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Service Tax - Employer-Employee Relationship - The appellant entered into a Hotel Operating Agreement with Hilton International Manage LLC USA for the management and operation of the hotel. The appellant was paying management/operator fees to Hilton US and its other foreign affiliates and discharging service tax under reverse charge mechanism – Service Tax demand alleging that the General Manager and other department heads of the hotel were actually employees of Hilton US and their salaries paid by the appellant should be included in the "gross amount charged" by Hilton US for the purpose of service tax – HELD - In cas... [Read more]

Service Tax - Employer-Employee Relationship - The appellant entered into a Hotel Operating Agreement with Hilton International Manage LLC USA for the management and operation of the hotel. The appellant was paying management/operator fees to Hilton US and its other foreign affiliates and discharging service tax under reverse charge mechanism – Service Tax demand alleging that the General Manager and other department heads of the hotel were actually employees of Hilton US and their salaries paid by the appellant should be included in the "gross amount charged" by Hilton US for the purpose of service tax – HELD - In case of similar hotel owners operating under the Hilton brand across India, the adjudicating authorities and appellate authorities have held that the General Manager and other department heads are not employees of Hilton overseas entities and the salary paid to them is not exigible to be taxed as a part of the management fee/operating fee paid to Hilton Overseas entities Consequently, the same view would have to be taken in the instant case – Further, the Operating Agreement clearly states that the general manager and other department heads are employees of the appellant and the power of hiring/transfer and termination of the employees lay with the appellant. The appellant had fulfilled all the statutory obligations of an employer, such as PF contribution, Form-16, etc. which established the employer-employee relationship between the appellant and the general manager and other department heads. Accordingly, no service tax is liable to be paid by the appellant on the salaries paid to the General Manager and other department heads and set aside the impugned order – The appeal is allowed - Valuation of Taxable Service - The department had alleged that the salaries paid by the appellant to the general manager and other department heads should be included in the "gross amount charged" by Hilton US for the purpose of service tax – HELD - As per Section 67 of the Finance Act, 1994, the value of taxable service is the gross amount charged by the service provider for such service. The Supreme Court in Union of India vs. Intercontinental Consultant and Technocrats Pvt. Ltd. held that the valuation of taxable service cannot be anything more or less than the consideration paid as quid pro quo for rendering such a service. Consequently, no service tax is liable to be paid by the appellant. [Read less]

GST - Consolidation of multiple financial years in single SCN and OIO, Contradictory Judgements of High Courts - SCN issued consolidating demands across multiple years, including an alleged wrongful availment of concessional rate on works contract rate - Petitioner challenged the SCN and OIO on the ground that the consolidation of multiple financial years into a single adjudicatory exercise is improper, as the present matter did not concern fraudulent availment or utilization of ITC, but rather an interpretational dispute as to the nature of the supplies and the applicable rate of tax - Whether the consolidation of multipl... [Read more]

GST - Consolidation of multiple financial years in single SCN and OIO, Contradictory Judgements of High Courts - SCN issued consolidating demands across multiple years, including an alleged wrongful availment of concessional rate on works contract rate - Petitioner challenged the SCN and OIO on the ground that the consolidation of multiple financial years into a single adjudicatory exercise is improper, as the present matter did not concern fraudulent availment or utilization of ITC, but rather an interpretational dispute as to the nature of the supplies and the applicable rate of tax - Whether the consolidation of multiple financial years in a single SCN and OIO is permissible – HELD - The Court is bound by the decision in Ambika Traders, wherein the Delhi High Court had accepted the consolidation of SCNs covering multiple financial years under both Sections 73 and 74 of the CGST Act, even in cases not involving allegations of fraudulent ITC availment or utilization - The language used in Sections 73 and 74 of the CGST Act contemplates the issuance of notices for "any period" or "such periods", which allows for the consolidation of multiple financial years - The withdrawal of the SLP against the Ambika Traders decision with no observation also indicates that the said decision would continue to hold the field. Mere pendency of proceedings before the Supreme Court involving similar issue does not efface the binding nature of the judgment presently holding the field. So far as this Court is concerned, it remains bound by the view taken in Ambika Traders and must proceed accordingly – There is no grounds to interfere with the impugned OIO and the writ petition is dismissed [Read less]

Central Excise – Applicability of valuation under Section 4A of CEA, 1944 - Strapped tyres, tubes and flaps - whether the strapped tyre-tube-flap combinations constitute “pre-packaged commodities” under Section 2(l) of the Legal Metrology Act, 2009 so as to attract a statutory requirement to declare retail sale price and consequently fall within Section 4A of the Central Excise Act, 1944 – HELD – The Tyres, tubes and flaps secured by plastic carry straps are not "placed in a package" within the meaning of the Legal Metrology Act, 2009. Mere strapping at two or three points, covering hardly 1.4% to 3.3% of the sur... [Read more]

Central Excise – Applicability of valuation under Section 4A of CEA, 1944 - Strapped tyres, tubes and flaps - whether the strapped tyre-tube-flap combinations constitute “pre-packaged commodities” under Section 2(l) of the Legal Metrology Act, 2009 so as to attract a statutory requirement to declare retail sale price and consequently fall within Section 4A of the Central Excise Act, 1944 – HELD – The Tyres, tubes and flaps secured by plastic carry straps are not "placed in a package" within the meaning of the Legal Metrology Act, 2009. Mere strapping at two or three points, covering hardly 1.4% to 3.3% of the surface area, without any enclosure, wrapping or receptacle, cannot be equated to "placement in a package". The definition of "pre-packaged commodity" requires existence of a package, which is not satisfied in the present case. The earlier clarifications under the repealed Standards of Weights and Measures Act, which continue to hold the field, have specifically provided that tyres tied with polythene strips do not constitute "pre-packaged commodities" - Section 4A results in a deeming fiction substituting actual transaction value with a notional RSP-based value. Such deeming provisions must be strictly confined to cases where statutory preconditions are clearly met. To equate strapping for transport convenience with packaging would expand Section 4A beyond legislative intent and lead to anomalous consequences. Accordingly, the goods are correctly assessable under Section 4 of the Central Excise Act, 1944 and not under the deeming valuation provision of Section 4A - In the absence of any sustainable demand, the liability to interest under Section 11AA and penalty under Section 11AC does not arise. Penalty cannot be imposed merely for a technical or interpretational dispute, in the absence of any mala fide conduct – The impugned order is set aside and the appeal is allowed - Invocation of extended period under Section 11A(4) – HELD - The extended period under Section 11A(4) is not invokable. There is no evidence of fraud, collusion, wilful misstatement or deliberate suppression with intent to evade duty. The dispute is fundamentally interpretational, relating to the applicability of Section 4A vis-à-vis Section 4 in the context of the Legal Metrology Act. Mere difference in valuation methodology does not amount to suppression, particularly when the primary facts were consistently disclosed in statutory returns. [Read less]

Service Tax - Eligibility of CENVAT credit on common area maintenance service, vending machine service, photography service, and travel agent service - Whether the services in question can be considered as eligible input services under the CENVAT Credit Rules, 2004 – HELD - The common area maintenance service, vending machine service, and travel agent service have an indirect nexus to the output service provided by the appellant and are therefore eligible input services under the CENVAT Credit Rules. The definition of "input service" under Rule 2(l) of the CENVAT Credit Rules includes services that are used directly or i... [Read more]

Service Tax - Eligibility of CENVAT credit on common area maintenance service, vending machine service, photography service, and travel agent service - Whether the services in question can be considered as eligible input services under the CENVAT Credit Rules, 2004 – HELD - The common area maintenance service, vending machine service, and travel agent service have an indirect nexus to the output service provided by the appellant and are therefore eligible input services under the CENVAT Credit Rules. The definition of "input service" under Rule 2(l) of the CENVAT Credit Rules includes services that are used directly or indirectly by the provider of output service. There is no requirement for a one-to-one correlation between the input services and the output services. If the absence of any service adversely impacts the quality and efficiency of the output service, it should be considered as an eligible input service. The refund of CENVAT credit on these services was wrongly denied by the department – The impugned order is set aside and the appeal is allowed - Distinct person status of appellant and FRLON (USA) for the purpose of export of service - Whether the appellant and FRLON can be considered as distinct persons for the purpose of export of service under the Service Tax Rules, 1994 – HELD - The appellant and FRLON are two separate companies registered in different countries, managed by different professional people, and therefore, they are distinct persons. The definition of "distinct person" under Explanation 3(b) of Section 65B(44) of the Finance Act, 1994, states that an establishment of a person in the taxable territory and an establishment of any other person in a non-taxable territory shall be treated as establishments of distinct persons - The department had earlier sanctioned the refund filed by the appellant, accepting that the transaction between the appellant and FRLON was an export of service. Further, the High Court of Gujarat had also held that a holding company located outside India/non-taxable territory is to be treated as a distinct person from its Indian subsidiary for the purpose of export of service. Accordingly, the transaction between the appellant and FRLON should be treated as an export of service. [Read less]

GST - IGST refund on Zero-rated supplies, GSTR-1 filing error - While filing the GSTR-1 return, the petitioner inadvertently entered the IGST amount as zero under Table 6A. This resulted in the IGST refund scroll being generated online with a zero amount - Whether the petitioner is entitled to the IGST refund despite the error committed in filing the GSTR-1 return – High Court held that the Dept cannot have withheld the IGST refund solely on the ground of the difference between the GST data as per the return and the customs data, ignoring the representation made by the petitioner along with the relevant documents to show... [Read more]

GST - IGST refund on Zero-rated supplies, GSTR-1 filing error - While filing the GSTR-1 return, the petitioner inadvertently entered the IGST amount as zero under Table 6A. This resulted in the IGST refund scroll being generated online with a zero amount - Whether the petitioner is entitled to the IGST refund despite the error committed in filing the GSTR-1 return – High Court held that the Dept cannot have withheld the IGST refund solely on the ground of the difference between the GST data as per the return and the customs data, ignoring the representation made by the petitioner along with the relevant documents to show that the goods were exported as zero-rated supplies – Revenue in appeal against the High Court Order - HELD – While not inclined to interfere with the impugned judgment and order passed by the High Court, the submission made by learned ASG on the basis of proviso to Rule 96 of the CGST Rules, 2017, is kept open for being considered in an appropriate case - The Special Leave Petition stands dismissed [Read less]

Central Excise - Classification of goods as patent and proprietary ayurvedic preparations versus cosmetics - The appellant manufactured goods claimed to be patent and proprietary ayurvedic preparations, while the Revenue department classified them as cosmetics – HELD - The appellant had obtained licenses under the Indian System of Medicine to manufacture these products, and the active ingredients used were prescribed in authoritative ayurvedic texts. While the products also contained excipients, the presence of excipients does not disqualify the products from being classified as ayurvedic preparations, as excipients are ... [Read more]

Central Excise - Classification of goods as patent and proprietary ayurvedic preparations versus cosmetics - The appellant manufactured goods claimed to be patent and proprietary ayurvedic preparations, while the Revenue department classified them as cosmetics – HELD - The appellant had obtained licenses under the Indian System of Medicine to manufacture these products, and the active ingredients used were prescribed in authoritative ayurvedic texts. While the products also contained excipients, the presence of excipients does not disqualify the products from being classified as ayurvedic preparations, as excipients are commonly used in pharmaceutical preparations - The labels of the products clearly indicated their medicinal properties and the ailments they claimed to treat, demonstrating their nature as ayurvedic preparations and not mere cosmetics. The mere presence of therapeutic or prophylactic properties in a product does not necessarily make it a cosmetic. Accordingly, impugned orders classifying the goods as cosmetics is set aside and the appeal is allowed [Read less]

Central Excise - Availment of CENVAT credit without receipt of goods in factory - Whether the appellant had received the goods in their factory and later cleared to other customers, or the goods were directly delivered to the other customers without coming to the appellant's factory – HELD - The evidence relied upon by the department to conclude that the goods did not reach the appellant's factory is based on various presumptions and assumptions. The appellant provided sufficient evidence to show that the goods were first received in their factory, necessary tests were conducted, and only then the goods were cleared to t... [Read more]

Central Excise - Availment of CENVAT credit without receipt of goods in factory - Whether the appellant had received the goods in their factory and later cleared to other customers, or the goods were directly delivered to the other customers without coming to the appellant's factory – HELD - The evidence relied upon by the department to conclude that the goods did not reach the appellant's factory is based on various presumptions and assumptions. The appellant provided sufficient evidence to show that the goods were first received in their factory, necessary tests were conducted, and only then the goods were cleared to the other customers. The CENVAT credit availed was also reversed at the time of such clearance - The Department failed to conclusively establish that the goods were directly delivered to the other customers without reaching the appellant's factory. Because of various submissions, it is obvious that the goods were procured and handled by the appellant first, who also conducted certain tests, which are mandatorily required and thereafter, sold the same to the customers – The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Eligibility to avail Cenvat credit of CVD and SAD paid by debiting DEPB scrips – Appellant availed Cenvat credit on Special Additional Duty (SAD) imposed under section 3(5) of Customs Tariff Act, 1975, which was adjusted against various licenses issued to them under DEPB schemes - Department denied the credit, relying on various notifications and circulars which suggested that credit can only be availed if the duties are paid in cash, and not through adjustment against DEPB scrips - Whether the appellant was eligible to avail Cenvat credit of CVD and SAD paid by debiting DEPB scrips and not in cash – H... [Read more]

Central Excise - Eligibility to avail Cenvat credit of CVD and SAD paid by debiting DEPB scrips – Appellant availed Cenvat credit on Special Additional Duty (SAD) imposed under section 3(5) of Customs Tariff Act, 1975, which was adjusted against various licenses issued to them under DEPB schemes - Department denied the credit, relying on various notifications and circulars which suggested that credit can only be availed if the duties are paid in cash, and not through adjustment against DEPB scrips - Whether the appellant was eligible to avail Cenvat credit of CVD and SAD paid by debiting DEPB scrips and not in cash – HELD - As per the provisions of EXIM policy 2004-09, Cenvat credit is admissible even if the Additional Customs Duty is paid by way of debit under DEPB - As per Para 4.3 of EXIM policy 2002-07, there was a provision that in case where the Additional Customs Duty is adjusted from DEPB, no benefit of Cenvat credit/ drawback shall be admissible. However, with an amendment on 28.01.2004, this provision was deleted from Para 4.3.5. Therefore, there is no such explicit restriction for not taking credit if the payment has not been made in cash in terms of prevailing EXIM policy for the period post amendment i.e., 28.01.2004 - The importer is eligible for credit on the duty paid by debit in DEPB, as the CCR do not provide that the duty must be paid only in cash. The relaxation regarding allowing credit on duties paid through DEPB was not limited to the amended EXIM policy post 28.01.2004, but was applicable even under the old policy - The appellant was eligible to avail Cenvat credit of CVD and SAD paid by debiting DEPB scrips – The impugned order is set aside and the appeal is allowed [Read less]

Customs - SAD exemption on clearance from FTWZ to DTA - Appellants imported goods like waste, scrap, billets, and ferro alloys and used them for manufacturing. These imported goods were supplied through FTWZ and when cleared to DTA availing exemption from Special Additional Duty (SAD) under Notification No. 45/2005-Customs dated 16.05.2005 - Department denied the exemption alleging that the appellants had suppressed the fact that the imported goods were used for self-consumption and not for sale in DTA – HELD - The issue of eligibility for SAD exemption on clearance from FTWZ to DTA has been conclusively settled in favor... [Read more]

Customs - SAD exemption on clearance from FTWZ to DTA - Appellants imported goods like waste, scrap, billets, and ferro alloys and used them for manufacturing. These imported goods were supplied through FTWZ and when cleared to DTA availing exemption from Special Additional Duty (SAD) under Notification No. 45/2005-Customs dated 16.05.2005 - Department denied the exemption alleging that the appellants had suppressed the fact that the imported goods were used for self-consumption and not for sale in DTA – HELD - The issue of eligibility for SAD exemption on clearance from FTWZ to DTA has been conclusively settled in favor of the appellants in several decisions. The practice adopted by the appellants, in obtaining a certificate from a Chartered Accountant for compliance with the condition of payment of sales tax/VAT, did not indicate any mala fide intention or suppression of facts. Further, the demands for the period April 2012 to March 2013 are beyond the normal period of limitation. The extended period could not be invoked in the absence of any collusion, wilful misstatement, or intent to evade duty – The impugned order is set aside and the appeal is allowed [Read less]

Customs - Classification of Facsimile Machines and their Parts - Appellant imported facsimile machines and parts from Singapore during 2007-08 and 2008-09, classifying them under CTH 8443 3260 and claiming exemption from Basic Customs Duty under Notification No. 24/2005-Customs dated 01.03.2005 – Demand of differential duty alleging that the facsimile machines are classifiable under CTH 8443 3970 and the parts under CTH 8443 9960, and are not eligible for the exemption – Whether the facsimile machines imported by the appellant were capable of connecting to Automatic Data Processing (ADP) machine or network - HELD - It ... [Read more]

Customs - Classification of Facsimile Machines and their Parts - Appellant imported facsimile machines and parts from Singapore during 2007-08 and 2008-09, classifying them under CTH 8443 3260 and claiming exemption from Basic Customs Duty under Notification No. 24/2005-Customs dated 01.03.2005 – Demand of differential duty alleging that the facsimile machines are classifiable under CTH 8443 3970 and the parts under CTH 8443 9960, and are not eligible for the exemption – Whether the facsimile machines imported by the appellant were capable of connecting to Automatic Data Processing (ADP) machine or network - HELD - It is the case of the appellant that by using external devices such as VBC of ATA adapters, machines were capable of networking and therefore, correctly classifiable under CTH 8443 3260 - The tariff entry clearly differentiates facsimile machines based on their capability to connect to an ADP machine or a network. If such connectivity is available, the classification would fall under the entry relating to machines capable of networking. Department failed to produce any technical evidence to establish that the imported machines were incapable of connecting to a network or ADP machine - Further, the dispute related to the interpretation of tariff entries and technical capability of the machines, which is a matter of classification or interpretation of law, and therefore, the extended period of limitation cannot be invoked. The Circular No. 11/2008-Cus dated 01.07.2008 relied upon by the Department could be applied only prospectively, particularly when it imposes a burden adverse to the importer - Department has failed to discharge the burden of proving that the imported machines were not capable of connecting to ADP machine or network. Therefore, the classification adopted by the appellant under CTH 8443 3260 appears to be correct - the impugned Order-in-Appeal is set aside and the appeal is allowed [Read less]

Service Tax – Taxability of Despatch Money Received from Vessel Owners under "Port Service" Category – Appellant received "despatch money" from vessel owners for expeditious unloading of cargo and quick turnaround of vessels - Department held that this despatch money is consideration for "port service" provided by the appellant to the vessel owners and hence liable to service tax - Whether the despatch money received by the appellant can be classified as consideration for "port service" and subjected to service tax – HELD - As per the charter party agreement, the despatch money was an incentive/bonus paid by the vess... [Read more]

Service Tax – Taxability of Despatch Money Received from Vessel Owners under "Port Service" Category – Appellant received "despatch money" from vessel owners for expeditious unloading of cargo and quick turnaround of vessels - Department held that this despatch money is consideration for "port service" provided by the appellant to the vessel owners and hence liable to service tax - Whether the despatch money received by the appellant can be classified as consideration for "port service" and subjected to service tax – HELD - As per the charter party agreement, the despatch money was an incentive/bonus paid by the vessel owners to the appellant for quicker turnaround of the vessels, and not consideration for any specific "port service" rendered by the appellant. The Tribunal in Vedanta Ltd. case held that the despatch money cannot be subjected to service tax under the "port service" category as no party had performed any activity amounting to "service" under the definition – Further, the despatch money and demurrage were interdependent conditions of the contract regulating the turnaround time, and cannot be vivisected as a separate "service" provided by the appellant. Accordingly, the demand for service tax on the despatch money received by the appellant is set aside - The appeal of the appellant is allowed [Read less]

Service Tax - Laying of optical fibre cables for Railways, Vivisection of Contract - Works Contract Service (WCS) or Business Support Service (BSS) - Laying of optical fibre cables and related telecom work including provisions for establishment charges, procurement charges, and project management charges – Receipt of consideration by way of 13% over and above the cost - Department alleged that the 13% charges constituted a separate BSS, while the appellant claimed it was a composite WCS – HELD - The contract should be read as a whole and cannot be vivisected into different services. The scope of work included material,... [Read more]

Service Tax - Laying of optical fibre cables for Railways, Vivisection of Contract - Works Contract Service (WCS) or Business Support Service (BSS) - Laying of optical fibre cables and related telecom work including provisions for establishment charges, procurement charges, and project management charges – Receipt of consideration by way of 13% over and above the cost - Department alleged that the 13% charges constituted a separate BSS, while the appellant claimed it was a composite WCS – HELD - The contract should be read as a whole and cannot be vivisected into different services. The scope of work included material, labour, supervision, and administration charges - For execution of the work, the appellants were either awarding this work to some other sub-contractor or were undertaking certain work on their own. Since the work order was essentially OFC laying and maintenance and therefore, there is clearly material portion involved. It is not correct for the department to pick one clause out of the said composite contract to allege that they were separately providing BSS. From reading of the entire contract, it does not appear that the contract was given only for the purpose of supervision or for any support service. It is essentially given for the execution of entire work - The 13% charges are a mode of cost determination, not consideration for a separate BSS. The nature of work allotted to the appellant is a composite works contract, which cannot be vivisected into two parts viz., WCS and BSS. Even otherwise, the predominance of contract is works contract, which is imparting essential character to the work allotted. Therefore, once it is considered as WCS, it will exclude the works contract provided to Railways and therefore, to that extent, it will not be subjected to any service tax under the category of WCS – The demand is set aside and the appeal is allowed [Read less]

Service Tax - Classification of service under Works Contract Service (WCS) or Construction of Residential Complex Service (CRCS) - The appellant had challenged the classification of the services rendered by it under WCS instead of CRCS - Adjudicating authority had held that the construction of residential houses involves transfer of property in goods, and therefore, the same is classifiable under WCS instead of CRCS. Appellant argued that it had paid service tax under the category of CRCS availing the abatement of 33% of the gross value – HELD - Once a specific heading of WCS was introduced, the activity which was earlie... [Read more]

Service Tax - Classification of service under Works Contract Service (WCS) or Construction of Residential Complex Service (CRCS) - The appellant had challenged the classification of the services rendered by it under WCS instead of CRCS - Adjudicating authority had held that the construction of residential houses involves transfer of property in goods, and therefore, the same is classifiable under WCS instead of CRCS. Appellant argued that it had paid service tax under the category of CRCS availing the abatement of 33% of the gross value – HELD - Once a specific heading of WCS was introduced, the activity which was earlier classified under CRCS would also come within the purview of WCS, if there is transfer of property in goods in the execution of the contract. Admittedly, there was transfer of property in goods involved in the execution of the contract and VAT had also been paid. Therefore, the classification of the services under WCS was correct. However, the matter is remanded back to the adjudicating authority for the purpose of recalculating the demand by extending the benefit of composition scheme available for WCS – The appeal is allowed by way of remand - Exemption from service tax on irrigation and water supply projects - Appellant claimed exemption from levy of service tax on earth work excavation and construction services relating to Kovvada Kalva Reservoir scheme and on civil works relating to Godavari Drinking Water Project awarded by Greater Visakhapatnam Municipal Corporation (GVMC) – HELD - The adjudicating authority had not brought on record any evidence that the said activities would fall under the category of WCS. Merely because of an expression 'commissioning on turnkey basis' in the agreement, it cannot be presumed that there is transfer of property in goods while executing the said project. There is no dispute that these works were relating to irrigation projects and water supply projects, and therefore, the same should be excluded from the purview of service tax. [Read less]

Central Excise - Manufacture - conversion of GI wire into barbed wire and chain link mesh - Whether amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944 – HELD - The Adjudication Authority is directed to examine afresh whether the process of conversion of GI wire into barbed wire and chain link mesh amounts to "manufacture" as per the definition under Section 2(f) of the Central Excise Act, 1944. The Tribunal observed that this issue needs to be examined in detail based on the facts and circumstances of the case - The impugned orders are set aside and remanded for de-novo adjudication to Adjudicati... [Read more]

Central Excise - Manufacture - conversion of GI wire into barbed wire and chain link mesh - Whether amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944 – HELD - The Adjudication Authority is directed to examine afresh whether the process of conversion of GI wire into barbed wire and chain link mesh amounts to "manufacture" as per the definition under Section 2(f) of the Central Excise Act, 1944. The Tribunal observed that this issue needs to be examined in detail based on the facts and circumstances of the case - The impugned orders are set aside and remanded for de-novo adjudication to Adjudication authority - Branded goods - whether goods can be considered as branded based on the brand name "Tata Wiron" printed on the raw material (GI wire) used for manufacture – HELD - The Adjudication Authority shall re-examine the issue of whether the goods can be considered as bearing a brand name solely on the ground that the raw material used by the Appellant (GI wire) is embossed with the brand name "Tata Wiron" - SSI exemption - whether the unit is located in a rural area to avail the benefit of SSI exemption under Notification No. 8/2003-CE – HELD - The finding of the Appellate Authority regarding the issue of whether the premises is located in a rural area is contradictory and needs to be re-examined by the Adjudication Authority. The burden of proving the eligibility for the SSI exemption is on the Respondent, which needs to be properly examined. [Read less]

GST - Section 75(4) of the CGST Act, 2017 - Non-consideration of petitioner's additional reply and requests for a personal hearing – Violation of principles of natural justice for non-consideration of additional submissions – HELD - After the personal hearing the petitioner submitted further communications including an online reply and an email requesting a personal hearing, which were not considered by the adjudicating authority. The authority considered the final reply filed earlier but inadvertently overlooked the online submissions and the request for personal hearing - The failure to consider the additional reply ... [Read more]

GST - Section 75(4) of the CGST Act, 2017 - Non-consideration of petitioner's additional reply and requests for a personal hearing – Violation of principles of natural justice for non-consideration of additional submissions – HELD - After the personal hearing the petitioner submitted further communications including an online reply and an email requesting a personal hearing, which were not considered by the adjudicating authority. The authority considered the final reply filed earlier but inadvertently overlooked the online submissions and the request for personal hearing - The failure to consider the additional reply and to grant the requested personal hearing amounted to non-compliance with the statutory mandate of Section 75(4) of CGST act and breach of natural justice - The impugned order and the consequential demand notice in Form DRC-07 are quashed and the matter is remanded to the competent authority to pass a fresh order after granting the petitioner a personal hearing and considering the additional submissions – The petition is allowed [Read less]

GST - Legality of search and seizure under Section 67(2) of the CGST Act, 2017 - The petitioner challenged the search and seizure orders issued by the CGST Authorities on the grounds that the goods seized by the Authorities are still lying in their possession and the petitioner is not able to sell/supply them and the business is hampered because the respondents have seized all the necessary documents, computer ledgers etc. - Whether the search and seizure carried out by the authorities were legal and valid – HELD - The petitions were filed at a premature stage as a show cause notice had already been issued to the petitio... [Read more]

GST - Legality of search and seizure under Section 67(2) of the CGST Act, 2017 - The petitioner challenged the search and seizure orders issued by the CGST Authorities on the grounds that the goods seized by the Authorities are still lying in their possession and the petitioner is not able to sell/supply them and the business is hampered because the respondents have seized all the necessary documents, computer ledgers etc. - Whether the search and seizure carried out by the authorities were legal and valid – HELD - The petitions were filed at a premature stage as a show cause notice had already been issued to the petitioners under the provisions of Section 74(1) and Section 74(5)(a) of the CGST Act - It is not the function of the Court to act as a super-board or substitute its judgment for that of the administrative authorities. The sufficiency or inadequacy of the reasons to believe recorded by the authorities cannot be gone into while considering the validity of an act of authorization to conduct search and seizure - The respondents were ready to release the seized goods subject to the production of valid documents by the petitioners, but the petitioners had not produced any such documents. The petitioners had not been able to make out a case for the exercise of jurisdiction under Article 226 of the Constitution - The writ petitions are dismissed [Read less]

There is no prohibition under Sections 67 or 74 preventing the proper officer from relying upon material gathered during investigations conducted by officers of another Commissionerate, so long as such material is relevant to the issues involved.

GST - Supply of HDPE drums made to a person other than the merchant exporter – Eligibility to exemption under Notification No.41/2017–Integrated Tax (Rate) dated 23.10.2017 – Petitioner supplied HDPE Drums to Chemical Manufacturer for packing Ethyl Alcohol for export - Whether petitioner is entitled to concessional Rate of 0.1% GST under Notification No. 41/2017-IT (Rate) dated 23.10.2017 – Vide the impugned order the AAR & AAAR held that the petitioner is not entitled to the concessional rate of tax - HELD - The Notification grants a concessional GST rate on inter-state supply of taxable goods by a registered supp... [Read more]

GST - Supply of HDPE drums made to a person other than the merchant exporter – Eligibility to exemption under Notification No.41/2017–Integrated Tax (Rate) dated 23.10.2017 – Petitioner supplied HDPE Drums to Chemical Manufacturer for packing Ethyl Alcohol for export - Whether petitioner is entitled to concessional Rate of 0.1% GST under Notification No. 41/2017-IT (Rate) dated 23.10.2017 – Vide the impugned order the AAR & AAAR held that the petitioner is not entitled to the concessional rate of tax - HELD - The Notification grants a concessional GST rate on inter-state supply of taxable goods by a registered supplier to a registered recipient for export, subject to strict fulfilment of the specified conditions. One such condition is that the registered recipient shall move the goods directly from the place of the registered supplier either to the port/ICD/airport/land customs station for export, or to a registered warehouse from where the goods shall be moved for export - The Notification not only mandates that the order for supply of goods be placed for the purpose of export, but also requires that both the order and the supply be between the registered supplier and the registered recipient [merchant exporter]. Neither placement of the order nor supply of goods to or by any person other than the registered recipient is contemplated so as to avail the benefit under the Notification - In the present case, the supply was made by the petitioner to the chemical manufacturer, and not directly to the merchant exporter (registered recipient). This does not satisfy the condition of the Notification. The language of the Notification is clear and unambiguous, and cannot be interpreted liberally or expanded beyond its plain terms. The lower authorities were justified in holding that the petitioner is not entitled to the concessional GST rate under the Notification - The impugned AAAR & AAR orders are confirmed and the writ petition is dismissed [Read less]

Customs - Mis-declaration of goods, re-determination of value - Imported goods described as "Painted steel sheets" found to be "Painted galvanized steel sheets" - Issue of whether there was mis-declaration – HELD - The goods were zinc coated or galvanised and painted steel sheets and were described as painted steel sheets. They were neither described as ‘painted galvanised steel sheets’ nor were they described as ‘painted ungalvanized steel sheets’ - There was no mis-declaration as steel sheets can be galvanized or ungalvanized, and the description "painted steel sheets" was incomplete but not a mis-declaration. ... [Read more]

Customs - Mis-declaration of goods, re-determination of value - Imported goods described as "Painted steel sheets" found to be "Painted galvanized steel sheets" - Issue of whether there was mis-declaration – HELD - The goods were zinc coated or galvanised and painted steel sheets and were described as painted steel sheets. They were neither described as ‘painted galvanised steel sheets’ nor were they described as ‘painted ungalvanized steel sheets’ - There was no mis-declaration as steel sheets can be galvanized or ungalvanized, and the description "painted steel sheets" was incomplete but not a mis-declaration. The proper officer could have sought further information to get an accurate description, as is common practice. Mere incomplete description does not amount to mis-declaration warranting confiscation of goods and imposition of penalties – Regarding rejection of declared value and re-determination, when re-determination of value is based on values in other contemporaneous Bills of Entry, copies of those Bills of Entry and supporting documents should have been provided to the appellants. Failure to provide these documents renders the re-determination unsustainable. The specifications like level of zinc coating are vital to determine comparability of goods - The impugned order is set aside and all the appeals are allowed [Read less]

Customs - Retrospective Imposition of Anti-dumping Duty under Notification No.82/2011-CUS dated 25.08.2011 - The appellant imported PVC Flex Banner from China and the goods were provisionally assessed. Subsequently, the authorities levied Anti-dumping Duty (ADD) retrospectively under Notification No.82/2011-CUS dated 25.08.2011 for the period from 30.07.2010 to 29.01.2011, when no ADD was in force – HELD - The retrospective imposition of ADD is not permissible under the law. Once the provisional ADD had lapsed, the authorities could not levy ADD for the intervening period between the expiry of provisional ADD and the imp... [Read more]

Customs - Retrospective Imposition of Anti-dumping Duty under Notification No.82/2011-CUS dated 25.08.2011 - The appellant imported PVC Flex Banner from China and the goods were provisionally assessed. Subsequently, the authorities levied Anti-dumping Duty (ADD) retrospectively under Notification No.82/2011-CUS dated 25.08.2011 for the period from 30.07.2010 to 29.01.2011, when no ADD was in force – HELD - The retrospective imposition of ADD is not permissible under the law. Once the provisional ADD had lapsed, the authorities could not levy ADD for the intervening period between the expiry of provisional ADD and the imposition of final ADD, as it would amount to a retrospective levy which is not authorized under the Customs Tariff Act and the Anti-dumping Rules - The Supreme Court in the case of G.M. Exports has categorically held that there can be no levy of ADD during the 'gap' or 'interregnum' period between the expiry of provisional duty and the imposition of final duty. Such retrospective levy would render the relevant rules ultra vires the parent statute. The authorities are not justified in levying ADD retrospectively for the period after the expiry of provisional ADD and before the imposition of final ADD - The impugned order is set aside and the appellant is not liable to pay the ADD levied - The appeal is allowed [Read less]

Service Tax - Renting of immovable property - Service Tax on Supply of Electricity to tenants - Appellant provided electricity to tenants through sub-meters and DG set - Revenue demanded Service Tax on supply of electricity – HELD - Appellants have charged towards value of electricity on the basis of units consumed by the tenants. There is no dispute that electricity falls under chapter heading 2716 of Central Excise Tariff - Electricity is "goods" and not "service" under the definition of Service Tax law - Supply of electricity cannot be subject to Service Tax as it is a sale/transfer of goods. Service Tax cannot be dem... [Read more]

Service Tax - Renting of immovable property - Service Tax on Supply of Electricity to tenants - Appellant provided electricity to tenants through sub-meters and DG set - Revenue demanded Service Tax on supply of electricity – HELD - Appellants have charged towards value of electricity on the basis of units consumed by the tenants. There is no dispute that electricity falls under chapter heading 2716 of Central Excise Tariff - Electricity is "goods" and not "service" under the definition of Service Tax law - Supply of electricity cannot be subject to Service Tax as it is a sale/transfer of goods. Service Tax cannot be demanded on supply of electricity by the Appellant – The demand confirmed by the lower authorities is set aside and the appeal is allowed - Limitation Period for Demand - Revenue invoked extended period of limitation to raise demand for Service Tax and CENVAT Credit – HELD - Under the self-assessment regime, it is the responsibility of the Revenue officer to scrutinize the returns filed by the assessee and make a best judgment assessment if any tax is found to be short paid - Merely because the issues were detected during audit, the extended period of limitation cannot be invoked unless there is evidence of fraud, collusion, wilful misstatement or suppression of facts by the assessee - In the absence of such evidence, the demand made by invoking the extended period of limitation is set aside. [Read less]

Customs - Classification of "Pressed Distillate Oil" as "Base Oil" - Whether the chemical examiner's report was sufficient to conclude that the imported goods were "Base Oil" and not "Pressed Distillate Oil" and to change the classification accordingly - Denial of cross-examination of the chemical examiner was a violation of principles of natural justice – HELD - The chemical examiner's report merely indicated that the sample had characteristics of "Base Oil" but did not categorically state that the imported goods were "Base Oil". The report was incomplete and non-categorical, and could not be relied upon to allege misde... [Read more]

Customs - Classification of "Pressed Distillate Oil" as "Base Oil" - Whether the chemical examiner's report was sufficient to conclude that the imported goods were "Base Oil" and not "Pressed Distillate Oil" and to change the classification accordingly - Denial of cross-examination of the chemical examiner was a violation of principles of natural justice – HELD - The chemical examiner's report merely indicated that the sample had characteristics of "Base Oil" but did not categorically state that the imported goods were "Base Oil". The report was incomplete and non-categorical, and could not be relied upon to allege misdeclaration. The denial of cross-examination of the chemical examiner by the appellants was a serious violation of principles of natural justice - The incomplete, non-categorical report by CRCL cannot be relied upon to allege that the appellants have imported ‘Base Oil’ mis declaring the same to be ‘Pre-Distillate Oil’ – The appeal filed by assessees are allowed and Revenue appeals are dismissed [Read less]

GST – Condonation of delay in filing of Appeal - Delay in filing appeal due to lapse of internal auditor – HELD - The petitioner came to know of the passing of the order only on the recovery notice - The petitioner's grievance requires to be adjudicated by way of an appeal instead of writ proceedings. However, the petitioner fairly admits the lapse of the internal auditor, against whom certain internal proceedings have been initiated - In the peculiar facts of the case the Appellate Authority is directed to entertain the appeal without raising any objection on the ground of delay, if the appeal is filed within three we... [Read more]

GST – Condonation of delay in filing of Appeal - Delay in filing appeal due to lapse of internal auditor – HELD - The petitioner came to know of the passing of the order only on the recovery notice - The petitioner's grievance requires to be adjudicated by way of an appeal instead of writ proceedings. However, the petitioner fairly admits the lapse of the internal auditor, against whom certain internal proceedings have been initiated - In the peculiar facts of the case the Appellate Authority is directed to entertain the appeal without raising any objection on the ground of delay, if the appeal is filed within three weeks from the date of receipt of the certified copy of the order – The petition is disposed of [Read less]

GST – Blocking of Electronic Credit Ledger in wrongful availment of ITC by supplier - Invocation of Rule 86A of the CGST Rules, 2017 alleging that the petitioner has issued invoices without any supply of goods, thereby enabling the customer to avail of fraudulent ITC – HELD - The power under Rule 86A can be exercised only when the assessee has fraudulently availed or is ineligible for the ITC. In the present case, the allegation relates to the wrongful availment of ITC by the petitioner's customer and not the petitioner itself – The Rule 86A cannot be pressed into action against the petitioner in such circumstances, ... [Read more]

GST – Blocking of Electronic Credit Ledger in wrongful availment of ITC by supplier - Invocation of Rule 86A of the CGST Rules, 2017 alleging that the petitioner has issued invoices without any supply of goods, thereby enabling the customer to avail of fraudulent ITC – HELD - The power under Rule 86A can be exercised only when the assessee has fraudulently availed or is ineligible for the ITC. In the present case, the allegation relates to the wrongful availment of ITC by the petitioner's customer and not the petitioner itself – The Rule 86A cannot be pressed into action against the petitioner in such circumstances, as the allegations do not relate to the credit availed by the petitioner or that the petitioner is not conducting business from the place for which registration has been obtained. Therefore, the show-cause notice issued proposing to prevent the utilization of credit under Rule 86A is held to be improper and set aside - The respondents are directed to unblock the Electronic Credit Ledger of the petitioner forthwith – The petition is allowed [Read less]

Bombay Sales Tax Act, 1959 - Hire premium charges on vehicles sold and re-purchased – Reference by Tribunal, Withdrawal of case by the party - HELD – Once a reference is made by the Tribunal, the party at whose instance it has been made cannot be allowed to withdraw it. However, if the party fails to appear at the hearing of the reference or appears and says it is not interested in the reference being answered, the Court is not bound to answer the question referred and can decline to do so. The preliminary condition of a hearing taking place must be satisfied before the Court is obligated to decide the question of law ... [Read more]

Bombay Sales Tax Act, 1959 - Hire premium charges on vehicles sold and re-purchased – Reference by Tribunal, Withdrawal of case by the party - HELD – Once a reference is made by the Tribunal, the party at whose instance it has been made cannot be allowed to withdraw it. However, if the party fails to appear at the hearing of the reference or appears and says it is not interested in the reference being answered, the Court is not bound to answer the question referred and can decline to do so. The preliminary condition of a hearing taking place must be satisfied before the Court is obligated to decide the question of law referred to it. In the present case, since the applicant did not wish to pursue the reference, the Court declined to answer the questions referred, keeping them open to be answered in an appropriate case in the future – Ordered accordingly [Read less]

GST – Rajasthan AAR - Classification of rubber rings used in sprinkler and drip irrigation systems - The applicant is manufacturer of rubber rings used exclusively in sprinkler and drip irrigation systems - Whether the rubber rings should be classified under Heading 8424 as "parts suitable for use solely or principally with sprinklers or drip irrigation system", attracting a concessional GST rate of 5%, or whether they should be classified under Heading 4016 as "other articles of vulcanized rubber", attracting the standard GST rate of 18% - HELD – The classification of the rubber rings would depend on whether they are ... [Read more]

GST – Rajasthan AAR - Classification of rubber rings used in sprinkler and drip irrigation systems - The applicant is manufacturer of rubber rings used exclusively in sprinkler and drip irrigation systems - Whether the rubber rings should be classified under Heading 8424 as "parts suitable for use solely or principally with sprinklers or drip irrigation system", attracting a concessional GST rate of 5%, or whether they should be classified under Heading 4016 as "other articles of vulcanized rubber", attracting the standard GST rate of 18% - HELD – The classification of the rubber rings would depend on whether they are made of "hard rubber" or "other than hard rubber". If the rubber rings are made of hard rubber, they may be classified under Heading 8424 as parts suitable for use solely or principally with sprinklers or drip irrigation systems, and attract the concessional GST rate of 5%, provided that they are established to be used solely or principally with such systems. However, if the rubber rings are made of "other than hard rubber", or if they are not established to be used solely or principally with sprinklers or drip irrigation systems, they would be classified under Heading 4016 as "other articles of vulcanized rubber" and attract the standard GST rate of 18% - Ordered accordingly [Read less]

GST – Rejection of rectification application under Section 161 of CGST Act - The petitioner filed an application for rectification of an order passed by the respondent, which was rejected on the grounds that the issues raised did not qualify as "errors apparent on the face of the record" – HELD - The conclusion in the impugned order indicates that the petitioner had generated multiple E-way bills using the same invoice, resulting in under-declaration of invoice details in GSTR-1 and short payment of GST. There should have been a proper determination in the impugned order as to whether a single vehicle could have transp... [Read more]

GST – Rejection of rectification application under Section 161 of CGST Act - The petitioner filed an application for rectification of an order passed by the respondent, which was rejected on the grounds that the issues raised did not qualify as "errors apparent on the face of the record" – HELD - The conclusion in the impugned order indicates that the petitioner had generated multiple E-way bills using the same invoice, resulting in under-declaration of invoice details in GSTR-1 and short payment of GST. There should have been a proper determination in the impugned order as to whether a single vehicle could have transported the quantity of teak wood mentioned in the invoice, or whether it required multiple vehicles - The impugned order is quashed and matter is remitted back to the respondent to pass a fresh order on merits, after the petitioner establishes the quantum of items transported in each vehicle and the corresponding bank statements - The Writ Petition is disposed of [Read less]

Service Tax - Liability to pay Service Tax on job-work for manufacturing of cigarettes under the category of 'Business Auxiliary Service' - Whether the appellant is liable to pay service tax on the job-work activities performed for ITC Ltd – HELD - The appellant's job-work activities are fully exempted from service tax on two grounds. Firstly, if the job-work is considered as a manufacturing activity, it is exempt from service tax under Section 66D(f) of the Finance Act, 1994, which exempts services by way of carrying out any process amounting to manufacture or production of goods. Secondly, as per Notification No. 25/20... [Read more]

Service Tax - Liability to pay Service Tax on job-work for manufacturing of cigarettes under the category of 'Business Auxiliary Service' - Whether the appellant is liable to pay service tax on the job-work activities performed for ITC Ltd – HELD - The appellant's job-work activities are fully exempted from service tax on two grounds. Firstly, if the job-work is considered as a manufacturing activity, it is exempt from service tax under Section 66D(f) of the Finance Act, 1994, which exempts services by way of carrying out any process amounting to manufacture or production of goods. Secondly, as per Notification No. 25/2012-ST, when the job-work is carried out on an intermediate product and the final product is cleared by the principal manufacturer (ITC) on payment of excise duty, no service tax is required to be paid by the job-worker (the appellant) - In the present case, it is clear that the manufactured cigarettes are being cleared by the principal manufacturer ITC on payment of excise duty. Therefore, service tax demand cannot be confirmed against the appellant – Further, the Department failed to bring any concrete evidence to show that the appellant had indulged in any activity amounting to suppression. Given the exemption and the negative list provisions, the appellant had a bona fide belief that no service tax was required to be paid. Accordingly, the demand for the extended period is set aside on the ground of time-barred – The impugned order is set aside and the appeal is allowed [Read less]

GST – Karnataka AAR - Liability to GST on recovery of water charges by Residential Welfare Association (RWA) – Applicant-RWA recovers the actual cost of water supply from its members through separate monthly debit notes - Whether the recovery of water charges from its members, on an actual cost basis through separate monthly debit notes, is liable to GST even though water itself is exempt from tax – HELD - Though water is exempt from GST, the recovery of water charges is considered part of the overall maintenance services provided by the RWA to its members - The Association is not selling water as goods to its member... [Read more]

GST – Karnataka AAR - Liability to GST on recovery of water charges by Residential Welfare Association (RWA) – Applicant-RWA recovers the actual cost of water supply from its members through separate monthly debit notes - Whether the recovery of water charges from its members, on an actual cost basis through separate monthly debit notes, is liable to GST even though water itself is exempt from tax – HELD - Though water is exempt from GST, the recovery of water charges is considered part of the overall maintenance services provided by the RWA to its members - The Association is not selling water as goods to its members. It is only recovering from members the actual cost of water procured from third parties such as municipalities or tanker suppliers. This recovery is integrally linked to the overall service of maintaining the residential complex and its common facilities - The recovery cannot be treated as a separate supply of water (goods) as the RWA is not selling water but only recovering the actual cost incurred - The recovery of water charges from members is taxable under GST as it forms part of the maintenance services provided by the RWA – Ordered accordingly - Taxability of recovery of electricity charges for common areas – HELD - The RWA recovers the actual electricity charges for the common areas from its members. Though electrical energy is exempt from GST, the recovery of such charges is considered part of the maintenance services provided by the RWA to its members and is subject to GST at the applicable rates, in accordance with the ceilings specified under the relevant GST notification. The RWA does not satisfy the conditions to be treated as a 'pure agent' for the recovery of electricity charges, and hence the recovered amount forms part of the consideration for the maintenance services. The recovery of electricity charges for common areas from members is taxable under GST - Collection of corpus fund - The amounts collected by the RWA from its members towards a 'corpus fund' for meeting future capital expenditures constitute a 'supply' under GST law. Such collections are treated as advances for a future supply, and GST is payable at the time of receipt of the corpus fund, as per the provisions of the CGST Act. The collection of corpus fund from members is taxable under GST at the time of receipt - Monthly charges for community center - The monthly charges levied by the RWA for the upkeep of the community center within the residential complex are classified as 'Monthly Maintenance Charges' and qualify for the exemption threshold of Rs. 7,500 per member per month as per the relevant GST notification, provided the total monthly contribution per member (including water and electricity charges) does not exceed the exemption limit. The monthly charges for the community center are exempt from GST up to the prescribed limit. [Read less]