreign supplier were treated as non-releasable, and other goods lacked mandatory labelling declarations, with redemption fine imposed on non-releasable goods subject to re-export - Appellant sought re-export of the non-releasable goods - Whether the confiscation and redemption fine on such goods are sustainable - HELD - The mandatory labelling requirements are to be fulfilled before clearance for home consumption, and a Public Notice permits labels to be affixed before clearance with permission of the Deputy or Assistant Commissioner. Since the Department itself examined the goods before normal examination, the Appellant could not have sought such permission earlier, so the labelling lapse is curable. The amplifiers lacked compulsory BIS registration and were rightly treated as non-releasable, and the Appellant's willingness to re-export was accepted by the competent authority - The redemption fine on non-releasable goods subject to re-export is not disturbed and the appeal is partly allowed. [Read less]

Customs - Denial of concessional duty and confiscation of a car imported under the EPCG Scheme alleged to be used for personal purposes in violation of authorisation conditions - Appellant company, engaged in hotel related services, imported cars under EPCG Authorizations availing concessional duty under a Notification, the car in question being cleared at one port while three similar cars were cleared at another port - Department alleged on specific information that the cars were used as private vehicles of the Managing Director and his family and not to earn foreign exchange towards export obligation, and the duty demand... [Read more]

Customs - Denial of concessional duty and confiscation of a car imported under the EPCG Scheme alleged to be used for personal purposes in violation of authorisation conditions - Appellant company, engaged in hotel related services, imported cars under EPCG Authorizations availing concessional duty under a Notification, the car in question being cleared at one port while three similar cars were cleared at another port - Department alleged on specific information that the cars were used as private vehicles of the Managing Director and his family and not to earn foreign exchange towards export obligation, and the duty demand with interest, confiscation under Sections 111(d) and 111(o), redemption fine and penalties on the company and the Managing Director were confirmed and upheld by the Commissioner (Appeals) - Appellants contended that the identical issue on the three cars was decided in their favour by a coordinate Bench - Whether there is any violation of the EPCG Authorization conditions so as to sustain the duty demand, redemption fine and penalties - HELD - The authorization conditions in respect of this car are identical to those considered by the coordinate Bench in the case of the same appellants, and the facts being exactly similar, this Bench cannot decide the issue differently. The coordinate Bench had found that the allegation of non-fulfilment of export obligation was premature as the period for fulfilment had not expired when the SCN was issued, that the actual user test stood satisfied by the substantial foreign exchange earnings declared and not disputed, that violations relating to vehicle registration and insurance are the concern of the authorities concerned and not Customs, and that Revenue produced no documentary evidence beyond mere allegations. The Appellants had submitted the installation certificate, registration as a tourist taxi, certificate of foreign exchange earnings and requests for Export Obligation Discharge Certificate, and the competent authority confirmed fulfilment and later issued the certificate, the non-production of which at adjudication was beyond the control of the Appellants - Non-compliance with the conditions of the EPCG Scheme cannot legally be sustained, the duty demand, redemption fine and penalties are not sustainable, the impugned order is set aside and the appeals are allowed [Read less]

Customs - Penalty on Customs Broker under Section 114(i) of the Customs Act, 1962 for alleged failure to verify antecedents and KYC particulars of the exporter in an attempted export of prohibited goods - Appellant, a Customs Broker, handled a Shipping Bill for export of floor mats, and the container, after leaving the CFS, was found to contain red sanders allegedly substituted for the declared cargo - Appellant had obtained authorisation, verified the exporter's IEC through DGFT and ICEGATE and examined the previous shipping bill, while the adjudicating authority found inadequate verification of antecedents and imposed pe... [Read more]

Customs - Penalty on Customs Broker under Section 114(i) of the Customs Act, 1962 for alleged failure to verify antecedents and KYC particulars of the exporter in an attempted export of prohibited goods - Appellant, a Customs Broker, handled a Shipping Bill for export of floor mats, and the container, after leaving the CFS, was found to contain red sanders allegedly substituted for the declared cargo - Appellant had obtained authorisation, verified the exporter's IEC through DGFT and ICEGATE and examined the previous shipping bill, while the adjudicating authority found inadequate verification of antecedents and imposed penalty, which was upheld in appeal - Appellant contended that there was no evidence of knowledge, participation or control over the container after clearance - Respondent contended that a Customs Broker must know its client and that mens rea is not essential - Whether the alleged failure to verify antecedents and KYC particulars rendered the goods liable to confiscation or amounted to abetment so as to attract penalty under Section 114(i) - HELD - Section 114(i) requires an identifiable act, omission or abetment attributable to the person which rendered the goods liable to confiscation under Section 113, and a mere regulatory lapse is not sufficient. The SCN does not allege that the Appellant participated in the substitution or knowingly filed false documents, the substitution took place after the container left the CFS, and no material connects the Appellant with it. Absence of direct contact with the exporter does not by itself establish knowledge, collusion or facilitation, and the decision relied upon by Revenue is distinguishable since the broker therein acted through a proxy and signed blank documents. Although mens rea is not essential, proof of an intended act, omission or abetment is not dispensed with - The Department failed to establish the requisite nexus and the penalty under Section 114(i) is not sustainable - Penalty under Section 117 of the Customs Act, 1962 on Customs Broker where the alleged omission is insufficient for penalty under Section 114(i) - Whether penalty under Section 117 can be sustained independently - HELD - Section 117 is a residuary provision and cannot be invoked in the absence of an identifiable contravention of the Customs Act or failure to comply with a statutory obligation attracting such penalty. Once the alleged omission is found insufficient to attract Section 114(i), it cannot, without an independently established contravention, sustain a penalty under Section 117 - The penalty imposed under Section 114(i) read with Section 117 is set aside and the appeal is allowed. [Read less]

Kerala Value Added Tax Act, 2003 - Credit for tax deducted at source by the awarder under Section 10 of the KVAT Act, 2003 - Assessment completed without extending credit for tax deducted and remitted – Petitioner, engaged in execution of works contract, raised invoices on the 4th Respondent-awarder, who deducted tax at source while making payments on periodical bills and remitted it to the Government - Petitioner claimed credit for such tax in the returns, but the assessment for the relevant year was completed granting credit only to the extent reflected in the portal of the department and raising a demand along with in... [Read more]

Kerala Value Added Tax Act, 2003 - Credit for tax deducted at source by the awarder under Section 10 of the KVAT Act, 2003 - Assessment completed without extending credit for tax deducted and remitted – Petitioner, engaged in execution of works contract, raised invoices on the 4th Respondent-awarder, who deducted tax at source while making payments on periodical bills and remitted it to the Government - Petitioner claimed credit for such tax in the returns, but the assessment for the relevant year was completed granting credit only to the extent reflected in the portal of the department and raising a demand along with interest - Petitioner challenged the assessment on the ground that credit for the tax deducted and paid by the 4th Respondent was not extended - The Court by an earlier order noted that the 4th Respondent had remitted the amount and issued a certificate to the Petitioner - Whether the assessment, completed without extending credit for the tax deducted at source and remitted by the awarder, can be sustained - HELD - In view of the earlier order, the assessment requires to be revisited, especially as the Petitioner contends that the required certificates in Form 20F under the Kerala Value Added Tax Rules, 2005 were available with it. Pursuant to the orders of the Court, the awarder has provided the details of the tax remitted by it - The assessment order is set aside. The assessing authority shall pass fresh orders, reckoning the details of the tax payments effected by the 4th Respondent and extending credit to the Petitioner for the tax deducted at source - The writ petition is allowed [Read less]

Customs - Evidentiary value of statement of the director of a Custom House Agent recorded under Section 108 of the Customs Act, 1962 where procedure under Section 138B was not followed - Importers imported broken substandard areca nuts declared under a tariff item for processed preparations to claim an exemption Notification, the goods were seized as liable to confiscation and prohibited, and the director of the Appellant, the common CHA, admitted in his statement that the importers were advised to adopt the declared tariff item to clear goods at minimum duty - Appellant contended that a statement which has not undergone t... [Read more]

Customs - Evidentiary value of statement of the director of a Custom House Agent recorded under Section 108 of the Customs Act, 1962 where procedure under Section 138B was not followed - Importers imported broken substandard areca nuts declared under a tariff item for processed preparations to claim an exemption Notification, the goods were seized as liable to confiscation and prohibited, and the director of the Appellant, the common CHA, admitted in his statement that the importers were advised to adopt the declared tariff item to clear goods at minimum duty - Appellant contended that a statement which has not undergone the test of Section 138B cannot be the sole basis for penalty - Whether the statement recorded under Section 108 can be relied upon to impose penalty on the CHA - HELD - Section 108 treats the proceedings as judicial proceedings and a voluntary confession made to a customs officer is admissible as substantive evidence, since customs officers are not police officers and the bar under the Indian Evidence Act on police confessions does not apply, as reaffirmed by the Hon'ble Supreme Court. There was no retraction of the statement by the Appellant, its director or the importers, and no evidence of coercion was produced. The statement stood corroborated by laboratory reports on the nature and moisture content of the goods and by the unretracted statements of the importers - The statement is voluntary, admissible and reliable, and the objection based on Section 138B is rejected - Penalty on Custom House Agent under Sections 112(a) and 114AA of the Customs Act, 1962 for advising misclassification of imported goods - Penalties were imposed on the Appellant CHA and its director for abetting improper importation by knowingly advising incorrect classification to wrongly avail an exemption Notification - Appellant contended that it only reproduced the importers' documents while filing Bills of Entry and that there was no proof of knowledge, intent or mens rea - Whether penalties under Sections 112(a) and 114AA are imposable on the Appellant - HELD - The Appellant admitted advising the importers to adopt the incorrect tariff item to remain competitive and obtain more clearance business, which establishes that the advice was given knowingly and intentionally, and the decisions relied upon are inapplicable as they concern absence of knowledge. A CHA occupies a position of trust and the Hon'ble Supreme Court has held that contravention of its obligations, even without intent, invites punishment under the Regulations. Penalties under Sections 112(a) and 114AA are imposable where there is knowledge and intention on the part of the CHA to let the importer make illegal imports, which the Respondent has proved - The penalties on the Appellant and its director are upheld and the appeals are dismissed. [Read less]

Central Excise - Includibility of sales tax subsidy received under a State Investment Promotion Scheme in the assessable value of goods under Section 4 of the Central Excise Act, 1944 - Appellant, a manufacturer of cement, paid VAT/CST on its sales and was entitled under the Scheme to an investment subsidy and an employment generation subsidy computed as a percentage of the VAT/CST paid, which was not paid in cash but received by way of VAT challans used to discharge output VAT/CST liability of subsequent periods - SCN alleged that the subsidy amounted to retention of the VAT/CST collected from customers and was includible... [Read more]

Central Excise - Includibility of sales tax subsidy received under a State Investment Promotion Scheme in the assessable value of goods under Section 4 of the Central Excise Act, 1944 - Appellant, a manufacturer of cement, paid VAT/CST on its sales and was entitled under the Scheme to an investment subsidy and an employment generation subsidy computed as a percentage of the VAT/CST paid, which was not paid in cash but received by way of VAT challans used to discharge output VAT/CST liability of subsequent periods - SCN alleged that the subsidy amounted to retention of the VAT/CST collected from customers and was includible in the transaction value, the adjudicating authority dropped the demand, and the Commissioner (Appeals) set aside that order and confirmed the demand - Appellant contended that the issue is no longer res integra in view of the decisions of the Tribunal in its favour - Whether the sales tax subsidy is includible in the assessable value of the goods cleared during the relevant period - HELD - The Principal Bench of the Tribunal, on a reference to resolve a difference of opinion, held that the subsidy under the promotion policy does not reduce the selling price, is not an additional consideration, and that the decision of the Hon'ble Supreme Court on subsidy relied upon by Revenue and Section 9 of the State VAT Act have no application. The subsidy does not reduce the sales tax payable by the assessee, since the entire amount of sales tax collected from the customer is paid and not retained, and VAT paid using such challans is to be construed as actual payment of VAT, which cannot be included in the transaction value under Section 4(3)(d). This view has been followed in later decisions of the Tribunal - The sales tax subsidy is not includible in the assessable value, no duty is payable and consequently no penalty is imposable, the impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Inclusion of value of rails supplied free of cost by Indian Railways in assessable value of glued joints - Effect of retrospective exemption by insertion of Entry No. 205A in Notification No. 12/2012-C.E. through Finance Act, 2015 for the period 17.03.2012 to 03.02.2014 - Appellant manufactured glued joints classifiable under Chapter Heading 8530 using rails supplied free of cost by Indian Railways under contracts for supply to the Railways - Adjudicating authority confirmed duty, interest and penalty by adding the value of free-supplied rails to the assessable value solely on the ground that no exemption ... [Read more]

Central Excise - Inclusion of value of rails supplied free of cost by Indian Railways in assessable value of glued joints - Effect of retrospective exemption by insertion of Entry No. 205A in Notification No. 12/2012-C.E. through Finance Act, 2015 for the period 17.03.2012 to 03.02.2014 - Appellant manufactured glued joints classifiable under Chapter Heading 8530 using rails supplied free of cost by Indian Railways under contracts for supply to the Railways - Adjudicating authority confirmed duty, interest and penalty by adding the value of free-supplied rails to the assessable value solely on the ground that no exemption was available during the relevant period - Appellant contended that the foundation of the demand no longer survives after the retrospective amendment, which was not available before the adjudicating authority, and prayed for remand - Whether the impugned demand can be sustained in view of the retrospective exemption granted subsequent to the order - HELD - The adjudicating authority proceeded on the premise that no exemption existed, which no longer survives after the Finance Act, 2015. Where the legislature grants exemption with retrospective effect, the amended provision is deemed to have existed from the date specified therein, and all pending proceedings are required to be decided in accordance with the amended law. The period covered by the retrospective exemption is precisely the period involved in the present proceedings, and the Tribunal cannot ignore a retrospective legislative amendment which directly governs the dispute. The adjudicating authority had no occasion to examine the Appellant's eligibility under the exemption since the amendment did not exist when the order was passed. The interests of justice require reconsideration in light of the amendment - All issues including eligibility to exemption, valuation, quantification of demand, interest, penalty and limitation are kept open, the impugned order is set aside and the appeal is allowed by way of remand [Read less]