More Judgements

1. Home
2. More Judgements

Customs - Applicability of Foreign Trade Policy 2023 - Para 2.31(I)(b) - Restriction on Import of Second-hand Electronics and IT Goods – Appellant imported consignments of old and used multi-function copying printer machines through regular channels without obtaining authorization from the DGFT. The goods were declared in Bills of Entry and subjected to first-check examination. The consignments comprised used MFDs of various makes and models - Whether imported old and used multi-function copying machines fall within the restricted category under Para 2.31(I)(b) of the Foreign Trade Policy, 2023 and require authorization ... [Read more]

Customs - Applicability of Foreign Trade Policy 2023 - Para 2.31(I)(b) - Restriction on Import of Second-hand Electronics and IT Goods – Appellant imported consignments of old and used multi-function copying printer machines through regular channels without obtaining authorization from the DGFT. The goods were declared in Bills of Entry and subjected to first-check examination. The consignments comprised used MFDs of various makes and models - Whether imported old and used multi-function copying machines fall within the restricted category under Para 2.31(I)(b) of the Foreign Trade Policy, 2023 and require authorization from the DGFT for lawful import – HELD - The old and used multi-function copying machines, being electronic and IT goods, fall squarely within the restricted category under Para 2.31(I)(b) of the Foreign Trade Policy, 2023. The statutory provision expressly covers second-hand capital goods other than re-manufactured capital goods which are covered under electronics and IT goods and categorizes them as restricted. Importation thereof is permissible only upon obtaining requisite authorization from the Director General of Foreign Trade. Where the legislature has prescribed a clear classification without ambiguity, effect must be given to the statutory language in its ordinary and natural sense. The provision does not create a residuary category that would render the restricted items freely importable. In the absence of the requisite authorization, the goods become liable to confiscation under Section 111(d) of the Customs Act, 1962 - The reliance on provisional release orders granted by higher Courts in similar matters is rejected as such orders expressly leave it open to the Customs authorities to proceed with adjudication in accordance with law. The issue being pending before the Supreme Court, the established course of law deserves to be followed - The goods are rightly held liable to confiscation under Section 111(d) of the Customs Act, 1962. However, considering the absence of any clandestine importation or mis-declaration regarding the description of goods, the redemption fine is reduced - The issue stands answered accordingly - Exemption as Highly Specialised Equipment under Electronics and Information Technology Goods (Requirements of Compulsory Registration) Order, 2021 - Appellant claimed exemption for the imported machines under Para 8 of the Compulsory Registration Order, 2021, contending that the equipment satisfies two of the four specified criteria for highly specialised equipment, namely, single phase power supply with current rating exceeding 16 Ampere and weight exceeding 80 kilograms. The adjudicating authority rejected this claim, interpreting the exemption to apply only to specialized equipment like high-end servers for nuclear reactors, space programmes and data centres - Whether multi-function copying machines qualify as highly specialised equipment entitled to exemption from compulsory BIS registration under Para 8 of the Compulsory Registration Order, 2021 when they satisfy the objective criteria prescribed therein - HELD – The Para 8 of the Compulsory Registration Order, 2021 prescribes four objective and quantifiable criteria for determining highly specialised equipment exemption, requiring fulfillment of any one criterion. The statutory provision employs plain and unambiguous language and does not restrict the benefit to any particular sector, industry or specialized domain. Where the language employed by the legislature is plain and unambiguous, effect must be given to the same in its ordinary sense, and no words can be added thereunder the guise of interpretation. The adjudicating authority has impermissibly traveled beyond the statutory text to import extraneous limitations unsupported by the legislation. The respondent's earlier conduct treating similar goods as highly specialised equipment for other importers and releasing machines up to 100 units per model demonstrates inconsistency and discrimination. The respondent's own prior orders in respect of similar goods imported by the same appellant had treated those goods as highly specialised equipment without insisting on BIS registration. The decision must rest upon consistent appreciation of evidence and cannot be founded upon contradictory assumptions. The equipment in question demonstrably satisfies at least two of the four prescribed criteria - The findings rejecting the claim of exemption as highly specialised equipment are unsustainable and set aside. The imported goods cannot be treated as liable to confiscation on account of alleged non-compliance with the Compulsory Registration Order, 2021 - Equipment Type Approval from Wireless Planning and Coordination Wing - Reliance on Hearsay Evidence - Requirement of Equipment Type Approval for wireless communication devices and evidentiary standards - Whether confiscation of imported multi-function devices can be sustained on the ground of non-compliance with Equipment Type Approval requirements from the Wireless Planning and Coordination Wing when the allegation rests solely on hearsay evidence derived from brochures without independent verification or opportunity for the importer to rebut – HELD - The findings regarding Equipment Type Approval requirement are founded upon material which is secondary and derivative in nature, procured from brochures and internet sources and never disclosed to the appellant. Reliance upon such hearsay material without disclosing underlying documents and without affording an opportunity to controvert the same violates the principles of natural justice. Material adverse to a party must ordinarily be disclosed to enable effective opportunity of rebuttal. The mere existence of optional wireless functionality in certain models cannot lead to the conclusion that the imported machines were equipped with such functionality. Suspicion, however grave, cannot substitute proof. The equipment must be established as a wireless communication device by design through cogent and affirmative evidence. A multi-function printer with an optional wireless LAN port does not automatically become a wireless communication device requiring mandatory approval. In the absence of positive material evidencing that the imported devices were in fact fitted with wireless modules, the allegation remains in the realm of conjecture and surmise - The findings regarding Equipment Type Approval requirement are not supported by satisfactory and affirmative evidence and are set aside. Non-compliance with WPC requirements cannot be regarded as furnishing an independent or additional ground for confiscation - Compliance with Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 - Whether an importer holding valid EPR authorization and submitting prescribed documentation including country-of-origin certificate can be found non-compliant with hazardous waste rules on grounds of allegedly absent certificates and annual returns when this constituted a first-time import transaction – HELD - The Extended Producer Responsibility Authorization is itself a substantive compliance requirement envisaged under the statutory framework governing e-waste management and not merely a documentary formality. Once obtained from the competent authority and placed on record, it cannot be lightly disregarded while evaluating compliance. The country-of-origin certificate was consistently maintained to have been submitted with the Bills of Lading and packaging. In any event, CBIC Circular No. 07/2020 expressly contemplates situations where exporting country certificate is unavailable and permits post-import inspection by approved Chartered Engineers. The 100 percent first-check examination by Chartered Engineers in India constitutes the alternative mechanism expressly recognized by the Board itself. Insistence upon the exporting country certificate despite this recognized alternative appears misplaced. The requir [Read less]

Customs - Classification of blood glucose monitoring system – Respondent-SEZ imported blood glucose monitoring systems classified under Customs Tariff Item 90278090 as instruments for chemical analysis at Nil Basic Customs Duty - Revenue sought to reclassify them under CTI 90189099 as medical diagnostic instruments attracting 5% duty - Whether glucometers/blood glucose monitoring systems merit classification under CTH 9027 (instruments for physical or chemical analysis) or under CTH 9018 (instruments used in medical, surgical, dental or veterinary sciences) – HELD - Glucometers performs chemical analysis of blood gluco... [Read more]

Customs - Classification of blood glucose monitoring system – Respondent-SEZ imported blood glucose monitoring systems classified under Customs Tariff Item 90278090 as instruments for chemical analysis at Nil Basic Customs Duty - Revenue sought to reclassify them under CTI 90189099 as medical diagnostic instruments attracting 5% duty - Whether glucometers/blood glucose monitoring systems merit classification under CTH 9027 (instruments for physical or chemical analysis) or under CTH 9018 (instruments used in medical, surgical, dental or veterinary sciences) – HELD - Glucometers performs chemical analysis of blood glucose levels through electrochemical or enzymatic reactions occurring on the test strip, which constitutes its primary scientific function. The fact that an instrument is used in the field of medicine does not by itself place it under CTH 9018 where a heading describing its analytical function is available. The measurement of blood glucose level by a glucometer is itself the diagnostic step integral to clinical use and the analytical function of the device is not divorced from its medical purpose. Rule 3(a) of the General Rules for the Interpretation of the Customs Tariff applies with the more specific heading being CTH 9027 describing the analytical nature rather than CTH 9018 describing its field of application. This classification is supported by consistent precedents - The appeal filed by Revenue is dismissed and the Commissioner (Appeals) order is upheld [Read less]

Customs - Classification of Interactive Display Systems – Appellant engaged in importing interactive display systems (viewboards) containing automatic data processing units classified the goods under Chapter Tariff Item 8471.4190 as ADP machines. The adjudicating authority reclassified them under Chapter Tariff Item 8528.5200. The appellate authority allowed the importer's appeal by relying on an earlier tribunal decision that had classified identical goods under 8471.4190 - Whether the Department can reagitate the same issue of classification in a subsequent assessment order despite a settled Tribunal decision – HELD ... [Read more]

Customs - Classification of Interactive Display Systems – Appellant engaged in importing interactive display systems (viewboards) containing automatic data processing units classified the goods under Chapter Tariff Item 8471.4190 as ADP machines. The adjudicating authority reclassified them under Chapter Tariff Item 8528.5200. The appellate authority allowed the importer's appeal by relying on an earlier tribunal decision that had classified identical goods under 8471.4190 - Whether the Department can reagitate the same issue of classification in a subsequent assessment order despite a settled Tribunal decision – HELD - The issue of classification is no longer res integra as it has already been settled in favour of the Respondent-importer in its own case by the Tribunal. The earlier Tribunal decision is binding on the Department and the Department cannot reagitate the same dispute of classification. The principles of judicial discipline require that officers in quasi-judicial matters are bound by decisions of Appellate authorities - Officers cannot bypass appellate orders regarding the same issue merely because such orders are subject matter of further appeal unless their operation has been suspended by a competent Court. The Tribunal's decision in this matter has been relied upon in subsequent Tribunal decisions regarding similar goods and such decisions have been upheld by the Supreme Court, making the issue binding on all judicial and quasi-judicial authorities - The appeal filed by the Revenue is dismissed as being devoid of any merits [Read less]

Service Tax - Cost Sharing of Common Expenses between Parent Company and Wholly Owned Subsidiary - Applicability of Service Tax under Business Support Service - Demand notice alleging that the parent company has provided BSS to the subsidiary and is liable to pay service tax on the amount recovered from the subsidiary under the head "Business Support Service" as specified in Section 65 of the Finance Act, 1994 - Whether cost sharing of common expenses between a parent company and its wholly owned subsidiary amounts to provision of service taxable under the category of business support service – HELD - The parent company ... [Read more]

Service Tax - Cost Sharing of Common Expenses between Parent Company and Wholly Owned Subsidiary - Applicability of Service Tax under Business Support Service - Demand notice alleging that the parent company has provided BSS to the subsidiary and is liable to pay service tax on the amount recovered from the subsidiary under the head "Business Support Service" as specified in Section 65 of the Finance Act, 1994 - Whether cost sharing of common expenses between a parent company and its wholly owned subsidiary amounts to provision of service taxable under the category of business support service – HELD - The parent company merely procures services from external vendors on behalf of both entities and does not itself provide any service to the subsidiary. The recovery of expenses represents mere reimbursement of actual costs incurred and not consideration for services rendered. Prior to the amendment dated 01.05.2011, the definition of BSS specifically enumerated activities such as evaluation of prospective customers, telemarketing, processing of purchase orders, managing distribution and logistics, customer relationship management, accounting and transaction processing, and operational assistance for marketing. The activities in the present case such as hospitality, insurance premium, rent, repair and maintenance, and telephone charges do not fall within any of these specified categories - The arrangement satisfies the criteria of a "pure agent" under the Valuation Rules as the parent company recovers only the exact amount paid to third-party vendors without any markup. Additionally, whatever service tax is paid by the appellant, the same is entitled as CENVAT Credit by their subsidiary companies. Therefore, it will be termed as “service has been provided to self” and it is a revenue neutral situation and no service tax is payable by the appellant - The demand of service tax is set aside and the appeal is allowed [Read less]

GST - Cancellation of GST Registration - Requirement of Speaking Order – Issue of Show Cause Notice for failure to furnish returns for a continuous period of six months but the SCN did not specify the exact period during which returns were not filed – The cancellation order was passed without petitioner furnishing any reply or appearing for personal hearing - Whether the cancellation of GST registration is valid when the cancellation order does not assign proper reasons – HELD – The statutory prescription to record reasons as mandated by Form GST REG-19 under Rule 22(3) of the CGST Rules, 2017 - The adjudicating au... [Read more]

GST - Cancellation of GST Registration - Requirement of Speaking Order – Issue of Show Cause Notice for failure to furnish returns for a continuous period of six months but the SCN did not specify the exact period during which returns were not filed – The cancellation order was passed without petitioner furnishing any reply or appearing for personal hearing - Whether the cancellation of GST registration is valid when the cancellation order does not assign proper reasons – HELD – The statutory prescription to record reasons as mandated by Form GST REG-19 under Rule 22(3) of the CGST Rules, 2017 - The adjudicating authority exercising statutory power of cancellation under the Act must record reasons for its decision as it is implicit in the principles of natural justice and fair play and forms part of fair procedure, particularly when the decision affects the rights of the person concerned. Recording of reasons is a check against arbitrary action and demonstrates conscious application of mind - The statute itself prescribes that reasons must be recorded in the decision through Form GST REG-19, and absence of reasons violates this statutory prescription and renders the order illegal. The fact that the assessee did not submit any reply or appear before the officer does not absolve the officer from the obligation of passing a speaking order, as any order bringing adverse consequences cannot be a mere paper formality - The impugned cancellation order is set aside and quashed and the matter is reverted to the stage of issuance of the show cause notice - The writ petition stands allowed [Read less]

GST - Refund claim - Bunching across tax periods - Whether bunching of refund claims across multiple tax periods is permissible under GST law – HELD - The CBIC Circular dated 31.03.2020 permits bunching of refund claims across tax periods. The said Circular was required to be taken into consideration while deciding the refund application. The respondent authority failed to consider the applicable Circular while issuing the impugned rejection order - The impugned order is set aside and the matter is remanded to the respondent for reconsideration – The writ petition is disposed of

GST - Validity of Summary of Show Cause Notice as substitute for Show Cause Notice - Whether a Summary of Show Cause Notice in Form DRC-01 can constitute a valid Show Cause Notice as required under Section 73(1) of the CGST Act, 2017 – HELD - The Rule 142(1)(a) of the CGST Rules, 2017 merely contemplates a summary to accompany the Show Cause Notice, but the actual Show Cause Notice must be issued separately by the Proper Officer. The statement provided under Section 73(3) is distinct and cannot be equated with the Show Cause Notice under Section 73(1) - The Order in Original is set aside and quashed. The Summary of Show ... [Read more]

GST - Validity of Summary of Show Cause Notice as substitute for Show Cause Notice - Whether a Summary of Show Cause Notice in Form DRC-01 can constitute a valid Show Cause Notice as required under Section 73(1) of the CGST Act, 2017 – HELD - The Rule 142(1)(a) of the CGST Rules, 2017 merely contemplates a summary to accompany the Show Cause Notice, but the actual Show Cause Notice must be issued separately by the Proper Officer. The statement provided under Section 73(3) is distinct and cannot be equated with the Show Cause Notice under Section 73(1) - The Order in Original is set aside and quashed. The Summary of Show Cause Notice is not set aside, but the Respondent is directed to issue a fresh Show Cause Notice in compliance with Section 73(1) of the Act, properly detailing the cause of action and authenticated by the Proper Officer. The fresh Show Cause Notice shall date back to the date of issuance of the Summary, and the period from the date of Summary till the date of service of the present order is excluded from the period of limitation under Section 73(10) of the Act for passing the final order – The writ petition stands disposed of [Read less]

Central Excise - Remission of Central Excise Duty for Inevitable Manufacturing Losses – Appellant-manufacturer of pig iron discovered a shortage of pig iron during physical stock verification conducted after the blast furnace shut down, representing an accumulated loss of 0.55% against total production over eleven years – Appellant applied for remission of duty under Rule 21 of the Central Excise Rules, 2002, contending that the shortage resulted from inevitable and irrecoverable handling losses during the manufacturing process – Dept rejected the remission application, reasoning that the loss was not attributable to... [Read more]

Central Excise - Remission of Central Excise Duty for Inevitable Manufacturing Losses – Appellant-manufacturer of pig iron discovered a shortage of pig iron during physical stock verification conducted after the blast furnace shut down, representing an accumulated loss of 0.55% against total production over eleven years – Appellant applied for remission of duty under Rule 21 of the Central Excise Rules, 2002, contending that the shortage resulted from inevitable and irrecoverable handling losses during the manufacturing process – Dept rejected the remission application, reasoning that the loss was not attributable to natural causes and that the manufacturer ought to have undertaken timely stock-taking - Whether inevitable and irrecoverable handling and process losses occurring before removal of goods qualify for remission under Rule 21 of the Central Excise Rules, 2002 – HELD - The Rule 21 empowers remission where goods are lost or destroyed by natural causes or unavoidable accident before removal. The expressions "natural causes" and "unavoidable accident" must be given a reasonable and liberal meaning to include inevitable, irrecoverable handling and process losses inherent to manufacturing, not confined to catastrophic events alone. The generation of pig iron chips, dust and dross is an inevitable consequence of pig iron manufacturing, and the loss of 0.55% is well within the Board's prescribed condonable limit of 2%, which constitutes binding instructions that the Revenue authority cannot ignore – Further, the Commissioner erred in referring to the erstwhile Rule 223A of the Central Excise Rules, 1944, when the application was expressly made under Rule 21 of the Central Excise Rules, 2002, the operative provision. The Commissioner was bound to allow remission since the inevitability and irrecoverable character of the loss remained undisputed and the loss fell squarely within the remissory ambit of Rule 21 - The Commissioner's order rejecting the remission application is set aside, entitling the appellant to remission of central excise duty on the shortage – The appeal is allowed [Read less]

GST - Waiver of interest and penalty - Whether an applicant can be denied waiver of interest and penalty under Section 128-A of the CGST Act, 2017 on the ground that the applicant availed input tax credit from non-existing taxpayers, cancelled dealers, and return defaulters, when the assessment proceedings were initiated under Section 73 instead of Section 74 – HELD - Where the authority relies on grounds pertaining to wrongful availment of input tax credit, such proceedings should have been initiated under Section 74, which deals with circumstances where a person has received an ineligible refund or availed credit not p... [Read more]

GST - Waiver of interest and penalty - Whether an applicant can be denied waiver of interest and penalty under Section 128-A of the CGST Act, 2017 on the ground that the applicant availed input tax credit from non-existing taxpayers, cancelled dealers, and return defaulters, when the assessment proceedings were initiated under Section 73 instead of Section 74 – HELD - Where the authority relies on grounds pertaining to wrongful availment of input tax credit, such proceedings should have been initiated under Section 74, which deals with circumstances where a person has received an ineligible refund or availed credit not permissible. Since the record demonstrates that proceedings were initiated under Section 73, which pertains to discrepancies in returns and tax payable, the rejection order based on ineligibility grounds falls outside the permissible scope of Section 128-A. The application was filed within the prescribed temporal limits of the Act and meets the conditions for waiver eligibility - The impugned rejection order is set aside and the respondents are directed to reconsider and pass fresh orders on the waiver application – The writ petition is disposed of [Read less]

Service Tax - Applicability of limitation period on refund of erroneously paid service tax under Reverse Charge – Movement of goods partly by road through a transport contractor and partly by rail - The service provider raised invoices charging service tax on the transport contractor, which were endorsed in favor of appellant – The Appellant, under the mistaken belief that Reverse Charge mechanism was applicable to rail transportation services, paid service tax on the same transportation services for which the service provider had already discharged service tax liability - Whether the appellant is entitled to claim ref... [Read more]

Service Tax - Applicability of limitation period on refund of erroneously paid service tax under Reverse Charge – Movement of goods partly by road through a transport contractor and partly by rail - The service provider raised invoices charging service tax on the transport contractor, which were endorsed in favor of appellant – The Appellant, under the mistaken belief that Reverse Charge mechanism was applicable to rail transportation services, paid service tax on the same transportation services for which the service provider had already discharged service tax liability - Whether the appellant is entitled to claim refund of service tax paid by it on transportation of goods by the service provider when the service provider had already paid service tax on the same services and the appellant also paid service tax under RCM – HELD - The fundamental principle is that service tax cannot be levied twice on the same activity. If service tax has been discharged on the same transportation activity by both the service provider and the appellant under RCM by mistake, then the service tax paid by the appellant is required to be refunded. The matter requires examination by the adjudicating authority to ascertain whether service tax has indeed been paid twice on the same services - When service tax has been paid erroneously under the RCM on services that were not payable by the service recipient, the limitation period prescribed under Section 11B of the Central Excise Act, 1944 does not apply to refund claims - The period of limitation cannot be invoked when amounts have been paid under a mistake of law and the revenue had no jurisdiction to collect or retain. Such payments are in the nature of mere deposits and not duty or amount payable in law - The matter is sent back to the adjudicating authority to examine whether service tax has been paid twice on the same transportation services and to pass an appropriate order in accordance with law. The limitation period is held to be inapplicable to the refund claims in question - The appeals are disposed of by way of remand [Read less]

GST - Authority of Central Government to issue Notifications beyond GST Council Recommendations - The Central Government issued Notification No.27/2017 - Central Tax (Rate), dated 22.09.2017, amending Notification No.1/2017 – Central Tax (Rate), dated 28.06.2017 and Notification No.28/2017 - Central Tax (Rate), dated 22.09.2017, amending Notification No. 2/2017 – Central Tax (Rate), dated 28.06.2017 under Sections 9 and 11 of the CGST Act, 2017, which amended the tax treatment of pulses by incorporating the expression "enforceable right in a court of law" in addition to "actionable claim" as recommended by the GST Coun... [Read more]

GST - Authority of Central Government to issue Notifications beyond GST Council Recommendations - The Central Government issued Notification No.27/2017 - Central Tax (Rate), dated 22.09.2017, amending Notification No.1/2017 – Central Tax (Rate), dated 28.06.2017 and Notification No.28/2017 - Central Tax (Rate), dated 22.09.2017, amending Notification No. 2/2017 – Central Tax (Rate), dated 28.06.2017 under Sections 9 and 11 of the CGST Act, 2017, which amended the tax treatment of pulses by incorporating the expression "enforceable right in a court of law" in addition to "actionable claim" as recommended by the GST Council in its 21st meeting, thereby widening the scope of taxability beyond what was recommended - Whether the Central Government can issue notifications that go beyond the recommendations made by the GST Council – HELD - Applying the ratio established in Union of India v. Mohit Minerals Private Limited, the Central Government, while exercising the power to issue statutory Notifications under Sections 9 and 11 of the CGST Act (charging and exempting provisions), is bound by the recommendations of the GST Council. The Notification must be issued "on the recommendations" of the Council, which means it should not only reflect the recommendations but also not exceed them. Both statutory Notifications and Rules are forms of subordinate legislation and must be laid before Parliament. If the Government stands bound by GST Council recommendations while exercising Rule-making power under Section 164, it stands equally bound when issuing Notifications under Sections 9 and 11. The objective of the GST regime is to establish a uniform taxation system and harmonized national market, which would be defeated if the Centre unilaterally goes beyond Council recommendations. The GST Council represents the combined wisdom of States and the Centre, and such recommendations cannot be lightly cast aside. The expressions "actionable claim" and "enforceable right in a court of law" are not synonymous, with the latter having a much wider ambit. The addition of "enforceable right in a court of law" in the impugned Notifications constitutes going beyond the Council's recommendation, as the Council specifically recommended only "actionable claim" and not the broader expression - The impugned notifications issued by the Central Government under Sections 9 and 11 are declared ultra vires the CGST Act insofar as they incorporate the expression "enforceable right in a court of law," but are declared intra vires to the extent they remain valid without this expression - The writ petitions stand allowed - Power of GST Council to Ratify Notifications Issued by Central Government - The GST Council, in its 22nd meeting held on 06.10.2017, ratified the notifications dated 22.09.2017 issued by the Central Government under Sections 9 and 11 of the CGST Act, 2017, and approved additional conditions regarding voluntary forgoing of actionable claims or enforceable rights by persons having such claims or rights over brand names - Whether the GST Council has the power to ratify notifications issued by the Central Government either under Section 9 or Section 11 of the CGST Act, 2017 – HELD - The GST Council does not possess the power to ratify notifications issued by the Central Government. The power of the GST Council is derived from Article 279A of the Constitution of India, which confers only the power to make recommendations with respect to matters specified in Article 279A(4). The power to ratify is nowhere conferred upon the GST Council either explicitly or by necessary implication - Ratification, as a legal concept, involves the retrospective validation of an invalid act that was improperly or unauthorisedly performed initially, but such power requires explicit or implied conferment. Since neither the Constitution nor any statute invests the GST Council with ratification power, any attempt at ratification exceeds the Council's jurisdiction - The ratification made by the GST Council in its 22nd meeting is declared without jurisdiction and is set aside. [Read less]

Andhra Pradesh General Sales Tax, 1957 - Works Contract - Double taxation through inclusion of amounts already assessed in prior and subsequent assessment years in turnover computation - Whether the orders confirming assessment of the entire amount received during the assessment year as turnover, without deducting amounts already subjected to tax in preceding and subsequent years, amounts to double taxation and violates the principle against undue enrichment – HELD - The turnover under Section 2(s) of the APGST Act, 1957 means the amount payable based on invoices raised for works executed during that specific assessment ... [Read more]

Andhra Pradesh General Sales Tax, 1957 - Works Contract - Double taxation through inclusion of amounts already assessed in prior and subsequent assessment years in turnover computation - Whether the orders confirming assessment of the entire amount received during the assessment year as turnover, without deducting amounts already subjected to tax in preceding and subsequent years, amounts to double taxation and violates the principle against undue enrichment – HELD - The turnover under Section 2(s) of the APGST Act, 1957 means the amount payable based on invoices raised for works executed during that specific assessment year - The authorities failed to properly verify and address the dealer's contention that amounts relating to work executed in other assessment years and already subjected to tax in those years should not be included in the turnover for the disputed assessment year. Including such amounts results in double taxation leading to undue enrichment which is impermissible - The expression "turnover" as defined in the statute, read with the provisions relating to works contracts, explicitly contemplates only amounts for works executed during the assessment year in question. The orders passed by the assessing authority, Appellate Commissioner, and Tribunal failed to specifically deal with this material contention despite categorical averments and supporting evidence produced by the dealer – The impugned orders are set aside and the matter is remitted to the assessing authority to verify the books of account and materials to determine whether the net turnover includes amounts already assessed in the previous year and subsequent year and pass a fresh order accordingly – The Tax Revision Case stands partly allowed [Read less]

GST - Works contracts - Retroactive application and waiver of statutory provisions – Respondents-Contractors having entered into works contracts with government agencies and departments prior to 01.07.2017 claimed that the rates quoted by them were inclusive of all taxes applicable at that time and did not include the element of GST. When the GST regime came into force on 01.07.2017, the works contracts became subject to GST at 18% and subsequently 12%, thereby increasing the tax burden of the contractors - Authorities issued notices demanding GST payment. The writ petitions filed by the contractors were allowed by the S... [Read more]

GST - Works contracts - Retroactive application and waiver of statutory provisions – Respondents-Contractors having entered into works contracts with government agencies and departments prior to 01.07.2017 claimed that the rates quoted by them were inclusive of all taxes applicable at that time and did not include the element of GST. When the GST regime came into force on 01.07.2017, the works contracts became subject to GST at 18% and subsequently 12%, thereby increasing the tax burden of the contractors - Authorities issued notices demanding GST payment. The writ petitions filed by the contractors were allowed by the Single Judge, who issued directions to the employers to reimburse the differential tax and to the GST authorities to waive interest, penalty, and limitation periods for filing amended returns - Whether directions issued by the trial court permitting contractors to file returns by calculating differential tax and directing tax authorities to waive interest, penalty, and limitation periods under the GST Acts are sustainable and whether the burden of incremental tax arising from the change in tax regime can be shifted to the employers through judicial directions to tax authorities – HELD - The controversy regarding incremental tax burden arising from the change in tax regime is essentially a matter between the contractors and the employers with whom they had entered into contracts, and not a matter for judicial intervention with respect to the statutory scheme for levy and collection of GST. The liability of contractors to pay GST is required to be determined strictly in accordance with the provisions of the relevant GST statutes. The levy of interest under the GST Acts is automatic and mandatory and admits of no discretion to waive or reduce it through judicial directions. No directions can be issued permitting the filing of revised returns contrary to the statutory provisions of the GST Acts, and plenary directions to waive penalty, interest, or the limitation for filing returns cannot be sustained as they are contrary to the statutory scheme - The dispute regarding differential tax reimbursement must be resolved between the contractors and employers through contractual remedies, and not through directions to tax authorities. The courts cannot issue directions to tax authorities regarding levy, assessment, and collection of tax, penalty, or interest in a private contractual dispute between contractors and employers. Judicial power cannot be exercised to override or modify the statutory scheme governing tax liability, which is a matter of statutory prescription - The impugned order, to the extent it issues directions to the tax authorities, stands set aside. The appeals are disposed of on the basis that directions to reimburse differential tax are construed as applicable only to the concerned employers and not to the tax authorities – The appeal is disposed of [Read less]

Customs – Eligibility to exemption from Social Welfare Surcharge on camera modules for mobile phones under Notification No. 11/2018-Cus - The imported camera modules could only function as digital cameras after being assembled with other mobile phone components and lacked independent features such as internal storage device, output terminals, optical viewfinder, or liquid crystal display in their imported condition - Whether the appellant is eligible to claim exemption from payment of Social Welfare Surcharge under entry no. 30 of Notification No. 11/2018-Cus dated 02.02.2018 while importing camera modules for mobile pho... [Read more]

Customs – Eligibility to exemption from Social Welfare Surcharge on camera modules for mobile phones under Notification No. 11/2018-Cus - The imported camera modules could only function as digital cameras after being assembled with other mobile phone components and lacked independent features such as internal storage device, output terminals, optical viewfinder, or liquid crystal display in their imported condition - Whether the appellant is eligible to claim exemption from payment of Social Welfare Surcharge under entry no. 30 of Notification No. 11/2018-Cus dated 02.02.2018 while importing camera modules for mobile phones – HELD - The Notification No. 11/2018-Cus dated 02.02.2018 explicitly requires that goods must satisfy two conditions i.e. classification under tariff item 85258020, and second, the goods must answer the description of a "Digital Still Image Video Camera." While the classification condition is satisfied, the second condition is not fulfilled because camera modules are distinct products from digital still image video cameras. Although both may be classified under the same tariff heading, camera modules cannot independently perform the functions of a digital camera at the time of import. A camera module requires assembly with other mobile phone components to function as a digital camera, whereas a digital still image video camera is a standalone product with built-in storage, output terminals, viewfinders, and display features in its imported condition – The functionality similarity at a post-import stage cannot establish that goods satisfy the notification's description requirement at the point of importation. The exemption notifications must be interpreted strictly and the assessee bears the burden of establishing that goods satisfy all conditions specified in the notification. The exclusion of camera modules from the basic customs duty exemption under Notification No. 37/2018 indicates legislative intent to distinguish camera modules from complete digital cameras - The camera modules, being parts of mobile phones that only acquire digital camera functionality after assembly, do not satisfy the description requirement of the notification - the Order-in-Original upholding the demand for Social Welfare Surcharge is upheld. The penalty imposed under section 112(b)(ii) of the Customs Act, 1962 and confiscation of goods are held to be justified – The appeal is dismissed [Read less]

GST - Inadvertent error in availing Input Tax Credit - Voluntary Reversal - Rectification of Assessment Order – Petitioner inadvertently availed excess Input Tax Credit amounting to a specified sum under the IGST column in December 2017. Upon noticing the mistake, the assessee voluntarily reversed the entire credit in July 2019 - Authorities passed an assessment order demanding recovery of the excess Input Tax Credit. The assessee's application for rectification was rejected by the authority on the ground that the request did not satisfy the conditions necessary to exercise rectification jurisdiction - Whether an assessm... [Read more]

GST - Inadvertent error in availing Input Tax Credit - Voluntary Reversal - Rectification of Assessment Order – Petitioner inadvertently availed excess Input Tax Credit amounting to a specified sum under the IGST column in December 2017. Upon noticing the mistake, the assessee voluntarily reversed the entire credit in July 2019 - Authorities passed an assessment order demanding recovery of the excess Input Tax Credit. The assessee's application for rectification was rejected by the authority on the ground that the request did not satisfy the conditions necessary to exercise rectification jurisdiction - Whether an assessment order demanding recovery of excess Input Tax Credit claimed inadvertently is valid when the assessee claims to have voluntarily reversed the entire credit without utilization, notwithstanding the assessee's failure to respond to the notice and show cause proceedings – HELD - Although the assessee failed to respond to the initial notices served under the GST procedure, the circumstances of the case warrant interference with the assessment order. The assessee's defense is premised on the claim that the excess availment was purely procedural and clerical in nature occurring at the nascent stage of GST implementation without any revenue implication or mala fide intent, and that the credit was voluntarily reversed without being utilized for any tax discharge or refund. The tax authority did not have an occasion to verify whether there was a bona fide error which was rectified voluntarily because the assessee did not respond to the statutory notices, but such verification could be undertaken if the assessee is given a fresh opportunity. If an opportunity as contemplated under Section 75(4) is extended, the assessee could demonstrate the inadvertent error and the voluntary reversal - The assessment order is quashed and the proceedings are restored to the tax authority with an opportunity to the assessee to file a detailed response with all supporting documents – The petition is disposed of [Read less]

Customs - Sampling procedure for imported coal - Applicability of IS 436 standard – Import of coking coal and claiming exemption under Notification No.21/2002-CUS dated 01.03.2002 and Notification No.20/2006-Cus. dated 01.03.2006 - Revenue authority denied the benefit after testing the imported goods. The testing samples are drawn without following the prescribed IS 436 standard procedure, and subsequently, the test results from the load port and the Central Institute of Mining and Fuel Research do not match. The company requests re-testing by an independent laboratory after receiving the test report with a delay of eigh... [Read more]

Customs - Sampling procedure for imported coal - Applicability of IS 436 standard – Import of coking coal and claiming exemption under Notification No.21/2002-CUS dated 01.03.2002 and Notification No.20/2006-Cus. dated 01.03.2006 - Revenue authority denied the benefit after testing the imported goods. The testing samples are drawn without following the prescribed IS 436 standard procedure, and subsequently, the test results from the load port and the Central Institute of Mining and Fuel Research do not match. The company requests re-testing by an independent laboratory after receiving the test report with a delay of eight months, and also objects to the sampling procedure retroactively - Whether the Revenue is justified in denying the benefit of the exemption notification when the samples drawn for testing do not comply with the IS 436 standard procedure – HELD - As established by the Supreme Court's decision in the case of Tata Chemicals Ltd., the samples must be drawn in accordance with the IS 436 standard. If the method of testing is not mentioned in the tariff, the Indian Standard Institution's method applies to both Excise and Customs matters. There can be no estoppel against law and the Customs authorities cannot be absolved from following the prescribed procedure merely because a representative was present or because the objection was raised subsequently - Where a variation exists between test reports from different laboratories, the request for re-testing cannot be ignored as an afterthought merely because it was made after eight months, particularly when the original test report itself was communicated after such a delay - The appeal filed by the Revenue is dismissed [Read less]

Service Tax – Majority Order - Classification of Site Formation Services as Works Contract - Classification of services rendered in relation to development of residential layouts - Appellant undertook conversion of agricultural land to residential use, obtained statutory approvals, and executed extensive civil infrastructure works prior to selling developed sites to housing societies and individual buyers. The assessee had also paid VAT under a composition scheme under State VAT Act and had voluntarily obtained service tax registration under works contract category - Whether the services rendered by the appellant as to b... [Read more]

Service Tax – Majority Order - Classification of Site Formation Services as Works Contract - Classification of services rendered in relation to development of residential layouts - Appellant undertook conversion of agricultural land to residential use, obtained statutory approvals, and executed extensive civil infrastructure works prior to selling developed sites to housing societies and individual buyers. The assessee had also paid VAT under a composition scheme under State VAT Act and had voluntarily obtained service tax registration under works contract category - Whether the services rendered by the appellant as to be classifiable under ‘Site Formation and Clearance, Excavation, Earth Moving and Demolition Service’ as held by the Member (Technical) or whether the services rendered by the appellant as to be classifiable under ‘Works Contract’ as held by the Member (Judicial) - HELD - The activities undertaken by the assessee involve transfer of property in goods in the execution of the contract, encompassing construction, erection, completion, fitting out and alteration of immovable property, which are hallmarks of works contract as defined under Section 65(54) of the Finance Act, 1994. The court applied the principle laid down by the Supreme Court in Larsen and Toubro that in composite contracts involving both goods and services, the most specific description must be preferred over general description, and that service tax cannot be imposed on a portion of the total consideration. The assessee had paid VAT on composition basis under State law, which triggers the Board's Circular clarification that contracts treated as works contract for VAT purposes shall be treated as works contract for service tax purposes – It is observed that approximately 70 per cent of the total value comprises cost of materials and infrastructure facilities, demonstrating a composite nature of the contract. The site formation service under Section 65(97a) refers to preparatory activities antecedent to construction, while the present activities involve comprehensive construction and installation services that extend beyond mere site formation and clearance – All the activities carried out in respect of movable or immovable property wherein transfer of property is involved and the supply of goods on payment of VAT is involved would fall under the category of ‘Works Contract’ only. Applying the cited case-laws, the statutory provisions and the Board’s clarification, it is held that the services provided by the appellant falls within the classification of ‘Works Contract service’ only – Ordered accordingly [Read less]

Central Excise - Non-application of Mind and Non-speaking Order - Whether an appellate order passed without independently examining the grounds of appeal, documentary evidence, and relevant statutory provisions, and merely adopting the view of the lower authority without recording reasoned findings, can be sustained in law – HELD - When a quasi-judicial authority exercises appellate jurisdiction, it is mandated to independently assess the matter before it and record its own findings rather than merely adopting the view of the authority below. The first appellate authority instead of examining the grounds of appeal indepe... [Read more]

Central Excise - Non-application of Mind and Non-speaking Order - Whether an appellate order passed without independently examining the grounds of appeal, documentary evidence, and relevant statutory provisions, and merely adopting the view of the lower authority without recording reasoned findings, can be sustained in law – HELD - When a quasi-judicial authority exercises appellate jurisdiction, it is mandated to independently assess the matter before it and record its own findings rather than merely adopting the view of the authority below. The first appellate authority instead of examining the grounds of appeal independently and applying its mind to the issues raised, restricted itself to reproducing the findings recorded in the orders below by making a blanket statement that no reason exists to interfere without any engagement with the appellant's submissions. Such an order constitutes a non-speaking order which fails to identify the specific grounds of appeal urged by the appellant, does not examine the evidence and documents filed before it, and does not engage with the relevant statutory provisions or record any independent conclusion on the merits - The requirement of passing a reasoned order is not a mere formality but forms part and parcel of the principle of natural justice and supervisory jurisdiction of superior courts, as an order without reasons lacks legal foundation. The failure to assign reasons renders an administrative or quasi-judicial order arbitrary and liable to be set aside on that ground alone - The orders-in-appeal are set aside and the matter is remanded to the Commissioner (Appeals) for fresh decision on merits with independent examination of all grounds of appeal, documentary evidence, and statutory provisions, with the direction to pass a speaking order – The appeal is allowed by remand [Read less]

Service Tax - Export of services, Refund of accumulated Cenvat credit – Rejection of refund claim on the ground that the services rendered do not qualify as export of services - Whether refund of accumulated Cenvat credit can be denied on the ground that services do not constitute export of services without issuing a specific notice under Rule 14 of the Cenvat Credit Rules, 2004 for recovery of the alleged irregular credit – HELD – The refund of Cenvat credit cannot be denied merely on the assertion that services are not export services without following the statutory procedure prescribed under Rule 14 of the CCR, 20... [Read more]

Service Tax - Export of services, Refund of accumulated Cenvat credit – Rejection of refund claim on the ground that the services rendered do not qualify as export of services - Whether refund of accumulated Cenvat credit can be denied on the ground that services do not constitute export of services without issuing a specific notice under Rule 14 of the Cenvat Credit Rules, 2004 for recovery of the alleged irregular credit – HELD – The refund of Cenvat credit cannot be denied merely on the assertion that services are not export services without following the statutory procedure prescribed under Rule 14 of the CCR, 2004. Rule 3 provides the enabling provision for taking Cenvat credit on inputs and input services with the objective of utilizing the same for payment of excise and service tax on output services. In case of exportation of output services, Rule 5 specifically provides for refund of accumulated Cenvat credit subject to compliance with procedures and guidelines laid down under notifications issued thereunder. Rule 14 mandates that in case of irregular availment of credit or its utilization, such credit can be recovered from the assessee through prescribed recovery provisions - The admitted fact that the Department has not invoked Rule 14 for effecting recovery of alleged irregular Cenvat credit is determinative. Rule 5 does not specify that Cenvat credit can be denied on the ground of irregular availment or utilization without first following the recovery procedure. The denial of refund benefit without questioning the eligibility of Cenvat credit through proper notice and without invoking the recovery provisions is purely outside the scope of the show-cause notice and cannot be sustained - The orders rejecting the refund claim are set aside and the appeals are allowed [Read less]

Service Tax - Banking services - Minimum Average Balance as Consideration – Petitioners-Banks provided various facilities and services to customers who maintained a Minimum Average Balance (MAB) in their accounts, without charging any monetary consideration for such services. When MAB was not maintained, Banks charged penalty/fees on which service tax was duly discharged - Authorities issued Show Cause Notices demanding service tax on the basis that the commitment of customers to maintain MAB constituted non-monetary consideration for the services provided by banks - Whether services provided by banks to customers mainta... [Read more]

Service Tax - Banking services - Minimum Average Balance as Consideration – Petitioners-Banks provided various facilities and services to customers who maintained a Minimum Average Balance (MAB) in their accounts, without charging any monetary consideration for such services. When MAB was not maintained, Banks charged penalty/fees on which service tax was duly discharged - Authorities issued Show Cause Notices demanding service tax on the basis that the commitment of customers to maintain MAB constituted non-monetary consideration for the services provided by banks - Whether services provided by banks to customers maintaining MAB, without any monetary or non-monetary consideration being charged, amount to taxable services under Section 65B(44) and Section 66E(e) of the Finance Act, 1994 and whether the customer's obligation to maintain MAB constitutes consideration for such services as defined under Section 67 of the Finance Act, 1994 – HELD - For a transaction to be taxable under service tax law, there must be an activity carried out by one person for another for consideration. The definition of consideration under both the Indian Contract Act, 1872 and the Finance Act, 1994 requires that consideration must necessarily accrue to and vest in the service provider. In the present case, the banks have not charged any consideration, monetary or non-monetary, and MAB maintenance is merely a contractual condition, not the consideration for the services. Applying the inversion test, when MAB is not maintained, the bank charges penalty but continues to provide the same services at the same rate, which demonstrates that MAB is merely a condition of contract and not a consideration for an independent service – The transaction comprises the maintenance of a deposit in a bank account and the levy of a penalty in the event of a breach, upon which the requisite Service Tax stands duly discharged. Consequently, the transaction does not give rise to any further taxable element or facet warranting examination through the prism of Service Tax - The Supreme Court judgments in Bhayana Builders (P) Ltd and in Edelweiss Financial Services Ltd cases establish that unless an amount is charged by the service provider to the service recipient, it does not enter into the equation for determining the value on which service tax is payable – Further, the CBIC Circular No.178/10/2022-GST dated 03.08.2022 explicitly states that there must be a necessary and sufficient nexus between the supply and the consideration, and an agreement to do or tolerate an act cannot be presumed to exist merely because there is a flow of money or commitment from one party to another. The respondents themselves had dropped identical proceedings against another bank by accepting substantially similar contentions. The impugned notices are contrary to the Circulars issued by the respondents themselves and the scheme and mandate of the Finance Act, 1994 provisions - The show cause notices demanding service tax and all further proceedings emanating therefrom are quashed. The writ petitions are allowed - Service Tax - Valuation of Services - Whether penal charges collected for non-maintenance of MAB can be treated as consideration for valuing services provided free of cost - HELD – The penal charges are distinct from consideration and are levied only to deter non-compliance with contractual terms, the penalty amount cannot be equated with the value of services as it represents compensation for breach and not quid pro quo for services provided when MAB is maintained, and the principle established by the Apex Court in Bhayana Builders case requires that consideration must be for the actual service provided with direct nexus between the supply and the consideration charged - Service Tax - Applicability of Board Circulars - Whether tax authorities are bound by circulars issued by the Board - HELD – The Circulars issued by the Board are binding on the Department and the Department cannot take a stand contrary to instructions issued by the Board, the Circulars dated 03.08.2022 and 28.02.2023 specifically clarify that an independent contract with express or implied agreement establishing necessary and sufficient nexus between supply and consideration is essential for taxability, and agreements cannot be presumed from mere flow of money, therefore show cause notices issued contrary to these circulars are without jurisdiction and authority of law - Service Tax - Jurisdiction of High Court under Article 226 - Whether writ petition is maintainable when alternative statutory remedy is available - HELD - when the respondents have acted beyond the scope of their jurisdiction by issuing show cause notices for services not falling within the taxable definition, the High Court can exercise writ jurisdiction as the issue involves a pure question of law without any disputed questions of fact, the pre-determined stand of the respondents makes alternative remedies futile, and the finding that the relevant jurisdictional facts are missing renders the proceedings ex facie illegal, therefore the High Court is entitled to entertain the petitions. [Read less]

Service Tax: Majority Order - Service of Order, Statutory Period for Filing Appeal – Rejection of appeal filed beyond the condonable limits - While the Hon’ble Member (Judicial) held that the impugned order passed by the Commissioner (Appeals) rejecting the appeal of the appellant on time-bar is held to be unsustainable, the Hon’ble Member (Technical) held that the Commissioner (Appeals) was right in rejecting the appeal as the appeal was filed beyond the condonable limits provided by the statute - Whether service of the Order-in-Original to an authorized representative who appeared in the personal hearing constitute... [Read more]

Service Tax: Majority Order - Service of Order, Statutory Period for Filing Appeal – Rejection of appeal filed beyond the condonable limits - While the Hon’ble Member (Judicial) held that the impugned order passed by the Commissioner (Appeals) rejecting the appeal of the appellant on time-bar is held to be unsustainable, the Hon’ble Member (Technical) held that the Commissioner (Appeals) was right in rejecting the appeal as the appeal was filed beyond the condonable limits provided by the statute - Whether service of the Order-in-Original to an authorized representative who appeared in the personal hearing constitutes valid service of the order for the purpose of computing the statutory period for filing appeal – HELD - An authorized representative who appears for and on behalf of the appellant before the adjudicating authority under Section 35Q of the Central Excise Act, 1944, which defines 'authorized representative' as a person authorized to appear including a relative or regular employee, is competent to receive the order in compliance with Section 37C of the Central Excise Act. Service of the Order-in-Original to such authorized representative (by tendering it on 02.01.2018) constitutes valid and effective service of the order for computing the statutory period. The statutory period of two months for filing appeal runs from 02.01.2018, with an additional condonable period of one month till 02.04.2018. Since the appeal was filed on 09.05.2018, it is barred by limitation. The principle established by the Supreme Court in Singh Enterprises requires that appeals must be filed within the prescribed statutory period and the legislature has expressly excluded the application of Section 5 of the Indian Limitation Act, 1963 to tax matters. No power exists to condone delay beyond the statutory condonable period of 30 days, and the Commissioner (Appeals) correctly upheld the time bar to the appeal - The order of the Commissioner (Appeals) is upheld and the appeal is dismissed [Read less]

GST – Proceedings for delayed or non-deposit of GST amount - BNS, 2023 vs. CGST/SGST Act, 2017 - Invocation of General Penal provisions under Bharatiya Nyaya Sanhita without resort to special statute providing exhaustive mechanism – The applicant was accused of delayed/non-deposit of GST/TDS amount deducted from payments made in relation to execution of Gram Sabha development works - Whether the authorities can legally initiate criminal prosecution by invoking the penal provisions of Bharatiya Nyaya Sanhita without invoking the penal provisions and mandatory statutory procedure prescribed under the GST Act, which is a ... [Read more]

GST – Proceedings for delayed or non-deposit of GST amount - BNS, 2023 vs. CGST/SGST Act, 2017 - Invocation of General Penal provisions under Bharatiya Nyaya Sanhita without resort to special statute providing exhaustive mechanism – The applicant was accused of delayed/non-deposit of GST/TDS amount deducted from payments made in relation to execution of Gram Sabha development works - Whether the authorities can legally initiate criminal prosecution by invoking the penal provisions of Bharatiya Nyaya Sanhita without invoking the penal provisions and mandatory statutory procedure prescribed under the GST Act, which is a special statute providing a complete mechanism for adjudication, penalty and prosecution – HELD – The CGST/SGST Act, 2017 is a complete and self-contained special statute providing comprehensive machinery relating to deduction of tax, assessment, adjudication, penalty and prosecution. Sections 50, 51, 122, 126 and 138 of the GST Act unmistakably demonstrate that the legislature has consciously created a complete code to deal with all contingencies arising out of non-deduction, short deduction, delayed deposit or non-deposit of GST amount, including determination of liability, imposition of interest, levy of penalty, prosecution and compounding of offences. Once the field is specifically occupied by a special statute providing an exhaustive mechanism, resort to the provisions of general penal law can be justified only where the allegations independently disclose essential ingredients of distinct criminal offences such as dishonest misappropriation, forgery, fabrication of records, cheating or wrongful gain - In the present case, the allegation against the applicant is confined only to delayed/non-deposit of GST/TDS amount, with no allegation of embezzlement, dishonest misappropriation, siphoning of money, fabrication or manipulation of records, fake transactions, forged documents or wrongful gain. The material brought on record indicates that the amount allegedly not deposited was subsequently deposited in the government account. Thus, the allegations squarely fall within the statutory framework of the GST Act and not within the ambit of general penal provisions - Initiation of criminal prosecution under general penal law, without resorting to the statutory mechanism prescribed under the GST Act is legally unsustainable - The impugned charge sheet and cognizance/summoning order and proceedings are quashed. However, the order does not preclude authorities concerned to proceed against the applicant under the UPGST Act, 2017 – The application is allowed [Read less]

Customs - Evidentiary value of retracted statement in valuation proceedings – Appellant imported high pressure laminate sheets and declared the value at USD 12,000 (C&F). The revenue redetermined the value at USD 43,500 (C&F) based on a statement made by the importer, which was later retracted, and also relied upon a proforma invoice of another company whose product specifications were different from the imported goods - Whether the entire proceedings based on a retracted statement, without any other corroborating evidence or contemporaneous import records, can form the basis for enhancement of the declared value of impo... [Read more]

Customs - Evidentiary value of retracted statement in valuation proceedings – Appellant imported high pressure laminate sheets and declared the value at USD 12,000 (C&F). The revenue redetermined the value at USD 43,500 (C&F) based on a statement made by the importer, which was later retracted, and also relied upon a proforma invoice of another company whose product specifications were different from the imported goods - Whether the entire proceedings based on a retracted statement, without any other corroborating evidence or contemporaneous import records, can form the basis for enhancement of the declared value of imported goods under the Customs Valuation Rules, 2007 – HELD - The entire proceedings are based on the retracted statement which lacks evidentiary value. There is no evidence on record nor any discussion of contemporary imports or invoices to substantiate the enhancement of the declared value. The invoice of another company relied upon by the revenue has products with different specifications as compared to the imported goods and therefore, they are not comparable. Without any other credible evidence on record except for the retracted statement, there is no reason to uphold the value redetermination - The impugned order set aside and the appeal is allowed [Read less]

Central Excise - Classification of animated films and television serials as software for Central Excise Duty purposes - Whether animated films and television serials in the form of CDs and Betacam SP Pal tapes, cleared in the DTA by a EOU constitute software liable to Central Excise duty or fall within the definition of information technology software exempt from such duty – HELD - The products constitute software under the statutory definition of information technology software, which encompasses any representation of instructions, data, sound or image recorded in machine-readable form and capable of being manipulated o... [Read more]

Central Excise - Classification of animated films and television serials as software for Central Excise Duty purposes - Whether animated films and television serials in the form of CDs and Betacam SP Pal tapes, cleared in the DTA by a EOU constitute software liable to Central Excise duty or fall within the definition of information technology software exempt from such duty – HELD - The products constitute software under the statutory definition of information technology software, which encompasses any representation of instructions, data, sound or image recorded in machine-readable form and capable of being manipulated or providing interactivity to a user by automatic data processing machine - The products cleared by the appellant in the form of CD are not a simple compact disc which when installed in the computer start functioning. On the other hand, they are CDs which can function only with the software which are supplied to the customers along with the CDs, therefore, they are rightly classifiable under CTH 8524.20 as ‘Software’ - The experts initially opined the products were not software but revised their opinion during cross-examination when considering the statutory definition, rendering the original basis of the show-cause notice invalid - The unit operates under the Software Technology Park scheme with a Letter of Permission for development and export of software, and since the exports are not disputed as software, the products cleared in the DTA must similarly be software as there is no evidence that domestic and export products differ - The Department itself demonstrated confusion by classifying the same goods under different tariff headings in successive show-cause notices, indicating failure to understand the product description in terms of the statutory definition. The animated advertisements, commercials, cartoons and serials in CD form, which function only with accompanying software tools such as Animo, US-Animation and 3D Studio Max, are rightly classifiable as software. The impugned order demanding central excise duty is set aside - The appeal is allowed [Read less]

Customs - Refund of Special Additional Duty of Customs when Sales Tax/VAT is Exempt – Import of goods under contract with Metro Rail Corporation – Appellant claimed refund of SAD of customs paid at the time of importation under Notification No. 102/2007 dated 14.09.2007. The importer contends that the goods were exempt from Sales Tax/VAT as the sale took place in the course of import under Section 5(2) of the CST, 1956 - Revenue rejected the refund claim on the ground that one of the mandatory conditions prescribed in the Notification, namely payment of appropriate Sales Tax/VAT on sale of imported goods, has not been ... [Read more]

Customs - Refund of Special Additional Duty of Customs when Sales Tax/VAT is Exempt – Import of goods under contract with Metro Rail Corporation – Appellant claimed refund of SAD of customs paid at the time of importation under Notification No. 102/2007 dated 14.09.2007. The importer contends that the goods were exempt from Sales Tax/VAT as the sale took place in the course of import under Section 5(2) of the CST, 1956 - Revenue rejected the refund claim on the ground that one of the mandatory conditions prescribed in the Notification, namely payment of appropriate Sales Tax/VAT on sale of imported goods, has not been fulfilled - Whether refund of SAD of customs is admissible under Notification No. 102/2007 dated 14.09.2007 when the imported goods are exempt from levy of Sales Tax/VAT – HELD - The Notification mandates that the importer shall pay "appropriate sales tax or value added tax as the case may be" on sale of imported goods. The term "appropriate" connotes the rate applicable to the transaction. When goods are legitimately exempt from Sales Tax or VAT under Constitutional provisions and statutory law, the appropriate rate of such tax becomes nil. Therefore, when the appropriate rate is nil, the appropriate Sales Tax or VAT paid is also nil, and this does not constitute non-compliance with the notification - So long as appropriate Sales Tax or VAT at the applicable rate is paid, refund of Special Additional Duty of customs is admissible, and where the appropriate rate is nil, the condition stands satisfied by payment of nil amount. The importer cannot be penalized for the goods being legitimately exempt from Sales Tax or VAT – The rejection of refund claim is set aside and the appeal is allowed [Read less]

Customs - Classification of Reformate – Appellant imported Reformate classifying it under tariff item 2707 50 00, claiming concessional Customs duty rates. The Commissioner of Customs rejects this classification and reclassifies the product under tariff item 2710 12 19, confirming differential duty demands with interest and imposing a redemption fine - Whether Reformate is classifiable under Tariff item 2707 50 00 as claimed by the appellant-importer or under Tariff item 2710 12 19 as claimed by the Revenue – HELD – Heading 2707 covers not only distillates of coal tar or mineral tar but also similar products obtained... [Read more]

Customs - Classification of Reformate – Appellant imported Reformate classifying it under tariff item 2707 50 00, claiming concessional Customs duty rates. The Commissioner of Customs rejects this classification and reclassifies the product under tariff item 2710 12 19, confirming differential duty demands with interest and imposing a redemption fine - Whether Reformate is classifiable under Tariff item 2707 50 00 as claimed by the appellant-importer or under Tariff item 2710 12 19 as claimed by the Revenue – HELD – Heading 2707 covers not only distillates of coal tar or mineral tar but also similar products obtained by processing of petroleum, as clarified in the HSN Explanatory Notes. The expression "at 250°C" in the tariff description should be interpreted as "by 250°C" to align with the fractional distillation process, wherein a product begins distilling as temperature rises and continues distilling until the specified temperature is reached. The Department itself had interpreted "at 210°C" as "by 210°C" in the Show Cause Notice while classifying under 2710, and therefore cannot be permitted to take a contrary stand. Reformate, containing 80% or more aromatic content, cannot be classified under 2710 as a preparation since all preparations under that heading must contain at least 70% of petroleum oils from specified categories, which would necessarily result in non-aromatic constituents exceeding aromatic constituents. The definition of motor spirit under Supplementary Note (a) requires cumulative satisfaction of two conditions: flash point below 25°C and suitability for use as fuel in spark ignition engines. The expression "admixture with any other substance" refers to substances other than mineral oil, and Reformate added as blend stock in large proportion to gasoline cannot be treated as an admixture - The Supreme Court's dismissal of the Revenue's appeal against the Tribunal's earlier decision in an identical case creates binding precedent by virtue of merger doctrine. Since the products and subject matter are identical, the Revenue cannot maintain two conflicting positions on identical products imported during the disputed periods - The goods are classified under Tariff Item 2707 50 00. The impugned order is set aside, and the appeal is allowed [Read less]

Service Tax - Commercial Training or Coaching Services - Exclusion under Section 65(27) of Finance Act, 1994 – Respondent conducts Maritime training academy imparting coaching and training in maritime courses and issues certificates recognized by the Director General of Shipping under the Merchant Shipping Act, 1958 - Whether services rendered by the academy fall under the category of 'Commercial Training or Coaching' Service or excluded from the definition under Section 65(27) of the Finance Act, 1994 – HELD - The services rendered by the respondent are excluded from the levy of service tax as the institute is approve... [Read more]

Service Tax - Commercial Training or Coaching Services - Exclusion under Section 65(27) of Finance Act, 1994 – Respondent conducts Maritime training academy imparting coaching and training in maritime courses and issues certificates recognized by the Director General of Shipping under the Merchant Shipping Act, 1958 - Whether services rendered by the academy fall under the category of 'Commercial Training or Coaching' Service or excluded from the definition under Section 65(27) of the Finance Act, 1994 – HELD - The services rendered by the respondent are excluded from the levy of service tax as the institute is approved by the Director General of Shipping for conduct of courses for aspiring seafarers, and the certificates issued are recognized by law through the Director General of Shipping who is the authority vested with the power to issue competency certificates under Section 78 of the Merchant Shipping Act, 1958. The Tribunal in Cochin Shipyard Ltd. case, held that courses conducted come within the excluded category of the definition of commercial training or coaching centres. The courses are conducted as per the syllabus prescribed by the Director General of Shipping in line with requirements of the STCW code and are not mere internal coaching classes, hence the Respondent is not liable to pay service tax under the category of commercial training or coaching services - There is no finding on the second issue regarding legal services, which has been fairly admitted by the respondent. The respondent has agreed to discharge the service tax along with interest. Penalties are set aside – The appeal is partially allowed [Read less]

Central Excise - CENVAT Credit on Erection and Commissioning Services – Appellant availed CENVAT credit on erection and commissioning charges paid to sub-contractors. The adjudicating authority disallowed the credit on the ground that erection and commissioning is a post-manufacturing activity and does not qualify as input service under Rule 2(l) of CENVAT Credit Rules, 2004 - Whether CENVAT credit on erection and commissioning charges paid to sub-contractors is allowable when the assessee itself is a registered output service provider separately charging and collecting service tax on such services – HELD - The assesse... [Read more]

Central Excise - CENVAT Credit on Erection and Commissioning Services – Appellant availed CENVAT credit on erection and commissioning charges paid to sub-contractors. The adjudicating authority disallowed the credit on the ground that erection and commissioning is a post-manufacturing activity and does not qualify as input service under Rule 2(l) of CENVAT Credit Rules, 2004 - Whether CENVAT credit on erection and commissioning charges paid to sub-contractors is allowable when the assessee itself is a registered output service provider separately charging and collecting service tax on such services – HELD - The assessee is an independent output service provider registered under the Service Tax Act and erection and commissioning is an independent service which the assessee provides separately with applicable output service tax charged on such services. For providing such output services, the assessee availed services of sub-contractors who raised invoices on the assessee. There exists direct nexus between the charges paid to sub-contractors and the assessee's business of providing erection and commissioning services. The eligibility for CENVAT credit under Rule 2(l) of CENVAT Credit Rules, 2004 is established - CENVAT credit on erection and commissioning services is allowed - Since the confirmation of demand is unsustainable the levy of interest and imposition of penalty are also unsustainable - The impugned order is set aside and the appeal is allowed - CENVAT Credit on Management Consultant Services availed for identification of key market trends and developing business plans. Although the agreement was common for multiple group companies, a fixed percentage of the total contract fee was allocated to the assessee and a separate invoice was raised on the assessee for its share – Disallowance of credit on the ground that such services had no connection with manufacturing activity. The appellate authority additionally held that since services were used by the group company as a whole, CENVAT credit was not allowable - Whether CENVAT credit on management consultant services is allowable when the services relate to business activities such as identifying market trends and developing business plans, even though they do not have direct nexus with manufacturing – HELD – The CENVAT credit on management consultant services is allowable. Rule 2(l) does not require any direct nexus between the services and the manufactured product. The relevant criterion is whether the services are availed towards activities relating to business. Identifying key market trends and developing business plans are activities crucial to the business of the assessee and clearly establish the nexus with business activities. Additionally, the services qualify as market research activities which are specifically included in the definition of input service under Rule 2(l) of CENVAT Credit Rules, 2004. The services also fall under Section 65(105)(r) of the Finance Act, 1994. – the CENVAT credit on management consultant services is allowed - CENVAT Credit on Manpower Supply Services - Whether CENVAT credit on manpower supply services is allowable when the assessee demonstrates that contract labourers were engaged solely in manufacturing dutiable products and similar credit was allowed in subsequent periods – HELD - The manpower supply agency raises separate invoices for labourers supplied for dutiable and exempt products. The contract labourers in question were engaged solely in manufacturing dutiable products and accordingly, the assessee is eligible for full credit of the amount paid to the manpower supply agency. The fact that CENVAT credit on manpower supplied from the same agency was allowed for subsequent periods with an average quantum corresponding to the monthly average during the period in question establishes the eligibility for credit. The absence of corroborating evidence at the adjudication stage does not preclude credit when supported by subsequent period adjudication orders and invoices – CENVAT credit on manpower supply services is allowed - CENVAT Credit on Mediclaim and Accidental Insurance Policy – Whether CENVAT credit on mediclaim and accidental insurance policies for employees qualifies as input service under Rule 2(l) of CENVAT Credit Rules, 2004 – HELD – The CENVAT credit on mediclaim and accidental insurance policies for employees qualifies as input service. A mediclaim policy for employees constitutes an input service under Rule 2(l) of CCR, 2004, both under the main limb and the inclusive limb of the definition. It is not necessary for the assessee to establish an integral connection between the service and business of manufacture for the service to be categorized as input service. The findings of the adjudicating authority based on the requirement of direct or indirect use in relation to manufacture are not sustainable – CENVAT credit on mediclaim and accidental insurance policies for employees is allowed. [Read less]

Service Tax liability on international air transport services involving round-trip tickets - Whether service tax is liable on round-trip air transport services where the passenger embarks from outside India and returns to the same place without the aim of travelling from India to a place outside India – HELD - The Board's Circular No. 96/7/2007-ST dated 17.10.2006 clarifies that in case of round trips, where the journey is a single continuous one and the passenger's aim is not to travel from India to a place outside India, service tax is not leviable under Section 65(105)(zzzo) of the Finance Act, 2006. In the present ca... [Read more]

Service Tax liability on international air transport services involving round-trip tickets - Whether service tax is liable on round-trip air transport services where the passenger embarks from outside India and returns to the same place without the aim of travelling from India to a place outside India – HELD - The Board's Circular No. 96/7/2007-ST dated 17.10.2006 clarifies that in case of round trips, where the journey is a single continuous one and the passenger's aim is not to travel from India to a place outside India, service tax is not leviable under Section 65(105)(zzzo) of the Finance Act, 2006. In the present case, since the round trip was 'Maldives-Trivandrum-Maldives', the passenger embarked outside India and returned to the same place, making it a continuous round trip not attracting service tax liability. Further, the Commissioner (Appeals) had already dropped the demand for a subsequent period on the same ground that service tax is not payable on any sector of a trip when the passenger embarks outside India on a round-trip ticket or on a continuous trip terminating outside India. Accordingly, the impugned orders are set aside and the appeals are allowed [Read less]