More Judgements

Home

More Judgements

2026-VIL-749-CAL | High Court SGST

GST - Seizure of Goods - Release of Perishable Goods - Distinction Between Release Under Section 129(1)(a) and Section 129(1)(b) of the CGST Act - Goods were seized by CGST authorities and the appellant, who had made a statement before the Anti-Evasion Section that he was not the consignor and was a painter by profession, approached the court for release claiming to be the owner - The adjudicating authority found that the appellant was not the owner and the actual owner could not be traced. The ld. Single Judge directed the CGST authorities to auction the goods and directed the appellant to participate in such auction. The... [Read more]

2026-VIL-745-PAT-CE | High Court CENTRAL EXCISE

Central Excise – CENVAT credit on capital goods installed in Captive Power Plant – Appellant installed a Captive Power Plant within its factory premises where electricity was generated using bagasse as fuel; the electricity generated was substantially consumed within the factory for manufacture of dutiable final products while surplus electricity was supplied to State Electricity Board - Department denied CENVAT credit on capital goods installed in the Captive Power Plant on the ground that electricity is exempted goods and the capital goods were used for generation of exempted goods – Whether capital goods installed in a Captive Power Plant qualify for CENVAT credit where electricity generated is predominantly consumed in manufacture of dutiable goods but surplus is supplied outside the factory – HELD – Rule 6(4) of CENVAT Credit Rules, 2004 prohibits availment of CENVAT credit only where capital goods are used exclusively in manufacture of exempted goods, thus, the statutory embargo requires exclusive use to the exclusion of dutiable final products. In the present case, the admitted factual position is that electricity was predominantly consumed in manufacture of dutiable final products and only surplus was supplied outside the factory. Once the admitted position is that the Captive Power Plant formed an integral part of the respondent’s manufacturing unit and the electricity generated therein was substantially utilized in the manufacture of dutiable final products, the requirement of exclusive use contemplated under Rule 6(4) cannot be said to have been satisfied - The Circular No. 665/56/2002-CX dated 25.09.2002 clarifies that CENVAT credit on capital goods used in manufacture of exempt intermediate goods cannot be denied where such intermediate goods are captively consumed in manufacture of final products chargeable to duty. The Tribunal was justified in holding that denial of CENVAT credit was unsustainable – The Revenue appeal is dismissed and the CESTAT order allowing CENVAT credit on capital goods is affirmed - Central Excise – CENVAT credit on specified taxable services under Rule 6(5) – Appellant availed CENVAT credit on seventeen specified taxable services covered under Rule 6(5) of CENVAT Credit Rules, 2004 in relation to Captive Power Plant - Department denied credit on ground that services were related to generation of electricity which was partly supplied as exempted goods outside the factory – Whether specified taxable services qualify for CENVAT credit where electricity generated is part captively consumed in dutiable manufacturing – HELD – Rule 6(5) of CENVAT Credit Rules, 2004 carves out exception in respect of specified taxable services and permits availment of full credit unless such services are used exclusively for manufacture of exempted goods or provision of exempted services; the legislative intent recognizes that certain common input services are incapable of precise segregation between dutiable and exempted activities - The admitted factual position is that electricity generated was substantially consumed in manufacture of dutiable products and only surplus was supplied outside; it cannot be held that specified services were used exclusively for exempted goods; the finding recorded by Tribunal is consistent with plain language of Rule, CBEC circulars and admitted facts – CENVAT credit on specified input services is admissible - Central Excise – CENVAT credit on iron and steel items used for repair and maintenance – Department denied CENVAT credit on iron and steel items such as M.S. angles, channels, joists and plates on ground that after amendment with effect from 07.07.2009 such goods ceased to be eligible for credit as they were used for fabrication of supporting structures and did not qualify as capital goods or inputs – Whether iron and steel items qualify for CENVAT credit where used for repair and maintenance of existing plant and machinery – HELD – Admissibility of CENVAT credit on iron and steel items depends upon purpose for which goods have been used and not merely nomenclature; where used for construction of buildings or fabrication of immovable supporting structures credit is ordinarily unavailable; where established to have been used in repair, replacement or maintenance of existing plant and machinery directly connected with manufacturing process, claim is required to be examined in light of actual use - Tribunal recorded categorical finding of fact that items were used for repair and maintenance of existing capital goods forming part of manufacturing unit. Revenue failed to demonstrate that finding is either unsupported by evidence or suffers from perversity. The actual use of goods constitutes determinative test while examining admissibility of credit – Denial of credit on iron and steel items is set aside - Central Excise – Duty liability on waste and scrap arising from capital goods – Department confirmed demand for duty on waste and scrap arising from capital goods on premise that Appellant cleared such waste and scrap and under Rule 3(5) of CENVAT Credit Rules, 2004 is liable to discharge duty – Whether waste and scrap arising from capital goods attract duty liability – HELD – Revenue failed to point out any specific statutory provision or material on record demonstrating that finding suffers from legal infirmity; appeal under Section 35G of Central Excise Act, 1944 lies only on substantial question of law; where Tribunal upon appreciation of evidence records findings of fact which are neither shown to be perverse nor contrary to statutory provisions, Court would be slow to interfere merely because another view is possible. The jurisdiction under Section 35G is confined to examination of substantial questions of law and does not extend to fresh re-appreciation of factual issues – Demand for duty on waste and scrap is set aside. [Read less]

2026-VIL-1330-CESTAT-CHD-ST | CESTAT SERVICE TAX

Service Tax – Applicability of extended period of limitation based on third-party Income Tax data – Appellant received services income for the year 2014-15 as per Income Tax data but failed to file service tax returns or deposit tax; Department issued notice on basis of third-party data received from Income Tax Department alleging suppression of facts and invoked extended period of limitation demanding recovery of service tax - Commissioner (Appeals) dropped demand for period April 2014 to September 2014 as time-barred but sustained demand for October 2014 to March 2015 by invoking extended period – Whether extended ... [Read more]

2026-VIL-16-AAR-CU | Advance Ruling Authority CUSTOMS

Customs AAR – Eligibility to exemption in terms under Sl. No. 39 of Notification No. 24/2005-Cus dated 01.03.2005 to spare parts of the capital goods used in the manufacture of Printed Circuit Boards – HELD - The SI. No. 39 of the said notification is intended to cover goods having a direct nexus with the manufacture of the specified products, namely consumables, raw materials, components, and other inputs that are consumed in, or incorporated into, the final products covered under SI. Nos. 1 to 38 - Further, the capital goods, spare parts of which are proposed to be imported duty free under this notification are not b... [Read more]

2026-VIL-1331-CESTAT-CHD-ST | CESTAT SERVICE TAX

Service Tax – Taxability of shelters and facilities provided by local authority to bus operators – Appellant-Nagar Panchayat, provided shelters and facilities with toilets to bus operators at bus stop and collected Adda Fees for maintenance of the facilities - Department contended that Adda Fees collected constituted consideration for Business Support Services rendered and demanded service tax along with interest and penalty – Whether facilities provided by local authority for public use and Adda Fees collected constitute taxable services under Business Support Services – HELD – Appellant is a statutory body perf... [Read more]

2026-VIL-1334-CESTAT-CHE-CE | CESTAT CENTRAL EXCISE

Central Excise – Classification of Minute Maid Nimbu Fresh beverage product – Appellant, a contract packaging/bottling company manufacturing and clearing 'Minute Maid Nimbu Fresh' (MMNF) declared classification of Central Excise Tariff Heading 22029020 as 'Fruit pulp' or 'Fruit juice based drink' – Department alleged that MMNF should be classified under CETH 22021020 as 'Lemonade' and therefore abatement under Section 4A of Central Excise Act would not be available – Demand of differential Central Excise duty on ground that tax payable on Section 4 value was not paid – Whether MMNF containing lemon juice concentr... [Read more]

2026-VIL-1332-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax – Taxability of Commercial Training and Coaching services – Appellant provided training in construction activities to candidates referred by manpower agencies; upon completion, candidates cleared competency tests conducted by Government of Singapore and were sent to Singapore for employment - Department issued show cause notice invoking extended period of limitation, alleging short-payment of service tax as the services fell under Commercial Training or Coaching Service – Whether services provided by training institute qualify for exemption under Notification 24/2004 as Vocational Training and whether ext... [Read more]

2026-VIL-1316-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs - Rate of interest on delayed refund of amount deposited during investigation - Appellant imported mixed xylene isomers classified under certain Customs Tariff Heading and deposited duty differential amount under protest pending investigation, which was subsequently determined not to be due by higher authorities and ordered to be refunded but refund was granted with interest at 6% instead of 12% per annum – Applicable rate of interest payable on delayed refund of amount deposited during course of investigation - HELD - Interest at 12% per annum is payable on delayed refund of amount deposited during investigation... [Read more]

2026-VIL-1323-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs - Demand of duty forgone on utilization of transferable DFIA licenses when allegations against issuing exporter have been vacated – Appellant-Importer utilized transferable Duty Free Import Authorization licenses issued by exporter for importing goods and claimed import duty exemption but investigation revealed exporter had not disclosed technical characteristics and specifications of essential oil used in manufacture of goods in shipping bills and improperly obtained DFIA licenses - Appellant as importer was demanded to pay duty forgone aggregating specified amount under Section 28 of Customs Act by invoking ext... [Read more]

2026-VIL-1315-CESTAT-HYD-CE | CESTAT CENTRAL EXCISE

Central Excise - Cenvat Credit - Applicability of Rule 6 of Cenvat Credit Rules to goods cleared under Notification at concessional rate of duty – Appellant cleared Sulphuric Acid partly on payment of central excise duty and partly without payment of duty to fertilizer manufacturers under Notification No. 12/2012-CE and availed common Cenvat Credit of duty paid on inputs without maintaining separate accounts - Whether goods cleared under conditional duty-free removal under the notification constitute exempted goods within the meaning of Rule 2(d) of Cenvat Credit Rules, 2004 and attract Rule 6 requiring segregation or reversal of credit - HELD - Goods cleared under conditional exemption Notification cannot be treated as exempted goods as the exemption is not unconditional but depends upon fulfillment of elaborate statutory conditions prescribed under the relevant rules. The exemption is transaction-specific and purpose-oriented while the goods themselves remain intrinsically dutiable and are admittedly cleared on payment of duty to numerous other buyers. The statutory scheme prescribes elaborate safeguards including procurement certificates, verification, execution of bonds, maintenance of records, end-use verification and recovery mechanisms which demonstrate exemption is conditional with liability shifting to recipient manufacturer if conditions are violated. Goods cleared under such conditional duty-free removals cannot be mechanically equated with manufacture of inherently exempted goods. Hence Rule 6 of Cenvat Credit Rules has no application to such clearances and common Cenvat Credit attributable to inputs used in manufacture of such goods cannot be reversed – Further, the invocation of extended period of limitation is not sustainable as the conduct disclosed no deliberate attempt to evade duty and ingredients for extended period are conspicuously absent. The demands for Cenvat Credit reversal, interest and penalty cannot survive as the principal demand itself is not sustainable - In matters involving interpretation of rule and conditional exemptions, penalties cannot be imposed without fraud or willful misstatement or suppression of material facts. The impugned order is set aside and appeals are allowed [Read less]

2026-VIL-1319-CESTAT-CHD-CE | CESTAT CENTRAL EXCISE

Central Excise - Refund of duty claimed on ground of vires of exemption notifications while challenging same before High Court, Sanction of the refund subject to outcome of the Writ Petitions - Whether refund of duty can be sanctioned when notifications are challenged before High Court and whether differential refund on alleged fictitious clearances can be granted when matter is pending decision - HELD - Issue challenging vires of notifications was agitated before High Court but now stands settled being decided by Hon'ble Supreme Court in VVF Ltd case whereby it was clarified that Supreme Court judgment shall not affect am... [Read more]

2026-VIL-1318-CESTAT-ALH-CE | CESTAT CENTRAL EXCISE

Central Excise – Validity of imposition of penalty under Section 11AC of Central Excise Act and Section 78 of Finance Act when duty and service tax have been deposited with interest before issuance of show cause notice - Whether penalties under Section 11AC of Central Excise Act and Section 78 of Finance Act are imposable when the assessee has deposited duty and service tax along with due interest before issuance of show cause notice - HELD – The plain reading of Section 11AC and proviso to Section 11AC of Central Excise Act clearly provides that where duty and interest payable under Section 11AA is paid either before issue of show cause notice or within thirty days of issue thereof, no penalty shall be payable by person liable to pay duty and all proceedings shall be deemed concluded. Imposition of penalties by lower authorities went contrary to provisions of Act and showed total failure to read statutory provisions - Similarly penalties under Section 78 of Finance Act on service tax short paid on reverse charge basis for Legal Services cannot be imposed as appellant had deposited entire service tax liability along with interest before issuance of show cause notice - Regarding service tax demand on reverse charge basis on transportation services claimed to be revenue neutral. Even if situation were revenue neutral, it does not wipe off tax liability, it imposes restriction on invocation of extended period of limitation. When the issue made is revenue neutral then there cannot be any reason for holding that the appellant could be held guilty for having intention to evade payment of service tax - Penalties under Section 78 imposed on revenue neutral transactions cannot be sustained. Penalties under Section 70 for late filing of returns are of civil nature and remedial and do not require mens rea. Appellant's appeal is partially allowed and penalties under Section 11AC aggregating to one amount and penalties under Section 78 aggregating to another amount are set aside while penalties for late filing of returns are upheld – The appeal is partly allowed [Read less]

2026-VIL-1317-CESTAT-HYD-ST | CESTAT SERVICE TAX

Service Tax - Exemption under Section 26(1)(e) of SEZ Act, 2005 for services provided to SEZ unit outside the geographical limits of the SEZ - Appellant provided Cargo Handling and Steamer Agency Services to approved SEZ Unit situated at Hazira for its authorized operations including export of goods but services were physically performed at Visakhapatnam Port outside the geographical limits of the SEZ - Whether exemption from Service Tax under Section 26(1)(e) of SEZ Act read with Rule 31 of SEZ Rules 2006 is available for services rendered outside the territorial boundary of SEZ where such services are received and utilized by SEZ Unit for its authorized operations - HELD - Exemption under Section 26(1)(e) of SEZ Act cannot be denied merely because services were physically performed outside the geographical limits of SEZ. The statutory provision makes exemption available for taxable services provided to Developer or Unit for carrying on authorized operations and neither the Section nor the Rule stipulates that service must be necessarily performed within territorial boundary of SEZ - The emphasis of statute is upon identity of recipient being SEZ Unit and purpose of service utilization being authorized operations. Section 51 of SEZ Act declares that provisions of Act have effect notwithstanding anything inconsistent in any other law and therefore substantive exemption granted by parent statute cannot be curtailed by delegated legislation issued under Finance Act – Further, the exemption flows from use of service for authorized operations and not physical location where service was rendered. The Department failed to dispute identity of recipient, nature of service or their utilization for authorized operations and denial of exemption rested solely on place where services were physically rendered - Issue relates purely to interpretation and therefore extended period of limitation cannot be invoked. Demand of Service Tax is not sustainable and appeal is allowed [Read less]

2026-VIL-748-BOM | High Court SGST

GST - Violation of Natural Justice and Procedural Non-Compliance - Lack of Reasoned Order and Denial of Hearing – Disposal of by way of a cryptic order containing merely a one-line rejection stated to be "Incorrect declaration of Order issuing Authority by Taxpayer" without any reasons in support of such conclusion - Whether an appeal order can be sustained when it is bereft of reasons and has been passed without affording a hearing to the taxpayer in violation of principles of natural justice - HELD - The principles of natural justice require that a taxpayer must be given an opportunity to be heard before disposal of an... [Read more]

2026-VIL-742-P&H | High Court SGST

GST - Refund of Unutilized Input Tax Credit on account of supply of zero rated services – Intermediary Services or export of service – Petitioner engaged in export of information technology and business support services on basis of agreement with overseas parent company - Department rejected the refund claim on ground that petitioner falls in category of intermediary under Section 2(13) IGST Act and does not qualify for refund. However, Department itself granted refund of unutilized credit for same services for various period, treating petitioner as exporter of services - Whether rejection of refund for identical servi... [Read more]

2026-VIL-1333-CESTAT-CHE-CE | CESTAT CENTRAL EXCISE

Central Excise – Invocation of extended period of limitation where Department had contemporaneous knowledge of facts – Appellant suffered loss of finished goods, inputs, and capital goods due to industrial violence and fire in factory - The appellant provided complete documentation including daily stock account, finished goods statements, and inventory details which were physically verified by Department - Department issued first SCN dated 08.02.2013 based on this material demanding duty on finished goods lost; thereafter, in February 2017, more than three years later, Department issued another SCN invoking extended pe... [Read more]

2026-VIL-1314-CESTAT-AHM-CE | CESTAT CENTRAL EXCISE

Central Excise - Clandestine removal of ceramic goods - Whether the charge of clandestine removal from the investigated premises has been established by the department with sufficient corroborating evidence - HELD - This bunch of appeals are emanating from the same investigation and materially has the same facts as has been decided by the Division Bench in the matter of Famous Ceramic Industries case in which appeals were disposed of giving benefit of penalty and duty – As the charge of clandestine removal is not substantiated by the Department, penalties imposed against the appellants cannot be sustained and are set asi... [Read more]

2026-VIL-1321-CESTAT-KOL-ST | CESTAT SERVICE TAX

Service Tax - Eligibility of Cenvat Credit taken on basis of supplementary invoice issued by service provider for prior periods when service tax was not originally charged - Service provider had not discharged service tax liability from earlier years and issued supplementary invoice in 2016 for prior years and paid service tax with interest and penalty on self-disclosure, appellant took Cenvat Credit on basis of supplementary invoice - Department denied Cenvat Credit invoking Rule 9(1)(bb) of Cenvat Credit Rules 2004 claiming service provider had suppressed facts - Whether Cenvat Credit is barred under Rule 9(1)(bb) when n... [Read more]

2026-VIL-1320-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - Taxability of amount reimbursed for providing apprenticeship training – Appellant provides apprenticeship training to graduates and diploma holders as statutory obligation under Apprentices Act and pays stipend to apprentices, fifty percent of which is reimbursed by Board of Apprenticeship Training - Department demanded service tax on reimbursed amount treating it as consideration for providing commercial training and coaching services - Whether reimbursed amount constitutes taxable consideration for service rendered under Finance Act 1994 or is merely reimbursement of statutory grant not attracting service... [Read more]

2026-VIL-747-PAT | High Court SGST

GST - Continued Transit after Expiry of E-Way Bill, Release of goods pending appeal - Petitioner transported goods from Mumbai to Nepal under valid export documents and a valid E-Way Bill with statutory validity period, but the physical movement of taxable goods continued after the statutory validity of the e-way bill had expired when the vehicle was intercepted – Imposition of penalty after rejecting the reasons given by the driver - The petitioner sought quashing of both the penalty order and the appellate order and interim relief for release of the goods and vehicle - Whether the penalty imposed for continued transit ... [Read more]

2026-VIL-740-BOM | High Court SGST

GST - Proceedings against Non-Existent Entity – Petitioner, IDFC First Bank Limited, is successor to IDFC Alternatives Limited (IAL) pursuant to NCLT Orders of amalgamation – Dept initiated proceedings against IAL by way of Show Cause Notice and adjudication order dated 19th December 2025, whereas IAL had ceased to exist effective from 09th December 2022 as per first NCLT order, and further amalgamation order of 25th September 2024 merged IDFC Limited (into which IAL was earlier merged) with IDFC First Bank Limited - Despite petitioner disclosing amalgamations to revenue authorities vide letters and in reply to SCN, proceedings were continued against IAL - Whether proceedings initiated and continued against a non-existent entity can be sustained despite knowledge of revenue authorities – HELD – Proceedings initiated and continued against a non-existent entity are impermissible in law and cannot be sustained. Mere participation and knowledge of the petitioner in proceedings does not validate proceedings against a non-existent entity - The facts that impugned Show Cause Notice and Order were uploaded on portal of IAL and addressed to IAL clearly demonstrate that respondents initiated proceedings against a non-existent entity - Mere addition of words ‘now merged with IDFC First Bank Limited’ will not infuse life into invalid proceedings. However, respondents are not precluded from initiating fresh proceedings against petitioner if entitled to in law – The proceedings for such recovery of tax and other liabilities need to be initiated in the name of the transferee company and not in the name of the non-existing company - The impugned Order and SCN are quashed and set aside. The writ petition is allowed - Locus of petitioner to maintain the present petition – HELD - Respondents questioning the Petitioner's locus to maintain the present Petition. The Respondents cannot, on the one hand, seek to fasten upon the Petitioner the liability arising out of the Impugned Order and, on the other hand, contend that the Petitioner has no locus to challenge it. In any event, if the contention of the Respondents were to be accepted, it would result in an anomalous situation whereby the Petitioner, as the successor of IAL, would be required to bear the consequences of the Impugned Order and any liability arising therefrom, while, at the same time, being denied the right to question its legality. The proposition is therefore not only manifestly unjust but would also deprive the Petitioner of an effective remedy in law. Therefore, unable to accept the objection to the Petitioner's locus. [Read less]

2026-VIL-1322-CESTAT-BLR-ST | CESTAT SERVICE TAX

Service Tax - Export of Services or Intermediary Services – Appellant is engaged in the business of offering products and services to its group entities through International Service Agreement, Manufacturing Support Services Agreement and other agreements. Appellant also rendered services relating to Products and Spares under cost plus markup basis - The adjudicating authority held that the services qualified as intermediary services under Rule 2(f) of Place of Provision of Services Rules 2012 and were chargeable to service tax - Whether the services rendered by the Appellant to overseas entities through various service agreements qualify as export of services or intermediary services chargeable to service tax – HELD – The services do not fall under the category of intermediary services as contemplated under Rule 2(f) of Place of Provision of Services Rules 2012 since the concept of intermediary can be alleged only if there are three parties namely the supplier of principle service, recipient of services and intermediary facilitating or arranging the said supply - In the present case, service provider is not involved in the activity of negotiation of sale and purchase of goods in India and the agreements specifically restrict the service provider from acting as an agent or broker; further the services rendered are on principal to principal basis on service provider's own account - The meaning of facilitation and arrangement cannot be extended to cover agreements where main services are rendered by the service provider on its own account - Even though the agreements stipulate that there are two distinct supplies and minimum three parties, the condition of the contract for providing service based on cost plus basis cannot be considered as connected with main supply of goods as the main supply may or may not happen and cannot be directly correlated with the service provided - The concept of intermediary requires that the service provider merely arranges or facilitates the main supply between two or more other persons and does not himself provide the main supply – Further, it is settled law that if the service provider does not receive consideration from the customer of the entity to which render service, the service provider is providing the main service which was sub-contracted to it and receives consideration from the main contractor and cannot be termed as an intermediary - The impugned orders confirming the demand and penalty are set aside and the appeals are allowed [Read less]

2026-VIL-750-PAT | High Court SGST

GST - Cancellation of GST Registration - Violation of Principles of Natural Justice - Denial of Personal Hearing as Mandated by Section 75(4) of the CGST Act, 2017 – Rejection of appeal for revocation of cancellation on the ground of Limitation - Whether the cancellation of registration can be sustained when no personal hearing was afforded to the taxpayer in violation of the principles of natural justice - HELD - The cancellation is liable to be set aside on the ground of violation of the principles of natural justice as embodied in Section 75(4) of the Act, which casts a duty upon the respondent authorities to give per... [Read more]

2026-VIL-741-RAJ | High Court SGST

GST – Reasonable Apprehension of Bias – An investigation report was prepared by Deputy Commissioner and approved by Additional Commissioner for initiation of prosecution proceedings under Section 132 of CGST Act. Same Additional Commissioner who examined investigation report and approved proposal for prosecution subsequently acted as quasi-judicial adjudicating authority and imposed penalties on petitioner. Petitioner objected to dual role of same authority in investigation and adjudication - Whether same officer who approved investigation report for prosecution can act as quasi-judicial authority to adjudicate penalti... [Read more]

2026-VIL-739-RAJ | High Court SGST

GST - Confiscation of goods for deviation of vehicle on a wrong route - Department issued recovery notice for penalty and fine, and auction notice - A temporary GST ID was created in driver's name but password was never communicated, and despite repeated requests including email, department withheld the password, preventing petitioner from accessing portal to file statutory appeal electronically - Whether petitioner is entitled to relief to access temporary GST ID with password to file statutory appeal – HELD – The Competent Authority shall take appropriate steps to pass orders in accordance with law on the application... [Read more]

2026-VIL-751-GUJ | High Court SGST

GST - Interest on Delayed Filing of Returns - Liability when tax already deposited in Electronic Cash Ledger - Scope of Section 50 of CGST Act, 2017 and Proviso to Rule 88B of CGST Rules, 2017 - Petitioner filed belated returns for certain months and deposited the full amount of tax in the Electronic Cash Ledger before the due date for filing returns. Subsequently, an audit objection was raised regarding the interest computed and a notice was issued demanding interest on the basis of belated filing of returns - Rejection of refund application by claiming prospective application of proviso to Rule 88B - Whether interest can be levied on tax already deposited in the Electronic Cash Ledger for the period between the date of deposit and the date of filing of belated return – HELD - The interest on delayed payment of tax can only be levied from the due date of payment of tax till the deposit of such tax in the electronic cash ledger. When an amount has been deposited in the Electronic Cash Ledger on or before the due date for filing of the return and is later debited for payment of tax while filing the return after the due date, the deposited amount shall not be taken into consideration while calculating interest for the delayed period. The principle laid down in the judgment of this Court in Arya Cotton Industries case established that the amount lying in the electronic cash ledger represents advance tax already paid and cannot be subject to interest for the period after deposit – Secondly, the Proviso to Rule 88B of the CGST Rules was introduced by the GST Council in its 53rd meeting dated 22.06.2024 specifically to implement the ratio of this Court's judgment in Arya Cotton Industries. The respondent authority acted arbitrarily and with total non-application of mind by denying the refund application on the sole ground of prospective application of the Rule amendment, while ignoring the Court's decision which had already decided the issue in favor of the taxpayer - The impugned order rejecting the refund application is arbitrary and suffers from non-application of mind – The impugned order and the recovery notice is quashed and set aside. The respondent is directed to grant refund of excess amount of interest in terms of the refund application filed by the petitioner along with statutory interest – The petition is allowed [Read less]

2026-VIL-738-RAJ | High Court SGST

GST – Validity of Recovery proceedings – Uploading of show cause notice and adjudication order in the Additional Notices and Orders tab - The adjudication order confirmed a demand on the allegation of non-payment of GST on the difference between the turnover reflected in the audited financial statements and that disclosed in GSTR-9C – Validity of service of SCN and adjudication order on portal - Whether the mandatory procedure under Section 61 of the CGST Act, 2017 read with Rule 99 of CGST Rules 2017 was followed before initiating action under Section 73 – HELD – The mandatory procedure prescribed under Section 61 read with Rule 99 of CGST Rules 2017 was not followed as the notice in Form GST ASMT-10 contemplated under Section 61 was admittedly not issued or served upon the petitioner, either electronically on GSTN portal or otherwise. The legislative intent behind the notice in Form GST ASMT-10 is to avoid unnecessary litigation and to afford the assessee an opportunity to explain any discrepancy noticed in the return filed by him. The adjudication order, which merely reproduced the SCN without any independent findings, analysis, or reasons for confirming the demand, was non-speaking and unreasoned in violation of Section 75(6) of CGST Act - The mode of service was arbitrary contrary to GST SOP and user manual as documents were uploaded under the Additional Notices and Orders tab on the portal but no SMS or email intimation was sent to the petitioner's registered mobile number or email address in accordance with Section 169 of Act – Further, the recovery under Section 78 was ex facie illegal as the adjudication order was never communicated to the petitioner before bank account was debited and the statutory period under Section 78 could not begin to run absent valid service, rendering the recovery premature - The impugned show cause notice, adjudication order and consequential recovery including the debit of amount are quashed and liberty is given to the respondents to proceed afresh in accordance with law - The writ petition is allowed [Read less]

2026-VIL-1329-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs - Verification Procedure Under Rules of Origin under Free Trade Agreement - Country of origin certificates for jewellery - The Appellant imported diamond-studded gold jewellery from the exporting country and filed bills of entry claiming benefit under Notifications dated 31.08.2004 read with notification (NT) dated 31.08.2004 for goods under CTH 711319. The goods were duly assessed and cleared by the customs authority without any query. Subsequently, the department's investigation wing conducted an investigation alleging that the Certificates of Country of Origin were improper as they showed inflated local value content and that the Appellant had wrongly availed the benefit of the free trade agreement - Whether the benefit of a notification based on country of origin certificates can be denied based on investigations conducted within the importing country without following the prescribed procedure for verification with the issuing authority of the exporting country - HELD - The Interim Rules of Origin notified by the Central Government prescribe a specific mechanism for handling doubts regarding country of origin certificates. Rule 14 requires certificates to be issued by a government authority designated by the exporting party and notified to the importing party. Rule 15 provides the procedure for retroactive verification when there is reasonable doubt. The importing party must request a retroactive check from the issuing authority of the exporting country, specifying the reasons and additional information suggesting inaccuracy. The issuing authority must respond within three months - The proper procedure when there was reasonable doubt about the value addition in the certificates should have been to take up the matter with the issuing authority of the certificates in the exporting country as per Rule 15. Instead, the department recorded statements of various persons and obtained a letter from another jeweller and based on these investigations conducted within the country, denied the benefit of the notification. This procedure was contrary to the law. The impugned proceedings and demand based on a procedure contrary to the prescribed law cannot be sustained. The benefit of the notification cannot be denied. The demand is dropped and no penalty is imposable on the Appellant – The appeal is allowed [Read less]

2026-VIL-1327-CESTAT-CHE-CE | CESTAT CENTRAL EXCISE

Central Excise - Clandestine removal of MS ingots - Appellant, Managing Director of a steel manufacturing company, along with related companies and individuals, was accused of causing clandestine removal of MS ingots to four buyers. During the course of investigation, statements were recorded from the CEO and Managing Director of the company. The noticees initially did not file a formal reply to the SCN but during the personal hearing in March 2016, they sought cross-examination of the persons whose statements were recorded in the SCN, claiming the statements were not voluntary and obtained under duress. The adjudicating authority rejected the request for cross-examination without providing satisfactory reasons and proceeded to decide the case solely on the basis of the allegations in the SCN without affording the noticees an opportunity to file a final reply on merits - Whether the allegation of clandestine removal can be upheld when the adjudicating authority violates the principles of natural justice by denying cross-examination and refusing to afford a proper opportunity to defend - HELD - The order has been passed in serious violation of the principles of natural justice, specifically the principle of Audi Alteram Partem. When the adjudicating authority itself observes that the reply filed was interim, the officer is obligated to communicate the rejection of cross-examination to the parties and give them an opportunity to file a final reply on merits. There is no precedent supporting the proposition that no such second opportunity should be afforded when a request for cross-examination is rejected - Further, there are two ways of denying an admission under statement: one is to retract it entirely and the second is to seek cross-examination of the person giving the statement. The mere fact that statements were not retracted does not become conclusive or the end of the matter when cross-examination was properly sought. The adjudication proceedings were conducted as mere formality without substantive consideration. The allegation of clandestine removal stands not proved. The individual penalties under Section 26 of the Central Excise Rules 2002 imposed on the contesting Appellants also cannot be sustained as they have not been given reasonable opportunities to put forth their defence. The impugned order is set aside and the appeals are allowed [Read less]

2026-VIL-746-BOM | High Court VAT

Maharashtra Value Added Tax Act, 2002 - Priority of Dues - Secured Creditors v/s State Revenue Authorities - Whether secured creditors registered under the SARFAESI Act and RDDB Act have statutory priority in realization of dues from sale of secured assets over and above State revenue dues including tax, penalty, interest and other statutory dues – Whether State tax authorities can record charges or seek recovery from secured assets already subject to prior security interests - HELD - The secured creditors registered under Section 26E of the SARFAESI Act and Section 31B of the RDDB Act have statutory priority in realization of dues from the sale of secured assets over and above all other debts including government revenues, taxes, cesses and rates payable to the Central Government or State Government or local authority - The term priority means the right to enforce a claim in preference to others and shall override any charge created under State laws creating first charge, in view of the express subordination of State enactments to Central legislation. For dues arising prior to the amendment to the SARFAESI Act dated 24.01.2020, the State must demonstrate compliance with all statutory procedures including attachment in accordance with law and due proclamation thereof before the property is sold - Merely issuing an attachment order without following prescribed procedures is insufficient to create any charge or priority over secured assets. The mere recording of boja or encumbrance in revenue records against secured assets after enforcement of security interests is not justified and such encumbrances must be removed. Auction purchasers who have purchased secured assets in auction sales conducted by secured creditors and paid full consideration and obtained sale certificates are entitled to enjoy the fruits of the purchase and are not liable to be burdened with charges or encumbrances recorded by State tax authorities - The State cannot chase the same asset in the hands of purchaser to realise its dues after the secured creditor has already enforced its security interest and sold the asset. The attachment orders and intimation notices issued by the State tax authorities are quashed and set aside - The petitioners are allowed [Read less]

2026-VIL-1326-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - Exemption for Reinsurance of Weather-Based Crop Insurance - Applicability to reinsurers - Appellant, an insurance company, was denied the benefit of Exemption Notification 58/2010 and 25/2012-ST which provide exemptions for reinsurers related to general insurance business in weather-based crop insurance or modified agricultural schemes approved by the Government of India - Whether the exemption notifications applicable to reinsurers engaged in weather-based crop insurance can be denied without proper application of the notification terms - HELD - This issue has been settled by a prior decision of the Tribunal bench in favor of the Appellant for a subsequent period wherein the Tribunal held that the levy of Service Tax on reinsurance services provided by the appellant to Agricultural Insurance Corporation of India (AICIL) under Weather Based Crop Insurance or Modified National Agricultural Insurance Scheme untenable due to retrospective exemption provided by Section 135 of the Finance Act, 2025. The ratio of that decision is squarely applicable to the present case. The denial of the exemption is unsustainable and the exemption benefit is allowed - Service Tax - CENVAT Credit Reversal - Reversal Cannot Be Based on Total Credit - Rule 6 reversal - The Revenue demanded a reversal of CENVAT credit under Rule 6 of the CENVAT Credit Rules, 2004, by calculating the reversal on the entire total CENVAT credit availed by the Appellant - Whether a reversal of CENVAT credit under Rule 6 can be sustained when it is calculated on the total CENVAT credit rather than on the credit specifically attributable to exempted services or deemed supplies - HELD - This issue is settled by established precedents including Toshiba JSW Power Systems and Lotte India Corporation Ltd. The law is clear that demands for reversal of CENVAT credit must be based on the specific credit attributable to the exempted or deemed supply. A reversal calculated on the total CENVAT credit availed by the entity is not sustainable in law. The demand for reversal on total credit is set aside - Service Tax - CENVAT Credit for Specific Input Services - Remand for Production of Evidence - The Appellant availed CENVAT credit for various input services including air travel agency services, rail travel agency services, club membership fees, group insurance for employees, rent-a-cab services and catering services. The lower authorities denied the credit primarily on the ground that supporting documentary evidence was not provided - Whether CENVAT credit on the specified input services is admissible and whether the Appellant should be given an opportunity to substantiate the claims with evidence - HELD - While various judicial precedents establish that the specified services are eligible for CENVAT credit, the denial by the lower authorities was fundamentally based on the lack of supporting documentary evidence. To ensure that substantive justice is done, the Appellant should be given a fair opportunity to produce the requisite records and documentation. The matter is remanded to the Original Authority for fresh adjudication on the merits after the Appellant furnishes the supporting evidence - Service Tax - CENVAT Credit on Tax Paid Under Reverse Charge Mechanism - The Appellant availed CENVAT credit for service tax paid under the reverse charge mechanism on insurance auxiliary services provided by unregistered vendors. The Revenue alleged that the Appellant had availed excess credit compared to the actual entitlement. The Appellant contended that since the entire tax was paid under the reverse charge mechanism, it was legally entitled to the full credit and that no excess was availed - Whether CENVAT credit can be denied or reduced when tax has been properly paid under the reverse charge mechanism - HELD - The matter requires verification of the actual documents and a detailed speaking order examining the tax paid and the credit availed. The claim cannot be rejected without affording the Appellant an adequate opportunity to present evidence regarding the tax liability and payment. The matter is remanded to the Original Authority for verification of documentary evidence and for passing a detailed reasoned order - Service Tax - Re-credit of Previously Reversed CENVAT Entry - The Appellant had availed CENVAT credit for motor vehicle repair services. This credit was initially denied by the lower authority but subsequently allowed by the Commissioner (Appeals) in 2011. When the Appellant sought to re-credit the previously reversed amount in 2013, the Revenue rejected it as time-barred under Section 11B of the Central Excise Act, 1944 which provides a one-year limitation for refund claims - Whether the one-year limitation period under Section 11B applies to the re-credit or reversal of a CENVAT credit entry that was previously reversed but subsequently restored - HELD - The Madras High Court decision in ICMC Corporation Ltd. establishes that re-credit of a previously reversed entry is merely an accounting adjustment and does not involve an outflow of funds from the exchequer. Therefore it is not a refund of duty within the meaning of Section 11B. The one-year limitation period under Section 11B does not apply to such re-credit entries. The rejection of the re-credit claim as time-barred is set aside and the Appellant is entitled to the re-credit of the amount - Service Tax - CENVAT Credit on Capital Goods - Statutory Limitation on Timing of Availment - Capital goods - 50 percent restriction in first year - The Appellant availed 100 percent of the CENVAT credit on capital goods within a single financial year, despite the statutory provisions which restrict the availment to 50 percent in the first year with the balance to be availed in subsequent years. The Appellant contended that there was no express statutory bar preventing the entire credit from being taken in the first year - Whether the statutory restriction of capital goods credit to 50 percent in the first year is mandatory or merely a preference that can be bypassed - HELD - The statute explicitly provides that only 50 percent of the CENVAT credit on capital goods can be availed in the first year, with the remaining 50 percent to be availed in subsequent years. This is a mandatory statutory restriction and not merely a guideline. The fact that there is no express language stating one cannot take the entire amount does not override the affirmative statutory provision. The Appellant cannot claim 100 percent of the capital goods credit in a single year. The claim for full credit in the first year is dismissed - Service Tax - CENVAT Credit for Repair Services - Invoice to Insured Party - Insurance company repair services - The Revenue appealed against the allowance of CENVAT credit for repair services availed by the insurance company. The Revenue contended that the credit was ineligible because the service invoices were issued in the name of the insured party rather than in the name of the insurance company, even though the insurance company paid the service provider and bore the entire service tax cost - Whether an insurance company is entitled to CENVAT credit for repair services when the invoices are technically in the name of the insured party but the insurance company is the actual payer and bears the tax incidence - HELD - This issue is squarely covered by prior decisions of this Tribunal bench in favor of insurance companies in similar circumstances. An insurance company is entitled to CENVAT credit on repair services provided to the insured even if the invoice is nominally issued to the insured party, provided the insurance company actually pays the service provider and bears the full service tax cost. The Revenue's appeal is dismissed and the credit is upheld. [Read less]

2026-VIL-1325-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax – Demand invoking Extended Period of Limitation – Appellant-EOU providing business auxiliary services, sub-contracted data capturing and data processing services to its wholly owned subsidiary. The Department issued a Show Cause Notice on July 24, 2009, for the period 2004-05 to 2006-07, demanding service tax on the basis that the subcontracted activities constituted taxable business auxiliary services - Whether the extended period of limitation under Section 73(1) can be invoked when the Appellant did not file returns or register for the service and the activity was sought to be taxed based on the Appellan... [Read more]

2026-VIL-744-KAR | High Court SGST

GST – Challenge to Constitutional Validity of Health Security and National Security Cess Act, 2025 - Levy of Cess on Machine Ownership instead of Actual Production - Deemed Production versus Actual Quantity Manufactured - Petitioners challenged the constitutional validity of the HSNS Cess Act which levies a cess on machines installed or processes undertaken for the manufacture or production of specified goods, particularly pan masala, contending that the Act was beyond the legislative power conferred under the Constitution and violated Articles 246A and 271 - The Respondents submitted that the impugned Act was a constitutionally valid piece of fiscal legislation enacted in public interest to regulate a sector notorious for tax evasion - Whether the Health Security and National Security Cess Act, 2025 and the Rules or the Notifications made in furtherance of the impugned Act and the Rules would fall foul of certain tenets of the Constitution of India - HELD - Article 246A of the Constitution provides for the imposition of GST. The taxable event in terms of the impugned Act being the ownership or possession of the installed machine and not on the supply of goods and services which is a taxable event under the GST, Article 246A is not applicable - The Parliament has the exclusive legislative power to make laws with respect to matters enumerated in List I of the Seventh Schedule and possesses residuary power under Entry 97 of List I to legislate on any matter not enumerated in List II or List III, including power to impose any tax not mentioned in either of those Lists, and therefore the contention that Parliament lacked the legislative competence to enact the impugned legislations is without merit. However, the manner in which the HSNS Cess Act and the HSNS Cess Rules levy the cess is unreasonable and vague, as it is based on assumption of quantity manufactured instead of actual quantity manufactured, thereby failing the tenets of Article 14 of the Constitution of India - The Act imposes a restriction by demanding cess on the deemed production and not on actual production, which attracts arbitrariness as obtaining under Article 14 of the Constitution of India - The imposition of cess on machinery presuming it would produce at maximum capacity when the actual production capacity falls significantly below that threshold, lacks any rational basis and rational classification, thereby rendering the Act and the Rules unconstitutional. The Health Security and National Security Cess Act, 2025 is held to be unconstitutional insofar as it seeks to impose upon the same class of property, persons, or transactions a burden that results in manifest inequality. The power of the Union Government to promulgate a law to levy cess is upheld, but the Act and the Rules are held to be unconstitutional and obliterated - The Notifications dated 16-12-2025, 31-12-2025, 01-01-2026 and 30-01-2026 stand obliterated. However, liberty is reserved to the Union to bring in the enactment, bearing in mind the observations made in the course of the order - The writ petitions are partly allowedrnrn^Challenge to Rule 15 of Health Security and National Security Cess Rules, 2025 - Abatement of Cess - Minimum Period of Continuous Non-operation of Fifteen Days - Arbitrariness and Violation of Article 14 of the Constitution - Petitioners challenged Rule 15(a) of the Health Security and National Security Cess Rules, 2026, which provides for abatement of cess only in cases where the manufacturing activity remains suspended continuously for a minimum period of fifteen days, contending that the Rule operated arbitrarily and violated Article 14 of the Constitution - Whether the prescription of a minimum threshold of fifteen continuous days for grant of abatement was arbitrary and violative of Article 14 of the Constitution - HELD - Rule 15(a) operates arbitrarily and is violative of Article 14 of the Constitution. The Rule fails to account for genuine hardship faced by assessees, for whom the Rules provide no alternative remedy. Further, the prescription of a minimum period of fifteen days proceeds solely on the presumption that assessees are likely to indulge in tax evasion and administrative difficulties in preventing tax evasion cannot, by themselves, justify the prescription of such an arbitrary threshold under the Rules - The contention of the Respondent that the prescription of a minimum threshold of fifteen continuous days for grant of abatement is a deliberate anti-evasion policy, intended to eliminate bogus claims for shorter periods, and that only a period of suspension extending to fifteen continuous days establishes the genuineness of the claim, cannot be accepted. Even where manufacturing activity is suspended for periods shorter than fifteen days due to genuine reasons, the Petitioners remain liable to pay cess, thereby incurring further losses in addition to those already suffered on account of the suspension of manufacturing activity. The Rule, therefore, operates arbitrarily and is violative of Article 14 of the Constitution of India. The Rules are held to be unconstitutional and obliterated. [Read less]

2026-VIL-1328-CESTAT-AHM-ST | CESTAT SERVICE TAX

Service Tax - Works Contract Service - Personal Use Exclusion - Residential quarters for government employees - The Respondent constructed residential quarters for the Gujarat State Police Housing Corporation Limited and other government departments to house their staff. The Revenue classified the construction as a taxable works contract service relating to a residential complex - Whether construction of residential staff quarters for government bodies for use by their employees falls within the definition of a taxable residential complex or is excluded from service tax - HELD – The Section 65(91a) of Finance Act, 1994 defines a residential complex and specifically excludes complexes constructed for personal use. The explanation clarifies that personal use includes permitting the complex to be used as a residence by another person on rent or without consideration. Established precedents including Khurana Engineering Ltd. and Nitesh Estates Ltd. have consistently held that when government bodies construct quarters for their own employees, such construction falls under the personal use exclusion and is not taxable. The construction of residential staff quarters by government agencies for their employees is not liable to service tax as it does not constitute a residential complex in the taxable sense – Ordered accordingly - Service Tax - Exemption - Services relating to electricity transmission - The Respondent provided construction services to the Gujarat Energy Transmission Corporation Limited for electricity transmission infrastructure. The Revenue classified this as a taxable works contract service - Whether construction services provided to electricity transmission corporations fall within the scope of service tax or are specifically exempted - HELD - Services provided in relation to the transmission and distribution of electricity are specifically exempted from payment of service tax pursuant to Notification 11/2010-ST and Notification 45/2010-ST. This position has been consistently upheld in prior Tribunal decisions including Vraj Construction. Construction services relating to electricity transmission are exempt from service tax liability - Service Tax - Works Contract Service - Construction of APMC facilities - The Respondent constructed shops, platforms and godowns for the Agricultural Produce Market Committee. The Respondent contended these were for civic amenities and non-commercial government functions. The Revenue contended these structures were used for commercial leasing to traders - Whether construction of shops and commercial facilities for APMC constitutes a taxable works contract service or falls outside the scope of service tax - HELD - The Supreme Court decision in Krishi Upaj Mandi Samiti vs. Commissioner of C.Ex. and S.T., Alwar establishes that APMCs do not perform mandatory sovereign or statutory functions when they lease shops or land to traders for a fee. Rather these are discretionary commercial activities undertaken by APMC. Consequently the construction of such commercial buildings and facilities for APMC falls within the taxable ambit of Works Contract Services. Construction services for APMC facilities are taxable as works contract services. However the Respondent is entitled to the benefit of the Works Contract Composition Scheme 2007 and cum-tax benefit under Section 67. The matter is remanded to the Adjudicating Authority for fresh computation of the tax amount after applying the available benefits - Service Tax - Extended period of limitation - Invocation when facts suppressed - The Respondent had not registered for service tax nor filed any returns disclosing their works contract activities to the Revenue for the relevant financial years 2008-09 to 2011-12. The Revenue issued a SCN invoking the five-year extended period of limitation alleging suppression of facts with intent to evade tax - Whether failure to register and file returns when providing taxable services justifies the invocation of the extended period of limitation - HELD - The Respondent failed to fulfill statutory obligations including registration, assessment and filing returns. The Show Cause Notice established that the Respondent did not bring the facts of their taxable services to the knowledge of the Department. This conduct constitutes suppression with an intent to evade tax particularly regarding the taxable works contract services for APMC and other bodies. The invocation of the extended period of limitation was held to be valid and justified in law when the assessee remained unregistered and made no disclosure of taxable services despite legal obligations to do so - Service Tax - Goods Transport Agency Service - Reverse charge - The Show Cause Notice proposed a demand regarding GTA services used by the Respondent under reverse charge mechanism. The Adjudicating Authority in the original order dropped this demand - Whether the GTA demand can be upheld when the Revenue does not specifically challenge this finding in its appeal - HELD – The Revenue had challenged only the dropping of the Works Contract Service demand and had not specifically contested the findings regarding the GTA service demand. Since the Revenue did not appeal against this portion of the original order, the decision to drop the GTA demand became final and cannot be disturbed and the demand stands dropped. [Read less]

2026-VIL-743-MAD | High Court VAT

Tamil Nadu VAT Act, 2006 – Best Judgment Assessment - Equal Addition for probable omission - Unaccounted purchase of cotton yarn and failure to maintain stock register in Form-H - Whether equal addition and penalty can be sustained when stock difference is based on notional trading account method without physical verification and without regular pattern of suppression in earlier or subsequent periods – HELD – Trading Account Method, though not entirely accurate, is acceptable when no other method of stock verification is feasible. Stock difference of nearly five times between book stock and physical stock constitutes... [Read more]

More Judgements Home More Judgements