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Central Excise – Assessment under Section 4 of Central Excise Act, 1944 - Clearances to related parties at price below cost of manufacture – Appellant cleared identical batteries to two vendors at Rs 2.13 and Rs 2.20 per piece while clearing same batteries to its own Lucknow unit at Rs 2.90 and Rs 2.81 per piece under CAS-4 costing – MoU showed buyback arrangement where vendors manufactured torches as per appellant's design and specification and sold them back to appellant – Department invoked extended period alleging relationship and mutuality of interest – Appellant contended that prices were charged on transac... [Read more]

Central Excise – Assessment under Section 4 of Central Excise Act, 1944 - Clearances to related parties at price below cost of manufacture – Appellant cleared identical batteries to two vendors at Rs 2.13 and Rs 2.20 per piece while clearing same batteries to its own Lucknow unit at Rs 2.90 and Rs 2.81 per piece under CAS-4 costing – MoU showed buyback arrangement where vendors manufactured torches as per appellant's design and specification and sold them back to appellant – Department invoked extended period alleging relationship and mutuality of interest – Appellant contended that prices were charged on transaction value under Section 4 of Central Excise Act and buyers were independent entities not related parties - Whether identical batteries cleared to different buyers at significantly different prices where buyback arrangement exists is assessable on contractual price or whether cost-of-manufacture method applies - HELD – Where price at which goods are sold is exceptional and substantially below cost of manufacture, such price cannot be accepted as normal price for purposes of Section 4(1)(a) of CEA. The expression ‘ordinarily sold’ excludes extraordinary or unusual transactions. Where there is clear indication that extra-commercial consideration has entered into sale transaction, such as perpetual loss-making transactions, the price cannot be sole consideration contemplated under Section 4(1)(a) - In present case, battery prices were significantly lower than cost of manufacture and sales were made continuously, indicating extra-commercial consideration. The buyback agreement and nature of transaction indicate price not at arm's length - Where all three conditions of Section 4(1)(a) namely normal price, ordinarily sold and sole consideration are not satisfied, valuation must be done under Section 4(1)(b) read with Central Excise Valuation Rules - On extended period, where agreements and documents regarding related transactions are available on record and already known to Department through its own investigation, the conditions for invoking extended period are not satisfied as there is no wilful suppression. However, normal period of limitation being barred by date of SCN, demands within normal period are upheld along with interest. Penalties imposed under Section 11AC were set aside as they were wrongly imposed under Rule 15 of CENVAT Credit Rules which is inapplicable to undervaluation cases - The appeals are partly allowed [Read less]

GST - Audit under Section 65 - Communication of audit findings under Rule 101(5) CGST Rules, 2017 in Form GST ADT-02 - Apprehension of recovery without adjudication - Distinction between audit report and adjudication order - Petitioner apprehended that recovery would be effected on basis of audit findings without there being any adjudication proceeding - HELD - The communication of audit findings is administrative action in nature only and does not constitute adjudication. Rule 101(5) provides that on conclusion of audit, proper officer shall inform findings of audit to registered person in accordance with provisions of su... [Read more]

GST - Audit under Section 65 - Communication of audit findings under Rule 101(5) CGST Rules, 2017 in Form GST ADT-02 - Apprehension of recovery without adjudication - Distinction between audit report and adjudication order - Petitioner apprehended that recovery would be effected on basis of audit findings without there being any adjudication proceeding - HELD - The communication of audit findings is administrative action in nature only and does not constitute adjudication. Rule 101(5) provides that on conclusion of audit, proper officer shall inform findings of audit to registered person in accordance with provisions of sub-section 6 of Section 65 in Form GST ADT-02. Such communication is merely informing registered person of audit findings and does not amount to adjudication order. It is obvious that GST Department shall take further action in accordance with provisions of CGST Act - The apprehension of petitioner that recovery will be effected on basis of such information is misconceived – The petition is disposed of with finding that impugned communication is merely administrative in nature and does not vitiate the proceedings - the petition is disposed of [Read less]

GST - Violation of principles of natural justice - Denial of opportunity to submit supporting documents before passing adverse order - Authority held that appellant could not submit purchase and sales ledger, purchase and sales register and taxable and exempted sales bills and invoices till date and that submitted documents were not sufficient to refute allegations levelled in SCN. Accordingly, appeal was decided against petitioner without allowing submission of all documents - Whether denial of opportunity to produce documents in support of claim before passing adverse order amounts to violation of natural justice - HELD ... [Read more]

GST - Violation of principles of natural justice - Denial of opportunity to submit supporting documents before passing adverse order - Authority held that appellant could not submit purchase and sales ledger, purchase and sales register and taxable and exempted sales bills and invoices till date and that submitted documents were not sufficient to refute allegations levelled in SCN. Accordingly, appeal was decided against petitioner without allowing submission of all documents - Whether denial of opportunity to produce documents in support of claim before passing adverse order amounts to violation of natural justice - HELD - Not allowing petitioner to produce documents in support of its claim amounts to violation of principle of natural justice more so when authorities are deciding matter which is against petitioner and to its detriment. Petitioner who is being penalized ought to be given every chance to defend himself before authorities concerned who have decided to impose penal order on petitioner. The right to defend one's case before a decision is made against one is a fundamental principle of natural justice and cannot be denied merely because adjournment was sought to gather documents - The fact that documents were sought to be submitted during proceedings itself demonstrates petitioner's bonafides and intention to support its case with evidence. Writ petition is disposed of by directing petitioner to submit all documents relating to proceeding within period of two weeks. Respondents directed to pass fresh order upon consideration of documents so submitted by petitioner and to pass reasoned order – The petition is disposed of [Read less]

Customs - Invocation of Extended Period of Limitation under Section 28(4) of Customs Act in cases of alleged mis-declaration of Country of Origin - Mis-declaration of Country of Origin of imported polyester knitted fabrics – Appellant imported polyester knitted fabrics and submitted certificates of origin issued by Malaysian authorities. Departmental authorities alleged that the goods were actually of Chinese origin and the certificates of origin were fabricated. Show cause notice invoking extended period of limitation was issued alleging evasion of customs duty through mis-declaration of country of origin - Whether exte... [Read more]

Customs - Invocation of Extended Period of Limitation under Section 28(4) of Customs Act in cases of alleged mis-declaration of Country of Origin - Mis-declaration of Country of Origin of imported polyester knitted fabrics – Appellant imported polyester knitted fabrics and submitted certificates of origin issued by Malaysian authorities. Departmental authorities alleged that the goods were actually of Chinese origin and the certificates of origin were fabricated. Show cause notice invoking extended period of limitation was issued alleging evasion of customs duty through mis-declaration of country of origin - Whether extended period of limitation under Section 28(4) can be invoked for alleged mis-declaration of country of origin when the appellant had no conscious knowledge of the infirmity in the certificates and was not instrumental in obtaining fabricated certificates – HELD – Extended period of limitation under Section 28(4) can be invoked only when there is specific and explicit averment in the show cause notice and credible evidence establishing that the appellant was involved in collusion, wilful misstatement or suppression of facts. The burden to prove mala fide conduct lies on the department - In the present case, the appellant consistently maintained throughout the proceedings that he had received the certificates of origin from the foreign supplier and had no reason to believe they were not genuine. Department failed to establish any positive act by the appellant to obtain fabricated certificates or that he had conscious knowledge of the inaccuracies in the certificates - Merely because goods were imported with certificates of origin later found to be fabricated does not render the importer liable to extended period unless it is established that the importer stepped into the shoes of the supplier and was instrumental in obtaining the fabricated certificate. The absence of any culpatory statement and the consistent non-committal stance of the appellant throughout multiple recorded statements cannot be interpreted as admission of involvement in fraud. Extended period cannot be invoked on the basis of bare assertions or suspicions arising from delayed overseas verification reports - The delay in conducting verification beyond the stipulated time period of two months and even thereafter obtaining verification response only after considerable inordinate delay further militates against invocation of extended period. The SCN having not specifically alleged the ingredients of Section 28(4) against the appellant, the invocation of extended period is not legally sustainable – The extended period of limitation is not invokable. The demand for differential duty on the basis of alleged mis-declaration cannot be sustained and set aside – The appeals are allowed - Country of Origin Certificates – Verification procedure under Rule 7(c) and Rule 7(d) of Customs Tariff Determination of Origin of Goods under Preferential Trade Agreement Rules 2009 – Appellant submitted country of origin certificates purportedly issued by Malaysian authorities - Department sought verification of certificates from Malaysian authorities but only 15 certificates out of 29 were verified - Whether the mandatory procedural requirements of Rule 7(c) and Rule 7(d) can be dispensed with on the ground that fraud is alleged and Rule 23 relating to fraudulent acts applies – HELD – Rule 23 merely provides for cooperation between member countries in taking action against persons involved in fraudulent acts and does not dispense with the procedural requirements of Rule 7(c) and Rule 7(d). These are duly incorporated domestic provisions forming part of the binding statutory framework and cannot be ignored. When a treaty provision has not been incorporated into domestic law, it cannot be enforced in derogation of municipal law. However, when Rules have been incorporated into domestic law and given statutory recognition, they must be followed by the customs authorities - Rule 23 may justify deeper investigation but cannot be read to dispense with requirements of Rule 7(c) and Rule 7(d). In the present case, only 15 certificates were verified and the verification report merely stated that certificates were not authentic and belonged to other company without providing detailed exhaustive clarification addressing the grounds raised by the importing authority or specifying to whom the actual certificates were issued. The procedure contemplated under Rule 7(c) and Rule 7(d) had not been properly followed - The verification process having not been followed in totality, the allegation of fraud cannot be held to be established - Confiscation of Imported Goods on Ground of alleged Mis-declaration of Country of Origin - Goods imported and cleared by Customs authorities as well as goods seized were proposed to be confiscated on ground of misdeclaration of country of origin. The department alleged that goods were of Chinese origin but declared to be of Malaysian origin - Whether goods already cleared by customs authorities can be confiscated on ground of subsequent allegation of mis-declaration of country of origin when the allegation of mis-declaration is not established through credible and authenticated evidence – HELD – Goods when already cleared by Customs after due examination and satisfying themselves as to the conditions for clearance cease to be imported goods as per Section 2(f) of Customs Act. Once goods have been imported and cleared for home consumption by the proper officer, it is not open for the revenue to subsequently propose confiscation on allegations not supported by credible authenticated evidence. Unauthenticated photocopies and bare unverified reports from overseas authorities are not sufficient to reject declared transaction value or country of origin. The evidence produced in the case consisting of printouts from overseas authority websites, unsigned documents and letters not bearing official stamps and seals do not possess evidentiary value - The goods were exported and imported on the basis of country of origin certificates purportedly issued by competent Malaysian authorities and samples drawn were not subjected to test analysis that was shared with appellant. The mere suspicion arising from delayed and incomplete overseas verification report is not sufficient to confiscate goods already cleared. The country of origin of goods cannot be held to be established as Chinese when proper verification procedure had not been followed – Confiscation of goods already cleared for home consumption cannot be upheld. The allegation of mis-declaration of country of origin not having been established through credible and authenticated evidence, the goods stand to be of Malaysian origin as declared. [Read less]

Customs - Interest on voluntary deposit during investigation – Rejection of interest claim on ground that refund had been sanctioned within 03 months from date of filing refund application - Whether Appellant was entitled to interest on amounts voluntarily deposited during investigation when refund has been allowed within 03 months – HELD - The issue regarding payment of interest on amounts voluntarily deposited during investigation is no more res intergra and has been decided by various case law. The consistent legal approach of High Courts and Supreme Court allowing interest even in absence of statutory provisions is... [Read more]

Customs - Interest on voluntary deposit during investigation – Rejection of interest claim on ground that refund had been sanctioned within 03 months from date of filing refund application - Whether Appellant was entitled to interest on amounts voluntarily deposited during investigation when refund has been allowed within 03 months – HELD - The issue regarding payment of interest on amounts voluntarily deposited during investigation is no more res intergra and has been decided by various case law. The consistent legal approach of High Courts and Supreme Court allowing interest even in absence of statutory provisions is now a judicial precedent. When a decision has been consistently followed at various fora including Divisional Benches of the Tribunal and various High Courts, same becomes a judicial precedent worthy to be followed even in absence of statutory provisions - The Tribunal is bound by law laid down by Hon'ble Supreme Court. Interest shall be calculated at 12% from date of deposit till date of refund – The appeal is allowed [Read less]

Central Excise - Valuation of excisable goods - Tooling advances received from buyer - Inclusion in assessable value - Application of Rule 6 of Central Excise Valuation Rules, 2000 - Appellant contended that tooling cost required to be amortised over finished goods manufactured with tools and that proportionate cost had already been included in assessable value through supplementary invoices - Adjudicating Authority accepted amortisation method and dropped proceedings. Commissioner (Appeals) relayed on Circular No.170/4/96-CX to mandate Cost Accountant certificate and remanded for fresh determination - Whether entire tooli... [Read more]

Central Excise - Valuation of excisable goods - Tooling advances received from buyer - Inclusion in assessable value - Application of Rule 6 of Central Excise Valuation Rules, 2000 - Appellant contended that tooling cost required to be amortised over finished goods manufactured with tools and that proportionate cost had already been included in assessable value through supplementary invoices - Adjudicating Authority accepted amortisation method and dropped proceedings. Commissioner (Appeals) relayed on Circular No.170/4/96-CX to mandate Cost Accountant certificate and remanded for fresh determination - Whether entire tooling advance is includible in assessable value or only proportionate amortised tooling cost attributable to finished goods - HELD - Section 4 of Central Excise Act and specifically Rule 6 of Central Excise Valuation Rules, 2000, with its Explanation 1, contemplate that value of tools, dies, moulds used in production must be apportioned as appropriate and not automatically loaded on single clearance. What is required is determination of portion attributable to goods being valued - Circular No.170/4/96-CX proceeds on principle of proportionate valuation and does not mandate Cost Accountant as inflexible requirement. Evidence on record including tooling records with tool descriptions and values, production records, supplementary invoice referring to tool amortisation cost with corresponding assessable value and duty, and Chartered Accountant certificate establishes actual tooling activity and inclusion of amortised cost in assessable value. Department has not identified any specific deficiency in amortisation – Further, extended period invocation cannot be sustained as tooling advances and proposed method of amortisation were specifically brought to Department's notice during audit. Mere failure or negligence in adopting correct valuation does not establish suppression with intent to evade where dispute concerns valuation methodology and facts disclosed to Department. No material establishing deliberate suppression or intent to evade duty warranting penalty under Section 11AC. The Order-in-Original dropping proceedings is restored and the appeal is allowed [Read less]

Central Excise - Sugar syrup as intermediate product manufactured for captive consumption - Marketability test - Applicability of Section 2(d) of Central Excise Act, 1944 - Appellant manufactured biscuits exempt from excise duty under Notification No.03/2006-CE and also manufactured sugar syrup captively for use in biscuit production without paying excise duty during September 2009 to September 2011, claiming that sugar syrup being non-marketable intermediate product was not excisable goods. Revenue issued show cause notice proposing recovery of central excise duty under Section 11A(4) along with interest and penalty - Whe... [Read more]

Central Excise - Sugar syrup as intermediate product manufactured for captive consumption - Marketability test - Applicability of Section 2(d) of Central Excise Act, 1944 - Appellant manufactured biscuits exempt from excise duty under Notification No.03/2006-CE and also manufactured sugar syrup captively for use in biscuit production without paying excise duty during September 2009 to September 2011, claiming that sugar syrup being non-marketable intermediate product was not excisable goods. Revenue issued show cause notice proposing recovery of central excise duty under Section 11A(4) along with interest and penalty - Whether sugar syrup containing 80 percent sugar content manufactured by appellant and captively consumed in manufacture of exempt biscuits is an excisable good - HELD - The test of marketability under Section 2(d) of CEA, 1944, as explained in the explanation inserted by Finance Act, 2008, requires that goods must be capable of being bought and sold for a consideration and are deemed to be marketable. So long as product is capable of being bought and sold, it is excisable - Marketability is a decisive test of dutiability and not actual marketing. The sugar syrup in the present case contains sugar content of 80 percent by weight and would have shelf life without addition of any preservative. The sugar syrup satisfies the requirement of marketability and is therefore both marketable and excisable goods - The sugar syrup manufactured as per own specifications with sugar content of 80 percent by weight and intended for their principal comes into existence as result of process of manufacture and is distinct product capable of being bought and sold - Regarding invocation of extended period, the appellant had sent letter indicating various ingredients used in biscuit manufacture, which was generic in nature and not an intimation regarding non-payment of excise duty on sugar syrup as same was manufactured captively and not shown in ER-1 returns filed with department. Accordingly, defence taken by appellant for non-invocation of extended period is not correct and extended period is justified - In case duty liability on sugar syrup is held, appellant should be allowed the Cenvat credit on the quantity of sugar so consumed to manufacture sugar syrup - The demand of central excise duty, recovery of interest and imposition of penalty under Section 11AC are upheld - The appeal is partially allowed [Read less]

GST - Denial of Input Tax Credit on account of GSTR-3B and GSTR-2A Mismatch - Reliance on mismatch without Invoice-Wise Verification - Appellant claimed Input Tax Credit pertaining to prior financial year invoices in the subsequent financial year. Revenue alleged excess Input Tax Credit based on mismatch between FORM GSTR-3B and FORM GSTR-2A without examining the Appellant's contention that the difference arose because credit pertaining to prior financial year was availed within the time permitted under Section 16(4) of the CGST Act, 2017 - Whether the difference between credit claimed in FORM GSTR-3B and credit reflected ... [Read more]

GST - Denial of Input Tax Credit on account of GSTR-3B and GSTR-2A Mismatch - Reliance on mismatch without Invoice-Wise Verification - Appellant claimed Input Tax Credit pertaining to prior financial year invoices in the subsequent financial year. Revenue alleged excess Input Tax Credit based on mismatch between FORM GSTR-3B and FORM GSTR-2A without examining the Appellant's contention that the difference arose because credit pertaining to prior financial year was availed within the time permitted under Section 16(4) of the CGST Act, 2017 - Whether the difference between credit claimed in FORM GSTR-3B and credit reflected in FORM GSTR-2A can be treated as inadmissible excess without invoice-wise verification – HELD - The statutory provision Section 16(4) as it stood for the transition period permitted a taxpayer to claim credit on prior year invoices up to the due date of the subsequent year return. FORM GSTR-2A was at the relevant time a facilitation tool and not a statutory bar to credit. The Circular No. 183/15/2022-GST specifically directs the Proper Officer to verify, not summarily disallow, cases where prior year credit has been claimed in subsequent year returns - The finding that non-appearance of an invoice in FORM GSTR-2A shows that the supplier did not pay tax is an assumption, not a finding reached after verification. The three precedents relied upon by the First Appellate Authority namely Mahalakshmi Cotton Ginning Processing and Oil Industries v. State of Maharashtra, ALD Automotive Private Limited v. CTO, and Microqual Techno Ltd. v. State of Karnataka rest on facts and statutory provisions materially different from the present case and could not have been relied upon to disallow the credit - The demand cannot be sustained as it stands without invoice-wise verification of the prior year credit - The demand for excess credit raised is not sustainable without proper invoice-wise verification and reconciliation. The matter is remanded to the Proper Officer for de novo adjudication with directions to carry out invoice-wise verification with reference to prior year records - The appeal is allowed by way of remand - Violation of Natural Justice - Mandatory personal hearing - Section 75(4) - Absence of personal hearing before confirmation of demand - The Show Cause Notice issued under Section 73 recorded the date, time and venue of personal hearing as NA and no personal hearing was granted to the Appellant before the Order-in-Original was passed confirming the entire demand - Whether the absence of a personal hearing before confirmation of demand under Section 73(9) vitiates the Order-in-Original – HELD - The Section 75(4) makes a hearing mandatory once an adverse decision is contemplated against the person, irrespective of whether a specific request for hearing was made. The absence of any such hearing before the Order-in-Original was passed is a clear infirmity - The Show Cause Notice itself records the date, time and venue of personal hearing as NA and nothing on the record shows that any hearing was in fact granted before the demand was confirmed. The absence of a personal hearing, by itself, justifies setting aside the Order-in-Original – The Appellant shall be granted a proper opportunity of personal hearing, with the date, time and venue duly communicated, and shall be permitted to produce its books of account, invoices and any further reconciliation statements, before any fresh order is passed. The issue is answered in favour of assessee - Notice under Section 61 / Form GST ASMT-10 - Scrutiny of returns - Independent provisions Section 61 and Section 73 - Absence of notice in FORM GST ASMT-10 - The Proper Officer initiated proceedings under Section 73 read with Rule 142 following an audit assignment, not pursuant to scrutiny under Section 61 - Whether the absence of a notice in FORM GST ASMT-10 under Section 61 renders proceedings initiated directly under Section 73 invalid – HELD - Section 61 and Section 73 are independent provisions. Section 61 provides one particular route for scrutiny of returns which requires a notice in FORM GST ASMT-10. Where the Proper Officer proceeds directly under Section 73 read with Rule 142 without first invoking Section 61, the absence of a FORM GST ASMT-10 notice does not, by itself, invalidate the proceedings. The present proceedings were initiated pursuant to a specific assignment under Section 73 read with Rule 142 following an audit reference, and not pursuant to scrutiny under Section 61. The decisions relied upon by the Appellant on this point are distinguishable on facts and do not invalidate the proceedings under Section 73. However, this ground does not cure the infirmities found on the prior issues which go to the root of the impugned orders. [Read less]

Service Tax - Classification of mining activities as cargo handling service - Appellant engaged in activities of excavation, loading, transportation and unloading of limestone from mine face to crusher situated within mining lease area - On introduction of taxable service of Mining of Mineral, Oil or Gas with effect from 01.06.2007, Appellant obtained service tax registration and discharged service tax under that category - Show cause notice for earlier period from February 2005 to December 2009 proposed to classify activities as Cargo Handling Service and invoking extended period of limitation. Commissioner confirmed dema... [Read more]

Service Tax - Classification of mining activities as cargo handling service - Appellant engaged in activities of excavation, loading, transportation and unloading of limestone from mine face to crusher situated within mining lease area - On introduction of taxable service of Mining of Mineral, Oil or Gas with effect from 01.06.2007, Appellant obtained service tax registration and discharged service tax under that category - Show cause notice for earlier period from February 2005 to December 2009 proposed to classify activities as Cargo Handling Service and invoking extended period of limitation. Commissioner confirmed demand under Cargo Handling Service - Whether activities of excavation, loading, transportation and unloading of limestone carried out within mining area are liable to service tax under Cargo Handling Service particularly for period prior to introduction of Mining of Mineral, Oil or Gas service with effect from 01.06.2007 – HELD - The activities constitute an integrated set of operations within mining area. Cargo handling service contemplates handling of cargo as cargo. Mere loading, unloading or movement of goods when performed in course of execution of another principal service does not ipso facto bring entire composite activity within taxable category of Cargo Handling Services. The real nature and dominant character of the contract are required to be examined - Appellant was not independently engaged for handling limestone as cargo but handling and movement took place within mining area as necessary part of mining operation. Revenue itself accepted these very same activities as mining service after 01.06.2007. No material change in nature of activity before and after 01.06.2007 has been demonstrated - Once essential character is found to be mining mere fact that excavation involves loading and movement cannot convert it into Cargo Handling Service for earlier period. Classification of composite activity cannot be determined by isolating one or two incidental elements - Introduction of specific taxable entry from particular date is relevant circumstance while examining legislative scheme. Extended period cannot be invoked as there was no deliberate suppression with intent to evade payment of service tax - Demand of service tax, interest and penalties is not sustainable and set aside - The appeal is allowed [Read less]

Central Excise - Fraudulent availment of CENVAT Credit - Documentary Evidence - The Appellant manufacturer was alleged to have fraudulently availed CENVAT credit amounting on invoices for raw materials supplied by M/s Bhiwadi Cylinders without actual receipt of goods - Department initiated proceedings based on investigations revealing that the ultimate vendor M/s MAI had not maintained manufacturing facility and had issued invoices without receiving raw materials. Appellant furnished Goods Receipts from the transporter showing delivery to its factory and entries in RG 23A Part-II register showing receipt and usage of the r... [Read more]

Central Excise - Fraudulent availment of CENVAT Credit - Documentary Evidence - The Appellant manufacturer was alleged to have fraudulently availed CENVAT credit amounting on invoices for raw materials supplied by M/s Bhiwadi Cylinders without actual receipt of goods - Department initiated proceedings based on investigations revealing that the ultimate vendor M/s MAI had not maintained manufacturing facility and had issued invoices without receiving raw materials. Appellant furnished Goods Receipts from the transporter showing delivery to its factory and entries in RG 23A Part-II register showing receipt and usage of the raw materials - Whether the Appellant's CENVAT credit should be disallowed on the basis of third-party data and oral statements from investigation when the Appellant produced documentary evidence supporting receipt and usage of goods – HELD - The Appellant had placed sufficient documentary evidence including Goods Receipts from the transporter and RG 23A records establishing receipt of raw materials. The Department had not produced any credible evidence except oral statements recorded during investigation and as per the Indian Evidence Act documentary evidence must prevail over oral evidence - Department had not conducted enquiry from the Appellant or searched its premises and had not followed compliance under Section 9D of the Central Excise Act necessary for admissibility of oral evidence. The burden of proof was on the Department to establish fraudulent availment which stood falsified by the documentary evidence produced by the appellant - The order disallowing the CENVAT credit is set aside and the appeal is allowed [Read less]

Service Tax - Adjustment of excess Service Tax Paid - Succeeding Month or Quarter - Rule 6(4A) of Service Tax Rules - Appellant availed CENVAT credit on service tax paid under Reverse Charge Mechanism on services received from foreign service providers and had made advance tax payments which were utilized against its liability in succeeding years - Department disallowed the adjustment contending that under Rule 6(4A) of the Service Tax Rules such adjustments of excess payment could be made only during the immediate succeeding month or quarter - Whether the adjustment of excess advance service tax paid could be made to a su... [Read more]

Service Tax - Adjustment of excess Service Tax Paid - Succeeding Month or Quarter - Rule 6(4A) of Service Tax Rules - Appellant availed CENVAT credit on service tax paid under Reverse Charge Mechanism on services received from foreign service providers and had made advance tax payments which were utilized against its liability in succeeding years - Department disallowed the adjustment contending that under Rule 6(4A) of the Service Tax Rules such adjustments of excess payment could be made only during the immediate succeeding month or quarter - Whether the adjustment of excess advance service tax paid could be made to a subsequent month or quarter beyond the immediate succeeding month or quarter under Rule 6(4A) of Service Tax Rules – HELD - The Rule 6(4A) does not contain the word immediate and the plain reading of the Rule allows an assessee to adjust the excess amount paid against service tax liability for the succeeding month or quarter. If adjustment could be made only in the immediate succeeding month or quarter, a situation would arise where an assessee has no service tax liability in that immediate period or excess paid is higher than the immediate period's liability making the Rule provision impractical. The Rule intends an assessee to adjust excess payment to liability accrued later thereby avoiding hassles of refund claims and since the excess amount is already in the hands of the Revenue there is no revenue loss in such adjustment and the Revenue is enriched by the interest on the excess amount till adjustment - The adjustment of excess service tax can be made not only in subsequent month or quarter but also in subsequent months or quarters - The impugned order is set aside and the appeals are allowed [Read less]

GST - Applicability of GST on Affiliation Services, Exemption under Entry 66 of Exemption Notification, Issuance of consolidated SCN for multiple tax period - Appellant engaged in field of education undertaking activities such as granting affiliation to schools, conducting public examinations and registering students - Show Cause Notice was issued proposing demand of tax alleging that affiliation services rendered by appellant do not fall within exemption entries 66(a), 66(aa), or 66(b)(iv) of the Exemption Notification No.12/2017-CT(Rate) dated 28.06.2017 - Whether affiliation services provided by appellant to schools con... [Read more]

GST - Applicability of GST on Affiliation Services, Exemption under Entry 66 of Exemption Notification, Issuance of consolidated SCN for multiple tax period - Appellant engaged in field of education undertaking activities such as granting affiliation to schools, conducting public examinations and registering students - Show Cause Notice was issued proposing demand of tax alleging that affiliation services rendered by appellant do not fall within exemption entries 66(a), 66(aa), or 66(b)(iv) of the Exemption Notification No.12/2017-CT(Rate) dated 28.06.2017 - Whether affiliation services provided by appellant to schools constitute supply within the meaning of Section 7(1)(a) read with Section 2(17) of the CGST Act, 2017 and whether affiliation is an independent taxable supply falling outside the exemption under Entry 66(b)(iv) of the Exemption Notification - HELD - The affiliation services provided by appellant to schools constitute independent taxable supply not forming integral part of services relating to admission to or conduct of examination. Entry 66(b)(iv) of the Exemption Notification dated 28.06.2017 is confined to services relating to admission to or conduct of examination by an educational institution. The affiliation provided by appellant relates to defining and accrediting the functionality of the school which is much broader in scope compared to conduct of an entrance examination. Affiliation to the colleges by university is prerequisite for any college to admit students for the course offered. Only after affiliation is granted the interface with the university and the admission of students in the affiliated college will commence - The service of granting affiliation is not part of admission of students or conduct of examination for them. Appellant being a registered society under Societies Registration Act 1860 and not a statutory university constituted under any Parliamentary or State legislative enactment discharging compulsory statutory functions cannot avail benefit of decisions rendered exclusively in context of statutory bodies – The activities of appellant constitute supply under Section 7 read with Section 9 of the CGST Act and are chargeable to GST - The affiliation services provided by appellant including affiliation processing or form charges constitute independent taxable supply not falling within exemption and accordingly demand for affiliation fees for the period 18.06.2021 to November 2023 is upheld - Issuance of SCN for a consolidated period, covering various limitations and the order passed in furtherance thereto for a consolidated period is in accordance with the law or not – HELD – The CGST Act nowhere prohibits issuance of a common Show Cause Notice covering multiple tax periods where the issues arise from the same investigation or audit - The validity of the notice has to be examined with reference to compliance with limitation for each tax period individually, and not merely on the ground that several years have been clubbed together in a single notice - The statutory language of Sections 73(3), 73(4), 74(3) and 74(4) of the Act 2017, employs the expressions “for any period” and “for such periods”, in contradistinction to the expression “financial year” used in Sections 73(10) and 74(10) of the CGST Act, thereby expressly contemplating a notice covering a period spanning more than one financial year - Where a consolidated notice under Section 73 or Section 74 of the Act has been issued and the appellant has been afforded a full and fair opportunity to respond to the allegations therein, the mere fact of consolidation, in the absence of demonstrable prejudice, cannot vitiate or invalidate the proceedings under the GST regime. The appellant has not demonstrated any prejudice flowing from the consolidated format - The proceedings in this particular matter are not vitiated solely on the ground of the issuance of a consolidated SCN and order passed for a consolidated period covering July 2017 to November 2023 - Taxability Of Annual Registration and Late Registration Charges - Appellant contended that annual registration charges as well as late annual registration charges are in nature of affiliation fee for continuance of affiliation of schools being charged annually for continuance of affiliation in default whereof school would stand de-affiliated. Appellant contended that these charges should be exempted not only for period July 2017 to 17th June 2021 but also for subsequent period 18th June 2021 to November 2023 under the Exemption Notification - Whether annual registration charges and late charges qualify for exemption under Entry 66(b)(iv) of the Exemption Notification or receive benefit of regularization granted for affiliation charges - HELD - The annual registration charges as credited in books of account under head annual charges and collected from affiliated schools annually and failure to pay may result in de-affiliation are administrative and preparatory in nature. Exemption entry applies only to services expressly covered therein and exemption cannot be extended to administrative or preparatory charges – The strict construction rule mandated by Constitution Bench does not permit extension of exemption to activities that are preparatory to and not constitutive of conduct of examination. The fact that non-payment may lead to de-affiliation is commercial consequence of contractual obligation and does not transform administrative charge into examination related service - The Circular No. 234/28/2024 dated 11.10.2024 subject matter is confined to affiliation services simpliciter and there is no reference express or implied to annual registration charges renewal charges or late fees for registration as falling within ambit of regularization. Being clarificatory instrument issued in specific context of affiliation services its benefit cannot be extended by inference to distinct category of receipt merely because both arise from same underlying regulatory relationship - Exemption or regularization dispensation being in nature of fiscal concession must be strictly construed and scope cannot be enlarged by implication to categories of supply not expressly covered therein - The annual registration charges and late charges are independent supply distinct from services relating to admission of students or conduct of examinations and do not qualify for exemption - Finding of appellate authority upholding levy of GST on annual registration and late charges is affirmed - Cum-Tax Valuation Under Rule 35 of CGST Rules 2017 - Appellant contended that amounts collected by appellant if taxable at all should be treated as inclusive of GST under Rule 35 of the Rules 2017 - Whether amounts collected by appellant are to be treated as inclusive of GST under Rule 35 of the CGST Rules, 2017 – HELD - Where tax has not been collected separately, gross amount received must be treated as value of taxable service inclusive of tax for purpose of quantifying tax liability. Settled cum-duty or cum-tax jurisprudence developed under erstwhile Central Excise and Service Tax regime applies with equal force to valuation under the CGST Act. Burden placed upon appellant to independently establish GST inclusiveness stands discharged in law once it is demonstrated that no tax was separately collected from recipients - Where gross amount charged does not separately disclose tax component amount charged is to be regarded as inclusive of such tax - In present case first appellate authority has observed that no documentary evidence has been furnished by appellant to substantiate its version that fees collected were inclusive of GST. The burden of proof placed upon appellant is discharged – The appellant is entitled to benefit of cum-tax valuation under Rule 35 of the Rules 2017 and amounts collected by appellant are to be treated as inclusive of GST. This issue is decided in favour of appellant - Invocation of Section 74 of CGST Act 2017 - Fraud Wilful [Read less]

GST - Denial of appellate remedy - Non-communication of adjudication order to updated address - Recovery notice issued without furnishing copy of adjudication order - Petitioner had updated change in registered address in year 2023 but adjudication order dated 27.03.2024 was sent to old address. Accordingly, petitioner did not receive adjudication order and recovery notice in Form DRC-13 was subsequently - Whether recovery notice can be issued when adjudication order has not been communicated to petitioner due to outdated address and whether limitation for appeal starts from date of recovery notice or from date of communic... [Read more]

GST - Denial of appellate remedy - Non-communication of adjudication order to updated address - Recovery notice issued without furnishing copy of adjudication order - Petitioner had updated change in registered address in year 2023 but adjudication order dated 27.03.2024 was sent to old address. Accordingly, petitioner did not receive adjudication order and recovery notice in Form DRC-13 was subsequently - Whether recovery notice can be issued when adjudication order has not been communicated to petitioner due to outdated address and whether limitation for appeal starts from date of recovery notice or from date of communication of adjudication order - HELD – The adjudication order must be communicated to petitioner at registered address and if petitioner has updated address, order must be sent to updated address. Even if petitioner may have come to know about SCN and participated in proceedings, that cannot be held against petitioner to infer knowledge of adjudication order as of its date. Admittedly, adjudication order was sent to address from which petitioner had moved. There could be intervening circumstances which may justify inference that petitioner was not aware of order until service of recovery notice - Period of limitation for appellate remedy is required to be reckoned from date of communication of order to petitioner. Petitioner has now received copy of order and limitation for challenging order must commence from date of receipt of adjudication order by petitioner - Recovery notice issued during period when petitioner was not aware of adjudication order cannot be sustained - Petition is allowed by quashing recovery notice. Petitioner granted liberty to avail remedy against adjudication order with limitation for appeal being computed from date of receipt of adjudication order – The petition is allowed [Read less]

GST - Cancellation of GST Registration - Opportunity of Hearing and Procedural Defect - Fixing date of hearing before show cause period expires - The date for personal hearing was fixed on 05.03.2024 while the date for filing show cause was 07.03.2024, meaning the hearing was fixed prior to show cause period expiring. Appellant did not submit show cause response and registration was cancelled ex-parte by order dated 22.04.2024 - Whether proper opportunity of hearing was granted as required under Section 75(4) of CGST Act, 2017 which provides that opportunity of hearing shall be granted where adverse decision is contemplate... [Read more]

GST - Cancellation of GST Registration - Opportunity of Hearing and Procedural Defect - Fixing date of hearing before show cause period expires - The date for personal hearing was fixed on 05.03.2024 while the date for filing show cause was 07.03.2024, meaning the hearing was fixed prior to show cause period expiring. Appellant did not submit show cause response and registration was cancelled ex-parte by order dated 22.04.2024 - Whether proper opportunity of hearing was granted as required under Section 75(4) of CGST Act, 2017 which provides that opportunity of hearing shall be granted where adverse decision is contemplated against person – HELD - As per Section 75(4), opportunity of hearing is required to be fixed only where adverse decision is contemplated against person. When no show cause is filed within given period of 30 days, date of hearing is required to be fixed thereafter or in case show cause is filed but authorities not satisfied then date for hearing is required to be fixed. Fixing date of hearing on 05.03.2024 while show cause filing period was 07.03.2024 was an empty formality and procedurally defective - Permanent cancellation of registration inflicts civil death to livelihood of person. The impugned orders are set aside and competent authority shall consider application for revocation on its own merit without rejecting it on limitation ground alone – The writ application stands allowed [Read less]

Service Tax - Classification of services rendered by shipping agents and freight forwarders - Distinction between taxable support services and non-taxable transportation - Appellant raises invoices on customers including freight component with mark-up along with ancillary charges such as LCL charges, documentation charges, terminal handling charges and delivery order charges - Appellant discharges service tax on ancillary charges but not on ocean/air freight in the belief that the same was not taxable/exempt during the relevant period - Respondent alleges that mark-up charged by appellant on freight charged by shipping com... [Read more]

Service Tax - Classification of services rendered by shipping agents and freight forwarders - Distinction between taxable support services and non-taxable transportation - Appellant raises invoices on customers including freight component with mark-up along with ancillary charges such as LCL charges, documentation charges, terminal handling charges and delivery order charges - Appellant discharges service tax on ancillary charges but not on ocean/air freight in the belief that the same was not taxable/exempt during the relevant period - Respondent alleges that mark-up charged by appellant on freight charged by shipping companies constitutes consideration for taxable service classified - Whether freight component recovered by appellant on principal-to-principal basis with a commercial mark-up constitutes taxable consideration for Business Support Service - HELD - Prior to 01.07.2012 transportation of goods by vessel or aircraft from place outside India to customs station in India did not fall within definition of taxable service - With effect from 01.07.2012 the activity stood expressly excluded by Section 66D(p)(ii) of negative list and continued till its omission with effect from 01.06.2016 - Freight component paid by appellant to shipping lines and airlines recovered from its customers therefore represents consideration for an activity which statute itself has by deliberate design kept outside tax net throughout the period in question. Where principal activity is non-taxable by legislative design the profit or margin earned in course of that very activity cannot be severed and taxed as if it were consideration for distinct service - Rule 5 of Valuation Rules cannot itself be source of taxability nor can it convert non-taxable transaction into taxable one merely because person recovering amount fails to qualify as pure agent - Classification and taxability of activity must be determined with reference to its substance and charging provisions applicable to it not with reference to manner of billing or presence of margin - The mark-up earned by Custom House agent or freight forwarder on ocean or air freight recovered on principal-to-principal basis does not constitute consideration for business support service – The invocation of extended period of limitation is not justified as issue involved is interpretational dispute and ingredients of fraud collusion wilful misstatement or suppression with intent to evade tax are not established - Demand of service tax on freight/mark-up amount for entire period is set aside - Impugned order is set aside and appeal is allowed [Read less]

GST - Refund of Pre-deposit to the extent of dropped demand - Finality of Appellate Proceedings - Scope of Circular No. 125/44/2019-GST - The Adjudicating Authority assessed tax liability which was challenged before the First Appellate Authority who partly allowed the appeal and dropped demand to the extent of 64 percent - Petitioner filed a refund application seeking refund of pre-deposit to the extent of demand dropped - Refund Authority relied on Circular No. 125/44/2019-GST dated 18.11.2019 and rejected the refund application on the ground that the appellate proceedings have not attained finality as the petitioner had ... [Read more]

GST - Refund of Pre-deposit to the extent of dropped demand - Finality of Appellate Proceedings - Scope of Circular No. 125/44/2019-GST - The Adjudicating Authority assessed tax liability which was challenged before the First Appellate Authority who partly allowed the appeal and dropped demand to the extent of 64 percent - Petitioner filed a refund application seeking refund of pre-deposit to the extent of demand dropped - Refund Authority relied on Circular No. 125/44/2019-GST dated 18.11.2019 and rejected the refund application on the ground that the appellate proceedings have not attained finality as the petitioner had expressed intention to challenge the appellate order before the GST Appellate Tribunal – Whether the Petitioner is entitled to refund of pre-deposit to the extent of demand dropped when the Petitioner proposes to challenge only the part of order which has gone against it and proceedings have attained finality to the extent of dropped demand - HELD - The reasoning in the impugned order that proceedings have not attained finality is erroneous as proceedings have attained finality to the extent of the demand dropped. The authority ought to have kept in mind that the petitioner proposes to challenge only that part of the order which has gone against it and to the extent of dropped demand the proceedings have attained finality. The reasoning that proceedings have not attained finality merely because the Petitioner proposes to challenge the part which has gone against it is fallacious - The Petitioner would be squarely covered by Circular dated 18th November, 2019 as refund of pre-deposit is admissible in respect of the dropped demand which has attained finality. Once the demand stood set aside a statutory right accrued in favour of the Petitioner to receive refund of the amount paid towards pre-deposit - The Order-in-Appeal is binding on the Respondent under Section 107(16) of the CGST Act, 2017 and therefore Respondent cannot refuse consequential refund of pre-deposit attributable to the demand set aside - The continued retention of such amount is wholly unauthorized and offends Article 265 of the Constitution - Pre-deposit bears the character only of a security deposit being a statutory condition precedent for hearing of the appeal and needs to be returned to the appellant whether the appellant succeeds fully or partly. The impugned order is quashed and set aside with direction to process the refund application expeditiously – The writ petition is allowed [Read less]

GST - Denial of Input Tax Credit to bona fide purchaser for default of supplier - Appellant was denied Input Tax Credit on the ground that suppliers had not deposited tax and had not filed GSTR-3B and invoices were not reflected in GSTR-2A of recipients - Whether Input Tax Credit can be denied to bonafide purchaser for default of supplier in depositing tax / non-filing of GSTR-3B / non-reflection of invoice in GSTR-2A - HELD - A bona fide purchaser who has received tax invoices from registered suppliers cannot be denied ITC merely because the supplier has defaulted in depositing tax or filing GSTR-3B - The conditions under... [Read more]

GST - Denial of Input Tax Credit to bona fide purchaser for default of supplier - Appellant was denied Input Tax Credit on the ground that suppliers had not deposited tax and had not filed GSTR-3B and invoices were not reflected in GSTR-2A of recipients - Whether Input Tax Credit can be denied to bonafide purchaser for default of supplier in depositing tax / non-filing of GSTR-3B / non-reflection of invoice in GSTR-2A - HELD - A bona fide purchaser who has received tax invoices from registered suppliers cannot be denied ITC merely because the supplier has defaulted in depositing tax or filing GSTR-3B - The conditions under Section 16(2)(a) and 16(2)(b) of CGST Act, 2017 are satisfied when purchaser is in possession of tax invoice issued by supplier registered under Act and has received goods or services - The only dispute under Section 16(2)(c) is whether tax charged has actually been paid to Government. The Department itself admits that proceedings have been initiated against defaulting supplier for non-filing of GSTR-3B. Having done so Department cannot doubly recover once from supplier and again from recipients - Department must first proceed for recovery against defaulting supplier under Section 79 of CGST Act. Mere non-reflection of invoices in GSTR-2A cannot by itself lead to automatic denial of Input Tax Credit to bona fide purchaser - The principle laid down in Suncraft Energy Private Limited which has been affirmed by Supreme Court squarely applies to facts of present case – Further, the Section 74 cannot be invoked mechanically merely to cover up the limitation under Section 73(10). The SCN must specifically allege how fraud was inferred or how concealment was detected - Bare invocation of words fraud willful misstatement and suppression of facts without listing out reasons is not sufficient to invoke extended limitation – The impugned is quashed and set aside and Respondents are directed to revisit issue by reconsidering reply with all documents in light of judgments in Suncraft Energy case - Respondent shall pass a reasoned and speaking order in accordance with law after affording opportunity of personal hearing to petitioners – The writ petition is allowed [Read less]

GST - Issuance of Show Cause Notice in the name of a deceased person - Assessment of tax liability of a deceased person - Appellant issued Show Cause Notice and Order in Original against a deceased proprietor instead of his legal heirs determining tax demand - Whether a Show Cause Notice can be issued in the name of a deceased person for determination of tax liability - HELD - It is a well settled proposition of law that issuance of a notice in the name of a dead person is a nullity non est and void ab initio in the eye of law - A SCN cannot be issued in the name of a dead person for determination of the liability of the d... [Read more]

GST - Issuance of Show Cause Notice in the name of a deceased person - Assessment of tax liability of a deceased person - Appellant issued Show Cause Notice and Order in Original against a deceased proprietor instead of his legal heirs determining tax demand - Whether a Show Cause Notice can be issued in the name of a deceased person for determination of tax liability - HELD - It is a well settled proposition of law that issuance of a notice in the name of a dead person is a nullity non est and void ab initio in the eye of law - A SCN cannot be issued in the name of a dead person for determination of the liability of the deceased without giving an opportunity to the legal representative - The determination of taxes in the name of a non-existing entity or person is not legally permissible and stands vitiated - Section 93(1) is a charging provision which says legal heirs is liable to pay tax due from deceased to the extent estate capable but it does not provide machinery to determine such liability - The machinery for determination remains Section 73 and 74 which require issuance of show cause notice to the person liable - Therefore the correct machinery is to issue Show Cause Notice to legal heirs in their own name describing them as legal heirs of deceased and to determine the liability - Department cannot issue Show Cause Notice to deceased and then direct the legal heirs to give reply to the same - The Show Cause Notice and Order in Original and the recovery notice are quashed and set aside - the writ petition stands disposed of without going into the merits of the case [Read less]

Central Excise - Refund of Education Cess and Secondary and Higher Education Cess - Scope of Section 11B of the Central Excise Act, 1944 - Applicability to amounts paid without authority of law - Appellant rejected refund claims for EC and SHEC that respondents had mistakenly paid for the period October 2013 to June 2017 on crude oil produced under NELP blocks arguing that the refund claims were barred by the limitation period prescribed in Section 11B of the Act, which prescribes a one year period for claiming refund from the relevant date - Whether the time limit prescribed in Section 11B of the Central Excise Act, 1944 ... [Read more]

Central Excise - Refund of Education Cess and Secondary and Higher Education Cess - Scope of Section 11B of the Central Excise Act, 1944 - Applicability to amounts paid without authority of law - Appellant rejected refund claims for EC and SHEC that respondents had mistakenly paid for the period October 2013 to June 2017 on crude oil produced under NELP blocks arguing that the refund claims were barred by the limitation period prescribed in Section 11B of the Act, which prescribes a one year period for claiming refund from the relevant date - Whether the time limit prescribed in Section 11B of the Central Excise Act, 1944 applies to refund claims for EC and SHEC when the same were paid by mistake and do not constitute duties of excise - HELD - Section 11B of the Act prescribes limitation for refund of duty of excise and interest and does not refer to other amounts collected without authority of law - EC and SHEC are not duties of excise as they are levied on the aggregate of excise duties and are not calculated as excise duty proper - The amount paid as EC and SHEC on Oil Industry Development Cess does not take the character of duty of excise but is simply an amount paid under a mistake of law - The provisions of Section 11B of the Act would therefore not be applicable to an application seeking refund of EC and SHEC paid under mistake - Since EC and SHEC are not duties of excise, the limitation prescribed under Section 11B of the Act would not apply and the general provisions under the Limitation Act, 1963 would be applicable - Section 17 of the Limitation Act inter alia provides that when a suit or application is for relief from consequences of a mistake, the period of limitation would not begin to run until the plaintiff or applicant has discovered the mistake or could with reasonable diligence have discovered it - The retention of EC and SHEC which have been paid on a mistaken notion by the respondents without any authority of law is not permitted under Article 265 of the Constitution which provides that no tax shall be levied or collected except by authority of law - A mistake does not confer any right on any party and can be corrected - Section 11B of the CEA, 1944 cannot be a bar to refund the EC and SHEC that has been paid mistakenly by the respondents to the appellant - The Revenue appeals are dismissed [Read less]

Service Tax - Export of services, Services provided by e-commerce marketplace operator to foreign affiliate - Determination of location of service use - Appellant provides services to affiliate eBay International AG such as promotion coordination with vendors marketing market data collection remittance of revenue operation of helpdesk and other administrative services for eBay India website - Appellant contends that services qualify as export since they are provided to recipient located outside India and payment received in foreign exchange and benefit of services accrue to foreign affiliate - Whether services provided in ... [Read more]

Service Tax - Export of services, Services provided by e-commerce marketplace operator to foreign affiliate - Determination of location of service use - Appellant provides services to affiliate eBay International AG such as promotion coordination with vendors marketing market data collection remittance of revenue operation of helpdesk and other administrative services for eBay India website - Appellant contends that services qualify as export since they are provided to recipient located outside India and payment received in foreign exchange and benefit of services accrue to foreign affiliate - Whether services provided in relation to business activities in India for foreign affiliate constitute export of services - HELD - Export of Services Rules 2005 provides three categories of services - Category I applies to services with nexus to immovable property - Category II applies to services where place of performance can be established - Category III applies to remaining services generally including knowledge or technique based services not linked to identifiable immovable property or whose location of performance cannot be readily identified - For Category III services which include BAS the relevant factor is location of service receiver and not place of performance. For Category III services export of service may take place even when all relevant activities take place in India so long as benefits of these services accrue outside India - Board's circular dated 24.02.2009 clarifies that for Category III services the phrase used outside India is to be interpreted to mean that benefit of service should accrue outside India - Board's circular dated 13.05.2011 further clarified that words accrual of benefit are not restricted to mere impact on bottom-line of person who pays for service. All activities extended by appellant to foreign subsidiary including marketing research consultancy promotion of sales through advertisement take place in India. Appellant did not conduct any market research or activity outside India while providing BAS – The services failed to satisfy essential qualification of service being delivered and used outside India. However Revenue concluded that services provided were not export of services they were provided within taxable territory in India. In absence of any notice for recovery of service tax due from appellant in respect of services not considered to be export of services in appropriate proceedings the refund claims filed in terms of Rule 5 of CCR, 2004 cannot be rejected. Revenue cannot have two stands in respect of same services - If Revenue's case is that activities undertaken do not amount to export of service then proceedings need to be initiated for demanding service tax in respect of taxable services provided. By not initiating any such proceedings, Revenue itself has allowed these taxable services as export of services. Having done so Revenue cannot in proceeding under Rule 5 for refund take contrary stand and deny refund treating services not to be export of services - Impugned order is set aside and appeals are allowed [Read less]

Customs - Judicial Review of Settlement Commission Order - Challenge to Show Cause Notice on Ground of Limitation after Settlement - Petitioner filed application before Settlement Commission for settlement of proceedings arising from Show Cause Notice demanding duty along with interest. Instead of pursuing statutory appellate remedy against adjudication order petitioner consciously elected to invoke jurisdiction of Settlement Commission. Settlement Commission passed order determining duty liability at reduced amount - Settlement Commission directed jurisdictional Commissioner to verify and quantify interest liability and i... [Read more]

Customs - Judicial Review of Settlement Commission Order - Challenge to Show Cause Notice on Ground of Limitation after Settlement - Petitioner filed application before Settlement Commission for settlement of proceedings arising from Show Cause Notice demanding duty along with interest. Instead of pursuing statutory appellate remedy against adjudication order petitioner consciously elected to invoke jurisdiction of Settlement Commission. Settlement Commission passed order determining duty liability at reduced amount - Settlement Commission directed jurisdictional Commissioner to verify and quantify interest liability and intimate Petitioner if further amount was payable. Subsequently, interest was quantified at higher amount. Petitioner challenged order of Settlement Commission seeking to set aside interest direction from remaining part of order and challenged validity of Show Cause Notice on ground of limitation – HELD - The scope of judicial review over orders of Settlement Commission is narrow and restricted to grounds such as contravention of statutory provisions, prejudice, fraud, bias or malice. Sufficiency of material placed before Settlement Commission and conclusions drawn therefrom ordinarily fall outside scope of judicial review - Once Petitioner consciously invoked jurisdiction of Settlement Commission and had settlement order passed, they cannot thereafter reopen validity of underlying Show Cause Notice by challenging it on ground of limitation. Petitioner cannot isolate direction regarding interest computation and under guise of challenging interest determination reopen validity of Show Cause Notice. Liability to pay interest is statutory consequence of liability to pay duty and does not stand extinguished merely because quantum of duty is settled – The mere fact that interest ultimately quantified is higher than amount initially computed by Petitioner cannot constitute ground for interference with Settlement Commission's order. Petitioner's challenge to Show Cause Notice on ground of limitation cannot be permitted to be indirectly raised by isolating direction relating to interest from settlement order as whole. Writ petition was dismissed as no ground existed to interfere with the order passed by the Settlement Commission [Read less]

Central Excise - Scope of Judicial Review of Settlement Commission Orders - Sufficiency of Evidence - The Petitioner approached the Settlement Commission for adjustment of CENVAT credit reversal in respect of its manufacturing activities during 2005. The Settlement Commission rejected the claim for adjustment on the ground that the documentary evidence furnished by the petitioner was insufficient to establish the reversal - Whether the High Court could interfere with the Settlement Commission's order on grounds of sufficiency and adequacy of evidence placed before it – HELD - The jurisdiction of the High Court under Arti... [Read more]

Central Excise - Scope of Judicial Review of Settlement Commission Orders - Sufficiency of Evidence - The Petitioner approached the Settlement Commission for adjustment of CENVAT credit reversal in respect of its manufacturing activities during 2005. The Settlement Commission rejected the claim for adjustment on the ground that the documentary evidence furnished by the petitioner was insufficient to establish the reversal - Whether the High Court could interfere with the Settlement Commission's order on grounds of sufficiency and adequacy of evidence placed before it – HELD - The jurisdiction of the High Court under Article 226 while examining an order of the Settlement Commission does not exercise appellate jurisdiction and the question is not whether the material placed before the Settlement Commission was sufficient in the Court's opinion but whether the order suffers from an infirmity warranting judicial interference within narrow parameters recognised by law - The sufficiency, adequacy and evidentiary value of material placed before the Settlement Commission are matters within the domain of the Settlement Commission and the High Court cannot undertake re-appreciation of such material as if sitting in appeal. The absence of an appellate remedy against the order of the Settlement Commission does not enlarge the scope of judicial review and the exercise of such jurisdiction remains subject to well-settled limitations governing judicial review of orders passed by specialised statutory bodies. The Court declined interference with the impugned order – The Writ Petition is dismissed [Read less]

Service Tax - Joint Venture operations – Demand under Manpower supply and Business Support Services - Scope of taxable service - Appellant as designated Operator for three petroleum exploration blocks allotted under NELP entered into Joint Operating Agreements with co-venturers and raised cash calls upon JV partners towards manpower and BSS rendered by appellant as Operator – Respondent-Dept alleged that gross amounts recovered by appellant from respective JVs towards manpower and business support services constitute consideration for taxable services rendered by appellant and are exigible to Service Tax - Whether cash... [Read more]

Service Tax - Joint Venture operations – Demand under Manpower supply and Business Support Services - Scope of taxable service - Appellant as designated Operator for three petroleum exploration blocks allotted under NELP entered into Joint Operating Agreements with co-venturers and raised cash calls upon JV partners towards manpower and BSS rendered by appellant as Operator – Respondent-Dept alleged that gross amounts recovered by appellant from respective JVs towards manpower and business support services constitute consideration for taxable services rendered by appellant and are exigible to Service Tax - Whether cash calls raised by operator of joint venture on its co-venturers for allocation of manpower costs and office expenses constitute consideration for taxable services - HELD - Contributions made by co-venturers towards execution of common venture do not constitute taxable consideration for services rendered inter se between Joint Venture and its constituents - In a joint venture the arrangement amongst parties is contractual for undertaking common enterprise for profit with joint control over strategic financial and operative decisions. Whatever a partner does for furtherance of business of partnership he does so only for advancing his own interest as he has a stake in success of venture. There is neither intention to render a service to other partners nor is there any consideration fixed as quid pro quo for any particular service - A contractor-contractee or principal-agent relationship which is an essential element of any taxable service is absent in relationship amongst co-venturers or between co-venturers and joint venture. The element of consideration which is necessary ingredient of any taxable service is absent in such arrangement - The activities undertaken by appellant as designated Operator do not constitute taxable service within meaning of Finance Act 1994. They merely represent discharge of contractual obligations undertaken by co-venturer in furtherance of common enterprise and allocation of resultant expenditure amongst participating members in accordance with their agreed participating interests – Further, extended period of limitation under proviso to Section 73(1) of Finance Act 1994 was invoked in purely mechanical manner without establishing indispensable statutory ingredients of fraud collusion willful misstatement or suppression of facts with intent to evade payment of Service Tax – The impugned demand of service tax together with interest thereon are set aside – The appeal is allowed [Read less]

GST - Interest and penalty on returns filed after due date, Maintainability of writ petition - Claim for refund of over-deposited taxes - Petitioner filed returns for financial year 2017-18 at the rate of 18 per cent instead of statutory rate of 12 per cent and subsequently issued credit notes to correct the inadvertent error in March 2018 - Despite the full discharge of tax liability by the petitioner and correction through credit notes, respondent authorities issued Show Cause Notice for alleged delayed filing of returns and imposed interest under Section 50 of CGST Act - Whether interest is sustainable when there is no ... [Read more]

GST - Interest and penalty on returns filed after due date, Maintainability of writ petition - Claim for refund of over-deposited taxes - Petitioner filed returns for financial year 2017-18 at the rate of 18 per cent instead of statutory rate of 12 per cent and subsequently issued credit notes to correct the inadvertent error in March 2018 - Despite the full discharge of tax liability by the petitioner and correction through credit notes, respondent authorities issued Show Cause Notice for alleged delayed filing of returns and imposed interest under Section 50 of CGST Act - Whether interest is sustainable when there is no tax arrear and only an inadvertent error in rate has been committed and corrected - HELD - The Court is prima facie satisfied with regard to the point of maintainability. The present Writ Petition is maintainable despite existence of alternative remedy when impugned orders suffers from lack of jurisdiction and violation of natural justice - the issue involved herein cannot be decided without exchange of affidavits. The respondent authorities are directed to file an Affidavit in Opposition. Let the matter be listed on 1st October 2026 - In the meantime the respondent authorities are directed not to give effect to the impugned orders till the next date of hearing – Ordered accordingly [Read less]

Customs – Target Plus Scheme – Requirement of nexus between goods imported and goods exported – Appellant exported iron ore fines and other minerals and obtained duty credit certificates for import of continuous cast copper rods – Department contended that copper rods had no nexus with minerals exported and benefit of Notification No. 32/2005-Cus could not be claimed – Appellant contended that broad nexus as contemplated in paragraph 3.2.5 of Handbook of Procedures was sufficient and that ambiguity in policy provisions had been interpreted in favour of exporters – Whether strict one-to-one nexus between importe... [Read more]

Customs – Target Plus Scheme – Requirement of nexus between goods imported and goods exported – Appellant exported iron ore fines and other minerals and obtained duty credit certificates for import of continuous cast copper rods – Department contended that copper rods had no nexus with minerals exported and benefit of Notification No. 32/2005-Cus could not be claimed – Appellant contended that broad nexus as contemplated in paragraph 3.2.5 of Handbook of Procedures was sufficient and that ambiguity in policy provisions had been interpreted in favour of exporters – Whether strict one-to-one nexus between imported goods and specific goods exported required or broad nexus with product group sufficient - HELD – Broad nexus between imported goods and any product group of exported goods is sufficient not strict one-to-one nexus. Policy as judicially interpreted by Hon'ble High Courts did not require that imported goods be usable in manufacture of very goods exported. It was sufficient to demonstrate that imported goods could be used as input in manufacture of goods falling within same defined product group as specified in Conditions Sheet attached to certificate – The harmonious interpretation between expression ‘broad nexus’ in Handbook of Procedures and words ‘input’ and use in FTP accepted – Further, extended period of limitation cannot be invoked without establishing intent to evade duty. Where policy provisions are ambiguous and capable of multiple interpretations and assessee proceeded on interpretation later upheld by Hon'ble High Courts, extended period cannot be invoked – Duty credit certificates used were never revoked, cancelled or amended by licensing authority DGFT. No evidence of fraud, collusion, wilful misstatement or suppression of facts – The CESTAT order upholding benefit of Notification is upheld and the Revenue appeal is dismissed [Read less]

Central Sales Tax Act, 1956 - Classification of Stock Transfers as Inter-State Sales - Vehicles manufactured at factory in Andhra Pradesh were transferred to regional sales offices in other States. Appellant claimed exemption under Section 6A of CST Act, 1956 on ground that these were branch stock transfers. Tax authority disallowed exemption and treated them as inter-state sales under Section 3(a) of CST Act, 1956 - Whether stock transfers of vehicles from manufacturing unit to regional sales offices qualify for exemption under Section 6A of CST Act or constitute inter-state sales under Section 3(a) of CST Act, 1956 – H... [Read more]

Central Sales Tax Act, 1956 - Classification of Stock Transfers as Inter-State Sales - Vehicles manufactured at factory in Andhra Pradesh were transferred to regional sales offices in other States. Appellant claimed exemption under Section 6A of CST Act, 1956 on ground that these were branch stock transfers. Tax authority disallowed exemption and treated them as inter-state sales under Section 3(a) of CST Act, 1956 - Whether stock transfers of vehicles from manufacturing unit to regional sales offices qualify for exemption under Section 6A of CST Act or constitute inter-state sales under Section 3(a) of CST Act, 1956 – HELD - The appellant's characterization of impugned transactions as branch stock transfers simpliciter is not acceptable. The function and effect of the APO document which originates in dealer-level demand is aggregated at central planning stage and directly triggers manufacture and despatch of vehicles to branch from which demand emanated is indistinguishable from an indent or purchase order. Data gathered at audit establishes concrete material that dealers placed firm orders on branches accompanied by advance payments before vehicles were despatched. The transactions bear all essential incidents of a pre-existing contract of sale occasioning inter-state movement of goods – The Form F declarations do not immunize transactions where material establishes that movement was occasioned by pre-existing contract of sale. The presumption raised by Form F is rebuttable and stands rebutted here by appellant's own admitted business practice read together with evidence gathered at stage of audit regarding advance orders and payments at branch level - The denial of exemption is sustainable both for non-compliance with statutory requirements and on independent ground that transactions satisfy ingredients of Section 3(a) CST Act - The impugned order is upheld. Transactions constitute inter-state sales and are exigible to tax – The writ petition is dismissed [Read less]

Service Tax – Authority of the Tribunal to constitute Larger Bench on conflicting High Court judgments - CESTAT observed conflicting views rendered by two different High Courts on interpretation of Section 142(3) of CGST Act, 2017. One judgment from jurisdictional High Court and another from another High Court on same issue. CESTAT directed constitution of Larger Bench to decide questions regarding refund of CENVAT credit in cash and doctrine of vested rights - Whether Tribunal can constitute a Larger Bench to examine conflicting High Court judgments and determine which judgment should be followed – HELD - Tribunal was... [Read more]

Service Tax – Authority of the Tribunal to constitute Larger Bench on conflicting High Court judgments - CESTAT observed conflicting views rendered by two different High Courts on interpretation of Section 142(3) of CGST Act, 2017. One judgment from jurisdictional High Court and another from another High Court on same issue. CESTAT directed constitution of Larger Bench to decide questions regarding refund of CENVAT credit in cash and doctrine of vested rights - Whether Tribunal can constitute a Larger Bench to examine conflicting High Court judgments and determine which judgment should be followed – HELD - Tribunal was confronted with unusual situation arising out of conflicting judgments rendered by two different High Courts on same issue. Judgment of jurisdictional High Court is binding on all Tribunals and subordinate Courts functioning within its territorial jurisdiction and cannot be ignored. The Tribunal ought not to have constituted a Larger Bench for purpose of examining correctness or applicability of judgment rendered by jurisdictional High Court as such exercise is impermissible in law - Judgment of jurisdictional High Court continues to bind all Tribunals unless it is stayed, reversed or overruled by Supreme Court. However, appropriate course for Tribunal would have been to defer further proceedings until Supreme Court renders decision in pending Special Leave Petition. It is impermissible for Tribunal to examine whether judgment of jurisdictional High Court should prevail over that of another High Court particularly when former is binding upon it – The order directing constitution of Larger Bench set aside. Service Tax Appeal shall remain pending and further proceedings deferred until final outcome of Special Leave Petition pending before Supreme Court – The writ petition stands allowed [Read less]

Service Tax - Maintainability of Appeal under Section 35G of Central Excise Act - Classification of Taxable Services - Revenue preferred an appeal under Section 35G of the Central Excise Act against the CESTAT's order which had allowed the Respondent's appeal and set aside the demand on the ground that the services rendered were not taxable under Section 65(105) of the Finance Act - Whether an appeal involving determination of classification of services falls within the prohibition against appeals on grounds of rate of duty or value of goods under Section 35G(1) of the Central Excise Act – HELD - The questions relating t... [Read more]

Service Tax - Maintainability of Appeal under Section 35G of Central Excise Act - Classification of Taxable Services - Revenue preferred an appeal under Section 35G of the Central Excise Act against the CESTAT's order which had allowed the Respondent's appeal and set aside the demand on the ground that the services rendered were not taxable under Section 65(105) of the Finance Act - Whether an appeal involving determination of classification of services falls within the prohibition against appeals on grounds of rate of duty or value of goods under Section 35G(1) of the Central Excise Act – HELD - The questions relating to classification of services and whether they are taxable fall within the expression determination of any question having relation to rate of duty. Section 35L(2) of the Central Excise Act clarifies that determination of disputes relating to taxability or excisability of goods is covered under the term determination of any question having relation to rate of duty and hence appeals in such matters should lie before the Supreme Court under Section 35L and not before the High Court under Section 35G - The amendment inserting Section 35L(2) is clarificatory in nature and does not create any new legal position but merely gives statutory expression to what was already the natural consequence of reading Sections 35G and 35L collectively. The phrase ‘shall include’ denotes inclusive and expansive definition clarifying the scope of an existing expression rather than adding a new category. The appeal under Section 35G is not maintainable and dismissed. Revenue would have to prefer the appeal before the Supreme Court under Section 35L if it intends to – The appeal is dismissed [Read less]

Andhra Pradesh General Sales Tax Rules, 1957 - Applicability of Rule 6(3)(i) to Works Contracts spread beyond One Year - Petitioner executed three different works contracts, two of which extended beyond one year. Department assessed the value of goods purchased considering Rule 6(3)(ii) instead of Rule 6(3)(i) applicable for works spread beyond one year - Whether in respect of contracts spread over a period of more than one year, the provision of Rule 6(3)(i) of the APGST Rules, 1957 would be applicable – HELD - The Rule 6(3)(i) merely provides another method of determining the turnover liable to tax for works spread bey... [Read more]

Andhra Pradesh General Sales Tax Rules, 1957 - Applicability of Rule 6(3)(i) to Works Contracts spread beyond One Year - Petitioner executed three different works contracts, two of which extended beyond one year. Department assessed the value of goods purchased considering Rule 6(3)(ii) instead of Rule 6(3)(i) applicable for works spread beyond one year - Whether in respect of contracts spread over a period of more than one year, the provision of Rule 6(3)(i) of the APGST Rules, 1957 would be applicable – HELD - The Rule 6(3)(i) merely provides another method of determining the turnover liable to tax for works spread beyond one year, based on the value of goods purchased and supplied or used in the execution of the works contract in that year, instead of the method prescribed in Rule 6(2) of arriving at turnover by deducting certain items of expenditure from gross receipts - The value of goods under Rule 6(3)(i) includes not only the cost of acquisition of goods but also transportation charges to deliver the goods to the situs of the works, cost of establishment relatable to supply of material, other charges incurred till incorporation in the works and profits relatable to the value of goods. The profit element may be estimated considering factors like profits ordinarily made by other contractors in similar works, profits earned by the contractor in previous years and profit percentage norms accepted in the industry - The deemed turnover under Rule 6(3)(i) would exclude profits on labour component and actual cost of incorporation in the works - The issue involved in the present writ petitions is covered by Full Bench decision of High Court of Andhra Pradesh in the case of State of Andhra Pradesh v. Seven Hills Constructions - The impugned order is set aside and the matter is remanded for fresh computation taking into consideration the provision of Rule 6(3)(i) after verifying whether the works executed by the petitioner actually spread over beyond one year – The writ petition is allowed [Read less]