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Central Excise - Valuation of Goods - Amortized Value of Tools and Dies – Appellant manufactures automobile parts and accessories supplied to original equipment manufacturers; tools and dies were supplied by customers free of cost or manufactured and recovered from customers through separate invoices – Whether the entire value of tools and dies recovered by the appellant from customers should be included in the assessable value of the final products or only the amortized value should be included under Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – HELD – The final p... [Read more]

Central Excise - Valuation of Goods - Amortized Value of Tools and Dies – Appellant manufactures automobile parts and accessories supplied to original equipment manufacturers; tools and dies were supplied by customers free of cost or manufactured and recovered from customers through separate invoices – Whether the entire value of tools and dies recovered by the appellant from customers should be included in the assessable value of the final products or only the amortized value should be included under Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – HELD – The final products cannot be manufactured without the tools and dies and their value should be included in the assessable value; however, as they are used repeatedly and not only once, the cost has to be spread over all goods manufactured using it through amortization - The amortized value alone has to be calculated and included in the assessable value and not the total value of tools and dies; the exemption under Notification No. 67/95-CE for captively used goods does not apply as the appellant sold the tools and dies under separate invoices and then used them within the factory premises - The extended period of limitation was correctly invoked as the appellant was fully aware that amortized value needs to be included since it followed this practice in other cases and no bonafide belief existed. The matter is remanded to the original authority to recompute the demand of duty by reckoning the amortized value of tools and dies and correspondingly recompute interest and penalty – Appeal allowed by way of remand to the original authority [Read less]

Customs - Adjudication of Show Cause Notice - Adjudicating Authority Cannot Travel Beyond Scope – Appellant, an authorised courier under the Courier Imports and Exports (Clearance) Regulations, 2010, accepted export consignment through intermediary agents and filed Courier Shipping Bill; examination revealed pseudoephedrine hydrochloride concealed in garment embroidery; Show Cause Notice alleged unauthorised sub-contracting of courier services and non-compliance with Know Your Customer requirements for identity verification – Whether the adjudicating authority can introduce for the first time in the Order-in-Original n... [Read more]

Customs - Adjudication of Show Cause Notice - Adjudicating Authority Cannot Travel Beyond Scope – Appellant, an authorised courier under the Courier Imports and Exports (Clearance) Regulations, 2010, accepted export consignment through intermediary agents and filed Courier Shipping Bill; examination revealed pseudoephedrine hydrochloride concealed in garment embroidery; Show Cause Notice alleged unauthorised sub-contracting of courier services and non-compliance with Know Your Customer requirements for identity verification – Whether the adjudicating authority can introduce for the first time in the Order-in-Original new material facts and legal foundations not disclosed in the Show Cause Notice, including alleged violation of different regulations, treatment of the appellant as consignor, and attribution of knowledge of attempted smuggling – HELD – The adjudicating authority cannot travel beyond the scope of the Show Cause Notice by introducing new material facts which constitute the very foundation of the proposed liability; a distinction must be maintained between material facts which form the foundation of the charge and particulars which elaborate such facts; the material facts necessary to constitute a complete cause of action must be stated in the Show Cause Notice to enable the assessee to reasonably defend itself; the essential test is whether the Notice disclosed the essential factual and legal foundation of the charge so as to enable the noticee to effectively defend itself; findings based on material facts not contained in the Show Cause Notice, such as alleged violation of Regulations 13(a) and 13(c), treatment of the appellant as consignor/exporter, and attribution of knowledge or conscious participation in smuggling, are unsustainable – Impugned order set aside to the extent it rests on such travel beyond the Notice - Customs - Courier Regulations - Identity Verification - Appellant, an authorised courier, accepted an export consignment on the basis of one identity document (driving licence) which contained both identity and address particulars; Show Cause Notice alleged contravention of Regulation 13(i) of the Courier Imports and Exports (Clearance) Regulations, 2010 for failure to obtain two identity documents as required by Know Your Customer instructions – Whether acceptance of a consignment on the basis of a single genuine identity document containing both proof of identity and address particulars constitutes contravention of Regulation 13(i) of the Courier Regulations – HELD – Regulation 13(i) requires verification of the antecedents, correctness of Importer Exporter Code number, identity of the client and functioning at the declared address using reliable, independent and authentic documents and information, but does not mandate two identity documents; the requirement for two documents originated from Board's Know Your Customer instructions issued vide Circular No. 33/2010 and was subsequently relaxed by Circular No. 7/2015-Cus which accepted one document if it contained both identity and address particulars; non-production of a second identity document may constitute a procedural lapse but absent evidence that the consignor's identity or address could not be verified from the undisputedly genuine identity document, it does not establish breach of Regulation 13(i); the circular, though prospective, supports the distinction by recognising that one prescribed document serving as proof of both identity and address is sufficient – Finding of contravention of Regulation 13(i) set aside - Customs - Courier Regulations - Sub-contracting of Core Functions vs Non-core Activities – Appellant, an authorised courier, arranged for pick-up and collection of export consignments through intermediary agents without obtaining written permission of the Commissioner of Customs; SCN alleged unauthorised sub-contracting in violation of Regulation 13(j) of the Courier Imports and Exports (Clearance) Regulations, 2010 – Whether outsourcing of physical pick-up and collection of export consignments from the consignor constitutes prohibited sub-contracting of functions under Regulation 13(j) of the Courier Regulations – HELD – Regulation 13(j) prohibits sub-contracting or outsourcing of functions permitted or required to be carried out by an authorised courier only when such functions are regulatory functions contemplated by the Courier Regulations; the regulation does not prohibit all commercial outsourcing but only those functions which the Regulations themselves designate as courier functions; pick-up and collection of export consignments are not assessment or clearance functions which constitute the core regulatory functions of an authorised courier under the Courier Regulations; Circular No. 59/2016-Cus recognises pick-up as a non-core activity not requiring prior written permission but only due diligence and intimation; installation of the appellant's software at the agent's premises shows knowledge of the arrangement but does not prove that a regulatory function was outsourced; mere outsourcing of physical pick-up therefore does not violate Regulation 13(j) – Finding of contravention of Regulation 13(j) set aside - Customs - Smuggling - Courier Liability for Concealed Contents - Knowledge and Connivance Required – Appellant, an authorised courier, filed Courier Shipping Bill for export of garments; examination revealed pseudoephedrine hydrochloride concealed ingeniously within embroidered portions of the garments; Show Cause Notice alleged that appellant knowingly filed a false or incorrect declaration and aided smuggling of prohibited narcotic drugs; penalties were proposed under Sections 114(i) and 114AA of the Customs Act, 1962 – Whether an authorised courier can be held liable for concealed prohibited contents discovered in export consignments in the absence of evidence of the courier's knowledge, connivance or collusion in the misdeclaration or concealment – HELD – A courier cannot be held liable for concealed contents merely because the consignor had incorrectly declared the contents of the consignment; Section 114(i) of the Customs Act requires an act or omission rendering goods liable to confiscation while Section 114AA requires use of false or incorrect material with knowledge or intent; mere filing of the courier declaration on the consignor's information followed by discovery of prohibited goods does not establish a knowing false declaration; installation of the appellant's software at another entity's premises or receipt of the consignment through an intermediary does not by itself establish knowledge and control or failure to discharge a specific regulatory obligation; no cogent evidence has been produced to establish that the appellant knew of, participated in, or facilitated the misdeclaration or the ingenious concealment of the narcotic substance which could be detected only by cutting open the garments; neither the ingredient of knowledge nor the ingredient of intent to make a false declaration is present – Penalties under Sections 114(i) and 114AA set aside; appeal allowed. 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GST - Power and jurisdiction of Appellate Authority to remand matter to original adjudicating authority - Section 107(11) of CGST Act 2017 - Revenue filed appeal against Rectification Order wherein First Appellate Authority partially allowed appeal and partially remanded matter to adjudicating authority for verification of documents and tax computation - Whether Appellate Authority has power to remand matter back to original adjudicating authority for verification of documents and tax computation instead of deciding appeal finally on merits - HELD - Section 107(11) of CGST Act 2017 explicitly provides that Appellate Author... [Read more]

GST - Power and jurisdiction of Appellate Authority to remand matter to original adjudicating authority - Section 107(11) of CGST Act 2017 - Revenue filed appeal against Rectification Order wherein First Appellate Authority partially allowed appeal and partially remanded matter to adjudicating authority for verification of documents and tax computation - Whether Appellate Authority has power to remand matter back to original adjudicating authority for verification of documents and tax computation instead of deciding appeal finally on merits - HELD - Section 107(11) of CGST Act 2017 explicitly provides that Appellate Authority shall after making such further inquiry as may be necessary pass such order as it thinks just and proper confirming modifying or annulling the decision or order appealed against but shall not refer the case back to the adjudicating authority that passed the said decision or order - The statute contemplates only three courses of action available to the Appellate Authority namely to confirm modify or annul the impugned decision or order. The power to remand has been expressly excluded by the legislature through the plain language of Section 107(11) - Where necessary the Appellate Authority may undertake or cause to be undertaken such further inquiry as it considers necessary and thereafter adjudicate the matter on its own merits without referring it back to the adjudicating authority. The Appellate Authority has the statutory power to call for records examine documents verify figures and undertake all necessary inquiries at its own level and then pass a final reasoned order. An order remanding matter to adjudicating authority for verification is in contravention of the express statutory bar against such remand - An order giving directions to the adjudicating authority without final determination on the merits amounts to referring the case back which is statutorily prohibited. The legislature has deliberately omitted the power to remand to ensure finality and closure of appellate proceedings. Any such remand exceeds statutory appellate jurisdiction and renders the order without legal authority - The Rectification Order to the extent it remands matter to adjudicating authority is set aside. The First Appellate Authority is directed to conduct necessary verification at its own level and pass a fresh final order on merits confirming modifying or annulling the demand following principles of natural justice – The appeal is disposed of [Read less]

GST - Refund of unutilized Input Tax Credit under inverted duty structure - Section 54(3) and Rule 89(5) of CGST Act 2017 - Show cause notice for rejection of refund on ground of ineligible ITC - Show cause notice was vague lacking invoice-wise details and specific grounds for rejection - First Appellate Authority introduced new grounds for rejection not contained in show cause notice or adjudication order - Whether refund application can be rejected on ground of ineligible ITC without initiating formal proceedings under Section 73 or Section 74 - HELD - The show cause notice must be specific detailed and clear indicating ... [Read more]

GST - Refund of unutilized Input Tax Credit under inverted duty structure - Section 54(3) and Rule 89(5) of CGST Act 2017 - Show cause notice for rejection of refund on ground of ineligible ITC - Show cause notice was vague lacking invoice-wise details and specific grounds for rejection - First Appellate Authority introduced new grounds for rejection not contained in show cause notice or adjudication order - Whether refund application can be rejected on ground of ineligible ITC without initiating formal proceedings under Section 73 or Section 74 - HELD - The show cause notice must be specific detailed and clear indicating the precise grounds and basis for proposed action. Where a show cause notice merely alleges ineligibility without furnishing invoice-wise details nature of ineligibility or specific computation it denies the assessee proper opportunity to defend its case - The determination of eligibility or otherwise of ITC is permissible only under Section 73 or Section 74 of CGST Act. There cannot be any disallowance of ITC dehors these provisions. Until and unless an order has been passed under Section 73 or Section 74 disallowing the ITC taken such ITC is presumed to be in order - Where ITC has been availed in statutory returns and not challenged through formal proceedings under Section 73 or Section 74 the same cannot be reopened in refund proceedings under Section 54 as a collateral matter. The refund proceedings under Section 54(3) read with Rule 89(5) cannot be converted into proceedings to re-adjudicate eligibility of ITC which is the exclusive domain of Section 73 or Section 74 – The settled position that there cannot be two different yardsticks one for permitting credit and another for eligibility to refund is legally well-established. Without questioning the credit taken the eligibility to refund cannot be questioned - Further, the Appellate Authority cannot transgress the boundaries of the show cause notice and introduce new grounds for rejection not contained therein. Such introduction of extraneous grounds violates principles of natural justice - The portion of the Order-in-Appeal sustaining denial of refund is set aside. The refund application is to be allowed for the amount rejected. The grounds for rejection introduced by the Appellate Authority beyond the SCN are set aside – The appeal is allowed [Read less]

Central Excise – CENVAT Credit – Countervailing Duty on Capital Goods Imported by Separate Entity – Appellant, engaged in manufacture of cement, availed CENVAT credit of Countervailing Duty paid on capital goods imported by M/s Coromandel Electric Company Ltd., a separately incorporated Special Purpose Vehicle established for captive power generation. The appellant subsequently acquired majority shareholding in the Special Purpose Vehicle and the electricity generated was exclusively used in manufacture of dutiable cement products by the appellant. The Department disallowed the credit on the ground that the capital g... [Read more]

Central Excise – CENVAT Credit – Countervailing Duty on Capital Goods Imported by Separate Entity – Appellant, engaged in manufacture of cement, availed CENVAT credit of Countervailing Duty paid on capital goods imported by M/s Coromandel Electric Company Ltd., a separately incorporated Special Purpose Vehicle established for captive power generation. The appellant subsequently acquired majority shareholding in the Special Purpose Vehicle and the electricity generated was exclusively used in manufacture of dutiable cement products by the appellant. The Department disallowed the credit on the ground that the capital goods were imported by a separate legal entity distinct from the appellant – Whether the appellant was entitled to avail CENVAT credit on duty paid by another independent incorporated entity notwithstanding the captive power arrangement, economic integration and shareholding relationship between the two companies – HELD – The appellant is not legally entitled to avail CENVAT credit of Countervailing Duty paid on capital goods imported by M/s Coromandel Electric Company Ltd., a separate incorporated legal entity. Statutory tax benefits must attach to the legal entity recognized by statute and not merely to the economic beneficiary of the transaction. The imported capital goods stood in Bills of Entry filed in the name of the Special Purpose Vehicle and customs duty including Countervailing Duty was discharged by that entity as importer of record. The CENVAT Credit Rules do not recognize any principle by which credit legally accruing to one incorporated entity may automatically stand transferred to another merely because both entities are commercially interconnected or because the appellant holds majority shareholding. The doctrine of separate juristic personality remains fundamental to company law and cannot be selectively disregarded merely because such disregard would yield tax advantage. Rule 3 and Rule 4(3) of the CENVAT Credit Rules permit credit only by a manufacturer or eligible person in prescribed modes and do not recognize transfer of credit entitlement between separate legal entities. The appellant neither imported the goods directly nor acquired them under any arrangement contemplated under the Rules. The statutory conditions for availment of credit therefore remain unfulfilled. The decisions in Vikram Cement v Commissioner of Central Excise and Birla Corporation Ltd. v Commissioner of Central Excise concerning single assessee claiming credit within integrated manufacturing operations do not apply to the present situation involving two separate incorporated entities. The economic integration and functional nexus cannot create statutory entitlement where the statute does not confer one – The impugned order is upheld and the appeal filed by the appellant is dismissed - Central Excise – CENVAT Credit – Recovery of Inadmissible Credit – Interest and Penalty – Having determined that the appellant was not entitled to avail CENVAT credit of Countervailing Duty paid on capital goods imported by another separate entity – Whether the demand for recovery of the credit together with applicable interest and equal penalty under Section 11AC of the Central Excise Act, 1944 and Rule 15(2) of the CENVAT Credit Rules, 2004 was sustainable – The appellant contended that the availment was based on bona fide interpretation of the Rules, the transaction was revenue neutral as duty was already discharged by the separate entity, and the dispute was purely interpretational in nature – HELD – The demand for recovery of inadmissible CENVAT credit is legally sustainable. Having held that the appellant was not legally entitled to avail the disputed CENVAT credit, recovery of the same under Rule 14 of the CENVAT Credit Rules, 2004 is the inevitable statutory consequence. The plea of revenue neutrality cannot validate credit availed contrary to statutory provisions or defeat recovery of inadmissible credit, as equitable considerations cannot create a substantive right where the statute does not confer one. The appellant admittedly availed credit on capital goods imported by another independent corporate entity without any statutory provision permitting such availment. Recovery of statutory interest, being compensatory in nature, follows automatically as a consequence of recovery of inadmissible credit. The imposition of equal penalty under Section 11AC is also sustainable as the appellant availed credit without any statutory authority. The fact that the dispute involves interpretation of law does not set aside interest and penalty when credit is availed in violation of the statutory framework. The demand confirmed under the impugned Order-in-Original is therefore legal and sustainable. [Read less]

Central Excise - Reliability of documents seized during search for establishing clandestine removal, Contradictions in evidence of panch witnesses and investigating officers, Requirements of evidence for proving suppression or concealment of production – The Department relied on the Panchnama drawn during the search and documents listed therein to establish clandestine removal and proposed duty demand. The appellant contended that the panch witnesses in their cross-examination categorically stated that no such documents were recovered during the search and that the Panchnama contained contradictions regarding timing of t... [Read more]

Central Excise - Reliability of documents seized during search for establishing clandestine removal, Contradictions in evidence of panch witnesses and investigating officers, Requirements of evidence for proving suppression or concealment of production – The Department relied on the Panchnama drawn during the search and documents listed therein to establish clandestine removal and proposed duty demand. The appellant contended that the panch witnesses in their cross-examination categorically stated that no such documents were recovered during the search and that the Panchnama contained contradictions regarding timing of the search and execution – Whether the demand for central excise duty can be sustained on the basis of documents purportedly seized during search when panch witnesses contradict the recovery of such documents and the Panchnama contains contradictions as to dates and timing – HELD – The Panchnama drawn during search is not reliable as Panch witnesses gave contradictory statements regarding the time of conclusion of the search; documents mentioned in the Panchnama and not produced before the Adjudicating Authority are not reliable evidence to allege clandestine removal - When the documents on the basis of which the demand was proposed in the show cause notice were not shown to the appellant and are not produced before the appellate authority for verification such documents are not reliable evidence - The statement of the appellant's proprietor recorded during investigation wherein he stated that he was not aware who prepared the rough entries and was signing first and last page without understanding the contents was not contradicted by the Revenue with cogent evidence and therefore cannot be treated as an inculpatory statement - With deduction of clearances based on unreliable documents the total turnover falls within the Small Scale Industries exemption limit and the appellant is not liable to pay duty. Consequently the impugned order is set aside and the appeal is allowed [Read less]

Customs – Import of Newsprint under Foreign Trade Policy - Applicability of RNI registration requirement at time of import versus time of clearance - Appellant imported newsprint under Foreign Trade Policy 2009-2014 and 2015-2020, stored it in bonded warehouses and subsequently sold to RNI-registered actual users who filed bills of entry claiming exemption under Notification No. 12/2012-Cus., Sl. No. 264 - Whether prior to 03.06.2016, the appellant, not holding RNI registration certificate, could legally import newsprint under duty-free regime - HELD - Imports made prior to 03.06.2016 cannot be treated as violation of ap... [Read more]

Customs – Import of Newsprint under Foreign Trade Policy - Applicability of RNI registration requirement at time of import versus time of clearance - Appellant imported newsprint under Foreign Trade Policy 2009-2014 and 2015-2020, stored it in bonded warehouses and subsequently sold to RNI-registered actual users who filed bills of entry claiming exemption under Notification No. 12/2012-Cus., Sl. No. 264 - Whether prior to 03.06.2016, the appellant, not holding RNI registration certificate, could legally import newsprint under duty-free regime - HELD - Imports made prior to 03.06.2016 cannot be treated as violation of applicable Foreign Trade Policy. The DGFT Notification No. 09/2015-2020 dated 03.06.2016 expressly clarified that RNI registration requirement applies at time of import of goods, whereas prior policy required it at time of clearance. The amended requirement cannot be applied retrospectively to imports made before 03.06.2016. Additionally, Notification No. 12/2012-Cus., Sl. No. 264 did not itself prescribe any condition requiring the importer to be RNI-registered or Actual User. Therefore, exemption from basic customs duty and additional duty was not conditional upon such requirements. The import of newsprint under such exemption followed by sale to RNI-registered actual users could not constitute violation of import policy or Customs Act – Revenue appeals against Order-in-Appeal setting aside confiscation are rejected - Customs - Confiscation of newsprint - Burden of proof for establishing illicit import and diversion to dummy units - Newsprint seized at various premises, Appellant alleged to have imported improperly and cleared to dummy units for illicit consideration, charged under Sections 111(d), 111(o) and Section 112 of Customs Act, 1962 - Whether confiscation and penalty can be sustained based on procedural irregularities such as non-tallying of reel serial numbers without substantive evidence of illegal import or diversion - HELD - The initial burden of establishing that goods were illicitly imported lies with Department. Department must establish foundational facts from which it can be reasonably inferred that goods were illicitly or improperly imported and thereafter supplied to dummy units for illicit consideration. Only upon such foundational facts being established would evidentiary burden shift to person in possession. In present case, no evidence of blame-worthy conduct with intention to evade duty was discerned. Allegations that goods were cleared to dummy units against illicit consideration were neither charged nor proved. Procedural irregularities and serial number non-tallying do not constitute sufficient evidence of illegal import when every identified importer produced bills of entry, bills of lading, packing lists, invoices, transport documents and payment documents coupled with CA certificate. Confiscation and penalties are not sustainable - Appeals are rejected [Read less]

Customs - Classification of Sensors - Specific Tariff Entry Prevails Over Residuary Entry – Appellant manufactures passenger and multi-utility vehicles and imported various sensors from group companies; identical components bearing the same part numbers were classified under different Customs Tariff Headings at different points of time - Show Cause Notice issued proposing reclassification and recovery of alleged short-paid duty – Whether temperature sensors, gas analysis sensors and other sensors should be classified under specific tariff headings such as Heading 8533 (thermistors), Heading 9027 (gas analysis apparatus... [Read more]

Customs - Classification of Sensors - Specific Tariff Entry Prevails Over Residuary Entry – Appellant manufactures passenger and multi-utility vehicles and imported various sensors from group companies; identical components bearing the same part numbers were classified under different Customs Tariff Headings at different points of time - Show Cause Notice issued proposing reclassification and recovery of alleged short-paid duty – Whether temperature sensors, gas analysis sensors and other sensors should be classified under specific tariff headings such as Heading 8533 (thermistors), Heading 9027 (gas analysis apparatus), Heading 8543 (electrical apparatus) and Heading 8708 (motor vehicle parts) or under the residuary Heading 9031 (measuring or checking instruments) – HELD – Where a specific tariff heading applies, the residuary heading cannot be preferred; a thermistor-based temperature sensor whose primary function is to sense temperature through resistance change and transmit the signal to the Engine Control Unit, without performing temperature conversion or calibration itself, is classifiable under Heading 8533 as a thermistor and not under the residuary Heading 9031; gas analysis sensors using electrochemical cells to determine the concentration of constituents in exhaust gas are specifically covered by Heading 9027 and not under Heading 9031; the Sensor Speed which merely detects magnetic field changes and generates electrical signals without performing measurement is classifiable under Heading 8543 as an electrical apparatus; the Retainer Ultrasonic Sensor, being specially designed for use solely with motor vehicles, is classifiable under Heading 8708 and not under the general plastic articles heading – Appeals allowed with modification; classification of specific sensors set aside and appellant's declared classification upheld - Customs Duty - Extended Period of Limitation - Burden on Revenue to Establish Wilful Misstatement – Whether the extended period under Section 28(4) of the Customs Act can be invoked merely on the basis of repeated adoption of different classifications for identical goods without evidence of deliberate suppression or wilful misstatement with intent to evade duty – HELD – The extended period requires a positive act indicating wilful default; mere wrong classification or breach of the self-assessment obligation is insufficient; the Revenue must establish by cogent evidence, either direct or circumstantial, raising adverse inference, collusion, wilful misstatement or suppression of facts with intent to evade duty - The changing pattern of classification adopted by an importer, without more, does not establish deliberate suppression or wilful misstatement; the Bills of Entry contained the relevant particulars and were self-assessed under the statutory scheme; the subsequent adoption of a different classification cannot by itself, without sufficient evidence, establish a charge of suppression or wilful misstatement - The presumption of innocence is a background assumption of the legal system. Therefore in the absence of sufficient evidence, the extended period is not invocable – Demand raised by invoking extended period set aside as barred by limitation - Customs Duty - Section 28 - Reclassification Without Duty Demand Not Permissible – Appellant imported sensors which were classified under specific tariff headings at the time of import; Show Cause Notice proposed reclassification of thirty-six sensors under Section 28 but did not raise any demand of differential duty in respect of them; appellant contended that Section 28 cannot be invoked merely to reclassify goods where no duty demand has been raised – Whether the proper officer can invoke Section 28 merely to alter the classification of goods already assessed under a completed assessment, where no duty or other liability is proposed to be recovered and no short-levy, non-levy or erroneous refund is alleged – HELD – Once the assessment under Section 17 is completed and goods are cleared from Customs control, the proper officer becomes functus officio and cannot review or alter the assessment except under a specific statutory provision empowering such action; Section 28 is a specific provision for recovery of duty not levied, not paid, short-levied, short-paid or erroneously refunded; where no duty is sought to be recovered, a distinction has to be made between re-assessment undertaken to determine and recover duty under a statutory provision and a mere change in classification of goods already assessed - Reclassification of goods in respect of which no differential duty is demanded is beyond the scope of Section 28 proceedings; this finding does not preclude the Department from examining the correct classification at the stage of assessment of any subsequent Bill of Entry as each Bill of Entry constitutes a fresh assessment – Proposed reclassification of thirty-six sensors set aside. [Read less]

Service Tax – Determination of Taxable Service and Taxable Value – Appellant rendered services including Erection, Commissioning and Installation Service, Manpower Supply Service and Maintenance or Repair Service and Department alleged services were rendered without registration and wrongly claimed abatement on the basis of differences between Balance Sheet, Income Tax records and ST-3 Returns – Whether service tax demand can be sustained merely on the basis of accounting differences between Balance Sheet and Income Tax records without first establishing the taxable service and taxable value – HELD – Service tax ... [Read more]

Service Tax – Determination of Taxable Service and Taxable Value – Appellant rendered services including Erection, Commissioning and Installation Service, Manpower Supply Service and Maintenance or Repair Service and Department alleged services were rendered without registration and wrongly claimed abatement on the basis of differences between Balance Sheet, Income Tax records and ST-3 Returns – Whether service tax demand can be sustained merely on the basis of accounting differences between Balance Sheet and Income Tax records without first establishing the taxable service and taxable value – HELD – Service tax can be levied only after the Department identifies the taxable service, classifies the activity under the appropriate charging entry and determines the taxable value in accordance with Section 67 of the Finance Act, 1994. Mere differences between Balance Sheet, Income Tax records and ST-3 Returns cannot by themselves constitute the basis for confirming service tax liability without first undertaking the statutory exercise or verifying the underlying agreements, invoices, work orders and other contemporaneous records. A Show Cause Notice must clearly identify the taxable services, specify the appropriate taxable category and disclose the basis of computation of demand. A vague or omnibus demand founded merely on financial statements without proper classification cannot be sustained. Accounting entries in financial statements cannot constitute sole basis for determining service tax liability. Figures reflected in Balance Sheet or Income Tax records may justify investigation but cannot by themselves establish taxable value without examination of underlying contracts, invoices and contemporaneous evidence. The Department substantially accepted audit computation based on Balance Sheet without undertaking detailed verification required by law. The controversy stands concluded by the Tribunal's earlier decision in the same assessee's case involving identical facts and issues wherein it was held that the Show Cause Notice failed to properly identify and classify the taxable services or correlate the receipts with the charging provisions of the Finance Act, 1994 and that invocation of extended period was unsustainable. Judicial discipline requires respectfully following the earlier Final Order. The adjudicating authority travelled beyond allegations contained in the Show Cause Notice and burden of establishing taxability always rests upon the Department. Only the admitted liability is sustained – The service tax demand on merits is unsustainable except for the admitted liability which is sustained with applicable interest under Section 75 subject to adjustment of amounts already paid, and the balance disputed demand is set aside - the appeal is partly allowed - Service Tax – Invocation of Extended Period – Department proceeded on basis of non-filing of ST-3 returns, non-registration and incorrect availment of abatement and alleged suppression and wilful misstatement to invoke extended period – Appellant contended that proceedings were based on its own Balance Sheet, Income Tax records and ST-3 Returns and no suppression or wilful misstatement was established – Whether extended period can be invoked when proceedings are founded entirely on appellant's own statutory records – HELD – Extended period under proviso to Section 73(1) can be invoked only where the short-payment of service tax is by reason of fraud, collusion, wilful misstatement, suppression of facts or contravention of statutory provisions with intent to evade service tax. The burden of establishing these ingredients lies squarely upon the Department. The Show Cause Notice itself records that the demand was worked out by comparing appellant's Balance Sheet, Income Tax records and ST-3 Returns and no incriminating documents, parallel accounts or independent evidence of deliberate concealment have been brought on record. The proceedings are therefore founded entirely upon the appellant's own statutory records which substantially negates the allegation of suppression. The controversy stands concluded by the Tribunal's earlier decision in the same assessee's case wherein on substantially identical facts it was held that the Department was already aware of the appellant's activities through earlier audits and proceedings and invocation of extended period was therefore unwarranted. No material factual distinction has been demonstrated. Under settled law, extended period can be invoked only where there is a positive act of fraud, wilful misstatement or deliberate suppression with intent to evade duty and mere omission, accounting discrepancy or difference in interpretation is insufficient. The present dispute essentially relates to classification of services, reconciliation of receipts and admissibility of abatement, all arising from appellant's disclosed statutory records. The Department has failed to establish the statutory ingredients necessary for invoking proviso to Section 73(1) – Interest under Section 75 is payable on the admitted service tax liability subject to adjustment of any amount already discharged. Penalty under Section 78 is set aside as the admitted liability and delay in filing returns do not by themselves establish fraud, wilful misstatement or suppression with intent to evade service tax. [Read less]

Service Tax – Cum Tax Benefit – Appellant was engaged in rendering taxable services and had obtained service tax registration but was neither paying service tax nor filing returns – Department issued Show Cause Notice proposing service tax demand and the Adjudicating Authority confirmed the demand on the basis that service tax liability should be computed on the gross receipts – Appellant contended that cum tax benefit should be extended as it had not paid service tax and there was no evidence that service tax was separately collected from the service recipients – Whether cum tax benefit should be extended when s... [Read more]

Service Tax – Cum Tax Benefit – Appellant was engaged in rendering taxable services and had obtained service tax registration but was neither paying service tax nor filing returns – Department issued Show Cause Notice proposing service tax demand and the Adjudicating Authority confirmed the demand on the basis that service tax liability should be computed on the gross receipts – Appellant contended that cum tax benefit should be extended as it had not paid service tax and there was no evidence that service tax was separately collected from the service recipients – Whether cum tax benefit should be extended when service tax is not paid and not separately collected from service recipients – HELD – It is a well-settled principle that if service tax is not paid and there is no evidence that it has been separately collected from the service recipients, the amounts received as consideration should be considered as cum tax consideration and cum tax benefit should be extended. When service tax is levied on the consideration received for services and the tax is not paid by the service provider and there is no evidence of separate collection from the recipient, the amounts received must be presumed to include the tax component. The benefit of computing service tax on a reduced taxable value after deducting the tax component is available to the assessee. The appellant is entitled to cum tax benefit for determining the taxable value and computing service tax liability - The matter is remanded to the Commissioner for the limited purpose of calculating the amount of service tax, interest and mandatory penalty payable after extending cum tax benefit for the years 2014-2015, 2016-2017 and 2017-2018 – The appeal is partly allowed - Service Tax – Computation of Demand – Gross Receipts – Appellant rendered taxable services during the period 2014-15 to 2017-18 and the Department issued Show Cause Notice proposing demand of service tax based on gross receipts reflected in Income Tax returns for the years 2014-15, 2015-16 and 2016-17 and on the basis of contract amounts for the year 2017-18 as IT returns and balance sheets were not available for that year – Appellant contested the demand for 2017-18 on the ground that the tax was computed on the basis of contractual amounts instead of actual consideration received – Whether the demand for service tax can be sustained on the basis of contract value when IT returns or balance sheets are not available – HELD – When the Department does not have access to Income Tax returns or balance sheets for the relevant period, the best judgment can only be based on whatever figures are available to it. The demand for service tax can be made on the basis of the agreements entered into by the service provider when other documentary evidence of actual consideration received is not available. The contract value constitutes a reasonable basis for determining the taxable value in such circumstances. However, even when the demand is computed on the basis of contract value, the same principle regarding cum tax benefit applies. If service tax is not paid and there is no evidence that it was separately collected from the service recipients, the amounts received or contracted to be received should be considered as cum tax consideration – The demand for the year 2017-18 computed on the basis of contract value is sustainable but cum tax benefit should be extended in computing the service tax liability for that year as well. The appeal is partly allowed and the matter is remanded to the Commissioner for the limited purpose of calculating the amount of service tax, interest and mandatory penalty payable after extending cum tax benefit. [Read less]

GST - Competence of Proper Officer to issue Show Cause Notice under Section 122 of CGST Act, 2017 - Assignment of functions - Investigations into alleged issuance of invoices without actual supply of goods and wrongful availment of Input Tax Credit. Show Cause Notices under Section 122 were issued by DGGI on 30.06.2025. Petitioners contended that the issuing officer had not been assigned relevant functions under Section 122 at time of issuance and that subsequent assignment through Circular dated 27.10.2025 could not retrospectively validate notices which were void at inception - Respondents relied upon Notification No. 14... [Read more]

GST - Competence of Proper Officer to issue Show Cause Notice under Section 122 of CGST Act, 2017 - Assignment of functions - Investigations into alleged issuance of invoices without actual supply of goods and wrongful availment of Input Tax Credit. Show Cause Notices under Section 122 were issued by DGGI on 30.06.2025. Petitioners contended that the issuing officer had not been assigned relevant functions under Section 122 at time of issuance and that subsequent assignment through Circular dated 27.10.2025 could not retrospectively validate notices which were void at inception - Respondents relied upon Notification No. 14/2017 which places DGGI officers at par with corresponding rank central tax officers invested with all powers under CGST and IGST Acts, and contended that subsequent Circular merely clarified existing authority - Whether officer of Central Tax who is not specifically assigned function under Section 2(91) can initiate proceedings under Section 122 when empowered under Sections 3 and 5 of CGST Act and invested with powers of corresponding rank by Notification No. 14/2017-CT and subsequent Circular dated 27.10.2025 can retrospectively validate void SCNs - HELD – The statutory scheme distinguishes between designation or rank of officer and assignment of particular statutory function and expression proper officer is function-specific. However, on conjoint reading of Sections 2(91), 3 and 5 of CGST Act and Notification Nos. 02 and 14, Court is unable to hold that in absence of specific assignment officer otherwise empowered by Sections 3 and 5 is denuded of authority to initiate proceedings - Notification No. 14/2017-CT specifically invests DGGI officers with powers exercisable by Central Tax officers of corresponding rank and Notification No. 02/2017-CT assigns various functions to specified classes of officers. Question whether provisions read together constitute sufficient conferment of authority cannot be answered merely on basis of subsequent Circular dated 27.10.2025 which is issued in view of amendments in Finance Act and is clarificatory of manner in which functions are to be exercised and officers who perform such functions but cannot render nugatory or override statutory notifications already issued - Objection as to competence cannot be characterized as patent or self-evident absence of jurisdiction warranting interference under Article 226. Question involves construction of statutory scheme, effect of Notification Nos. 02 and 14, subsequent Circular and interrelationship between proceedings under Sections 73 or 74 and consequential penalties under Section 122, which are matters capable of examination by Appellate Authority which is competent to consider both questions of fact and law - Objection concerning competence of officer does not disclose patent absence of jurisdiction warranting interference in writ jurisdiction. Petitioners remain at liberty to raise said objection in statutory appeals - The writ petitions are disposed of - Applicability of Amended Pre-Deposit Requirement under Section 107(6) to Proceedings Initiated Before Amendment - Whether amended requirement of pre-deposit can be applied retrospectively to proceedings initiated before 01.10.2025 - HELD - Substituted proviso to Section 107(6) which came into force on 01.10.2025 does not govern appeals arising from adjudicatory proceedings initiated by Show Cause Notices issued prior to that date. Appellate remedy including conditions governing its exercise is governed by law applicable on date on which adjudicatory proceedings commenced - Amended pre-deposit requirement shall not apply to appeals arising from Show Cause Notices issued prior to 01.10.2025. Appeals shall be governed by Section 107(6) as it stood on respective dates of issuance of Show Cause Notices and shall not be rejected merely because Orders-in-Original were passed after 01.10.2025. [Read less]

Customs - Computation of statutory period for adjudication of Show Cause Notice – Application of Section 28(9A) of the Customs Act when interim order restraining coercive action pending – Petitioners imported duty-free raw materials under Advance Authorisation Licences and allegedly diverted the same to domestic market without fulfilling export obligations in breach of actual user condition. A Show Cause Notice was issued on 24.06.2022 under Section 28(4) of the Customs Act, 1962. Petitioners sought deferment of adjudication on account of pendency of writ petition with interim order restraining coercive recovery. Proce... [Read more]

Customs - Computation of statutory period for adjudication of Show Cause Notice – Application of Section 28(9A) of the Customs Act when interim order restraining coercive action pending – Petitioners imported duty-free raw materials under Advance Authorisation Licences and allegedly diverted the same to domestic market without fulfilling export obligations in breach of actual user condition. A Show Cause Notice was issued on 24.06.2022 under Section 28(4) of the Customs Act, 1962. Petitioners sought deferment of adjudication on account of pendency of writ petition with interim order restraining coercive recovery. Proceedings were transferred to Call Book. Order-in-Original was passed on 29.11.2024 demanding differential customs duty with applicable interest – Whether administrative transfer to Call Book suspends or extends statutory timeline – HELD – Section 28(9A) is a non-obstante provision addressing situations where proper officer is unable to determine amount of duty or interest for reasons enumerated therein including when interim order of stay has been issued by High Court. The provision does not make Call Book transfer itself source of any extension; rather statutory consequence flows from existence of circumstance contemplated therein - In the present case circumstance under clause (b) of Section 28(9A) was squarely attracted inasmuch as issue forming subject matter of writ petition was directly germane to adjudication and pendency thereof coupled with interim protection prevented proper officer from proceeding to final determination. Call Book entry was merely consequential to circumstance already placed before Authority by Petitioners themselves. The requirement of communication under Section 28(9A) was substantially satisfied since it was petitioners who brought to notice of Department the pendency of writ proceedings and identified that circumstance as ground for seeking deferment - Administrative circular regulating manner of Call Book transfer cannot override or displace statutory consequence flowing from circumstance expressly contemplated by Legislature. Circumstance ceased to exist on 08.12.2023 when writ petition was dismissed. From that date statutory period of one year under Section 28(9)(b) commenced which would expire on 08.12.2024. Since Impugned Order-in-Original was passed on 29.11.2024 it was within prescribed period – The Order-in-Original was passed within period prescribed under Sections 28(9) and 28(9A) of the Customs Act, 1962 - The writ petition is dismissed [Read less]

Customs – Valuation – Acceptance Letters and Right to Challenge Reassessment – Appellant imported polyester knitted fabrics from China and declared transaction value in accordance with commercial invoices. Customs authorities questioned the declared value and sought to enhance it based on National Import Database data showing contemporaneous imports at higher values. Appellant made written requests for clearance on payment of duty at enhanced value under protest to avoid demurrage and detention costs. Due to commercial pressures, Appellant submitted letters of acceptance agreeing to the enhancement and waiving the re... [Read more]

Customs – Valuation – Acceptance Letters and Right to Challenge Reassessment – Appellant imported polyester knitted fabrics from China and declared transaction value in accordance with commercial invoices. Customs authorities questioned the declared value and sought to enhance it based on National Import Database data showing contemporaneous imports at higher values. Appellant made written requests for clearance on payment of duty at enhanced value under protest to avoid demurrage and detention costs. Due to commercial pressures, Appellant submitted letters of acceptance agreeing to the enhancement and waiving the requirement of show cause notice or speaking order. Assessing Officer refused to pass a speaking order relying solely on the acceptance letter. All appeals filed by Appellant were rejected by Commissioner (Appeals) holding that since Appellant accepted enhancement in writing, no speaking order was required and the Appellant was barred from challenging the assessment – Whether an acceptance letter given at the threshold of clearance, essentially under commercial compulsion to avoid detention and demurrage charges, operates as an unconditional waiver of the statutory right to appeal against the valuation enhancement itself, or whether it only waives the procedural requirement of a speaking order under Section 17(5) of the Customs Act – HELD – Acceptance letters given under commercial pressure do not foreclose the statutory right to challenge the reassessment and valuation enhancement. The waiver of speaking order under Section 17(5) of the Customs Act is a limited procedural concession and cannot be construed as abandonment of the independent substantive right of appeal conferred by Section 128 of the Customs Act, 1962. There is no estoppel in taxation matters and consent given by an assessee cannot take away rights otherwise available under law. The mandate of Rule 12(2) of the Customs Valuation Rules, 2007 to communicate to the importer in writing the grounds for doubting the truth or accuracy of the declared value is mandatory and cannot be ignored or waived. The mere mention in an acceptance letter that contemporaneous import data has been shown to the Appellant without disclosing the actual comparable data including quantity, quality, and time of import does not constitute valid fulfillment of the statutory requirement. The formation of opinion regarding reasonable doubt and communication of the said grounds to the importer in writing is mandatory and subterfuge to bypass this mandate is unacceptable. The principles established by the Hon'ble Delhi High Court in Niraj Silk Mills v. Commissioner of Customs (ICD) Patparganj, squarely cover the facts of the present appeals and hold that the right to question the correctness of the decision of the proper officer is protected by statute and cannot be abandoned through acceptance letters. The reliance placed by the Department on M/s S.S. Overseas v. Union of India is misplaced as that decision addresses only the narrow question of whether a writ of mandamus lies for issuance of a speaking order and does not adjudicate upon the independent statutory right of appeal against the reassessment itself – The impugned Orders-In-Appeal are unsustainable in law and are set aside and the appeals are allowed with consequential relief as per law. [Read less]

Customs – Maintainability of appeal after approval of resolution plan under Insolvency and Bankruptcy Code, Binding effect of NCLT approval on statutory dues claims – Appellant company was subject to Corporate Insolvency Resolution Process under IBC. NCLT approved resolution plan under Section 31(1) of IBC. Customs appeal was pending before CESTAT challenging statutory dues payable to Central Government for period prior to resolution plan approval. Revenue authority continued proceedings in appeal - Whether ongoing customs proceedings can be continued when resolution plan is approved by NCLT for claims not forming part... [Read more]

Customs – Maintainability of appeal after approval of resolution plan under Insolvency and Bankruptcy Code, Binding effect of NCLT approval on statutory dues claims – Appellant company was subject to Corporate Insolvency Resolution Process under IBC. NCLT approved resolution plan under Section 31(1) of IBC. Customs appeal was pending before CESTAT challenging statutory dues payable to Central Government for period prior to resolution plan approval. Revenue authority continued proceedings in appeal - Whether ongoing customs proceedings can be continued when resolution plan is approved by NCLT for claims not forming part of resolution plan – HELD – Once a resolution plan is approved by Adjudicating Authority (NCLT) under Section 31(1) of IBC, claims provided in resolution plan stand frozen and become binding on Corporate Debtor and all creditors including Central Government and any State Government or local authority. All claims not part of resolution plan stand extinguished on date of NCLT approval and no person is entitled to initiate or continue any proceedings in respect of claims not forming part of resolution plan - Supreme Court in Ghanashyam Mishra and Sons case held that 2019 amendment to Section 31 of IBC is clarificatory and declaratory in nature. Central Government and State Governments are bound by resolution plan as they constitute operational creditors under IBC provisions. Even without 2019 amendment, statutory dues owed to Central Government would be covered by term creditor and other stakeholders under Section 31(1) of IBC. All statutory dues owed to Central Government not part of resolution plan stand extinguished and no proceedings in respect of such dues for period prior to NCLT approval could be continued. Neither party informed Tribunal whether statutory dues under contest were part of resolution plan or not. In any event, present appeal cannot be continued as it relates to period prior to NCLT approval and falls outside scope of approved resolution plan – Proceedings stand concluded and no further action can be taken on appeal – The appeal is disposed of [Read less]

Service Tax – Skill development services – Exemption under PMKVY – Appellant conducted PMKVY courses and earned income through M/s Globsyn Skills Development Private Limited which was an approved training partner of National Skill Development Corporation – Whether services provided by appellant as an associate partner of the approved training partner are eligible for exemption under para 9A(iv) of Notification No. 25/2012-ST – HELD – Exemption notifications must be interpreted strictly and the burden lies on the assessee to demonstrate that the case falls within the exemption parameters. Para 9A(iv) provides ex... [Read more]

Service Tax – Skill development services – Exemption under PMKVY – Appellant conducted PMKVY courses and earned income through M/s Globsyn Skills Development Private Limited which was an approved training partner of National Skill Development Corporation – Whether services provided by appellant as an associate partner of the approved training partner are eligible for exemption under para 9A(iv) of Notification No. 25/2012-ST – HELD – Exemption notifications must be interpreted strictly and the burden lies on the assessee to demonstrate that the case falls within the exemption parameters. Para 9A(iv) provides exemption to services provided by training partners approved by NSDC or Sector Skill Council in relation to NSDC schemes. Appellant was not the directly authorized training partner of NSDC but rendered services as an associate or sub-partner of the approved training partner. The exemption clause does not extend to indirect arrangements through intermediaries. The requirement for strict interpretation of exemption notifications precludes extending the exemption to arrangements not explicitly covered – Appellant is liable to pay service tax - Service Tax – Educational services – Exemption under negative list – Appellant provided distance learning and vocational training courses under Suresh Gyan Vihar University and earned income for rendering such services – Whether the services for providing education are exempt under clause (l)(ii) of section 66D of the Finance Act, 1994 – HELD – Clause (l)(ii) of section 66D provides exemption for services by way of education as part of a curriculum for obtaining a qualification recognized by law. The plain language of the clause does not restrict the exemption to education provided by the University itself but extends to education provided for obtaining a recognized qualification. The adjudicating authority erred in introducing a restrictive interpretation not found in the statutory provision. Where education leading to a statutorily recognized qualification is provided it falls within the exemption even if provided through an authorized educational partner. The demand for services provided to Sahitya Sadawat Samiti is set aside - Service Tax – Extended period of limitation – Department received third party information regarding appellant's differential income and issued show cause notice invoking extended period proposing service tax demand – Whether extended period was validly invoked in the absence of specific evidence of wilful suppression or misstatement – HELD – Extended period of limitation can be invoked only when there is conscious and willful suppression or misstatement with intent to evade tax as established by Supreme Court precedents. Mere non-response to letters or failure to immediately furnish documents does not constitute wilful suppression. The fact that the adjudicating authority ultimately upheld only a portion of the proposed demand after considering documents and information presented by appellant demonstrates the absence of wilful suppression. No specific act of fraud or wilful misstatement was alleged or established in the show cause notice. The extended period was wrongly invoked and cannot be sustained. The demand made for the extended period is set aside. [Read less]

Service tax – Renting of immovable property – Taxability and extended period of limitation – Appellant was a state-government-owned industrial development corporation providing land on lease for industrial development receiving lease rent and one-time premium. Department issued show cause notices invoking extended period of limitation proposing service tax demand – Whether renting of vacant land and one-time premium are taxable as service and whether extended period of limitation applies – HELD – Renting of vacant land became taxable from 01.07.2010 onwards but prior to that it did not constitute a taxable serv... [Read more]

Service tax – Renting of immovable property – Taxability and extended period of limitation – Appellant was a state-government-owned industrial development corporation providing land on lease for industrial development receiving lease rent and one-time premium. Department issued show cause notices invoking extended period of limitation proposing service tax demand – Whether renting of vacant land and one-time premium are taxable as service and whether extended period of limitation applies – HELD – Renting of vacant land became taxable from 01.07.2010 onwards but prior to that it did not constitute a taxable service. One-time premium collected in respect of leasing immovable property is leviable to service tax being distinct from periodical rent and constituting consideration paid for transfer of right to enjoy the property. Extended period of limitation applies only when there is conscious and deliberate withholding of information with intent to evade tax. As Appellant is a governmental authority there cannot be any malafide intent. The taxable status of the service was unclear during the period prior to 01.07.2010 when renting of vacant land was specifically excluded. In absence of any positive evidence of suppression or misstatement the extended period was wrongly invoked. Demand for the extended period is hereby dropped – The departmental appeal is dismissed [Read less]

Customs – Export Duty Refund – Limitation under Section 27 – Appellant exported non-alloy steel slabs on which export duty was leviable at the rate of 15 per cent ad valorem and voluntarily paid the same calculated on FOB price. The Board issued Circular dated 10.11.2008 clarifying that a policy decision had been taken that till 31.12.2008 the existing practice of computation of export duty by taking FOB price as cum-duty price may be continued and that with effect from 1st January 2009 the practice of computation shall be changed. Appellant filed refund claim for excess export duty paid. The original authority sanct... [Read more]

Customs – Export Duty Refund – Limitation under Section 27 – Appellant exported non-alloy steel slabs on which export duty was leviable at the rate of 15 per cent ad valorem and voluntarily paid the same calculated on FOB price. The Board issued Circular dated 10.11.2008 clarifying that a policy decision had been taken that till 31.12.2008 the existing practice of computation of export duty by taking FOB price as cum-duty price may be continued and that with effect from 1st January 2009 the practice of computation shall be changed. Appellant filed refund claim for excess export duty paid. The original authority sanctioned the refund, however the Commissioner (Appeals) rejected the refund claim holding it to be time-barred under Section 27 of the Customs Act, 1962 – Whether the refund claim for excess export duty was time-barred under Section 27 when the cause of action arose only at the stage of ascertainment and reassessment of the excess duty – HELD – The refund claim was not time-barred. The cause of action for refund arose only on the date when the excess duty was ascertained and reassessed vide Note dated 21.09.2015 by the Export Department, and not from the date of original payment. The excess duty remained unassessed until the said Note dated 21.09.2015 and the reassessment carried out vide the Note constituted a valid reassessment within the meaning of Section 27(1B)(c) of the Customs Act. Till the assessment order was rectified, the question of refund would not arise and the refund claim filed prior to such reassessment could not be treated as time-barred on the principle established in Commissioner of Customs (Import) v. Indian Farmers Fertiliser Co-Op. Ltd.. The principle of limitation was accordingly inapplicable. The Tribunal declined to resolve the contention that limitation runs from the date of discovery of the mistake under Section 17 of the Limitation Act, 1963 or that Article 265 of the Constitution provides an independent route to refund, as the arguments were foreclosed by the Nine-Judge Bench decision in Mafatlal Industries Ltd. v. Union of India. Order-in-Original No.44746/2016 sanctioning the refund was correctly passed. The impugned order dated 11.08.2016 rejecting the refund claim is set aside – The appeals are allowed - Customs – Export Duty Refund – Interest – Following the determination that the refund claim for excess export duty was not time-barred and order of refund was rightfully passed, whether interest on the refund was payable – HELD – Interest under Section 27A is payable on the refunded amount. The interest runs from the date immediately following the expiry of three months from the date of reassessment on 21.09.2015, that is, from 22.12.2015, until the date of actual refund, at the notified rate. Although the principle established in Ranbaxy Laboratories Ltd. v. Union of India, provides that interest on delayed refund runs from expiry of three months from the date of receipt of the refund application unaffected by the pendency of appellate proceedings, such a premise did not translate to the present facts without modification. The cause of action for the refund, being the ascertained existence of the excess payment, did not arise until the Note dated 21.09.2015. Prior to 21.09.2015, there was no ascertained sum for the Department to have refunded and no delay on its part in refunding one. The delay lay in the reassessment itself becoming necessary and being carried out. To fix the interest clock at the date of the original application while fixing the limitation clock at the date of reassessment for the identical cause of action would be to hold that the claim was both premature and overdue at the same moment, which is an inconsistency the Tribunal declined to introduce. Ranbaxy, properly applied on these facts, requires interest to run from 21.09.2015, the same date fixed as the relevant date under Section 27(1B)(c). Appeal is allowed to the extent that interest is directed to be computed and paid as above. [Read less]

Service Tax - Taxability of hoarding rental and sale of space for advertisement to advertising agencies, Applicability of extended period of limitation under Finance Act 1994, Requirement for positive act of suppression with intent to evade tax - The Appellant rented hoarding space to advertising agencies for displaying advertisements - Service tax demand under the heading of Advertising Agency Service for period up to 30.04.2006 at Rs.44,65,842 and under the heading of Sale of Space or Time for Advertisement Service for period from 01.05.2006 - Appellant contended that where hoarding is rented to advertising agencies, the... [Read more]

Service Tax - Taxability of hoarding rental and sale of space for advertisement to advertising agencies, Applicability of extended period of limitation under Finance Act 1994, Requirement for positive act of suppression with intent to evade tax - The Appellant rented hoarding space to advertising agencies for displaying advertisements - Service tax demand under the heading of Advertising Agency Service for period up to 30.04.2006 at Rs.44,65,842 and under the heading of Sale of Space or Time for Advertisement Service for period from 01.05.2006 - Appellant contended that where hoarding is rented to advertising agencies, the advertising agency is the service provider liable to pay tax, not the hoarding owner - Whether the demand confirmed by invoking extended period of limitation is sustainable when there is no allegation of positive act of concealment and the entire demand is derived from statutory records maintained by the Appellant filed in regular returns with no clandestine activity - HELD - For the period up to 30.04.2006 the issue is covered by the Tribunal's decision that mere sub-letting site to an advertising agency without providing services of the nature defined under the Finance Act would not make the service provider liable to pay service tax. As regards demand after 01.05.2006 it is of revenue-neutral situation as the Appellant was paying service tax wherever hoarding or space was provided to persons other than advertising agency and not paying tax where service was provided to advertising agencies since the agency was paying tax including the amount paid to them for leasing the hoarding or space - The show cause notice does not allege any positive act of concealment and the entire demand is derived from statutory records maintained by the Appellant. A mere bald allegation of suppression cannot be ground to invoke the extended period as established law requires positive act of suppression with intent to evade. The issue is one of interpretation and not solely procedural and there were conflicting judicial views regarding tax liability on this issue. Since the SCN was issued beyond the normal period of limitation, the demand confirmed by invoking extended period is unsustainable - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Exemption for technical testing and analysis of newly developed drugs on human participants, Role of Clinical Research Organisation versus Sponsor in regulatory – Appellant is Clinical Research Organisation engaged in providing services including clinical trial management and technical testing and analysis of newly developed drugs on human participants. Appellant conducted clinical trials under written agreements with pharmaceutical companies as Sponsors each of whom held DCGI-approved permission for the trials in question - Department issued Notice proposing denial of exemption under Notification 11/2007-S... [Read more]

Service Tax - Exemption for technical testing and analysis of newly developed drugs on human participants, Role of Clinical Research Organisation versus Sponsor in regulatory – Appellant is Clinical Research Organisation engaged in providing services including clinical trial management and technical testing and analysis of newly developed drugs on human participants. Appellant conducted clinical trials under written agreements with pharmaceutical companies as Sponsors each of whom held DCGI-approved permission for the trials in question - Department issued Notice proposing denial of exemption under Notification 11/2007-ST dated 01.03.2007 and Notification 25/2012-ST Entry 7 dated 20.06.2012 contended that exemption required independent institutional approval to the CRO itself as the DCGI approval held by Sponsors is not sufficient - Whether technical testing and analysis service rendered by Clinical Research Organisation functioning under written contracts with DCGI-approved Sponsors and registered with Clinical Trial Registry of India qualifies for exemption when approval is granted to Sponsor and not to CRO independently - HELD - The exemption notification must be construed in light of the actual regulatory scheme administered by DCGI. Under such scheme permission to conduct clinical trial is granted to Sponsor the pharmaceutical company that owns the molecule. No mechanism exists or has existed by which Clinical Research Organisation itself can apply for or be granted DCGI approval independently - CRO appointed by Sponsor as agent to execute and coordinate the trial that DCGI has approved. Requiring independent institutional approval to CRO would impose condition that no CRO could ever satisfy rendering the exemption impossible to perform which offends the legal principle that law does not require performance of impossibility - A CRO conducting trials under written agreements with DCGI-approved Sponsors and registered with Clinical Trial Registry of India operates under DCGI-approved protocols and stands approved through the regulatory mechanism to conduct such trials - Appellant conducting trials under tripartite agreements bearing DCGI-approved protocol numbers and stood registered with Clinical Trial Registry, notwithstanding lack of separate institutional approval, qualifiy as entity ‘approved to conduct clinical trials’ within meaning of the exemption. The regulatory scheme itself supports this interpretation and reading exemption to require free standing institutional approval that regulator does not issue would be inconsistent with scheme and practice - The technical testing and analysis service rendered by appellant is exempt from service tax under Notification 11/2007-ST for period up to 30.06.2012 and under Entry 7 of Notification 25/2012-ST for period thereafter – The appeal is allowed - Service Tax - Taxability of forfeited employee deposits under commercial training or coaching service - Whether amounts forfeited from employees for premature resignation before completion of minimum agreed service period constitute consideration for commercial training or coaching service taxable under pre-negative list definition of Section 65(105)(zzc) or constitute non-taxable compensation for breach of employment contract - HELD - Commercial training or coaching service as defined under Section 65(105)(zzc) presupposes a commercial training or coaching centre rendering training or coaching to trainee for fee or other consideration paid for imparting skill or knowledge - The relationship between appellant and employees from whom deposits were recovered was relationship of employer and employee under contract of service not that of commercial training centre and external trainee. Any training appellant gave to employees was given in employer capacity for its own business purposes and not as service rendered by commercial training or coaching centre to trainee - Deposit forfeited upon employee resignation constitutes compensation for breach of employee's undertaking to serve for minimum period not fee charged for imparting skill or knowledge. No taxable service is rendered by employer in collecting or retaining such security deposit. Amount does not answer description of consideration for any taxable service and falls outside scope of commercial training or coaching service for pre-negative list period. Even for period after 01.07.2012 when negative list regime came into force the amount would not constitute consideration for declared service under Section 66E(e) which covers agreements to refrain from act tolerate act or situation or do act for consideration - The demand for commercial training or coaching service is not sustainable as amounts represent non-taxable compensation for breach of employment contract - Extended period of limitation - Whether extended period of limitation under proviso to Section 73(1) is properly invoked when Department was aware of and had inquired into precise nature of Appellant's clinical research activities as early as 2010 and Appellant had consistently maintained and disclosed its belief in exemption entitlement - HELD - Suppression contemplated by proviso to Section 73(1) is suppression from Department and it is difficult to conceive how Appellant can be said to have suppressed from Department a fact Department had itself elicited and was investigating several years before SCN. Appellant's omission to register itself or file returns proceeded from consistently stated belief that its testing services stood exempt under Notification 11/2007-ST a belief resting on tenable interpretation of that notification. Interpretation of fiscal exemption that is open to genuine debate honestly entertained and disclosed the moment Department made inquiry is antithesis of deliberate positive act of concealment that law requires before extraordinary period of five years can be invoked - The extended period of limitation under proviso to Section 73(1) is unsustainable - Imposition of penalties under Sections 76 78 and 77 Finance Act 1994 - Whether penalties under Sections 76 78 and 77 Finance Act 1994 can be imposed and sustained when principal service tax demands themselves are found to be unsustainable and ingredients of fraud collusion wilful mis-statement suppression or intent to evade are absent - HELD - Where principal demand itself is found to be unsustainable due to misinterpretation of exemption provision or erroneous denial of exemption entitlement the penalty resting on that very demand cannot survive - Where Appellant maintained tenable interpretation of exemption provision honestly entertained and disclosed to Department when inquiry was made and no positive act of suppression or intent to evade is established the penalties presupposing such ingredients cannot be sustained. Penalties for violations of Sections 69 70 and related provisions under Section 77 are procedural in nature but where principal substantive liability is found to be not due the penalties consequential upon that liability also cannot be upheld - The penalties imposed under Sections 76 78 77(1)(a) and 77(2) are not sustainable and set aside. [Read less]

Service Tax – Classification of Services as Management, Maintenance or Repair Service versus Works Contract Service – Appellant, a License Contractor, carried out reconstruction, repair and maintenance of damaged portions of irrigation canals. The Adjudication Authority confirmed demand of service tax under Management, Maintenance or Repair Service (MMRS) category and the Commissioner (Appeals) upheld the demand. The Appellant contended that the activities involved supply of property in goods and hence were composite works contracts falling under Works Contract Service, for which VAT had been paid under the Kerala Valu... [Read more]

Service Tax – Classification of Services as Management, Maintenance or Repair Service versus Works Contract Service – Appellant, a License Contractor, carried out reconstruction, repair and maintenance of damaged portions of irrigation canals. The Adjudication Authority confirmed demand of service tax under Management, Maintenance or Repair Service (MMRS) category and the Commissioner (Appeals) upheld the demand. The Appellant contended that the activities involved supply of property in goods and hence were composite works contracts falling under Works Contract Service, for which VAT had been paid under the Kerala Value Added Tax Rules, 2005 – Whether the services should be classified and taxed under the MMRS category or under the Works Contract Service category – HELD – The services fall within Works Contract Service and not MMRS. As per Section 65(105)(zzzza) of the Finance Act, 1994, Works Contract covers repair, alteration, renovation or restoration services in relation to construction of civil structures. The taxation provisions in Section 65(105) refer only to service contracts simpliciter and not to composite works contracts, such as the repair and maintenance of irrigation canals which involve both provision of labour and transfer of property in goods. The judgment of the Hon'ble Supreme Court in Commissioner v. M/s Larsen & Toubro, held that no attempt has been made by the taxation provisions to remove the non-service elements from composite works contracts by deducting the value of property transferred. As in the similar circumstances in M/s Agarwal Engineering Works v. Commissioner, the materials provided were separately subjected to VAT by the Government, indicating that the services were composite in nature involving both labour and materials. Since the Appellant had paid VAT on materials supplied as part of the works contract, the services cannot be taxed under any other category of services such as MMRS. The demand confirmed under the MMRS category is accordingly unsustainable and is set aside – the impugned orders are set aside and appeals are allowed - Service Tax – Extended Period of Limitation – Following the determination that the service activities were composite works contracts and not taxable under MMRS category, the question arose whether the demand confirmed by invoking the extended period of limitation under Section 73 of the Finance Act, 1994 was sustainable – The Appellant contended that the extended period of limitation could not be invoked as there was neither deliberate suppression of facts nor intention to evade payment of tax, as admitted by the Commissioner (Appeals) in setting aside the penalties imposed under Section 78 – HELD – The demand confirmed by invoking the extended period of limitation is unsustainable. The impugned order itself found that there was no deliberate suppression of facts or intention to evade payment of tax, on which ground the penalties under Section 78 were set aside. The certificate issued under Kerala Value Added Tax Rule, 2005 evidences payment of VAT by the Appellant in compliance with the applicable tax law. In absence of any suppression or evasion intention, there is no justification for invoking the extended period of limitation under Section 73. The invocation of extended period of limitation requires conditions precedent to be satisfied, and once the Appellate Authority itself found absence of suppression and evasion intent, the entire demand confirmed by invoking extended period of limitation is rendered unsustainable - Service Tax – Manpower Recruitment and Supply Agency Service – Extended Period of Limitation – The Adjudication Authority confirmed demand of service tax under the category of Manpower Recruitment and Supply Agency Service for the period from 01.04.2010 to 31.12.2010 – The Appellant contended that the manpower was provided in an emergency situation as a one-time activity and the value of the amount received was well within the exemption limit prescribed for such services. HELD – The demand under the category of Manpower Recruitment and Supply Agency Service is unsustainable. Though the said activity is taxable under the category of Manpower Recruitment and Supply Agency Service, the value of the transaction is below the taxable limit prescribed for such services, rendering the demand unsustainable. Additionally, considering that the Appellant had provided manpower in an emergency situation as a one-time activity, the same cannot be sustained as a regular taxable service. The demand confirmed by the Adjudication Authority and upheld by the Commissioner (Appeals) under this category is accordingly set aside. [Read less]

Service Tax – Works Contract – Taxability Prior to 01.06.2007 – Appellant carried out execution of civil contracts for construction of buildings and tower foundations for government departments and religious institutions. Service tax authority demanded service tax under the categories of Commercial or Industrial Construction Service, Erection, Commissioning or Installation Service for the period from 2004-2005 to March 2006. The Adjudication Authority confirmed the demand and imposed penalties. The Commissioner (Appeals) upheld the demand and penalties – Whether the composite contract entered by the Appellant inclu... [Read more]

Service Tax – Works Contract – Taxability Prior to 01.06.2007 – Appellant carried out execution of civil contracts for construction of buildings and tower foundations for government departments and religious institutions. Service tax authority demanded service tax under the categories of Commercial or Industrial Construction Service, Erection, Commissioning or Installation Service for the period from 2004-2005 to March 2006. The Adjudication Authority confirmed the demand and imposed penalties. The Commissioner (Appeals) upheld the demand and penalties – Whether the composite contract entered by the Appellant including supply of material and labour should be classified as Works Contract Service and whether service tax was chargeable on such activities during the period prior to 01.06.2007 when Works Contract Service was introduced in the service tax regime – HELD – The composite contract entered by the Appellant including supply of material is falling under the category of Works Contract and no demand is sustainable before the introduction of service tax on works contract with effect from 01.06.2007. The issue is settled as per the decision of Hon'ble Supreme Court in Commissioner v. M/s Larsen & Toubro holding that composite contracts including supply of material are taxable under Works Contract Service. Service tax on works contracts was introduced only from 01.06.2007 and therefore, the demand made prior to 01.06.2007 for services rendered on construction of government buildings and civil structures is unsustainable. The demand made by invoking extended period of limitation for the period prior to 01.06.2007 is accordingly set aside. The penalties imposed under Sections 77 and 78 of the Finance Act, 1994 for the period prior to 01.06.2007 are also set aside as the demand itself is unsustainable. However, the appropriation of the amount paid by the Appellant with interest from 01.06.2007 to March 2008 under the category of Works Contract is upheld as the service was taxable from that date – The impugned order is modified to this extent – Appeal is partially allowed with consequential relief in accordance with law [Read less]

GST - Show cause notice issued under Section 74 of CGST Act 2017 based on alleged violation of Rule 96(10) of CGST Rules 2017 - Rule 96(10) omitted unconditionally with effect from 8th October 2024 by Notification No.20/2024 Central Tax without any saving clause - Whether proceedings can be initiated or continued based on a provision which has been omitted from the rules without any saving clause - HELD - Upon omission of a Rule provision without any saving clause the provision ceases to exist in the eye of law and no proceedings can be initiated or continued on the basis thereof - The intention to omit the Rule without an... [Read more]

GST - Show cause notice issued under Section 74 of CGST Act 2017 based on alleged violation of Rule 96(10) of CGST Rules 2017 - Rule 96(10) omitted unconditionally with effect from 8th October 2024 by Notification No.20/2024 Central Tax without any saving clause - Whether proceedings can be initiated or continued based on a provision which has been omitted from the rules without any saving clause - HELD - Upon omission of a Rule provision without any saving clause the provision ceases to exist in the eye of law and no proceedings can be initiated or continued on the basis thereof - The intention to omit the Rule without any saving clause was to bring to an end the unnecessary complications once and for all and the intention cannot be to keep alive the unnecessary complications so far as the pending proceedings are concerned. The CBIC have accepted this declaration of law and issued Office Memorandum dated 24.08.2026 instructing the field formations not to initiate or pursue proceedings based upon the omitted Rule 96(10). A show cause notice issued under Section 74 of the CGST Act 2017 founded solely upon the omitted Rule 96(10) is not sustainable and all consequential orders passed in pursuance thereof are also rendered unsustainable - The show cause notice along with the consequential orders passed in pursuance are quashed and set aside – The petition is disposed of [Read less]

Service Tax – Manpower Recruitment or Supply Agency Service – Applicability to Non-Commercial Organizations – Appellant is a non-commercial, charitable organization registered under the Travancore Cochin Literacy Scientific and Charitable Societies Registration Act, engaged in organizing economically backward women for full employment and providing them with training in various skills. Appellant organizes women members to ensure every family obtains full employment with full employment comprising work security, income security, food security and social security. The women members, who are part of the organization and... [Read more]

Service Tax – Manpower Recruitment or Supply Agency Service – Applicability to Non-Commercial Organizations – Appellant is a non-commercial, charitable organization registered under the Travancore Cochin Literacy Scientific and Charitable Societies Registration Act, engaged in organizing economically backward women for full employment and providing them with training in various skills. Appellant organizes women members to ensure every family obtains full employment with full employment comprising work security, income security, food security and social security. The women members, who are part of the organization and constitute its workforce, seek direct employment with clients with organizational endorsement to ensure payment of prompt and correct wages to reduce exploitation. The Department raised demand for service tax under the category of manpower recruitment or supply agency service for the period from 01.05.2006 to 31.12.2007. The Commissioner (Appeals) confirmed the demand without considering the factual aspects of the organization and its functioning – Whether the appellant, a non-commercial charitable organization where the organization and workers are not separately identifiable, is engaged in rendering service for supply of manpower within the meaning of Section 65(68) of the Finance Act, 1994 – HELD – The appellant is not engaged in rendering any service in any manner for the supply of manpower. The appellant organizes women to ensure that every family obtains full employment and the organizational structure suggests it is essentially in the nature of a trade union or workers collective where members constitute the organization. The members acquire knowledge through training programmes organized by the organization and thereafter seek employment with clients with organizational endorsement. No intermediaries exist in this case. The definition of manpower recruitment or supply agency service contemplates a situation where a person is engaged in supply of manpower and presumes an employer-employee relationship between the agency and the individual, with individuals being contractually employed by the manpower recruitment or supply agency. In the present case, the workers and the organization are not separately identifiable and no such contractual employment relationship exists between the organization and the workers. The organization does not supply manpower but rather facilitates direct employment of collective workers. The fact that the appellant is not a commercial concern further distinguishes it from the category of manpower supply agencies. For the period prior to 01.05.2006, the definition of manpower recruitment or supply agency explicitly required the service provider to be a commercial concern, and the appellant does not qualify as such. Even if the activities were to be considered within the scope of manpower supply services, the considerable portion of the amount collected was reimbursed as wages to members and the balance charged as registration and training fees was negligible and did not fall within the monetary limit of taxable service – The adoption of the gross amount without deducting reimbursable wages is unsustainable – The appeal is allowed [Read less]

GST – Refund of accumulated Input Tax Credit for inverted duty structure, Composite supply of packaged tea, Applicability of CBIC Circular No. 135/5/2020, Packing materials as eligible inputs – Respondents claimed refund of accumulated ITC under Section 54(3)(ii) of CGST Act for period 01.05.2020 to 30.06.2020 on ground that input tax on packing materials was higher than output tax on packaged - Revenue appeal contending that refund not eligible since both input and output are same i.e. tea attracting GST at 5 percent and relying on para 3.2 of Circular No. 135/5/2020 dated 31.03.2020 which clarifies that refund would ... [Read more]

GST – Refund of accumulated Input Tax Credit for inverted duty structure, Composite supply of packaged tea, Applicability of CBIC Circular No. 135/5/2020, Packing materials as eligible inputs – Respondents claimed refund of accumulated ITC under Section 54(3)(ii) of CGST Act for period 01.05.2020 to 30.06.2020 on ground that input tax on packing materials was higher than output tax on packaged - Revenue appeal contending that refund not eligible since both input and output are same i.e. tea attracting GST at 5 percent and relying on para 3.2 of Circular No. 135/5/2020 dated 31.03.2020 which clarifies that refund would not be admissible where input and output supplies are same – Whether appellant is entitled to refund under Section 54(3)(ii) of CGST Act when principal input is bulk tea and output is packaged tea despite both attracting same GST rate – HELD – On plain reading of Section 54(3)(ii) of Act, statute permits refund where credit accumulated because rate of tax on inputs is higher than rate on output supplies. Legislature consciously employed expression inputs in plural and made no distinction between principal input and ancillary inputs. Reading such restriction into statute would not meet ends of justice and lacks legislative intent - Comparing purchase of bulk tea with sale in small packages while ignoring other inputs like packing materials is factually incorrect. Term input has broad meaning defined in Section 2(59) CGST Act and includes all goods used in course or furtherance of business other than capital goods. Packing materials, labels, cartons and plastic containers are indispensable for marketing packaged tea and qualify as inputs - CBIC vide para 13 of Circular No. 79/53/2018 dated 31.12.2018 specifically recognises packing materials as eligible inputs. Output supply is composite supply with tea as primary supply taxed at 5 percent but packing materials are separate inputs taxed at 12 percent and 18 percent resulting in accumulation of ITC. Provisions of Circular No. 135/5/2020 applicable only where there is reduction in GST rate on same goods as indicated in heading of para 3 of Circular. In instant case tea when purchased in bulk and sold in packages attracts same rate i.e. 5 percent, hence circular not applicable - CBIC has no power to add to provisions of Act through circulars. Section 168(1) confines CBIC powers to issuing circulars for uniform implementation of Act. If taxpayer is entitled to refund under Section 54, same cannot be denied by circular issued under Section 168(1) – The order of First Appellate Authority upheld. Appellant is entitled to refund of accumulated ITC on packing materials under Section 54(3)(ii) of CGST Act – The Revenue appeal is dismissed [Read less]

GST – Refund of accumulated Input Tax Credit for inverted duty structure, Composite supply of packaged tea, Applicability of CBIC Circular No. 135/5/2020, Packing materials as eligible inputs – Respondents claimed refund of accumulated ITC under Section 54(3)(ii) of CGST Act for period 01.05.2020 to 30.06.2020 on ground that input tax on packing materials was higher than output tax on packaged - Revenue appeal contending that refund not eligible since both input and output are same i.e. tea attracting GST at 5 percent and relying on para 3.2 of Circular No. 135/5/2020 dated 31.03.2020 which clarifies that refund would ... [Read more]

GST – Refund of accumulated Input Tax Credit for inverted duty structure, Composite supply of packaged tea, Applicability of CBIC Circular No. 135/5/2020, Packing materials as eligible inputs – Respondents claimed refund of accumulated ITC under Section 54(3)(ii) of CGST Act for period 01.05.2020 to 30.06.2020 on ground that input tax on packing materials was higher than output tax on packaged - Revenue appeal contending that refund not eligible since both input and output are same i.e. tea attracting GST at 5 percent and relying on para 3.2 of Circular No. 135/5/2020 dated 31.03.2020 which clarifies that refund would not be admissible where input and output supplies are same – Whether appellant is entitled to refund under Section 54(3)(ii) of CGST Act when principal input is bulk tea and output is packaged tea despite both attracting same GST rate – HELD – On plain reading of Section 54(3)(ii) of Act, statute permits refund where credit accumulated because rate of tax on inputs is higher than rate on output supplies. Legislature consciously employed expression inputs in plural and made no distinction between principal input and ancillary inputs. Reading such restriction into statute would not meet ends of justice and lacks legislative intent - Comparing purchase of bulk tea with sale in small packages while ignoring other inputs like packing materials is factually incorrect. Term input has broad meaning defined in Section 2(59) CGST Act and includes all goods used in course or furtherance of business other than capital goods. Packing materials, labels, cartons and plastic containers are indispensable for marketing packaged tea and qualify as inputs - CBIC vide para 13 of Circular No. 79/53/2018 dated 31.12.2018 specifically recognises packing materials as eligible inputs. Output supply is composite supply with tea as primary supply taxed at 5 percent but packing materials are separate inputs taxed at 12 percent and 18 percent resulting in accumulation of ITC. Provisions of Circular No. 135/5/2020 applicable only where there is reduction in GST rate on same goods as indicated in heading of para 3 of Circular. In instant case tea when purchased in bulk and sold in packages attracts same rate i.e. 5 percent, hence circular not applicable - CBIC has no power to add to provisions of Act through circulars. Section 168(1) confines CBIC powers to issuing circulars for uniform implementation of Act. If taxpayer is entitled to refund under Section 54, same cannot be denied by circular issued under Section 168(1) – The order of First Appellate Authority upheld. Appellant is entitled to refund of accumulated ITC on packing materials under Section 54(3)(ii) of CGST Act – The Revenue appeal is dismissed [Read less]

GST – Refund of accumulated Input Tax Credit for inverted duty structure, Composite supply of packaged tea, Applicability of CBIC Circular No. 135/5/2020, Packing materials as eligible inputs – Respondents claimed refund of accumulated ITC under Section 54(3)(ii) of CGST Act for period 01.05.2020 to 30.06.2020 on ground that input tax on packing materials was higher than output tax on packaged - Revenue appeal contending that refund not eligible since both input and output are same i.e. tea attracting GST at 5 percent and relying on para 3.2 of Circular No. 135/5/2020 dated 31.03.2020 which clarifies that refund would ... [Read more]

GST – Refund of accumulated Input Tax Credit for inverted duty structure, Composite supply of packaged tea, Applicability of CBIC Circular No. 135/5/2020, Packing materials as eligible inputs – Respondents claimed refund of accumulated ITC under Section 54(3)(ii) of CGST Act for period 01.05.2020 to 30.06.2020 on ground that input tax on packing materials was higher than output tax on packaged - Revenue appeal contending that refund not eligible since both input and output are same i.e. tea attracting GST at 5 percent and relying on para 3.2 of Circular No. 135/5/2020 dated 31.03.2020 which clarifies that refund would not be admissible where input and output supplies are same – Whether appellant is entitled to refund under Section 54(3)(ii) of CGST Act when principal input is bulk tea and output is packaged tea despite both attracting same GST rate – HELD – On plain reading of Section 54(3)(ii) of Act, statute permits refund where credit accumulated because rate of tax on inputs is higher than rate on output supplies. Legislature consciously employed expression inputs in plural and made no distinction between principal input and ancillary inputs. Reading such restriction into statute would not meet ends of justice and lacks legislative intent - Comparing purchase of bulk tea with sale in small packages while ignoring other inputs like packing materials is factually incorrect. Term input has broad meaning defined in Section 2(59) CGST Act and includes all goods used in course or furtherance of business other than capital goods. Packing materials, labels, cartons and plastic containers are indispensable for marketing packaged tea and qualify as inputs - CBIC vide para 13 of Circular No. 79/53/2018 dated 31.12.2018 specifically recognises packing materials as eligible inputs. Output supply is composite supply with tea as primary supply taxed at 5 percent but packing materials are separate inputs taxed at 12 percent and 18 percent resulting in accumulation of ITC. Provisions of Circular No. 135/5/2020 applicable only where there is reduction in GST rate on same goods as indicated in heading of para 3 of Circular. In instant case tea when purchased in bulk and sold in packages attracts same rate i.e. 5 percent, hence circular not applicable - CBIC has no power to add to provisions of Act through circulars. Section 168(1) confines CBIC powers to issuing circulars for uniform implementation of Act. If taxpayer is entitled to refund under Section 54, same cannot be denied by circular issued under Section 168(1) – The order of First Appellate Authority upheld. Appellant is entitled to refund of accumulated ITC on packing materials under Section 54(3)(ii) of CGST Act – The Revenue appeal is dismissed [Read less]

Customs – IGST Exemption under Advance Authorisation Scheme – Pre-import Condition – Appellant was engaged in manufacture and export of Basic Chromium Sulphate, Chromic Acid and Chrome Oxide Green and imported inputs under Advance Authorisation claiming IGST exemption – During the period from 13.10.2017 to 10.01.2019, a pre-import condition was introduced which required that before availing exemption from IGST, the import of corresponding raw materials must precede the export of finished products – Department alleged that in respect of certain imports, exports of finished products had preceded the corresponding i... [Read more]

Customs – IGST Exemption under Advance Authorisation Scheme – Pre-import Condition – Appellant was engaged in manufacture and export of Basic Chromium Sulphate, Chromic Acid and Chrome Oxide Green and imported inputs under Advance Authorisation claiming IGST exemption – During the period from 13.10.2017 to 10.01.2019, a pre-import condition was introduced which required that before availing exemption from IGST, the import of corresponding raw materials must precede the export of finished products – Department alleged that in respect of certain imports, exports of finished products had preceded the corresponding imports of raw materials and therefore appellant had violated the pre-import condition – Appellant contended that export obligations had been discharged as evidenced by issuance of Export Obligation Discharge Certificates and therefore entire demand must disappear – Whether the fulfilment of export obligation by itself can erase the breach of pre-import condition where such breach is otherwise established – HELD – The pre-import condition applicable during the relevant period was valid and the Hon'ble Supreme Court in Union of India Vs Cosmo Films Ltd., has upheld the validity of the pre-import condition. The fulfilment of the export obligation by itself cannot erase the actual breach of the specific pre-import condition where such breach is otherwise established. The subsequent regularisation mechanism provided under CBIC Circular No. 16/2023-Cus dated 07.06.2023 and Trade Notification No. 07/2023-24 issued by DGFT expressly recognises that imports under the Advance Authorisation Scheme made from 13.10.2017 to 09.01.2019 which could not satisfy the pre-import condition may be regularised by making payment as prescribed. The appellant cannot claim complete immunity from payment of IGST merely on the ground that the import obligation under the Advance Authorisations was subsequently fulfilled. To the extent the pre-import condition was factually violated, the IGST is required to be regularised in accordance with the procedure prescribed pursuant to Cosmo Films Ltd. – The appeal cannot be allowed on the ground that export obligations have been discharged but the matter requires fresh determination on re-assessment on Bill of Entry-wise and raw material-wise basis - the appeal is partly allowed and partly remanded - Customs – IGST Demand – Quantification Methodology – Advance Authorisation – Appellant challenged the quantification of IGST demand at Rs. 5,77,38,576/- computed by Adjudicating Authority on an authorisation-wise basis treating the entire Advance Authorisation as one unit without examining each raw material and each Bill of Entry separately – Appellant quantified the IGST at Rs.1,78,38,015/- without prejudice and also contended that the pre-import condition should be examined in relation to the actual import and export correlation for each raw material – Whether the Adjudicating Authority was correct in adopting the methodology of quantifying demand on the basis of the entire Advance Authorisation without Bill of Entry-wise and raw material-wise examination – HELD – The pre-import condition cannot be examined in the abstract for the entire Advance Authorisation without correlating the individual raw material, its import, the corresponding exported product and the chronology relevant to that particular material. The finding that export should be treated as satisfying the pre-import requirement only when at least one consignment of every raw material in an Advance Authorisation has already been imported requires reconsideration. Such an approach may artificially deny exemption even in respect of a raw material which had admittedly been imported before its corresponding export. The violation has to be determined having regard to the actual import-export correlation and the wording of the applicable notification. The plea concerning clubbing of Advance Authorisations cannot be ignored. Where the competent DGFT authority has permitted clubbing and the relevant procedure provides that the clubbed authorisations shall be treated as one authorisation for the prescribed purposes, the Customs Authorities are required to take the legal effect of such clubbing into account while quantifying the liability. The impugned order does not satisfactorily deal with this aspect – The figure of Rs. 5,77,38,576/- cannot be sustained merely on the basis of the methodology adopted in the impugned order without a fresh Bill of Entry-wise and raw material-wise exercise. The matter is remanded to the Appraising Authority for limited purpose of requantification on re-assessment basis - Customs – Interest, Confiscation, Redemption Fine and Penalty – IGST on Breach of Pre-import Condition – Adjudicating Authority imposed interest under Section 28AA, ordered confiscation under Section 111(o), imposed redemption fine of Rs. 4,00,00,000/- under Section 125 and penalty under Section 114A – Appellant contended that during the relevant period 2017-19, Section 3(12) of the Customs Tariff Act, 1975 incorporated provisions of the Customs Act only in relation to recovery of duties and taxes and did not provide the substantive machinery for levy of interest, confiscation, redemption fine and penalty in relation to IGST levied under Section 3(7) of the Customs Tariff Act – Whether interest, confiscation, redemption fine and penalty could be sustained for IGST liability arising from breach of pre-import condition during the relevant period – HELD – The Bombay High Court in the case of AR Sulphonates Pvt Ltd., examined the statutory framework governing imports which violated the pre-import condition prior to the subsequent legislative amendment and found that there was no statutory authority for consequential levy of interest and penal consequences during the relevant period. The Ahmedabad Tribunal in the case of Chiripal Poly Films Ltd., in the context of the very same pre-import condition dispute, held that in the absence of a specific statutory provision authorising levy of interest in IGST paid through the regularisation procedure, such interest could not be sustained. These authorities are applicable to the present dispute pertaining to the period 2017-19. The Revenue cannot impose a fiscal or penal liability merely by borrowing machinery provisions, unless the substantive statute creating the levy so authorises. Apart from the statutory issue, the case arises from interpretation and implementation of a temporary pre-import condition which remained in force only from 13.10.2017 to 09.01.2019 and thereafter became subject matter of extensive litigation. Mere breach of the pre-import condition by itself cannot automatically be equated with suppression or wilful misstatement. The records disclosed the Advance Authorisation numbers in the Bills of Entry and Shipping Bills and these circumstances do not justify sustaining the penalty in the manner imposed – The demand of interest under Section 28AA, confiscation under Section 111(o), redemption fine of Rs. 4,00,00,000/- under Section 125 and penalty under Section 114A are set aside. [Read less]

Customs – Smuggling of ozone depleting substance and imposition of penalties – Appellant collected import documents related to import of goods declared to contain consumer goods like table napkin papers and decorative items in two containers and handed them over to the Customs House Agent who filed Bills of Entry. Upon examination by Directorate of Revenue Intelligence, it was discovered that prohibited R-22 gas, an ozone depleting substance, was concealed in the containers in addition to declared goods. The appellant was found to have conspired with the defacto importers and agreed to facilitate clearance of the contr... [Read more]

Customs – Smuggling of ozone depleting substance and imposition of penalties – Appellant collected import documents related to import of goods declared to contain consumer goods like table napkin papers and decorative items in two containers and handed them over to the Customs House Agent who filed Bills of Entry. Upon examination by Directorate of Revenue Intelligence, it was discovered that prohibited R-22 gas, an ozone depleting substance, was concealed in the containers in addition to declared goods. The appellant was found to have conspired with the defacto importers and agreed to facilitate clearance of the contraband – Whether the appellant, by merely collecting and handing over import documents to the Customs House Agent without making, signing or using any declaration, was liable to penalties under Section 114AA and whether the DRI had jurisdiction to issue Show Cause Notice for recovery of duty under Section 28 of the Customs Act – HELD – Although the appellant contended that he merely facilitated collection and handing over of documents and did not participate in making, signing or using any declaration during the course of business under the Act, the tribunal relied on findings in the earlier order that the appellant had conspired with the defacto importers and agreed to facilitate clearance of prohibited goods in return for cash consideration, thereby playing a serious role in the smuggling of R-22 gases – The penalties imposed on the appellant were fully justified – On the jurisdiction issue, the Directorate of Revenue Intelligence officers, when appointed as customs officers and assigned relevant functions under Notification No. 44/2011, are competent to issue Show Cause Notice for recovery of duty under Section 28 of the Customs Act, thereby rejecting the plea for want of jurisdiction – The order imposing penalties is upheld and the appeal is dismissed [Read less]

Customs - Appellate Procedure - Additional Ground of Law – Appellant exported Iron Ore Fines through Gangavaram Port; assessments were finalized provisionally and then finalized on basis of chemical examination reports treating Fe content on Dry Metric Ton basis - Appellant having accepted the proposed finalization and waived personal hearing challenged final assessments before Commissioner (Appeals) on the ground that Fe percentage should be calculated on Wet Metric Ton basis with reference to total mass including moisture – Whether the Commissioner (Appeals) was justified in rejecting the appeal on the ground that Ru... [Read more]

Customs - Appellate Procedure - Additional Ground of Law – Appellant exported Iron Ore Fines through Gangavaram Port; assessments were finalized provisionally and then finalized on basis of chemical examination reports treating Fe content on Dry Metric Ton basis - Appellant having accepted the proposed finalization and waived personal hearing challenged final assessments before Commissioner (Appeals) on the ground that Fe percentage should be calculated on Wet Metric Ton basis with reference to total mass including moisture – Whether the Commissioner (Appeals) was justified in rejecting the appeal on the ground that Rule 5 of the Customs (Appeals) Rules, 1982 applies to an additional ground of law raised for the first time in appeal where such ground is based on existing evidence and records – HELD – Rule 5 of the Customs (Appeals) Rules, 1982 regulates production of additional evidence and does not apply to an additional ground of law; the appellant did not seek to introduce any new test report or factual evidence but merely contended that the Fe percentage recorded in the test reports already forming part of the assessment record should be converted and considered on a different basis for determining the tariff entry and rate of duty; such a contention constitutes a legal ground based on existing record and cannot be equated with production of additional evidence; Section 128A(2) of the Customs Act, 1962 specifically enables the Commissioner (Appeals) to permit an appellant to raise a ground not specified in the memorandum of appeal where the omission was not wilful or unreasonable; a pure question of law which can be determined on the basis of facts already available on record may be raised at the appellate stage; the mere fact that the appellant initially accepted the proposed finalization or waived personal hearing does not preclude it from challenging the final assessment through the statutory appeal as there can be no estoppel against correct application of a statutory provision – Appeal allowed by way of remand for fresh consideration - Customs - Export Duty on Iron Ore - Fe Content Determination on Wet Metric Ton Basis – Whether the percentage of Fe content for determining the applicable rate of export duty of Iron Ore should be calculated on Wet Metric Ton basis with reference to the total mass of ore including moisture or on Dry Metric Ton basis – HELD – The percentage of Fe content for determining applicable rate of export duty must be calculated on Wet Metric Ton basis taking into account the moisture content and the condition of Iron Ore as presented for export; after determining the actual quantity of iron, its percentage has to be worked out with reference to the total weight of iron ore available at the relevant time inclusive of moisture; if moisture is excluded while calculating the denominator, the Fe percentage would not represent the condition of the goods as presented for export; the Board has clarified in Circular No. 4/2012-Cus dated 17.02.2012 that for the purpose of charging export duty, assessment of iron ore for determination of Fe content shall be made on Wet Metric Ton basis and not on Dry Metric Ton basis - The basis adopted for determining transaction value under commercial contract and the basis for determining Fe percentage for classification and rate of duty operate in different fields; merely because the contractual price is expressed on Dry Metric Ton basis does not necessarily follow that Fe percentage for tariff purposes must also be taken on Dry Metric Ton basis - The applicable rate of duty has to be determined in accordance with tariff notification, governing statutory provisions and binding judicial precedents – Assessment orders set aside and matter remanded for fresh determination of Fe content on Wet Metric Ton basis. [Read less]

Service Tax – Refund of service tax already collected and deposited, Unjust Enrichment - Burden of Proof on Claimant – Appellant entered into contract with Transmission Corporation of Andhra Pradesh Ltd for laying, jointing, termination, testing and commissioning of underground electrical cables - appellant discharged Service Tax on advance amount. Subsequently relying on CBEC Circular No. 123/5/2010-TRU clarifying that laying electrical cables between grids, sub-stations and transformer stations was not taxable, appellant claimed refund of Service Tax and interest – Whether a service provider who has collected Servi... [Read more]

Service Tax – Refund of service tax already collected and deposited, Unjust Enrichment - Burden of Proof on Claimant – Appellant entered into contract with Transmission Corporation of Andhra Pradesh Ltd for laying, jointing, termination, testing and commissioning of underground electrical cables - appellant discharged Service Tax on advance amount. Subsequently relying on CBEC Circular No. 123/5/2010-TRU clarifying that laying electrical cables between grids, sub-stations and transformer stations was not taxable, appellant claimed refund of Service Tax and interest – Whether a service provider who has collected Service Tax from the service recipient on the basis of a contract price expressly stated to be inclusive of taxes can claim refund of such Service Tax merely by establishing that the activity was later clarified or determined to be non-taxable – HELD – Every refund claim under Section 11B of the Central Excise Act is subject to the doctrine of unjust enrichment; the claimant is required to establish that the incidence of the tax for which refund is sought has not been passed on to any other person; the burden of proving this fact squarely rests on the claimant; a contract stipulation that the price is inclusive of Service Tax supports the finding that the contractual consideration included the tax burden - The statutory presumption regarding passing on of tax incidence cannot be rebutted merely by making an assertion or by raising a legal contention that the activity was subsequently found to be non-taxable. The claimant must produce relevant primary documents including invoices, ledgers, balance sheets and accounting records to establish that the incidence of tax was not passed on or to show that the contract price was reduced or that a credit note was issued to the service recipient – The Notification No. 45/2010-ST cannot be read as conferring an unconditional right for refund of Service Tax already collected and deposited. The notification cannot be construed as authorizing a service provider to recover tax from the recipient and thereafter obtain refund from the Government - The appellant may be correct in contending that the subject activity was covered by the clarification relating to cable-laying or by the provisions concerning transmission of electricity, that finding alone is insufficient to sanction the refund. The appellant was required to cross the statutory bar of unjust enrichment, which it has failed to do – Refund claim dismissed as barred by unjust enrichment due to failure to prove non-passing of tax incidence to service recipient – The appeal is dismissed [Read less]

GST - Applicability of Section 74 to charitable entity registered under Section 12AA of Income Tax Act, Absence of Wilful Suppression or Fraud - Petitioner was registered under Section 12AA of Income Tax Act and engaged in charitable activities by way of preservation of environment through pollution control treatment and disposal of liquid and solid industrial waste - After introduction of GST regime, petitioner claimed exemptions under Notification No.12/2017 dated 28.06.2017 relating to charitable activities and did not pay GST. As claiming exemption resulted disallowance of input tax credit, petitioner obtained GST regi... [Read more]

GST - Applicability of Section 74 to charitable entity registered under Section 12AA of Income Tax Act, Absence of Wilful Suppression or Fraud - Petitioner was registered under Section 12AA of Income Tax Act and engaged in charitable activities by way of preservation of environment through pollution control treatment and disposal of liquid and solid industrial waste - After introduction of GST regime, petitioner claimed exemptions under Notification No.12/2017 dated 28.06.2017 relating to charitable activities and did not pay GST. As claiming exemption resulted disallowance of input tax credit, petitioner obtained GST registration and thereafter stopped claiming exemption under entry relating to charitable activities from specified date – Issue of notice under Section 74 proposing to demand tax with interest and penalty for period from GST introduction to cessation of exemption claim - Whether Section 74 of CGST Act requiring malafide intent such as fraud, wilful misstatement or suppression can be invoked against the petitioner when the petitioner is engaged in charitable activity and Notification grants exemption from payment of GST - HELD - For invocation of Section 74 requires strict showing of malafide intent such as fraud, wilful misstatement or suppression. Suppression of facts in taxation can have only one meaning that correct information was not disclosed deliberately to escape payment of tax. When facts were known to both parties, omission by one to do what might have been done and not that must have been done does not render it suppression. Mere failure to declare does not amount to willful suppression and there must be some positive act from side of assessee to find willful suppression - From facts of present case, there was no deliberate intention on part of Petitioner not to disclose correct information or to evade payment of tax. Petitioner did not have any malice intent or deliberate intention to evade tax or suppression of facts to evade tax or fraud or willful misstatement made in order to evade tax - Petitioner had stopped claiming exemption and started paying tax since exemption was resulting in losses to disallowance of Input Tax Credit, which cannot be construed that petitioner willfully and deliberately in order to avoid liability of tax did so – The Respondents cannot ignore decision of this Court which is rendered in context of petitioner's activities and registration under Section 12AA of Income Tax Act - The show cause notice which has been issued in ignorance of decision of this Court laying quietus to activities carried out by petitioner which is registered under Section 12AA of Income Act cannot be sustained. - The impugned show cause notice is quashed and set aside – The petition is allowed [Read less]

Punjab VAT Act, 2005 - Applicability of amended Entry 60 of Schedule B of Punjab VAT Act to Digital Still Image Cameras - Petitioner claimed itself to be covered by entry number 60 of Schedule-B which provides for IT products - Dept invoked proviso to Section 8(3) of Punjab VAT Act to issue Notification dated 27.06.2006 whereby entry 60 was substituted with specified IT products and components enumerated with corresponding HSN codes - Petitioner contended that UT Administrator had no jurisdiction to issue notification under proviso to Section 8(3) of Punjab VAT Act and that original entry 60 would continue to be operative ... [Read more]

Punjab VAT Act, 2005 - Applicability of amended Entry 60 of Schedule B of Punjab VAT Act to Digital Still Image Cameras - Petitioner claimed itself to be covered by entry number 60 of Schedule-B which provides for IT products - Dept invoked proviso to Section 8(3) of Punjab VAT Act to issue Notification dated 27.06.2006 whereby entry 60 was substituted with specified IT products and components enumerated with corresponding HSN codes - Petitioner contended that UT Administrator had no jurisdiction to issue notification under proviso to Section 8(3) of Punjab VAT Act and that original entry 60 would continue to be operative for levy of VAT on Digital Still Image Cameras - Whether Administrator of UT Chandigarh had jurisdiction to amend entry 60 vide Notification dated 27.06.2006 and whether Digital Still Image Cameras qualify as Information Technology products under unamended entry 60 - HELD - Unamended entry 60 refers to IT products including computer, telephone, cell phone, Digital Video Disk and Compact Disk Teleprinter and Wireless Equipment and parts thereof. Goods enumerated therein are illustrative of broader expression. When amended entry 60 is examined, expression IT Products continues to form part of amended entry also. Both unamended and amended entry 60 cover IT Products with enumerated products being illustrative - Since petitioner's claim is based only on assertion that its product namely Digital Still Image Camera forms part of expression IT Products and expression IT Products finds place both in unamended entry 60 as well as amended entry 60, petitioner is not prejudiced in any manner by amended notification inasmuch as claim of being covered by expression IT Products remains uninfluenced by notification - Petitioner's claim of coverage by expression IT Products would be determined by reference to whether Digital Still Image Camera constitutes IT Product and not by reference to specific illustrative items listed. Specific enumeration of products in schedule cannot limit scope of broader expression IT Products - Challenge to notification on ground that it was issued without jurisdiction remains academic in importance. Petitioner would be better advised to challenge orders of assessment by filing appeals in accordance with law and all questions regarding coverage and tax liability are left open for examination in such appeals – The petitions are disposed of [Read less]

GST - Detention and prohibition of goods under Section 67(2) read with Rule 139(4) CGST Rules, 2017 - Automatic expiry of prohibition order after six months under Section 67(7) CGST Act, 2017 - Whether goods can be continued to be detained and prohibited after the automatic expiry of the prohibition order upon completion of the maximum period of six months prescribed under Section 67(7) of CGST Act when the Respondent's own admission is that the prohibition order ceases to operate automatically upon expiry of the extended period without requirement of a separate revocation order - HELD - Section 67(7) of the CGST Act presc... [Read more]

GST - Detention and prohibition of goods under Section 67(2) read with Rule 139(4) CGST Rules, 2017 - Automatic expiry of prohibition order after six months under Section 67(7) CGST Act, 2017 - Whether goods can be continued to be detained and prohibited after the automatic expiry of the prohibition order upon completion of the maximum period of six months prescribed under Section 67(7) of CGST Act when the Respondent's own admission is that the prohibition order ceases to operate automatically upon expiry of the extended period without requirement of a separate revocation order - HELD - Section 67(7) of the CGST Act prescribes a specific period during which a prohibition order issued under Section 67(2) remains valid and effective. Upon expiry of the extended period the prohibition order automatically comes to an end and ceases to have any force or effect. There is no requirement for the Department to pass a separate order revoking or withdrawing the prohibition order as it operates by operation of law upon the expiry of the prescribed period. The detention of goods beyond the period prescribed under Section 67(7) amounts to wrongful detention and disproportionate exercise of statutory power - Respondents are directed to forthwith release the goods of the petitioner - The writ petition is allowed [Read less]

GST – Summary dismissal of revenue appeal under Section 112(2) of CGST Act on ground of disputed amount below monetary limit – Department preferred appeal against First Appellate Authority order where the disputed amount was Rs. 36,607/- only - Whether appeal can proceed on merits when disputed amount falls below monetary threshold – HELD – Section 112(2) of CGST Act, 2017 provides for summary dismissal of appeals where no substantial grounds exist. For disputed amount of Rs. 36,607/- which is substantially below Rs. 50,000/- threshold, grounds raised by Department are not substantial enough to entail Bench interfe... [Read more]

GST – Summary dismissal of revenue appeal under Section 112(2) of CGST Act on ground of disputed amount below monetary limit – Department preferred appeal against First Appellate Authority order where the disputed amount was Rs. 36,607/- only - Whether appeal can proceed on merits when disputed amount falls below monetary threshold – HELD – Section 112(2) of CGST Act, 2017 provides for summary dismissal of appeals where no substantial grounds exist. For disputed amount of Rs. 36,607/- which is substantially below Rs. 50,000/- threshold, grounds raised by Department are not substantial enough to entail Bench interference with FAA findings. Even if appeal is admitted for hearing on merits, no end of justice would be served given quantum of dispute – Appeal dismissed summarily under Section 112(2) of CGST Act 2017 as the disputed amount is below the prescribed monetary limit [Read less]

GST – Dismissal of appeal for want of prosecution and failure to cure defects, Non-appearance of appellant despite multiple opportunities – Whether appeal can be maintained when appellant fails to cure prescribed defects and does not appear despite multiple opportunities – HELD – The Rule 42 of GSTAT Procedure Rules 2025 provides that where appellant does not appear on day fixed for hearing, Tribunal may dismiss appeal for default or hear and decide on merits. Appellant failure to cure defects on three occasions pointed out by Registry and three occasions by Bench demonstrates lack of interest to proceed with appea... [Read more]

GST – Dismissal of appeal for want of prosecution and failure to cure defects, Non-appearance of appellant despite multiple opportunities – Whether appeal can be maintained when appellant fails to cure prescribed defects and does not appear despite multiple opportunities – HELD – The Rule 42 of GSTAT Procedure Rules 2025 provides that where appellant does not appear on day fixed for hearing, Tribunal may dismiss appeal for default or hear and decide on merits. Appellant failure to cure defects on three occasions pointed out by Registry and three occasions by Bench demonstrates lack of interest to proceed with appeal - Appellant has been given sufficient time and no further time can be granted. Principles of natural justice have been followed in giving multiple opportunities. Tribunal exercised discretion under Rule 42 to dismiss appeal for want of prosecution – Appeal dismissed for want of prosecution without examining merits. Appellant at liberty to request restoration under proviso to Rule 42 within reasonable time - The appeal is dismissed [Read less]

GST - Anti-Profiteering – Construction of flats under joint venture with different pricing categories – Applicability of anti-profiteering provisions to Lower Income Group and Middle Income Group units where prices are fixed under State Government Notification – Whether the Respondent has contravened the anti-profiteering provisions of Section 171 of the CGST Act in respect of Lower Income Group and Middle Income Group units where prices were statutorily capped by Government notification limiting recovery to direct costs only – HELD – Upon introduction of GST the Respondent became entitled to avail Input Tax Cred... [Read more]

GST - Anti-Profiteering – Construction of flats under joint venture with different pricing categories – Applicability of anti-profiteering provisions to Lower Income Group and Middle Income Group units where prices are fixed under State Government Notification – Whether the Respondent has contravened the anti-profiteering provisions of Section 171 of the CGST Act in respect of Lower Income Group and Middle Income Group units where prices were statutorily capped by Government notification limiting recovery to direct costs only – HELD – Upon introduction of GST the Respondent became entitled to avail Input Tax Credit on goods and input services unlike the pre-GST regime where credit was restricted. The comparison of ITC in pre-GST and post-GST periods shows that additional benefit accrued to the Respondent. Such benefit is required to be passed on to homebuyers by way of commensurate reduction in prices. However the statutory restriction governing pricing of Lower Income Group and Middle Income Group units assumes material significance - The West Bengal Housing Department issued a notification fixing the maximum sale rate per square foot for LIG and MIG categories and specifically stipulating that only direct costs and no overhead or administrative costs were to be charged. Unlike in the case of Higher Income Group units the Respondent had no commercial discretion to load overheads administrative expenses or other indirect costs including the taxes attributable thereto into the sale price of LIG and MIG units - The pricing mechanism applicable to Lower Income Group and Middle Income Group units was materially different from that applicable to Higher Income Group units. Accordingly no profiteering can be attributed to the Respondent in respect of Lower Income Group and Middle Income Group units and any computation of profiteering if warranted ought to be restricted to Higher Income Group units alone – The Respondent has not contravened Section 171 in respect of Lower Income Group and Middle Income Group categories. No profiteering is attributable to these categories on account of the statutory restriction governing their pricing – The matter is disposed of - Anti-Profiteering – Comparison of Input Tax Credit availed in pre-GST and post-GST periods and passing of benefit to homebuyers – The Respondent constructed Higher Income Group flats entitled to avail additional Input Tax Credit post-GST compared to the pre-GST regime – Whether the Respondent derived additional Input Tax Credit benefit for Higher Income Group units – HELD – The statutory obligation to pass on benefit of reduction in tax rate or additional Input Tax Credit arises at the time of supply by way of commensurate reduction in prices. The Court has recognised genuine commercial cost escalations. Upon re-examination the Authority accepted the Respondent's Cost Escalation submission along with the CA Certificate - The Respondent had provided sufficient evidentiary support to establish passing on of Input Tax Credit benefit through issuance of credit notes and reduction in prices - The profiteered amount determined for Higher Income Group category was restricted to the residual shortfall requiring to be passed on to eligible recipients. – The Respondent derived additional Input Tax Credit benefit amounting to a specified sum inclusive of GST for Higher Income Group category and is liable to pass on such benefit to eligible recipients. The amount previously passed on must be duly verified and credited against the total demand - Anti-Profiteering – Liability to pay Interest on Unpassed Input Tax Credit Benefit – CGST Act Section 171, Rule 133(3)(b) – Whether interest is payable on the profiteered amount determined not to have been passed on and at what rate and for what period – HELD – Interest on unpassed Input Tax Credit benefit is compensatory in nature and intended to ensure restitution of the time value of money that rightfully belongs to the recipients. Section 171 casts statutory obligation to pass on benefit of reduction in tax rate or availability of additional Input Tax Credit by way of commensurate reduction in prices at the time of supply. Rule 133(3)(b) provides that amount not so passed on shall be returned to recipients along with interest at the rate of eighteen percent per annum calculated from the date of collection of the higher amount till the date of its actual return. The Delhi High Court in Reckitt Benckiser judgment held that Section 171 is broad enough to empower authorities to prescribe interest to deter registered persons from pocketing benefits meant for consumers. No special circumstances warrant deviation from the principled approach of awarding interest at eighteen percent in anti-profiteering cases – Respondent is liable to pay interest at the rate of eighteen percent per annum from the respective dates of collection of excess amount until the date of refund to eligible homebuyers - Penalty of ten percent of the profiteered amount is leviable under Section 171(3A) of CGST Act. However penalty shall stand waived if the Respondent deposits the entire profiteered amount with eligible homebuyers within thirty days from the date of the anti-profiteering authority's order. [Read less]

Service Tax - Works contract services to government and governmental authorities, Applicability of Notification 25/2012-ST Section 12(a), Scope of exemption for irrigation works - Appellant provided works contract services to Executive Engineer Irrigation Department for construction and maintenance of irrigation works including construction of claiming exemption from service tax under Notification 25/2012-ST - Department proposed service tax demand on entire amount received from Irrigation Department - Whether service tax is properly demanded on works contract services where exemption notification specifically covers const... [Read more]

Service Tax - Works contract services to government and governmental authorities, Applicability of Notification 25/2012-ST Section 12(a), Scope of exemption for irrigation works - Appellant provided works contract services to Executive Engineer Irrigation Department for construction and maintenance of irrigation works including construction of claiming exemption from service tax under Notification 25/2012-ST - Department proposed service tax demand on entire amount received from Irrigation Department - Whether service tax is properly demanded on works contract services where exemption notification specifically covers construction and maintenance of irrigation works provided to governmental authorities and assessee has produced work order documentation for majority of period - HELD - Notification 25/2012-ST Section 12(a) expressly exempts services provided to government and governmental authorities for construction erection commissioning installation completion fitting out repair maintenance renovation or alteration of canal dam or other irrigation works. The works undertaken by Appellant including construction of river ghat and development of destination tourism clearly fall within scope of exemption as they constitute irrigation works maintained by Irrigation Department. The Appellant has furnished documentary evidence in form of work orders establishing that services were provided under written agreement with Irrigation Department for exempted works. Such documentary evidence suffices to establish exemption for these periods. However for financial year 2014-15 where Appellant failed to produce contract agreement or work order despite claiming service to Irrigation Department the exemption cannot be granted as factual support is lacking - The exemption is properly granted for financial years 2015-16 2016-17 and 2017-18 but demand for financial year 2014-15 where documentary evidence supporting exemption is not produced is sustainable - Applicability of Partial Reverse Charge Mechanism for services to Corporate Body - Whether service provider-proprietorship firm is liable to pay fifty percent service tax on services to corporate body recipient even where recipient corporate body has discharged its fifty percent share of service tax liability under reverse charge mechanism - HELD - Notification 30/2012-ST Entry 9 dated 20-06-2012 provides that where works contract services are provided by individual HUF proprietorship firm or partnership firm or association of persons to a business entity registered as body corporate located in taxable territory both provider and recipient are liable to pay service tax to the extent of fifty percent each separately. This is partial RCM requiring bifurcated liability. The service provider remains liable to pay its fifty percent share independent of whether recipient has discharged or defaulted on its fifty percent share. The statutory obligation on service provider is not extinguished by recipient's discharge of its own liability. Even where Bharat Coking Coal Limited as corporate body recipient has paid its fifty percent share the service provider remains obligated to pay its fifty percent share to Government - The certificate produced by recipient merely evidences payment by recipient of its own liability and does not diminish service provider's independent and separate liability - The appellant is liable to pay fifty percent of service tax on the amount received from Bharat Coking Coal Limited as proprietorship concern even though recipient paid its fifty percent liability - Eligibility to Abatement for Maintenance and Repair Works - Whether service tax for maintenance repair and reconditioning works is properly calculated on seventy percent of amount charged as per Rule 2A(ii)(B) where work involves supply of materials equipment and labour by service provider - HELD - Rule 2A(ii) of Service Tax Determination of Value Rules 2006 provides different valuation for different categories of works contracts. Clause (B) thereof specifically provides that in case of works contract entered into for maintenance or repair or reconditioning or restoration or servicing of any goods service tax shall be payable on seventy percent of total amount charged for works contract. This implies abatement of thirty percent from the total amount charged. The intent of this provision is to give credit for cost of materials labour and other components that are inherent part of such maintenance repair and reconditioning services - Where Appellant as service provider arranged materials equipment and tools required for thorough repairing of residential quarters the work clearly falls within category of maintenance repair and reconditioning covered by Clause (B). Accordingly, service tax is correctly computed on seventy percent of amount charged for such services - The application of thirty percent abatement under Rule 2A(ii)(B) is proper and service tax demand calculated on seventy percent of amount received is sustainable. Penalties for Non-Registration and Non-Payment of Service Tax - Whether penalties are properly imposed where Appellant has failed to obtain service tax registration file statutory returns and pay service tax without providing valid excuse or justification - HELD - Section 77(1)(a) of Finance Act 1994 imposes penalty for contravention of Section 69 read with Rules requiring service tax registration. Where assessee engaged in providing taxable services fails to obtain registration within prescribed time the statutory contravention is established. Section 77(2) imposes penalty for contravention of Section 70 and Rules requiring filing of statutory returns ST-3. Where assessee fails to file statutory returns within due time statutory contravention is established. Section 76 imposes penalty where service tax has not been levied or paid or has been short-levied or short-paid where person served notice is liable in addition to service tax and interest to pay penalty - Appellant admits it did not discharge service tax liabilities on amounts admittedly received for taxable services. The statutory contraventions of non-registration non-filing of returns and non-payment of service tax are fully established. Penalties are properly imposed as they are consequence of clear breach of statutory obligations - The penalties imposed under Sections 76 77(1)(a) and 77(2) of Finance Act 1994 are properly levied and sustainable. [Read less]

GST - Involuntary Payment made during Search and Inspection Proceedings - Refund of involuntary or coercively recovered amount – Based on discrepancy between GSTR-3B and GSTR-7 records, authorities conducted inspection at Petitioner's premises. During inspection and subsequently thereafter, Petitioner made multiple payments through Form GST DRC-03 under alleged provisions of Section 74(5) of CGST Act, 2017 contending that such payments were made under duress and coercive pressure without any pre-dated subsisting tax demand outstanding at relevant time - Whether payments made during course of search, seizure and inspectio... [Read more]

GST - Involuntary Payment made during Search and Inspection Proceedings - Refund of involuntary or coercively recovered amount – Based on discrepancy between GSTR-3B and GSTR-7 records, authorities conducted inspection at Petitioner's premises. During inspection and subsequently thereafter, Petitioner made multiple payments through Form GST DRC-03 under alleged provisions of Section 74(5) of CGST Act, 2017 contending that such payments were made under duress and coercive pressure without any pre-dated subsisting tax demand outstanding at relevant time - Whether payments made during course of search, seizure and inspection proceedings can be treated as voluntary payment made by Petitioner under self-ascertainment in terms of Section 74(5) of CGST Act and whether Petitioner is entitled to refund of said amounts along with interest - HELD – It is undisputed fact that prior to search and inspection conducted, no notice was issued nor any proceedings to ascertain, adjudicate or determine tax, interest and penalty payable by Petitioner which indicates there was no occasion for Petitioner to pay amounts voluntarily by way of self-ascertainment, thereby indicating payment was not voluntary - The Rule 142 of the CGST Rules, 2017 specifically stipulates that if a voluntary payment is made under sub-section (5) of Section 73 or Section 74 in Form GST DRC-03, an acknowledgment of such payment is required to be issued by the concerned authorities in Form GST DRC-04. Admittedly, in the present case, the respondents have not issued GST DRC-04 - Further, sub-section (5) of Section 73 or Section 74 is to be made on the basis of own ascertainment of tax by the taxpayer or as ascertained by the proper officer. In the present case, there is no material on record to indicate any manner of assessment that has been made with regard to the tax on the basis of which the amounts that have been paid - Mere proceedings initiated under Section 79 of the Act will not in any manner indicate that the payments made by the petitioner are voluntary - It is clear from sequence of events that even payment made after issuance of notice requiring petitioner to appear personally was involuntary as said notice was not issued under any provision of law - Direction is issued to respondents to refund the aggregate amount paid together with interest at 6% per annum from date of payment till date of refund - The writ petition is allowed [Read less]

GST – Jurisdiction of Appellate Authority to dismiss statutory appeal for non-prosecution and failure to appear - Petitioner failed to appear for hearing despite three notices and substantial time given - Appellate Authority dismissed appeal for non-attendance and non-compliance on the ground that appellant failed to substantiate grounds of appeal - Whether Appellate Authority has power to dismiss an appeal for want of prosecution or non-appearance of appellant and whether appeal can be disposed without deciding on merits - HELD - The appellate authority under Section 107(11) of CGST Act, 2017 is statutorily mandated to ... [Read more]

GST – Jurisdiction of Appellate Authority to dismiss statutory appeal for non-prosecution and failure to appear - Petitioner failed to appear for hearing despite three notices and substantial time given - Appellate Authority dismissed appeal for non-attendance and non-compliance on the ground that appellant failed to substantiate grounds of appeal - Whether Appellate Authority has power to dismiss an appeal for want of prosecution or non-appearance of appellant and whether appeal can be disposed without deciding on merits - HELD - The appellate authority under Section 107(11) of CGST Act, 2017 is statutorily mandated to pass an order which it thinks just and proper either confirming modifying or annulling the decision or order appealed against after making such further inquiry as may be necessary - The statutory scheme contemplates only three courses of action available to the Appellate Authority namely to confirm modify or annul the impugned decision or order. No provision allows dismissal of appeal for non-appearance or non-prosecution - An appeal dismissed for non-appearance cannot constitute a reasoned order disposing of appeal by stating points for determination and reasons for decision as mandated by Section 107(12). The principles of natural justice require that even where appellant is not present the appellate authority must adjudicate the matter on the basis of documents and materials already on record and pass a reasoned order - The impugned order dismissing the appeal for non-attendance and non-compliance is quashed and set aside as it was passed without jurisdiction. The case is remanded to the Appellate Authority to decide the appeal on its merits in accordance with law following principles of natural justice – The petition is allowed [Read less]

Customs - Confiscation of foreign currency, Denial of opportunity of personal hearing before revisional authority, Principles of natural justice in adjudicatory proceedings - The Petitioners were intercepted at airport with foreign currency concealed in their persons. A show cause notice was issued proposing confiscation and penalty. The Adjudication Authority ordered confiscation and imposed penalty. The Petitioners preferred appeals before the Commissioner (Appeals) which were rejected vide common order. Thereafter the Petitioners filed revision applications before the revisional authority on the ground that no witness w... [Read more]

Customs - Confiscation of foreign currency, Denial of opportunity of personal hearing before revisional authority, Principles of natural justice in adjudicatory proceedings - The Petitioners were intercepted at airport with foreign currency concealed in their persons. A show cause notice was issued proposing confiscation and penalty. The Adjudication Authority ordered confiscation and imposed penalty. The Petitioners preferred appeals before the Commissioner (Appeals) which were rejected vide common order. Thereafter the Petitioners filed revision applications before the revisional authority on the ground that no witness was allowed to be cross-examined during adjudication proceedings. The authority passed a revision order without according adequate opportunity of hearing to the Petitioners - Whether the Petitioners were denied principles of natural justice when the revisional authority passed the order without affording them adequate opportunity for personal hearing and without recording their submissions - HELD - The Petitioners were afforded not one but four separate opportunities of personal hearing between September 2024 and December 2024 before the revisional authority. On three occasions none appeared on behalf of the petitioners and adjournments having been sought and granted. When final opportunity was fixed the authority accommodated the Petitioners' preferences as to mode and timing ultimately fixing virtual hearing between 3:00 P.M. and 3:45 P.M. of which due intimation was sent well in advance on that very morning - The Petitioners' assertion that counsel connected at 3:45 P.M. but the authority failed to join remains an unsubstantiated averment and is contradicted by the personal hearing sheet which reflects that only the Department appeared. The Petitioners took no steps for seeking personal hearing from the revisional authority. Such silence is difficult to reconcile with conduct of party genuinely aggrieved by alleged denial of hearing and supports the respondent's contention that the Petitioners had no further submissions to make - The isolated clerical error in the order recording hearing time does not establish that no hearing was held as the personal hearing sheet explains and corrects the discrepancy. The Petitioners cannot treat this clerical error as foundational infirmity going to root of the order. The Petitioners were granted repeated and adequate opportunity of which they failed to avail themselves through their own conduct - No violation of principles of natural justice has been established - The petition is dismissed [Read less]

Customs - Release of imported food products on clearance by Food Safety and Standards Authority, Binding nature of no objection certificate - Seizure and confiscation of food articles after FSSAI clearance – Import of roasted arecanuts - Department examined the goods and samples were drawn and sent to FSSAI. The FSSAI issued a no objection certificate stating the goods were in conformity with Food Safety and Standards Act 2006. Despite FSSAI clearance the goods were not released. During pendency of petition samples were again sent to Central Revenue Control Laboratory which reported moisture content at 6.8 per cent and 6... [Read more]

Customs - Release of imported food products on clearance by Food Safety and Standards Authority, Binding nature of no objection certificate - Seizure and confiscation of food articles after FSSAI clearance – Import of roasted arecanuts - Department examined the goods and samples were drawn and sent to FSSAI. The FSSAI issued a no objection certificate stating the goods were in conformity with Food Safety and Standards Act 2006. Despite FSSAI clearance the goods were not released. During pendency of petition samples were again sent to Central Revenue Control Laboratory which reported moisture content at 6.8 per cent and 6.9 per cent - Department seized the goods and passed an order permitting provisional release only upon executing bond and furnishing Bank guarantee - Whether goods can be seized and confiscated after FSSAI has issued no objection certificate and whether Bank guarantee can be insisted upon for provisional release of food articles cleared by the food regulator - HELD - Once a clear stand is taken by FSSAI that the imported food product is in no manner harmful for human consumption in light of requirements and parameters of FSSAI Rules any contrary position cannot be adopted by the Customs Department and the goods have to be released. The Food Import Manual issued by FSSAI clearly specifies the steps to be taken for laboratory analysis and it is only after this laboratory analysis that a no objection certificate is issued by FSSAI - The tests conducted by FSSAI are of precise nature and high standards of testing are ensured and made applicable before clearing food suitable for human consumption. Any window for reclassification of categorised goods itself is not on sound premise. The issuance of no objection certificate by FSSAI following its prescribed procedure including laboratory analysis concludes the matter and any subsequent examination and testing by Customs through CRCL is not permissible - The issue of release of roasted arecanuts upon furnishing bond without insisting on security deposit is now settled by law. The seizure memo and the impugned order to the extent seeking security deposit Bank guarantee are quashed and set aside. The respondent is directed to forthwith release the goods without insisting on Bank guarantee provided the petitioner obtains fresh certificate of fitness from FSSAI before dealing with the goods in open market - The writ petition is allowed [Read less]

Customs - Revocation of Customs Broker Licence, Procedure for examination of witnesses in revocation proceedings - CESTAT remanded the matter to the Commissioner for fresh adjudication with opportunity to cross-examine witnesses. The Appellant assailed this remand contending that permitting examination of witnesses would allow the Department to fill lacuna in proceedings and that error in procedure should lead to setting aside the order - Whether the remand directed by the appellate authority for grant of opportunity to cross-examine witnesses whose statements were relied upon in proceedings for revocation of Customs Broke... [Read more]

Customs - Revocation of Customs Broker Licence, Procedure for examination of witnesses in revocation proceedings - CESTAT remanded the matter to the Commissioner for fresh adjudication with opportunity to cross-examine witnesses. The Appellant assailed this remand contending that permitting examination of witnesses would allow the Department to fill lacuna in proceedings and that error in procedure should lead to setting aside the order - Whether the remand directed by the appellate authority for grant of opportunity to cross-examine witnesses whose statements were relied upon in proceedings for revocation of Customs Broker Licence is permissible - HELD - Regulation 17(3) of Customs Brokers Licensing Regulations 2018 expressly requires the Inquiry Officer to take such oral evidence as may be relevant or material to the inquiry while Regulation 17(4) confers upon the Customs Broker the right to cross-examine persons examined in support of grounds forming basis of proceedings. Where oral evidence is sought to be relied upon in the inquiry the Customs Broker must be afforded the corresponding opportunity of cross-examination. The procedure contemplated under Regulation 17 places a statutory obligation on the Inquiry Officer which could not have been overlooked by the Commissioner - The remand directed by CESTAT is founded upon a procedural infirmity in the inquiry and is permissible and appropriate as no provision prohibits the appellate authority from remanding a matter for fresh adjudication. An error in following the prescribed procedure does not necessarily entail setting aside the order altogether particularly where such procedural error can be rectified by granting an opportunity to the affected party. The Court is not expected to altogether set aside proceedings initiated against the Customs Broker for alleged misconduct merely on account of procedural error which can be remedied - The appeal is dismissed and the remand order directing fresh adjudication with opportunity for cross-examination stands upheld [Read less]

Customs - Confiscation and redemption of second-hand restricted goods, Exercise of discretion under Section 125 Customs Act, Distinction between restricted and prohibited goods - Appellant imported Posalux Machine DLR Measuring Unit which upon examination were found to be second-hand goods restricted as per the Foreign Trade Policy. The original adjudicating authority held that the goods were liable to be redeemed on payment of a redemption fine under Section 125 of the Customs Act 1962 and imposed a penalty under Section 112(a) - Commissioner (Appeals) reversed the decision holding that the goods were liable for absolute ... [Read more]

Customs - Confiscation and redemption of second-hand restricted goods, Exercise of discretion under Section 125 Customs Act, Distinction between restricted and prohibited goods - Appellant imported Posalux Machine DLR Measuring Unit which upon examination were found to be second-hand goods restricted as per the Foreign Trade Policy. The original adjudicating authority held that the goods were liable to be redeemed on payment of a redemption fine under Section 125 of the Customs Act 1962 and imposed a penalty under Section 112(a) - Commissioner (Appeals) reversed the decision holding that the goods were liable for absolute confiscation without redemption and enhanced the penalty under Section 114AA - Whether goods found to be restricted under Foreign Trade Policy can be subjected to absolute confiscation without exercise of discretion to offer redemption fine under Section 125 - HELD - Section 125 of the Customs Act 1962 provides that where confiscation of goods is authorised by the Act, the officer adjudging it may in case of goods the importation whereof is prohibited under the Act or under any other law give to the owner an option to pay a redemption fine. Before proceeding with absolute confiscation, the adjudicating authority must clearly construe whether the goods in question are liable for absolute confiscation or not - As per the paragraphs 2.31 (II) and para 2.10 of Foreign Trade Policy 2015-2020 the goods are found to be restricted only. Therefore, there is no reason for absolute confiscation of the goods, since the goods are found to be restricted as they are second hand goods, the same can be allowed on redemption fine - The original authority was justified in releasing the goods on payment of redemption fine. The Commissioner (Appeals) failed to provide specific reasons for absolute confiscation and the enhancement of penalty under Section 114AA after setting aside the penalty under Section 112(a) is misplaced as the two provisions operate on different premises. - The impugned order is set aside and the appeal is allowed [Read less]

Customs - Tariff classification of Battery Management Systems and Cell Supervisory Circuits, Applicability of Printed Circuit Board Assembly exclusion, Requirement for counter-expert opinion when challenging specialist opinion - Petitioner imported Battery Management Systems and Cell Supervisory Circuits for manufacturing electric vehicle lithium-ion battery packs and classified them under Customs Tariff Heading 9032 8990 and 8537 1000/8537 1090 claiming concessional customs duty at 2.5% per cent under Serial No.512 of Notification No.50/2017-Customs - Department proposed re-classification of the products as Printed Circui... [Read more]

Customs - Tariff classification of Battery Management Systems and Cell Supervisory Circuits, Applicability of Printed Circuit Board Assembly exclusion, Requirement for counter-expert opinion when challenging specialist opinion - Petitioner imported Battery Management Systems and Cell Supervisory Circuits for manufacturing electric vehicle lithium-ion battery packs and classified them under Customs Tariff Heading 9032 8990 and 8537 1000/8537 1090 claiming concessional customs duty at 2.5% per cent under Serial No.512 of Notification No.50/2017-Customs - Department proposed re-classification of the products as Printed Circuit Board Assemblies under Tariff Heading 8507 9090 which are excluded from the said exemption, alleging the Petitioner had mis-classified the goods with intention to evade payment of applicable customs duty and demanded differential duty of Rs.14,07,47,215 along with applicable interest and penalty - Whether the products can be classified as Printed Circuit Board Assemblies excluded from the Exemption Notification when the Petitioner relied upon a detailed expert opinion based on physical inspection and component-level analysis concluding that the products cannot be understood as PCBA used in manufacture of battery packs - HELD - When classification or taxability turns on specialised technical or scientific considerations, the adjudicating authority is bound to meaningfully evaluate expert opinion and if it seeks to disagree therewith it must do so only on the basis of commensurate expert or scientific material and not on subjective assumptions. The impugned order has simply brushed aside the opinion of the expert institute by observing that it is not relevant without a reasoned technical rebuttal or counter-expert opinion - In a case where the expert's opinion is based on physical inspection of the products and detailed component-level analysis, the same should not have been brushed aside lightly by substituting the adjudicating authority's own technical perception without a reasoned technical rebuttal. The Exemption Notification gives an impetus to manufacturing of battery packs for electric vehicles in India and the question of what is the worth of the expert report and should it have been discredited without a scientific base or counter-expert opinion is material - The impugned order is quashed and set aside and the matter is remanded to the Adjudicating Authority for fresh adjudication of the show cause notice on merits and in accordance with law, with liberty to the Department to obtain counter-expert opinion and thereafter proceed to analyse the expert report - The impugned order is quashed and set aside – The writ petition is allowed [Read less]

Service Tax - Penalty for failure to deposit collected service tax - Willful suppression and intent to evade duty - Appellant registered for Manpower Recruitment Agency Service collected service tax at prescribed rate from clients but deliberately failed to deposit the same to government exchequer within statutory time limit - Whether penalty under Section 76 can be imposed for failure to deposit tax without establishing mens rea or intention to evade - HELD - Penalty under Section 76 is for failure to deposit tax in time. When admittedly assessee was not depositing tax by due date, penalties must be imposed even if assess... [Read more]

Service Tax - Penalty for failure to deposit collected service tax - Willful suppression and intent to evade duty - Appellant registered for Manpower Recruitment Agency Service collected service tax at prescribed rate from clients but deliberately failed to deposit the same to government exchequer within statutory time limit - Whether penalty under Section 76 can be imposed for failure to deposit tax without establishing mens rea or intention to evade - HELD - Penalty under Section 76 is for failure to deposit tax in time. When admittedly assessee was not depositing tax by due date, penalties must be imposed even if assessee claims no mens rea, as the statutory provision requires only proof of default in compliance without establishing intent. The deliberate act of collecting service tax from clients but not remitting it to government constitutes willful suppression with intent to evade payment. Statements recorded under Section 108 of Customs Act, 1962 are admissible as substantive evidence, being invested with status of judicial proceedings and neither hit by exclusionary rules of Evidence Act nor violating constitutional protection against self-incrimination. For retraction of statement to be legally potent, it must be contemporaneous. Directors of appellant admitted collecting service tax but not depositing same with government, constituting grave offence. Reduction in penalty imposed on directors was erroneous and unsustainable - Penalty imposed on directors is restored - The appeals filed by the department are allowed and the appeal filed by the assessee is dismissed - Service Tax - Extended period of limitation - Invocation on ground of willful suppression - Appellant failed to declare short-paid service tax liability in statutory ST-3 returns filed for relevant half-yearly periods despite collecting service tax from clients - Whether extended period of limitation can be invoked under proviso to Section 11A where there is willful suppression of facts with intent to evade duty - HELD - Extended period of limitation of five years applies where short payment is by reason of willful suppression of facts with intent to evade payment of duty. Mere omission to give correct information is not suppression unless it was deliberate to stop payment of duty. Suppression means failure to disclose full information with intent to evade payment of duty. When Revenue invokes extended period, burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with willful misstatement. In present case, appellant deliberately concealed short-paid service tax liability from statutory returns despite collecting tax, constituting willful suppression with intent to evade duty - Invocation of extended period of limitation is upheld - Service Tax - Valuation of services - Determination of assessable value for housekeeping services - Department quantified taxable value of housekeeping services without reference to original invoices issued by appellant, appellant contested value and submitted invoices showing lower assessable value - Whether taxable value was correctly determined or whether matter requires remand for re-determination based on original source documents - HELD - Where taxability of services is not disputed but assessable value is contested, the assessable value must be ascertained based on original documents namely invoices available with department. The show cause notice was deficient and vague in not specifying the basis for quantification of taxable value. However, as taxability of services has not been disputed, it is reasonable and proper to remand matter to adjudicating authority for determination of correct assessable value after seeking relevant details and submissions from appellant. The adjudicating authority should re-adjudicate the demand by reference to original invoices and supporting documents - Matter is remanded for re-determination of assessable value and service tax liability with respect to housekeeping services. [Read less]

GST - Adjudication order passed without consideration of reply and supporting documents filed by assessee, Violation of principles of natural justice, Scope of rectification under Section 161 CGST Act, 2017 - Petitioner filed a rectification application challenging an adjudication order passed under Section 73(9) proposing demands on various grounds including royalty fees, transportation services, indirect income, penalties and fines, unaccounted tax liability, reversal of input tax credit and other matters. The Petitioner had filed detailed replies and submitted supporting documents during various visits before the proper... [Read more]

GST - Adjudication order passed without consideration of reply and supporting documents filed by assessee, Violation of principles of natural justice, Scope of rectification under Section 161 CGST Act, 2017 - Petitioner filed a rectification application challenging an adjudication order passed under Section 73(9) proposing demands on various grounds including royalty fees, transportation services, indirect income, penalties and fines, unaccounted tax liability, reversal of input tax credit and other matters. The Petitioner had filed detailed replies and submitted supporting documents during various visits before the proper officer but the impugned adjudication order did not discuss or consider the submissions filed in pursuance of personal hearing and did not address the specific contentions and documentary evidence submitted by the Petitioner - Whether an adjudication order passed without considering or appreciating the submissions and documentary evidence filed by the assessee in response to SCN constitutes apparent mistake of record warranting rectification under Section 161 and violates principles of natural justice - HELD - It is the basic right of an assessee and a requirement under principles of natural justice that the proper officer must consider the reply filed by the assessee to the show cause notice and if the proper officer seeks to reject any submission made by the assessee the reasons for such rejection must be clearly stated in the adjudication order. The non-consideration of the reply and supporting documents filed by the assessee in the adjudication order while making demand for differential tax constitutes violation of principles of natural justice as it deprives the assessee of the right to defend - When the assessee has submitted detailed explanation and documentary evidence for specific items like royalty fees, transportation charges, indirect income and other matters, the proper officer is required to pass a detailed speaking order addressing each contention and explaining why the submission is being rejected. The dismissal of rectification application without considering the various contentions raised therein shows that the proper officer has not applied its mind to the matters raised - The impugned order rejecting the rectification application is set aside and the matter is remitted back to the proper officer for reconsideration of the rectification application and the adjudication order afresh with due regard to the submissions and supporting documents filed by the petitioner and in accordance with law – The writ petition is allowed [Read less]

Chhattisgarh VAT Act 2005 - Taxability of lease rent received from Railways for wagons under ‘Own Your Wagon Scheme’ - Deemed sale and transfer of right to use goods - Assessment authorities and appellate authorities treated lease rent as taxable supply involving deemed transfer of right to use - Whether lease rent received by assessee from Railways in respect of wagons provided under the Central Government's ‘Own Your Wagon Scheme’ constitutes a taxable supply involving transfer of right to use goods under Section 2(s)(vi) read with Section 22 of Chhattisgarh VAT Act - HELD - The Supreme Court in the case of 20th ... [Read more]

Chhattisgarh VAT Act 2005 - Taxability of lease rent received from Railways for wagons under ‘Own Your Wagon Scheme’ - Deemed sale and transfer of right to use goods - Assessment authorities and appellate authorities treated lease rent as taxable supply involving deemed transfer of right to use - Whether lease rent received by assessee from Railways in respect of wagons provided under the Central Government's ‘Own Your Wagon Scheme’ constitutes a taxable supply involving transfer of right to use goods under Section 2(s)(vi) read with Section 22 of Chhattisgarh VAT Act - HELD - The Supreme Court in the case of 20th Century Finance Corporation and Great Eastern Shipping Company has laid down the principle that for taxation purposes a distinction must be maintained between tangible transfer of goods and contractual arrangements relating to right to use. The principle of law laid down by the Supreme Court in 20th Century Finance Corporation squarely applies to the present case - The lease rent paid by the Railways to the assessee in respect of wagons provided under the Own Your Wagon Scheme cannot be accepted to be taxable income under the statutory provisions of Section 2(s)(vi) read with Section 22 of the Act. The fact that the wagons were manufactured and handed over to the Railway Authorities in Rajasthan and West Bengal does not attract taxation in Chhattisgarh. The inter-State delivery of goods and the nature of the arrangement preclude taxability under the State VAT Act. The provisions contained under Section 2(s)(vi) read with Section 22 of the Act will not be attracted and the Assessment Authorities erred in subjecting the lease rent to tax - The lease rent received by the assessee from Railways for wagons provided under the ‘Own Your Wagon Scheme’ is not taxable under Section 2(s)(vi) read with Section 22 of Chhattisgarh VAT Act – The Tax References are disposed of [Read less]

GST - Cancellation of GST registration for non-filing of returns for six consecutive months - Section 29(2)(c) and Section 107 of CGST Act 2017 - Statutory limitation for filing statutory appeal and condonation of delay - Order cancelling registration was passed with retrospective effect from date of default - Statutory appeal was filed beyond prescribed period of limitation and extended condonable period - Appellate Authority dismissed appeal as barred by limitation - Whether High Court can condone delay in filing statutory appeal beyond maximum period of limitation prescribed in statute and remand matter to Appellate Aut... [Read more]

GST - Cancellation of GST registration for non-filing of returns for six consecutive months - Section 29(2)(c) and Section 107 of CGST Act 2017 - Statutory limitation for filing statutory appeal and condonation of delay - Order cancelling registration was passed with retrospective effect from date of default - Statutory appeal was filed beyond prescribed period of limitation and extended condonable period - Appellate Authority dismissed appeal as barred by limitation - Whether High Court can condone delay in filing statutory appeal beyond maximum period of limitation prescribed in statute and remand matter to Appellate Authority for decision on merits when appeal is filed after expiry of prescribed period of limitation - HELD - The statutory period of limitation prescribed for filing appeal under Section 107 of the CGST Act 2017 is binding on the appellate authority. The statute contemplates condonation of delay for a further period of one month beyond the prescribed period. Once appeal is filed beyond the maximum period inclusive of the condonable period the Appellate Authority loses jurisdiction to entertain the appeal - The High Court cannot exercise writ jurisdiction as a matter of course to circumvent the statutory scheme of limitation and entertain a writ petition filed after expiry of the statutory period to condone the delay and remand the matter to the Appellate Authority for consideration on merits. Such exercise of jurisdiction would defeat the legislative intent and render the statutory limitation provisions otiose -. The legislative mandate regarding limitation in special statutes like GST Act is based on fundamental principles of public policy ensuring expeditious adjudication and certainty. Any interference with the statutory scheme of limitation by the High Court except in exceptional and extraordinary circumstances where there is complete disregard of principles of natural justice or manifest lack of jurisdiction would undermine the efficacy of the statutory framework - In the present case the petitioner failed to furnish returns for six consecutive months a clear violation of statutory obligation under Section 39 and failed to file appeal within the prescribed period. No exceptional circumstance warranting interference has been demonstrated. Subsequent compliance with statutory requirements after cancellation of registration does not obliterate the earlier violations. - The writ petition is dismissed - The order cancelling the GST registration and the order of the Appellate Authority dismissing the appeal as barred by limitation cannot be interfered with – The petition is dismissed [Read less]

Central Excise – Classification of N-Hexane, Availability of CENVAT credit, Supplier's classification as against correct tariff classification – Appellant engaged in manufacture of Technical Grade Pesticides availed CENVAT credit on N-Hexane purchased from supplier who classified it under Chapter Heading 2710.12 (Chapter 27). Respondent denied credit on ground that goods falling under Chapter 27 excluded from input definition under Notification No. 5/94 dated 01.03.1994. Appellant challenged denial before Commissioner (Appeals) and CESTAT who confirmed the demand – Whether N-Hexane is classifiable under Chapter 29 an... [Read more]

Central Excise – Classification of N-Hexane, Availability of CENVAT credit, Supplier's classification as against correct tariff classification – Appellant engaged in manufacture of Technical Grade Pesticides availed CENVAT credit on N-Hexane purchased from supplier who classified it under Chapter Heading 2710.12 (Chapter 27). Respondent denied credit on ground that goods falling under Chapter 27 excluded from input definition under Notification No. 5/94 dated 01.03.1994. Appellant challenged denial before Commissioner (Appeals) and CESTAT who confirmed the demand – Whether N-Hexane is classifiable under Chapter 29 and thus eligible for CENVAT credit notwithstanding supplier's classification under Chapter 27 – HELD – On plain reading of relevant chapters, N-Hexane is a separately defined chemical compound with molecular composition C6H14 and definitive structural diagram satisfying conditions to be classified as Acyclic Saturated Hydrocarbon under Chapter 29 and not Motor Spirit under Chapter 27. For a product to qualify as Motor Spirit under Chapter 27, three conditions must be satisfied namely that it is a hydrocarbon oil excluding crude mineral oil, has flash point below 25°C and is suitable for use as fuel in spark ignition engines - Mere assertion that flash point is below 25°C is insufficient without cogent evidence that imported product was used as fuel in spark ignition engines. Respondent failed to discharge burden of proving that N-Hexane was Motor Spirit. N-Hexane is used as solvent for extraction of vegetable oils and manufacture of HDPE. Impurities present in imported product are unconverted starting materials at negligent percentage and do not suppress characteristic of N-Hexane. Percentage of n-Hexane in chemical analysis report is congruent with standard specifications – The Supreme Court in Reliance Industries case held that classification of N-Hexane under Chapter 29 was already clarified by DGFT in Policy Circular dated 14.07.2004 which bound the authorities. Mere fact that supplier mentioned wrong chapter heading in invoice would not determine availability of CENVAT credit when input is required to be classified under Chapter 29 – Appellant is entitled to CENVAT credit on N-Hexane. Supplier's classification is not determinative of correct tariff classification – The appeal is allowed [Read less]

GST - Constitutionality of Section 16(2)(c) of the CGST Act, 2017 – Eligibility to input tax credit to bonafide purchasers - Contingent nature of ITC entitlement – Availment of input tax credit on strength of purchases made from registered suppliers whose registrations were subsequently cancelled – Issue of show cause notice under Section 74 of the CGST Act alleging wrongful availment of input tax credit on purchases from certain suppliers - Petitioner challenged the Constitutional validity or, alternately, reding down of Section 16(2)(c) - Whether Section 16(2)(c) of the CGST Act is ultra vires the Constitution and ... [Read more]

GST - Constitutionality of Section 16(2)(c) of the CGST Act, 2017 – Eligibility to input tax credit to bonafide purchasers - Contingent nature of ITC entitlement – Availment of input tax credit on strength of purchases made from registered suppliers whose registrations were subsequently cancelled – Issue of show cause notice under Section 74 of the CGST Act alleging wrongful availment of input tax credit on purchases from certain suppliers - Petitioner challenged the Constitutional validity or, alternately, reding down of Section 16(2)(c) - Whether Section 16(2)(c) of the CGST Act is ultra vires the Constitution and whether the provision should be read down to protect bona fide purchasers - HELD – The provisions of Section 16(2)(c) indicate a deliberate allocation of risk. Parliament has chosen to place the risk of supplier default on the recipient, while simultaneously providing a mechanism for restoration of the credit once the default is cured. Whether that allocation is wise or harsh is a question of legislative policy and not a question of Constitutional validity. Particularly, in view of the fact that benefit of ITC is a contingent statutory entitlement, rather than a vested right, much less a constitutional right - The Supreme Court in Bhandari Scrap Traders v. Union of India has rejected plea to read down the provision and has expressly negated alternative prayer to declare Section as unconstitutional or read down, distinguishing and rejecting decisions of High Courts of Tripura, Karnataka and Gauhati to extent they read down Section 16(2)(c) - The finding of bonafides in those cases rested on specific factual foundation where Department had invoked only Section 73 and not disputed that purchaser had paid tax to supplier. The present case is converse where Department invoked Section 74 alleging fake invoices and bogus supplies involving chain of multi-layered paper transactions in which no goods moved which is precisely the class of case which the reading down does not protect - Section 16(2)(c) suffers from no constitutional infirmity. Further, the existence of the reversal and re-availment mechanism under Section 41, read with Sections 73 and 74, is a sufficient answer to the charge of arbitrariness - The Constitutional challenge to Section 16(2)(c) fails. The plea for reading down is not available in facts of present case – All contentions on the merits, including the contention that the transactions in question are bona fide, are kept open for consideration by the appellate authority in accordance with law - The writ petition is disposed of - Whether dismissal of Special Leave Petitions in Bhandari Scrap Traders case constitute a binding declaration of law – HELD - The petitioner contends that the Hon’ble Supreme Court order being one dismissing special leave petitions, it does not constitute a binding declaration of law. The petitioners’ contention is untenable. The order is a speaking order. It records reasons, expresses “complete and respectful agreement” with the High Court of Gujarat. In no uncertain terms it affirms and upholds the impugned judgment in Maruti Enterprise v. Union of India case. The constitutional challenge to Section 16(2)(c), is thus water under the bridge and no more an issue which is res integra - Jurisdictional Foundation for Invoking Section 74 – Whether show cause notice contains adequate allegation to invoke Section 74 - HELD - The show cause notice running into thirty three pages sets out in detail how multi-layered transactions were routed between bogus suppliers with whom Petitioner dealt, depicts chain of layering in graphic detail and alleges credit was availed on strength of fake invoices and bogus supplies involving paper transactions unaccompanied by any movement of goods which if established would squarely constitute fraud and suppression to evade tax within meaning of Section 74 - Plea of breach of natural justice - Pre-notice intimation requirement under Rule 142(1A) - Non-issuance of Form GST DRC-01A - Whether non-issuance of pre-notice intimation vitiated proceedings, whether same officer conducting investigation and adjudication constitutes bias, and whether inadequate consideration of reply filed by Petitioner amounts to breach of natural justice – HELD - The Rule 142(1A) was amended by Notification dated 15.10.2020 substituting word shall with may, meaning pre-notice intimation is now enabling facility not condition precedent, and non-issuance does not by itself vitiate notice. Petitioner suffered no prejudice as it had already been summoned under Section 70, Director's statement was recorded, records produced and it knew precisely what was alleged and replied on merits - Parliament has consciously placed investigation and determination within competence of same statutory office under scheme of Act and where statute itself confers both functions on same authority, Rule against bias stands displaced to that extent unless material exists suggesting closed mind, animus or personal interest which is not pleaded here - Alleged inadequacy in appreciation of reply filed by Petitioner stands on entirely different footing being arguendo an error within jurisdiction if at all, with appellate authority under Section 107 having plenary power to examine it including power to make further inquiry. Petitioner has been heard at every stage with all contentions remaining fully available in appeal and no prejudice of kind justifying bypass of statutory remedy is made out. 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GST - Challenge to constitutional validity of Sections 69 and 70 of CGST Act 2017 - Petitioner seeking a declaration that Sections 69 and 70 of the CGST Act are unconstitutional - HELD - The judgment delivered in Radhika Agarwal v. Union of India and Others, this Court has rejected the challenge to the vires of Sections 69 and 70 of the CGST Act - A penalty or prosecution mechanism for the levy and collection of GST and for checking its evasion is a permissible exercise of legislative power - The constitutional challenge to Sections 69 and 70 of CGST Act fails and the petition is dismissed

Andhra Pradesh Value Added Tax Act, 2005 - Tax Deduction at Source on works contract payments when underlying tax liability fully discharged by service provider, Mechanics of TDS versus principal liability – Petitioner-Company constructing a Hotel engaged a VAT-registered works contractor for the construction work - Petitioner failed to deduct TDS as required under Section 22 of the APVAT Act 2005 at the prescribed rate. Upon audit the Department issued Show Cause Notice proposing demand for TDS - Petitioner contended that the contractor had already fully discharged its tax liability for the entire period in question by ... [Read more]

Andhra Pradesh Value Added Tax Act, 2005 - Tax Deduction at Source on works contract payments when underlying tax liability fully discharged by service provider, Mechanics of TDS versus principal liability – Petitioner-Company constructing a Hotel engaged a VAT-registered works contractor for the construction work - Petitioner failed to deduct TDS as required under Section 22 of the APVAT Act 2005 at the prescribed rate. Upon audit the Department issued Show Cause Notice proposing demand for TDS - Petitioner contended that the contractor had already fully discharged its tax liability for the entire period in question by filing returns and paying tax and furnished proof including Assessment Order - Petitioner argued that demanding TDS when the underlying liability stood discharged would result in double taxation requiring subsequent refund - Whether TDS can be collected from the contractee when the contractor the person on whom the principal tax liability rests has already fully discharged the tax liability for the very same transaction and period - HELD - TDS is not a separate or independent tax liability but a mechanism to ensure timely collection in advance of tax that would otherwise be payable by the service provider. The deduction at source is credited against the actual tax liability of the provider and does not create an additional liability distinct from the provider's own liability. When the contractor the person on whom principal tax liability rests has already discharged that entire liability for the relevant period as evidenced by assessment orders showing full payment, the object and purpose of the TDS provision is completely defeated as once the principal liability itself stands discharged, there remains no further tax due against which a TDS deduction could be credited - Unable to accept the submission by the Dept that the petitioner’s statutory obligation under Section 22(3) of the APVAT Act operates independently of whether the contractor has already discharged the underlying tax liability and that the petitioner’s remedy is confined to seeking a refund after first suffering the deduction. Compelling the contractee to deduct and remit the same amount when already paid by the contractor results in the State receiving tax twice over on one transaction once from the contractor directly and again through the contractee indirectly necessitating a subsequent wasteful refund and rendering the entire exercise circular and purposeless - The tax administration cannot be reduced to a mechanical exercise of raising demands without regard to material that squarely negates the very premise of the demand - The impugned demand for TDS is set aside and the writ petition is allowed [Read less]

GST - Issuance of single consolidated show cause notice covering multiple financial years under Section 74 CGST Act, 2017 - The Petitioner was issued a single show cause notice related to multiple financial years under Sections 74 and 122 of CGST Act covering multiple financial years proposing tax demand - The Petitioner challenged the consolidate SCN on the ground that the statutory scheme contemplates separate limitation periods and separate determination for each financial year and therefore a single SCN cannot be issued for multiple financial years - Whether the statutory scheme under CGST Act permits issuance of a sin... [Read more]

GST - Issuance of single consolidated show cause notice covering multiple financial years under Section 74 CGST Act, 2017 - The Petitioner was issued a single show cause notice related to multiple financial years under Sections 74 and 122 of CGST Act covering multiple financial years proposing tax demand - The Petitioner challenged the consolidate SCN on the ground that the statutory scheme contemplates separate limitation periods and separate determination for each financial year and therefore a single SCN cannot be issued for multiple financial years - Whether the statutory scheme under CGST Act permits issuance of a single consolidated show cause notice covering multiple financial years when Section 74(10) prescribes limitation separately for each financial year - HELD - The statutory scheme does not permit issuance of a single consolidated show cause notice covering multiple financial years. Section 74(10) prescribes the limitation for passing the order with reference to the financial year which means each financial year has its own specific period of limitation and such period of limitation shall commence independently and would vary from year to year. By issuing single show cause notice for multiple financial years the revenue authority seeks to invoke its power for not only the relevant financial year but also for previous financial years for which no show cause notice can be issued having been barred by the period of limitation mentioned under Section 74(10) - The golden rule is that if the law states that a particular action has to be taken or step to be done in a particular manner and within a particular period of time fixed under the statute such act has to be carried out in that manner and within the fixed time only or not at all. The limitation period cannot be carried over or continue perpetually by clubbing the previous financial years with the current relevant financial year - The issuance of consolidated notice for multiple financial years is an apparent jurisdictional error on the face of the record and the existence of an alternative remedy of appeal does not bar the writ jurisdiction when there is an obvious jurisdictional defect. The consequences that demands are raised separately for separate financial years cannot cure the invalidity and illegality of the consolidated show cause notice itself - The show cause notice and the consequential adjudication order are quashed and set aside. The respondent revenue authorities shall be at liberty to proceed afresh on the issue strictly in accordance with law – The writ petition is disposed of [Read less]

GST – Rajasthan AAR – Classification and applicable tax rate on Psyllium Seeds (Isabgol) - Whether Psyllium Seeds (Isabgol) supplied in their natural, raw and unprocessed form as procured through Agricultural Produce Market Committee (APMC) auctions directly from farmers, without undergoing any drying, freezing, crushing or other processing qualifies as “fresh” Isabgol seeds and are exempted under Entry 87 (HSN 1211) of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 or alternately, qualifies as “goods of seed quality” and are exempt from GST under Entry 77 (HSN 12) of Notification No. 10/2025-Cent... [Read more]

GST – Rajasthan AAR – Classification and applicable tax rate on Psyllium Seeds (Isabgol) - Whether Psyllium Seeds (Isabgol) supplied in their natural, raw and unprocessed form as procured through Agricultural Produce Market Committee (APMC) auctions directly from farmers, without undergoing any drying, freezing, crushing or other processing qualifies as “fresh” Isabgol seeds and are exempted under Entry 87 (HSN 1211) of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 or alternately, qualifies as “goods of seed quality” and are exempt from GST under Entry 77 (HSN 12) of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 – HELD - the product ‘Psyllium seeds’ is part of plant (seed) and is used in pharmacy for the production of ‘Isabgol’. Moreover, the said seeds cannot be termed as ‘fresh’ at the time of supply by applicant. Entry No. 87 is a specific entry covering products of heading 1211 only and aptly covers ‘Psyllium seeds’ which are “fresh or chilled” only. Hence, the “Psyllium seeds” being dried, are not covered under Entry No.87 of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 as “Plants and parts of plants (including seeds and fruits) of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar purpose, fresh or “chilled” - The Psyllium seeds are parts of plants (seeds) of a kind used in pharmacy i.e. manufacture of isabgol, the same is dried, hence the same is covered under the ambit of Entry No.71 of the Schedule-I of Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025 and liable to tax @ 5% GST – Ordered accordingly [Read less]