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GST – Taxability of supply of solar power generating systems, issue of separate invoices for the supply of goods and services - Petitioner had been paying GST at an effective rate of 8.9% by applying the 70:30 mechanism set out in the relevant GST Rate notifications – Dept issued an assessment order demanding tax at 18% on the entire value, rejecting the petitioner's claim for the 70:30 mechanism - Whether the petitioner is entitled to pay GST on the supply of solar power generating systems and related services by applying the 70:30 mechanism as per the relevant GST notifications, or whether the higher rate of 18% can ... [Read more]

GST – Taxability of supply of solar power generating systems, issue of separate invoices for the supply of goods and services - Petitioner had been paying GST at an effective rate of 8.9% by applying the 70:30 mechanism set out in the relevant GST Rate notifications – Dept issued an assessment order demanding tax at 18% on the entire value, rejecting the petitioner's claim for the 70:30 mechanism - Whether the petitioner is entitled to pay GST on the supply of solar power generating systems and related services by applying the 70:30 mechanism as per the relevant GST notifications, or whether the higher rate of 18% can be levied on the entire value – HELD - A conjoint reading of the Entry 234 of Notification No. 1/2017 C.T (R), dated 28.06.2017 and Entry No.38 in Service rate Notification No.11/2017-C.T (R), dated 28.06.2017 and the explanations thereto clearly indicate that the 70:30 mechanism is applicable even if the petitioner has issued separate invoices for the supply of goods and services, as long as the supplies were made under a single contract - The respondent's contention that the 70:30 mechanism would not apply due to the issuance of separate invoices is rejected, as this does not negate the existence of an overall contract for the supply of solar power generating systems. Any supply of a Solar Power Generating System, or it’s parts as one supply or as separate parts would not make any difference, to the rate of tax. The view of the respondent to the contrary is incorrect – Further, the respondent failed to conduct a proper exercise to ascertain the value of goods and services separately and apply the appropriate rates of tax. The impugned order appears to be an attempt by the third respondent to simply raise revenue for the state without applying his mind to the facts - The impugned assessment order is set aside to the extent of the levy of differential rate of tax on the supply of goods and services of solar power generating systems and solar power-based devices – The writ petition is allowed [Read less]

Central Excise – Excisability of Waste & By-product - Whether spent earth emerging during the process of bleaching of crude palm oil is chargeable to excise duty – HELD - The spent earth (waste mud) emerging during the process of bleaching of crude palm oil is not an excisable good and is not liable to excise duty. The spent earth has not emerged by any conscious effort but has emerged involuntarily during the course of bleaching. The Department had mainly relied on a circular dated 28.10.2009 which was later withdrawn - There is an omnibus Notification No. 89/1995-CE dated 18.05.1995 which exempts all waste, parings a... [Read more]

Central Excise – Excisability of Waste & By-product - Whether spent earth emerging during the process of bleaching of crude palm oil is chargeable to excise duty – HELD - The spent earth (waste mud) emerging during the process of bleaching of crude palm oil is not an excisable good and is not liable to excise duty. The spent earth has not emerged by any conscious effort but has emerged involuntarily during the course of bleaching. The Department had mainly relied on a circular dated 28.10.2009 which was later withdrawn - There is an omnibus Notification No. 89/1995-CE dated 18.05.1995 which exempts all waste, parings and scrap arising in the course of manufacture of exempted goods from the whole of the duty of excise. The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Refund of Education Cess (EC) and Secondary Higher Education Cess (SHEC) - The appellant claimed exemption from payment of EC and SHEC under Notification Nos. 28/2010 and 29/2010 when paying Central Excise duty on coal - Refund sanctioning authority later rejected a part of the refund on the ground that there was no evidence that the customers had not availed Cenvat credit on the said payments - The Commissioner (Appeals) issued a show cause notice proposing to recover the sanctioned refund as "erroneous refund" under Section 35A of the Central Excise Act, 1944 - Jurisdiction of the Commissioner (Appeals) ... [Read more]

Central Excise - Refund of Education Cess (EC) and Secondary Higher Education Cess (SHEC) - The appellant claimed exemption from payment of EC and SHEC under Notification Nos. 28/2010 and 29/2010 when paying Central Excise duty on coal - Refund sanctioning authority later rejected a part of the refund on the ground that there was no evidence that the customers had not availed Cenvat credit on the said payments - The Commissioner (Appeals) issued a show cause notice proposing to recover the sanctioned refund as "erroneous refund" under Section 35A of the Central Excise Act, 1944 - Jurisdiction of the Commissioner (Appeals) to issue the show cause notice and the timeliness of the Departmental appeal against the original order sanctioning the refund – HELD - The findings of the Commissioner (Appeals) that the appellant was not entitled to the exemption from EC and SHEC under Notification Nos. 28/2010 and 29/2010 when paying Central Excise duty on coal are upheld, as the said notifications only exempted EC and SHEC where Clean Energy Cess (CEC) was leviable - On merit, the appellants have no case as the appellants got the refund on the ground that said exemptions were available to them, which was later noted that it was not correct as per legal provisions regarding applicability of EC & SHEC while paying Central Excise duty. EC & SHEC cannot be exempted when they are paying Central Excise duty while clearing the coal - The Commissioner (Appeals) was within his statutory powers under Section 35A to issue the SCN proposing to recover the "erroneous refund", as the relevant time limit under Section 11A(1) read with Explanation (b)(v) to sub-section 14 of Section 11A had not expired - The Departmental appeal against the original refund order is also found to be filed within the prescribed time limit under Section 35E(3). The technical grounds raised by the appellant challenging the timeliness of the departmental appeal and the issuance of the SCN by the Commissioner (Appeals) are rejected. The order of the Commissioner (Appeals) is upheld and the appeal is dismissed [Read less]

Central Sales Tax Act, 1956 - Branch Transfer or Inter-State Sale – Vide the impugned order the Tribunal held that the movement of goods from Maharashtra to Uttarakhand was in pursuance of purchase orders placed by assessee's sole buyer in Uttarakhand, and not a mere branch transfer. The movement of goods was an inter-State sale and branch transfer. A direction was issued to the Assessing Authority to ascertain the amount required to be transferred to the State of Maharashtra in terms of section 22(1B) of the CST Act so that the State of Uttarakhand can refund it to the State of Maharashtra – Instant appeal filed by th... [Read more]

Central Sales Tax Act, 1956 - Branch Transfer or Inter-State Sale – Vide the impugned order the Tribunal held that the movement of goods from Maharashtra to Uttarakhand was in pursuance of purchase orders placed by assessee's sole buyer in Uttarakhand, and not a mere branch transfer. The movement of goods was an inter-State sale and branch transfer. A direction was issued to the Assessing Authority to ascertain the amount required to be transferred to the State of Maharashtra in terms of section 22(1B) of the CST Act so that the State of Uttarakhand can refund it to the State of Maharashtra – Instant appeal filed by the State of Uttarakhand – SC HELD – There is no good ground to interfere with the impugned order/judgment in exercise of our jurisdiction under Article 136 of the Constitution of India. Accordingly, the special leave petition stands dismissed [Read less]

GST - Search and seizure operations – Jurisdiction of DGGI - Tax evasion by availing input tax credit without actual movement of goods - Whether the Additional Director General, Goods and Services Tax Intelligence or Additional Director General, Goods and Services Tax or Additional Director General, Audit and the Deputy/Assistant Director, Goods and Services Tax Intelligence or Deputy/Assistant Director, Goods and Services Tax or Deputy/Assistant Director, Audit has the jurisdiction to issue the show-cause notice – HELD - The High Courts in M/s. Aka Logistics Private Limited and Anr. Vs. Union of India and Yasho Indust... [Read more]

GST - Search and seizure operations – Jurisdiction of DGGI - Tax evasion by availing input tax credit without actual movement of goods - Whether the Additional Director General, Goods and Services Tax Intelligence or Additional Director General, Goods and Services Tax or Additional Director General, Audit and the Deputy/Assistant Director, Goods and Services Tax Intelligence or Deputy/Assistant Director, Goods and Services Tax or Deputy/Assistant Director, Audit has the jurisdiction to issue the show-cause notice – HELD - The High Courts in M/s. Aka Logistics Private Limited and Anr. Vs. Union of India and Yasho Industries Limited vs. Union of India, have held that the officers of the Directorate General of Goods and Services Tax Intelligence have been conferred the powers of the Commissioner and Deputy/Assistant Commissioner under the CGST Act by virtue of the notifications issued by the CBIC. Therefore, the jurisdictional objection of the petitioners is rejected - The petitioners did not raise any substantial arguments on the merits of the case and failed to demonstrate any exceptional circumstances to bypass the statutory remedy of appeal – The petitioners are granted liberty to avail the statutory remedy of appeal under Section 107 of the Act – The petitions are dismissed [Read less]

GST – Rejection of refund application, Violation of principles of natural justice, Functionality of GSTAT – Rejection of refund applications on the grounds of failure to submit certain documents and due to DGARM alerts against some of the petitioner's suppliers - Whether the refund orders are vitiated due to violation of principles of natural justice on account of non-grant of personal hearing to the petitioner - HELD - The petitioner was afforded adequate opportunity to file replies and appear for personal hearings at both the original and appellate stages. The mere non-acceptance of the petitioner's submissions does ... [Read more]

GST – Rejection of refund application, Violation of principles of natural justice, Functionality of GSTAT – Rejection of refund applications on the grounds of failure to submit certain documents and due to DGARM alerts against some of the petitioner's suppliers - Whether the refund orders are vitiated due to violation of principles of natural justice on account of non-grant of personal hearing to the petitioner - HELD - The petitioner was afforded adequate opportunity to file replies and appear for personal hearings at both the original and appellate stages. The mere non-acceptance of the petitioner's submissions does not amount to violation of principles of natural justice – The grievance is not of absence of opportunity, but of non-acceptance of the submissions. A distinction must be maintained between lack of jurisdiction and errors committed in the exercise of jurisdiction, and that the present case involves the latter - The entitlement to refund and the sufficiency of material in support thereof are matters falling within the domain of statutory adjudication. Such contentions, including those relating to equities, are open to be urged before the appellate forum and cannot be a ground to bypass the statutory remedy - The petitioner should avail the statutory remedy of appeal before the GSTAT, which has been found to be functional - The writ petition is disposed of - Lack of Functionality of GSTAT - The petitioner contended that the statutory remedy under Section 112 of the CGST Act is not efficacious as the GSTAT is not fully functional and there is considerable delay in hearing matters - Whether the lack of functionality of GSTAT can be a ground to bypass the statutory remedy - HELD - The High Cour in its earlier order in Rajesh Khanna vs Commissioner of Central Tax Appeals–I, Delhi & Ors., had taken note of the affidavit of the Joint Secretary, Ministry of Finance, recording that the requisite IT infrastructure is in place enabling virtual hearings and that the GSTAT has commenced scrutiny of appeals. Therefore, the GSTAT is functional and constitutes an efficacious statutory remedy, and that the petitioner's contention regarding lack of functionality is without merit. [Read less]

GST – Gujarat AAR - Taxability of academic coaching services - The applicant, an entity providing academic coaching services to students of Standards 5 to 12 of GSEB and CBSE curriculum - Whether such services are exempt under Entry 66 of Notification No. 12/2017-CTR as "education services" or taxable @18% under SAC 999293 as "commercial coaching services" – HELD - The services provided by the applicant are in the nature of supplementary education to help students improve their academic performance, rather than being part of the standard school curriculum - The academic coaching services provided by the applicant are n... [Read more]

GST – Gujarat AAR - Taxability of academic coaching services - The applicant, an entity providing academic coaching services to students of Standards 5 to 12 of GSEB and CBSE curriculum - Whether such services are exempt under Entry 66 of Notification No. 12/2017-CTR as "education services" or taxable @18% under SAC 999293 as "commercial coaching services" – HELD - The services provided by the applicant are in the nature of supplementary education to help students improve their academic performance, rather than being part of the standard school curriculum - The academic coaching services provided by the applicant are not covered under the definition of "Educational Institution" as defined in the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, and hence, the exemption under Entry No.66 of the said Notification is not available to the applicant. The said services provided by the applicant would be covered under "Education Services" at Sr. No. 30 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, and specifically under Entry No.599 (Service Code (Tariff) 999293) of the Annexure to the said Notification as "commercial training and coaching services", and accordingly, the services are liable to GST at the rate of 18% - The academic coaching services provided by the applicant are taxable @18% GST under SAC 999293 as "commercial coaching services" – Ordered accordingly [Read less]

GST – Gujarat AAR - Classification of services and applicable GST rate for rental of electric buses - Applicant provide end-to-end operation and maintenance of electric buses, entered into an agreement with Surat Sitilink Limited (SSL) for supply, operation, and maintenance of electric buses in the city of Surat. The consideration was a fixed amount payable per kilometer of bus operation - Whether the rental services of electric buses provided by the applicant should be classified under entry (i) of Sl. No. 10 of Notification No. 11/2017-CT(R) dated 28.06.2017, which covers rental services of motor vehicles where the cos... [Read more]

GST – Gujarat AAR - Classification of services and applicable GST rate for rental of electric buses - Applicant provide end-to-end operation and maintenance of electric buses, entered into an agreement with Surat Sitilink Limited (SSL) for supply, operation, and maintenance of electric buses in the city of Surat. The consideration was a fixed amount payable per kilometer of bus operation - Whether the rental services of electric buses provided by the applicant should be classified under entry (i) of Sl. No. 10 of Notification No. 11/2017-CT(R) dated 28.06.2017, which covers rental services of motor vehicles where the cost of fuel is included in the consideration charged – HELD - The rental services of electric buses provided by the applicant would not be covered under entry (i) of Sl. No. 10 of the notification, as electricity cannot be considered as "fuel" within the meaning of the term. The dictionary meanings of terms "fuel" and "electricity" are distinct, while electricity is a secondary energy carrier, fuel is a primary energy source containing chemical potential energy released through combustion. The legislature has distinguished between "motor vehicles" and "electrically operated vehicles" in other notifications, indicating the legislative intent to treat them as separate categories. Accordingly, the rental services of electric buses provided by the applicant would not be covered under entry (i) of Sl. No. 10 of Notification No. 11/2017-CT(R) - The rental services of electric buses provided by the applicant would be classified under entry (iii) of Sl. No. 10 of Notification No. 11/2017-CT(R) dated 28.06.2017 and would be taxable at the rate of 18% - Ordered accordingly - Whether the rental services of electric buses provided by the applicant should be classified under entry (iii) of Sl. No. 10 of Notification No. 11/2017-CT(R) dated 28.06.2017, which covers rental services of transport vehicles with operators, other than those covered under entries (i) and (ia) – HELD - The rental services of electric buses provided by the applicant would be covered under entry (iii) of Sl. No. 10 of the notification, as the services involve the rental of transport vehicles (electric buses) with operators, and the cost of "fuel" (i.e., electricity) is not included in the consideration charged. The legislature has used the specific term "electrically operated vehicle" in other notifications, indicating the legislative intent to treat them as a separate category from "motor vehicles" under the GST law. Accordingly, the rental services of electric buses provided by the applicant would be taxable at the rate of 18% under entry (iii) of Sl. No. 10 of the notification. [Read less]

Service Tax – Discharge of Statutory functions - Appellant was formed to perform statutory functions on behalf of the Government of Haryana, such as issuance of driving licenses, vehicle registration certificates, arms & ammunition licenses, income, caste, and domicile certificates, etc. through e-Disha/Common Services Centers where the services are provided at government-prescribed statutory charges - Whether the appellant can be considered as a 'Governmental authority' or 'local authority' under the Finance Act, 1994 and its services are exempt from service tax under Notification No. 25/2012-ST dated 20.06.2012 - HELD ... [Read more]

Service Tax – Discharge of Statutory functions - Appellant was formed to perform statutory functions on behalf of the Government of Haryana, such as issuance of driving licenses, vehicle registration certificates, arms & ammunition licenses, income, caste, and domicile certificates, etc. through e-Disha/Common Services Centers where the services are provided at government-prescribed statutory charges - Whether the appellant can be considered as a 'Governmental authority' or 'local authority' under the Finance Act, 1994 and its services are exempt from service tax under Notification No. 25/2012-ST dated 20.06.2012 - HELD - The appellant falls within the definition of 'Governmental authority' as defined under clause 2(s) of Notification No. 25/2012-ST dated 20.06.2012 – Appellant being an instrumentality of the State created to perform local functions electronically, is the implementing agency of the Government and not a commercial service provider. The functions performed by the appellant are Governmental and civic in nature, carried out not for commercial gain but as a part of the State's obligation to provide public services efficiently through e-governance platform. The statutory fee charged for issuing various licenses/certificates cannot be said to be commercial consideration decided between the parties - The exemption under Notification No. 25/2012-ST was consciously drafted to include Governmental authorities that may not be functioning directly as municipalities or panchayats but are executing or assisting in carrying out those functions on behalf of such constitutional bodies – The appellants, being an instrumentality of the State created to perform local functions electronically, are the implementing agency of the government, and are not a commercial service provider. Consequently, denial of exemption under Notification No. 25/2012-ST to the appellants, is not legally sustainable – The impugned order is set aside and the appeal is allowed - Invocation of extended period and imposition of penalties – HELD - The extended period cannot be invoked because the department has failed to prove any of the elements which are required for invoking the extended period provided under proviso to Section 73(1) of the Finance Act, 1994. Moreover, since the appellants are a ‘governmental authority’ fully controlled and funded by the Government of Haryana and its accounts/receipts are also subjected to audit by the Accountant General Haryana and there is no concealment or suppression of facts and every activity is already within the public domain and its operations are under the overall supervision of the Government of Haryana itself, therefore, the element “intent to evade the tax” is wholly absent. Moreover, the issue of taxability and availability of exemption under notification is purely an interpretational issue. Further, the appellants were under a bona fide belief that being a governmental authority performing municipal functions, their services were exempt and hence, no Service Tax registration was necessary - the appellants, being a non-profit government-controlled entity engaged in providing statutory citizen-centric services, leaves no room to infer any intent to evade the tax. Therefore, invocation of extended period and imposition of penalties under Sections 77 & 78 of the Finance Act, are not sustainable in law. [Read less]

Central Excise - Eligibility of Cenvat Credit on various input services - The appellant availed Cenvat Credit on various input services like house-keeping/gardening, vehicle repair, transportation/tour & travel, outward courier, interior decoration, construction, surface colouring/coating, fabrication and insurance services. The department denied the Cenvat Credit on these services on the ground that they do not have any nexus with the manufacturing process - HELD - All the input services availed by the appellant during the relevant period are eligible for Cenvat Credit. The definition of 'input service' under the Cenvat C... [Read more]

Central Excise - Eligibility of Cenvat Credit on various input services - The appellant availed Cenvat Credit on various input services like house-keeping/gardening, vehicle repair, transportation/tour & travel, outward courier, interior decoration, construction, surface colouring/coating, fabrication and insurance services. The department denied the Cenvat Credit on these services on the ground that they do not have any nexus with the manufacturing process - HELD - All the input services availed by the appellant during the relevant period are eligible for Cenvat Credit. The definition of 'input service' under the Cenvat Credit Rules has 'means clause' covering services used directly or indirectly in relation to the manufacture of final products, and an 'inclusion clause' specifically covering certain services. The impugned services fall within the ambit of 'input service' as they have a direct nexus with the manufacturing activity. The services like house-keeping/gardening, vehicle repair, transportation, outward courier, interior decoration, construction, surface colouring/coating, fabrication and insurance services are eligible for Cenvat Credit. Further, the extended period of limitation cannot be invoked in the present case as the department was already aware of the availment of credit by the appellant. Accordingly, the impugned order is set aside and the appeal is allowed [Read less]

Customs - Transaction value of goods imported from parent company, Mutuality of interest between the importer and exporter – Import of computer equipment and accessories from parent company. Department rejected the transaction value and sought to load a notional profit margin - Whether the transaction value can be rejected and the value enhanced by adding a notional profit margin on the ground that the appellant and its parent company were 'related persons' under the Customs Valuation Rules – HELD - The contention of the appellant that the parent company and the appellant have no interest in the business of each other ... [Read more]

Customs - Transaction value of goods imported from parent company, Mutuality of interest between the importer and exporter – Import of computer equipment and accessories from parent company. Department rejected the transaction value and sought to load a notional profit margin - Whether the transaction value can be rejected and the value enhanced by adding a notional profit margin on the ground that the appellant and its parent company were 'related persons' under the Customs Valuation Rules – HELD - The contention of the appellant that the parent company and the appellant have no interest in the business of each other is rejected. It is undisputed that the appellant is a fully owned subsidiary of its parent company. Therefore, it is difficult to say that the parent company had no interest on the appellant business. It is also difficult to say that the appellant had no interest in the business of its parent company because it as to show profits to its parent company – If one company directly or indirectly controls the other the two should be treated as related persons. It is undisputed that the parent company controls the appellant. Therefore, they two are related persons - There are, in all two types of goods viz. Palladium system imported in 2006 and ‘Other goods’ imported after 2007 - For the Palladium system imported in 2006, the relationship did not influence the price as the cost certificates submitted by parent company showed that the price included the costs plus a reasonable profit margin. Therefore, the addition of a notional profit margin to the transaction value of this item was not justified - For the other goods imported after 2007, the commercial invoices were issued only for Customs purposes without including any profit margin. In such a case, where the related party transaction did not reflect the true arm's length price, it reasonable for the Customs authorities to add a profit margin based on the profitability information provided by the parent company - The addition of profit margin for the Palladium system is set aside, while upholding the addition of profit margin for the other goods - The appeal is partly allowed [Read less]

The Uttarakhand Water Tax on Electricity Generation Act, 2012 - Competence of State Legislature to impose Tax on Electricity Generation – Challenge to the Constitutional validity and vires of "The Uttarakhand Water Tax on Electricity Generation Act, 2012" imposing a tax on the drawal of water for generation of electricity - Whether the State Legislature has the legislative competence to enact the Act which, in pith and substance, imposes a tax on the generation of electricity – HELD - The nature of the tax imposed by the Act is a tax on the generation of electricity, and not a tax on the drawal or use of water for elec... [Read more]

The Uttarakhand Water Tax on Electricity Generation Act, 2012 - Competence of State Legislature to impose Tax on Electricity Generation – Challenge to the Constitutional validity and vires of "The Uttarakhand Water Tax on Electricity Generation Act, 2012" imposing a tax on the drawal of water for generation of electricity - Whether the State Legislature has the legislative competence to enact the Act which, in pith and substance, imposes a tax on the generation of electricity – HELD - The nature of the tax imposed by the Act is a tax on the generation of electricity, and not a tax on the drawal or use of water for electricity generation. Taxation is a distinct matter and there is a clear distinction between general subjects of legislation and taxation. The power to tax cannot be deduced from a general legislative entry as an ancillary power. The State Legislature does not have the power to levy a tax on the generation of electricity as there is no entry in List II of the Seventh Schedule which empowers the State Legislature to do so. The delegation of power to the State Government to fix the rates of tax under the Act without any guidelines is excessive delegation and, therefore, the Act is ultra vires the Constitution – The Uttarakhand Water Tax on Electricity Generation Act, 2012 is ultra vires the Constitution and struck down - The reference is answered accordingly - Excessive Delegation - The appellants also challenged the Act on the ground that it involves excessive delegation of power to the State Government to fix the rates of the water tax. The Court agreed with the conclusion of brother Ravindra Maithani, J. that Section 17 of the Act, which empowers the State Government to fix the rates of the water tax, makes excessive delegation of power without any policy guidelines, and is therefore, bad in law - Doctrine of Promissory Estoppel - The appellants contended that the State is promissorily estopped from levying the water tax in the light of the respective agreements entered into with the State. The Court held that there can be no promissory estoppel against the legislature in the exercise of its legislative functions, and the competence and power of the State Legislature to enact legislation, including for the purpose of taxation, cannot be interdicted on the plea of promissory estoppel. [Read less]

Central Excise - Admissibility of CENVAT credit of Additional Duty of Customs (CVD) paid at concessional rate - The appellant, engaged in manufacture of iron and steel products, imported steam coal and paid Additional Duty of Customs (CVD) at the concessional rate of 2% under Notification No. 12/2012-Cus and availed CENVAT credit of the same under Rule 3 of the CENVAT Credit Rules, 2004 – Denial of CENVAT credit on the ground that the concessional excise duty applicable to indigenous coal under Notification No. 1/2011-CE and Notification No. 12/2012-CE, being subject to the condition of non-availment of credit, would equ... [Read more]

Central Excise - Admissibility of CENVAT credit of Additional Duty of Customs (CVD) paid at concessional rate - The appellant, engaged in manufacture of iron and steel products, imported steam coal and paid Additional Duty of Customs (CVD) at the concessional rate of 2% under Notification No. 12/2012-Cus and availed CENVAT credit of the same under Rule 3 of the CENVAT Credit Rules, 2004 – Denial of CENVAT credit on the ground that the concessional excise duty applicable to indigenous coal under Notification No. 1/2011-CE and Notification No. 12/2012-CE, being subject to the condition of non-availment of credit, would equally apply to imported goods – HELD - The Rule 3(1)(vii) of the CCR, 2004 specifically permits availment of credit of additional duty of customs and that there is no statutory restriction denying such credit when the duty is paid at concessional rate under a customs notification. The Department's attempt to import conditions from Central Excise notifications into the scheme governing CVD is contrary to settled principles of strict interpretation of taxing statutes. CENVAT credit of Additional Duty of Customs paid at concessional rates under Notification No. 12/2012-Cus is admissible and that conditions prescribed under Central Excise exemption notifications cannot be imported into Customs notifications - The appellant is entitled to avail CENVAT credit of the additional duty of customs paid at concessional rate under Notification No. 12/2012-Cus and that the denial of such credit is not sustainable in law - The impugned order is set aside and the appeal is allowed [Read less]

Central Excise – Refund of Differential Duty paid on notional and unrealised value basis supplementary invoices - Appellant sought to revise the price and issued supplementary invoice, discharging differential duty but the buyer refused to accept the revised price and declined payment of the differential amount - The appellant filed a refund claim on the ground that the enhanced price was never realized and therefore duty paid on such differential value is not legally payable – Whether the differential duty paid on supplementary invoices, arising from unilateral price revision, forms part of the assessable value under ... [Read more]

Central Excise – Refund of Differential Duty paid on notional and unrealised value basis supplementary invoices - Appellant sought to revise the price and issued supplementary invoice, discharging differential duty but the buyer refused to accept the revised price and declined payment of the differential amount - The appellant filed a refund claim on the ground that the enhanced price was never realized and therefore duty paid on such differential value is not legally payable – Whether the differential duty paid on supplementary invoices, arising from unilateral price revision, forms part of the assessable value under Section 4 of the CEA, 1944 when such price revision was not accepted and paid by the buyer - HELD - The differential duty paid by the appellant on the basis of supplementary invoices, arising out of unilateral price revision not accepted by the buyer, is not in accordance with the law and is refundable. The expression "price actually paid or payable" under Section 4 assumes significance and it must denote a legally enforceable obligation. In the absence of any contractual provision enabling upward price revision, the subsequent issuance of supplementary invoices remains a unilateral act on the part of the appellant without binding effect on the buyer. This reinforces the position that the revised price never attained the character of “price payable” under Section 4 - The supplementary invoice does not represent a valid transaction value. The duty paid on such notional and unrealized value cannot be sustained - The principle laid down in Commissioner of Central Excise v. Amul Industries Pvt. Ltd. is applicable that where efforts to realize enhanced consideration fail, the same cannot form part of assessable value. The retention of such duty by the Revenue would amount to collection of tax without authority of law - The differential duty paid by the appellant on the basis of supplementary invoices, arising out of unilateral price revision not accepted by the buyer, does not form part of the assessable value under Section 4 of the Central Excise Act, 1944 and is therefore it is refundable – The impugned order is set aside and the appeal is allowed - Unjust Enrichment - The contemporaneous evidence clearly establishes that the differential amount has not been realized by the appellant and that the incidence of duty has not been passed on to the buyer in any manner whatsoever. In the absence of any contrary material, it is held that the incidence of duty has not been passed on and the bar of unjust enrichment under Section 11B is not attracted. The doctrine of unjust enrichment as elaborately considered by the Hon'ble Supreme Court in CCE v. Allied Photographics India Ltd. requires the Department to establish based on evidence that the incidence of duty has been passed on, which is absent in the present case - The bar of unjust enrichment under Section 11B is not attracted. [Read less]

GST - Anti-profiteering – Non-passing on of benefit of additional Input Tax Credit to the homebuyers by way of commensurate reduction in prices in terms of Section 171 of the CGST Act, 2017 - HELD - The respondent had derived the benefit of additional Input Tax Credit, as determined in the DGAP Report, after the introduction of GST, and such benefit was required to be passed on to the homebuyers in terms of Section 171 of the CGST Act, 2017. The respondent's contention regarding the existence of an inverted duty structure and accumulation of unutilized ITC is rejected, as the benefit under Section 171 is to be computed o... [Read more]

GST - Anti-profiteering – Non-passing on of benefit of additional Input Tax Credit to the homebuyers by way of commensurate reduction in prices in terms of Section 171 of the CGST Act, 2017 - HELD - The respondent had derived the benefit of additional Input Tax Credit, as determined in the DGAP Report, after the introduction of GST, and such benefit was required to be passed on to the homebuyers in terms of Section 171 of the CGST Act, 2017. The respondent's contention regarding the existence of an inverted duty structure and accumulation of unutilized ITC is rejected, as the benefit under Section 171 is to be computed on the basis of availability of ITC and not its actual utilization. The argument that prices were fixed under a development agreement does not override the mandate of Section 171 - The profiteered amount, being part of the consideration collected from the homebuyers inclusive of GST, is required to be returned along with the corresponding GST component. Additionally, the respondent is liable to pay interest at the rate of 18% per annum on the profiteered amount from the date of collection till the date of actual refund, as per the provisions of Rule 133(3)(b) of the CGST Rules, 2017. Penalty under Section 171(3A) of the CGST Act, 2017 is also attracted, as the period of contravention extends beyond the date of its coming into force – Ordered accordingly [Read less]

The mere deposit of cash into the Electronic Credit Ledger would not amount to payment of tax under the provisions of GST Act. The payment of tax would occur only when the necessary amount is appropriated to the Govt exchequer through debit entries.

GST - Levy of GST on Affiliation Fees collected by University – Petitioner argued that the collection of affiliation fees was a statutory function and not a commercial activity, and hence, not amenable to GST - Whether the collection of affiliation fees by the statutory University would attract the levy of GST – HELD – Considering the nature of the statutory activities being undertaken by the University and in relation thereto, collecting of the affiliation fees cannot be held to be a form of supply of any service of the nature as contemplated in clause (a) of Section 7(1) of the CGST Act, 2017 - The collection of af... [Read more]

GST - Levy of GST on Affiliation Fees collected by University – Petitioner argued that the collection of affiliation fees was a statutory function and not a commercial activity, and hence, not amenable to GST - Whether the collection of affiliation fees by the statutory University would attract the levy of GST – HELD – Considering the nature of the statutory activities being undertaken by the University and in relation thereto, collecting of the affiliation fees cannot be held to be a form of supply of any service of the nature as contemplated in clause (a) of Section 7(1) of the CGST Act, 2017 - The collection of affiliation fees by the University is a statutory and regulatory function, and not a commercial activity falling within the purview of the term "supply" under Section 7 of the CGST Act, 2017. The University is established under a State legislation with the primary objective of disseminating education and not engaging in any business activities. The settled principles of law is, wide meaning needs to be attributed to the term "education" and that the activities of a Statutory University cannot be categorized as "business activities" for the purpose of GST. Once such activity itself is not ‘supply’ and/or it is not business within the meaning and purview of sub-section 1(a) of Section 7, there is no question of the charging provision being applicable. As a sequel thereto, once Sections 7 and 9 itself are not applicable, the proper officer would not have jurisdiction to issue show cause notice under section 74 of CGST Act – Further, the fees collected by the University, such as affiliation fees, are not in the nature of "consideration" as envisaged under the CGST Act, as there is no element of contractual relationship or quid pro quo involved - The Court relied on the decisions of the High Courts of Karnataka, Goa and Rajasthan, which have held that the collection of affiliation fees by universities is a statutory and regulatory function, and not a taxable activity under the GST laws. The proper officer acted without jurisdiction in issuing the show cause notice and passing the order-in-original demanding GST on the affiliation fees collected by the University - The impugned order-in-original and the rectification order are set aside and the writ petition is allowed [Read less]

GST – Taxability of Affiliation fees and NOC fees collected by public Universities – Petitioners-universities established under various State Acts challenge the assessment orders demanding GST on the Affiliation fees and No objection certificate (NOC) fees collected by the universities from affiliated colleges - Whether the activities of the public universities in granting affiliation and issuing NOC certificates can be considered as "supply of service" in the course or furtherance of "business" under the GST Act, thereby making them liable to GST - HELD - The Central, State and Local Governments have been put under a ... [Read more]

GST – Taxability of Affiliation fees and NOC fees collected by public Universities – Petitioners-universities established under various State Acts challenge the assessment orders demanding GST on the Affiliation fees and No objection certificate (NOC) fees collected by the universities from affiliated colleges - Whether the activities of the public universities in granting affiliation and issuing NOC certificates can be considered as "supply of service" in the course or furtherance of "business" under the GST Act, thereby making them liable to GST - HELD - The Central, State and Local Governments have been put under a separate category where questions of whether supply of services is in pursuance of business or not, is irrelevant and all supplies of services, irrespective of whether it is in the course of business or not, are taxable, unless they are included in Schedule-III or by way of a specific notification - The petitioners-Universities are all universities which are separate entities, created and established under the Acts of the State Legislature and they are not part of the State Government or Local Authority, neither they are part of the Central Government. In such circumstances, the provisions of Section 7(2) or Section 2(17)(i) of the CGST Act would not be applicable to the petitioners - The activities of the public universities in granting affiliation and issuing NOC certificates are not in the course or furtherance of "business" as defined under Section 2(17) of the CGST Act, 2017. Consequently, the activities of the petitioner universities do not constitute supply of service as provided in Section 7 of the GST Act. Consequently, these services would not be exigible to tax - The question of the universities being eligible for exemption under the relevant notifications does not arise since the activities themselves are not taxable in the first place. Accordingly, the assessment orders demanding GST on the affiliation fees and NOC fees collected by the public universities are set aside – The writ petitions are allowed [Read less]

Service Tax – Agreement for work contract/job contract or Supply of Manpower - Classification of the activities under "Manpower Recruitment or Supply Agency Services" - The appellant is engaged in execution of various work contracts for entities under different agreements. The Department classified the activities undertaken by the appellant under "Manpower Recruitment or Supply Agency Services" - Whether the activities undertaken by the appellant fall under Manpower Recruitment or Supply Agency Services or not - HELD – The agreements clearly demonstrate execution of work and not supply of manpower. The lump sum work co... [Read more]

Service Tax – Agreement for work contract/job contract or Supply of Manpower - Classification of the activities under "Manpower Recruitment or Supply Agency Services" - The appellant is engaged in execution of various work contracts for entities under different agreements. The Department classified the activities undertaken by the appellant under "Manpower Recruitment or Supply Agency Services" - Whether the activities undertaken by the appellant fall under Manpower Recruitment or Supply Agency Services or not - HELD – The agreements clearly demonstrate execution of work and not supply of manpower. The lump sum work contracts not specifying manpower cannot be classified as manpower service. The agreements are for undertaking work and the payment is based on the quantum of work done and not based on quantum of manpower or number of labourers or manpower supplied. In the absence of specific number of men supplied and in the absence of evidence to show that both the parties understood the services to be of a manpower supply, the activities of the appellant do not fall under "Manpower Recruitment or Supply Agency Services" – Further, the extended period has been invoked on the ground of non-registration and non-filing of returns, however, it is well settled that mere non-registration or non-filing of returns does not amount suppression of facts unless intent to evade tax is established, which is not the case here - The demand is not sustainable on merits and the extended period - The appeal is allowed [Read less]

Service Tax - Taxability of participation fee and recruitment fee collected by an educational institute from companies visiting the campus for recruitment - Whether the participation fees and recruitment fees collected by the appellant are liable to service tax under the category of 'Manpower Recruitment or Supply Agency' service - HELD - The amount collected as recruitment fees from the companies visiting the campus for recruitment of the management graduates is leviable to service tax under the category of 'Manpower Recruitment or Supply Agency' service as per the clarification provided in the CBEC Circular. However, the... [Read more]

Service Tax - Taxability of participation fee and recruitment fee collected by an educational institute from companies visiting the campus for recruitment - Whether the participation fees and recruitment fees collected by the appellant are liable to service tax under the category of 'Manpower Recruitment or Supply Agency' service - HELD - The amount collected as recruitment fees from the companies visiting the campus for recruitment of the management graduates is leviable to service tax under the category of 'Manpower Recruitment or Supply Agency' service as per the clarification provided in the CBEC Circular. However, the participation fees charged by the appellant from all the corporate houses for using the institute's infrastructure facilities and for the selection process cannot be subjected to service tax under this category, as the participation fees has no direct nexus with the actual recruitment - The demand for the earlier period cannot be sustained by invoking the extended period of limitation, as the Department was aware of the collection of such fees based on the previous show-cause notices issued, and the appellant's records were periodically audited. Therefore, the allegation of suppression of facts is unsustainable - The impugned order is modified to confirm the demand only to the extent of recruitment fees collected with interest for the normal period of limitation. The demand on participation fees is set aside. The appellant was also allowed the benefit of cum-tax value in computing the demand - The appeals are partly allowed [Read less]

Customs – Imposition of Anti-dumping duty on “semi-finished ophthalmic lenses” originating in or exported from China PR by treating the appellant to be non-cooperative - The designated authority treated Essilor Group as non-cooperative based on the finding that the related party to the appellant did not participate in the subject investigation - The designated authority relied on an Equity Pledge Agreement between Shanghai Essilor Optical Co. Ltd. (a group company) and Danyang Shoushi Glasses Co. Ltd. (the purchaser of Danyang ILT shares) to conclude that Essilor Group continued to control Danyang ILT indirectly - Wh... [Read more]

Customs – Imposition of Anti-dumping duty on “semi-finished ophthalmic lenses” originating in or exported from China PR by treating the appellant to be non-cooperative - The designated authority treated Essilor Group as non-cooperative based on the finding that the related party to the appellant did not participate in the subject investigation - The designated authority relied on an Equity Pledge Agreement between Shanghai Essilor Optical Co. Ltd. (a group company) and Danyang Shoushi Glasses Co. Ltd. (the purchaser of Danyang ILT shares) to conclude that Essilor Group continued to control Danyang ILT indirectly - Whether the existence of the Equity Pledge Agreement resulted in Essilor Group maintaining control over Danyang ILT, and whether Danyang ILT should be considered a related party to Essilor Group - HELD - The existence of the Pledge Agreement is not a relevant factor for determining the relationship between Essilor Group and Danyang ILT, as a pledge does not create any ownership or control rights by virtue of the pledged shares or equity. A pledge is a bailment of property as security for a debt, and the pledgee (Essilor Group) does not acquire ownership rights over the property which is pledged - The sale of shares by Essilor Group to Danyang Shoushi Glasses Co. Ltd. in November 2018 resulted in cessation of control by Essilor Group over Danyang ILT. Accordingly, Danyang ILT cannot be considered a related party to Essilor Group under the relevant rules - The designated authority could not have drawn an adverse inference against Essilor Group for not providing the Annual Reports of Danyang ILT, as these documents were not within the possession and control of Essilor Group - The recommendation of the Designated Authority for imposing anti-dumping duty on the appellant by treating it as non-cooperative is set aside and the DA is directed to consider the case of appellant afresh without treating it as non-cooperative – The appeals are allowed - Information regarding non-exporting related entities - Whether information regarding non-exporting related entities was relevant for the purpose of determining the dumping margin for Essilor Group - HELD - The filing of information by non-exporting producers is not necessary for determination of normal value, as it does not affect the normal value calculation. According to the relevant rules and trade notices, only those related producers whose product was exported to India were required to participate and file the questionnaire response. Since Essilor Group had disclosed that these three entities did not export the subject goods to India during the period of investigation, information relating to these non-exporting entities was irrelevant for the purpose of determining the dumping margin for Essilor Group. The DA was not justified in holding Essilor Group as non-cooperative on this ground. [Read less]

Customs – Validity of Certificate of Origin, sample testing – Revenue of the view that the SAFTA Certificates of Origin provided by the Bangladesh exporters, and the Bangladesh Authorities certifying in the Certificate of Origin that the Rapeseed oil is wholly manufactured in Bangladesh cannot be taken as correct - Whether the Revenue can question the veracity of the COO issued by the Bangladesh authorities and use limited sample testing results to determine duty liability across all consignments – HELD - The Certificate of Origin, sent by Indian officials for verification to the Bangladesh Officials, have been certi... [Read more]

Customs – Validity of Certificate of Origin, sample testing – Revenue of the view that the SAFTA Certificates of Origin provided by the Bangladesh exporters, and the Bangladesh Authorities certifying in the Certificate of Origin that the Rapeseed oil is wholly manufactured in Bangladesh cannot be taken as correct - Whether the Revenue can question the veracity of the COO issued by the Bangladesh authorities and use limited sample testing results to determine duty liability across all consignments – HELD - The Certificate of Origin, sent by Indian officials for verification to the Bangladesh Officials, have been certified by Bangladesh officials to be correct towards the contents therein. The DRI has no authority to question the COOs issued and duly affirmed by Bangladesh - Revenue cannot take the stand that since Erucic Acid content was not tested/verified, that by itself would prove their origin to be other than from Bangladesh, negating the assertion of the Bangladesh authorities – Further, in the present case all the imports were prior to the Section 28DA coming into force. Therefore, the appellants herein are not burdened with the additional requirement given so as to know the veracity of the overseas exporter as given in the Certificate of Origin - Revenue’s case doubting the veracity of the Certificate of Origin has no legs to stand on. Therefore, the impugned orders are set aside on this ground itself – The demand of duty, interest and penalties imposed are set aside and the appeals are allowed - Limited Sample testing, Extended period - The act of a few samples being tested for the second time, without giving any further opportunity to the appellants to get them re-tested is a case of gross error on the part of the Revenue. In many cases CRCL found the Erucic Acid value to be more than 2%. Therefore, the Revenue’s attempt to apply the lab result of the second sample taken for a few consignments to all the consignments, cannot be legally sustained - All documents for claiming the Duty exemption have been provided by the appellants at the time of imports. The goods were lab tested by CRCCL and the results were reflected in the website even before the Out of Charge was issued. No link of the appellants has been established by the Revenue with the purported non-fulfilment of SAFTA conditions in the COOs issued. Hence, the confirmed demand for the extended period stand set aside - In the absence of any evidence of collusion or fraud by the appellants, the demands confirmed for the extended period are set aside on grounds of time-bar as well - Duty re-assessment under Section 17(5) and appeal against self-assessment - Whether the Revenue was required to file an appeal against the self-assessed Bills of Entry before proceeding under Section 28 – HELD - The re-assessment under Section 17(5) and demand under Section 28 are distinct actions available to the Revenue. While the Supreme Court ruling in ITC Ltd. case requires the Revenue to file an appeal against self-assessment, in the present case, the Revenue's resort to Section 28 proceedings would not be vitiated since no case of suppression has been made out against the appellants. The Tribunal has not found any error in the Revenue's approach of proceeding under Section 28 in the present case. [Read less]

Customs – Levy of interest under Section 28AA of the Customs Act, 1962 on demand of IGST – Imposition of redemption fine under Section 125 of the Customs Act and penalty under Section 112(a) of the Customs Act, in lieu of confiscation of goods – HELD - In view of the judgments of the Bombay High Court in A.R. Sulphonates Private Limited vs. Union of India, the levy of interest, redemption fine, and penalty on the demand of IGST is not legally sustainable - The Section 3(12) of the Customs Tariff Act, 1975, prior to its amendment on 16.08.2024, did not apply the provisions of the Customs Act relating to interest, offe... [Read more]

Customs – Levy of interest under Section 28AA of the Customs Act, 1962 on demand of IGST – Imposition of redemption fine under Section 125 of the Customs Act and penalty under Section 112(a) of the Customs Act, in lieu of confiscation of goods – HELD - In view of the judgments of the Bombay High Court in A.R. Sulphonates Private Limited vs. Union of India, the levy of interest, redemption fine, and penalty on the demand of IGST is not legally sustainable - The Section 3(12) of the Customs Tariff Act, 1975, prior to its amendment on 16.08.2024, did not apply the provisions of the Customs Act relating to interest, offences, and penalties to the integrated tax chargeable under section 3(7) of the Tariff Act - The amendment to section 3(12) of the Tariff Act from 16.08.2024 is prospective in nature. The impugned order is set aside to the extent it demanded interest, imposed penalty, and gave an option to redeem the goods on payment of redemption fine. The confirmation of the demand and recovery of IGST is upheld - The appeal is partly allowed [Read less]

Customs - Fulfilment of export obligation through third party exports under EPCG Scheme, demand of differential duty - The appellant importer had obtained EPCG licenses and discharged the export obligation through third party exports. The Department alleged that the exports were not genuinely made by the appellant using the imported capital goods and the EODC obtained by the appellant was fraudulent - Whether the demand of differential duty can be confirmed on the ground that appellant has violated conditions No. 2 & 4 of the notification No. 97/2004-Cus. dated 17.09.2004 when EODC was already issued by DGFT – HELD - The... [Read more]

Customs - Fulfilment of export obligation through third party exports under EPCG Scheme, demand of differential duty - The appellant importer had obtained EPCG licenses and discharged the export obligation through third party exports. The Department alleged that the exports were not genuinely made by the appellant using the imported capital goods and the EODC obtained by the appellant was fraudulent - Whether the demand of differential duty can be confirmed on the ground that appellant has violated conditions No. 2 & 4 of the notification No. 97/2004-Cus. dated 17.09.2004 when EODC was already issued by DGFT – HELD - The provisions relating to third party exports under the EPCG Scheme were ambiguous at the relevant time. The DGFT had clarified the issue of third party exports and restored the EODC obtained by the appellant. The subsequent policy changes regarding third party exports cannot be made applicable retrospectively – Further, once the DGFT authorities exercised their jurisdiction and satisfied themselves that the export obligation was fulfilled by the appellant within the stipulated time and redeemed the bank guarantee, the customs department does not have any jurisdiction to sit in judgment over the EODC issued by the DGFT. If there was any misrepresentation, it was for the licensing authority (DGFT) to take steps in that behalf – The appellant cannot be penalized for the alleged procedural violations due to the lacuna in the Foreign Trade Policy and the Customs Notification - The demand and penalties in respect of the imports made under the two EPCG licenses are set aside, while upholding the findings in relation to the other two licenses which were not challenged by the appellant – The appeal is allowed [Read less]

Customs - Determination of Fe content for customs duty assessment of exported iron ore fines - Demand-cum-show-cause notice alleging misdeclaration of iron ore fines (Fe content) and consequent evasion of Customs duty - Order-in-original assessing the Fe content of the exported iron ore fines on dry metric tonne (DMT) basis, instead of the wet metric tonne (WMT) basis - Whether the Commissioner of Customs (Preventive) was justified in assessing the Fe content of the exported iron ore fines on DMT basis, instead of the WMT basis as per the CBIC circular, for the transactions that occurred prior to the amendment of the Custo... [Read more]

Customs - Determination of Fe content for customs duty assessment of exported iron ore fines - Demand-cum-show-cause notice alleging misdeclaration of iron ore fines (Fe content) and consequent evasion of Customs duty - Order-in-original assessing the Fe content of the exported iron ore fines on dry metric tonne (DMT) basis, instead of the wet metric tonne (WMT) basis - Whether the Commissioner of Customs (Preventive) was justified in assessing the Fe content of the exported iron ore fines on DMT basis, instead of the WMT basis as per the CBIC circular, for the transactions that occurred prior to the amendment of the Customs Tariff Act, 1975 by the Finance Act, 2022 - HELD - The transactions of export in question were prior to the amendment of the Customs Tariff Act, 1975 by the Finance Act, 2022 which changed the method of computation from WMT to DMT. Since the transactions of export relate to the period prior to the enforcement of the amendment in the Customs Tariff Act, 1975 by the Finance Act, 2022, the method of calculation would be governed by the extant statutory provisions, rules, and circulars on the date of the taxable event. It is settled legal position that the Fe content of the exported iron ore fines is to be determined on the WMT basis as per the CBIC Circular No. 04/2012-Customs dated 17.02.2012 - The Commissioner of Customs has proceeded to adjudicate the Fe content to be more than 58% on the basis of DMT, which is erroneous approach and such finding rendered in the Order-in-Original is perverse and inconsistent and conflicts with the settled position of law in this regard - The order-in-original passed by the Commissioner of Customs (Preventive) is inconsistent with the settled legal position and thus set aside. The matter is remitted back to the Commissioner to adjudicate the liability or otherwise by classifying the iron ore fines on the basis of WMT, after affording a reasonable opportunity of hearing to the petitioner and confronting the material collected - The order-in-original is set aside and the writ petition is allowed [Read less]

Customs - Classification and Valuation of components [heater, gear assembly, CAM, and lip seal] for compressors and automotive air conditioners – The Premises Based Audit (PBA) conducted by the Department found that the appellant had misclassified certain goods and short paid duty without applying the correct value – SCN seeking demand of duty of over Rs.77 crores. The Commissioner confirmed a demand of only Rs. 6.84 crores and dropped the rest. There is no appeal by the Revenue against the demand dropped by the Commissioner. Appeal by party against the demand confirmed by the Commissioner – HELD - Since there is no ... [Read more]

Customs - Classification and Valuation of components [heater, gear assembly, CAM, and lip seal] for compressors and automotive air conditioners – The Premises Based Audit (PBA) conducted by the Department found that the appellant had misclassified certain goods and short paid duty without applying the correct value – SCN seeking demand of duty of over Rs.77 crores. The Commissioner confirmed a demand of only Rs. 6.84 crores and dropped the rest. There is no appeal by the Revenue against the demand dropped by the Commissioner. Appeal by party against the demand confirmed by the Commissioner – HELD - Since there is no dispute on the legal position regarding the valuation, the matter insofar as the valuation is concerned is remanded to the Commissioner so that he can get an opportunity to examine the freight certificates now said to have been obtained by the appellant and decide the issue - The classification of 'O' Ring, Snap Ring and Gear Assembly has been conceded by the appellant. The classification of Heater is remanded to the Commissioner as the appellant disputes the recording in the order that it had accepted the department's classification. The classification of CAM is also remanded so that the appellant can explain its role of CAM in the Air conditioners. As for classification of Lip Seal, automobile parts such as washers, joints and the like and articles of vulcanised rubber, even if they are identifiable as such, cannot be classified under Chapter 87 and must be classified under the respective headings. Applying this section note, the Lip seals deserve to be classified under CTI 4016 93 30. The classification of the lip seal under CTI 8708 99 00 in the impugned order is not correct and set aside - The demands for extended period of limitation and the penalty imposed cannot be sustained as there is no evidence of collusion, wilful misstatement or suppression of facts. Classification of goods under a CTI is a matter of opinion. Simply because one holds a different and even an incorrect view regarding classification of the goods, it does not imply that the person has colluded or wilfully misstated or suppressed facts with an intent to evade duty - The appeal is partly allowed by remand [Read less]

Central Excise - Cenvat credit on common input services used for both manufacturing and trading activities - The appellant was availing Cenvat credit on the input services like 'business support service' and 'security services' which were the common inputs services used for both manufacturing activities as well as trading activities - Whether the appellant is liable to pay an amount equal to a percentage of the value of the exempted service (trading activity) under Rule 6(3)(i) of the Cenvat Credit Rules, 2004 for not maintaining separate accounts of utilizing such credits - HELD - The demand for the period 2009-2010 to 20... [Read more]

Central Excise - Cenvat credit on common input services used for both manufacturing and trading activities - The appellant was availing Cenvat credit on the input services like 'business support service' and 'security services' which were the common inputs services used for both manufacturing activities as well as trading activities - Whether the appellant is liable to pay an amount equal to a percentage of the value of the exempted service (trading activity) under Rule 6(3)(i) of the Cenvat Credit Rules, 2004 for not maintaining separate accounts of utilizing such credits - HELD - The demand for the period 2009-2010 to 2010-2011 is unsustainable as the definition of "exempted services" under Rule 2(e) of the Cenvat Credit Rules, 2004 was amended to include "trading" only with effect from 01.04.2011. Prior to that, there was no provision in law to disallow Cenvat credit availed on input services utilized for trading activity - As regards the demand for 2011-12, since the appellant had already reversed the entire Cenvat credit availed on the common input services, it tantamounts to non-availment of credit and therefore the appellant would not be required to pay any further amount under Rule 6(3)(i) - Further, the demand confirmed for the period 2009-10 to 2012-13 by invoking the extended period of limitation is also unsustainable as the Department was aware of the fact of trading activity and availment of Cenvat credit on common input services, but failed to issue the show cause notice within one year - The impugned order is set aside and the appeal is allowed [Read less]

Customs – Interest on refund of amount deposit pursuant to Supreme Court order - Applicable interest - The appellant had deposited an amount with the Department pursuant to the directions contained in the interim order of the Supreme Court subject to the condition that it will be refunded to the appellant with applicable interest in the event the appeal filed by the appellant was allowed. The Supreme Court subsequently allowed the appeal filed by the appellant – Appellant seeking interest at the rate of 6% per annum on the amount deposited pursuant to the directions issued by the Supreme Court - Whether the refund of a... [Read more]

Customs – Interest on refund of amount deposit pursuant to Supreme Court order - Applicable interest - The appellant had deposited an amount with the Department pursuant to the directions contained in the interim order of the Supreme Court subject to the condition that it will be refunded to the appellant with applicable interest in the event the appeal filed by the appellant was allowed. The Supreme Court subsequently allowed the appeal filed by the appellant – Appellant seeking interest at the rate of 6% per annum on the amount deposited pursuant to the directions issued by the Supreme Court - Whether the refund of amount deposited pursuant to Supreme Court order and the interest thereon would be governed by the provisions of the Customs Act, particularly Sections 27 and 27A, or whether the refund and interest would be in accordance with the directions contained in the interim order of the Supreme Court – HELD - The appellant was permitted to deposit the amount subject to the condition that the said amount will be refunded to the appellant forthwith with applicable interest in the event of the appeal being allowed. The appellant was, therefore, not required to file any application under section 27 of the Customs Act for refund of the amount and interest - The refund of the amount and the interest thereon would not be governed by the provisions of the Customs Act, particularly Sections 27 and 27A - Any deposit made pursuant to the directions of a Court order would be governed by the conditions imposed in that order and not by the provisions of the statute - The Supreme Court's interim order clearly directed that the amount deposited by the appellant shall be refunded forthwith with applicable interest in the event the appeal is allowed. The Department was bound to comply with this direction of the Supreme Court and the provisions of the Customs Act were not applicable – Further, the amount deposited by the appellant pursuant to the Supreme Court's order could not be treated as 'duty' under the Customs Act, and thus the provisions of Sections 27 and 27A would not apply - The Department is directed to forthwith pay interest to the appellant at the rate of 6% per annum from the date of deposit till the date of payment – The appeal is allowed [Read less]

Service Tax - Liability on Works Contract Service - Appellant executed a project for the Delhi PWD in connection with the Commonwealth Games, 2010. The Department alleged that the appellant had paid service tax at the rate of 2% under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, when the applicable rate should have been 4% - Whether the appellant is required to pay the differential service tax of 2% of the gross taxable value considering the services rendered as Works Contract Service - HELD – The appellant had paid service tax on the value of the service portion at the applicable rate ... [Read more]

Service Tax - Liability on Works Contract Service - Appellant executed a project for the Delhi PWD in connection with the Commonwealth Games, 2010. The Department alleged that the appellant had paid service tax at the rate of 2% under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, when the applicable rate should have been 4% - Whether the appellant is required to pay the differential service tax of 2% of the gross taxable value considering the services rendered as Works Contract Service - HELD – The appellant had paid service tax on the value of the service portion at the applicable rate of 10.30% after availing the benefit of exemption under Notification No.12/2003-ST dated 20.06.2003 on the value of materials supplied. The Department did not dispute the admissibility of the benefit under the said notification. In these circumstances, the demand for differential service tax of 2% under the Works Contract Service is not sustainable - The demand for differential service tax is set aside and the appeal is allowed [Read less]

Service Tax - Taxability of alumni fee collected along with tuition fee - Department alleged that the alumni fee collected by appellant along with the tuition fee is liable to service tax in the hands of the appellant - Whether the alumni fee is includible in the taxable value for the services rendered by the appellant - HELD - The alumni fee collected by the University cannot be considered as consideration for the services rendered by the appellant. When no service is provided, the applicability of service tax is not in question. The services rendered by the appellant does not relates to Alumni services to the ex-students... [Read more]

Service Tax - Taxability of alumni fee collected along with tuition fee - Department alleged that the alumni fee collected by appellant along with the tuition fee is liable to service tax in the hands of the appellant - Whether the alumni fee is includible in the taxable value for the services rendered by the appellant - HELD - The alumni fee collected by the University cannot be considered as consideration for the services rendered by the appellant. When no service is provided, the applicability of service tax is not in question. The services rendered by the appellant does not relates to Alumni services to the ex-students, if any, provided by the Sikkim Manipal University against the alumni fees collected by the University along with Tuition Fees. Therefore, alleging that the Alumni Fee which has been collected along with the tuition fees should be included in the gross taxable value, in the absence of any service by the appellant, cannot be sustained – Further, the demand was confirmed by invoking the extended period of limitation, which cannot be sustained as all the facts were within the knowledge of the department and the appellant had been regularly filing the service tax returns and subjected to periodic audits. Accordingly, the impugned order is set aside and the appeal is allowed [Read less]

Service Tax – Export of Services - Refund claim under Notification No.41/2012-ST dt. 29.06.2012 as amended by Notification No.1/2016 dt. 03.02.2016 – Refund of the service tax paid in respect of certain services viz. Currency Conversion charges, Bank charges and Terminal Handling charges which were utilised for the export of goods for the period 01.07.2012 to 12.06.2015 – Revenue of the view that to avail the benefit of Notification No.1/2016-ST there should be an earlier claim for refund which stood rejected, but in this case, the appellant’s present claim being made for the first time, the refund is not entertain... [Read more]

Service Tax – Export of Services - Refund claim under Notification No.41/2012-ST dt. 29.06.2012 as amended by Notification No.1/2016 dt. 03.02.2016 – Refund of the service tax paid in respect of certain services viz. Currency Conversion charges, Bank charges and Terminal Handling charges which were utilised for the export of goods for the period 01.07.2012 to 12.06.2015 – Revenue of the view that to avail the benefit of Notification No.1/2016-ST there should be an earlier claim for refund which stood rejected, but in this case, the appellant’s present claim being made for the first time, the refund is not entertainable - Whether the refund claim is admissible under Notification No.1/2016 even though there was no earlier rejected claim - HELD - The denial of refund is contrary to the spirit of Notification No.1/2016 which gives retrospective effect - Section 160 (2) of the Finance Act, 2016 mandates that rebate of all such service tax shall be granted which has been denied, but it should not have been so denied had the amendment made by sub-section (1) been in force at all in material times. Here, in the case on hand, there was no scope for the Revenue authorities to reject the Appellant’s claim since there was no refund claim made in the first place, hence, the word ‘denied’ has been equated with the word ‘rejected’ - Further, when the Notification itself does not discriminate between claimants and the non-claimants of refund, the artificial discrimination adopted by the authorities below therefore appears to be far-fetched. Accordingly, the impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Liability for Service Tax on Foreign Contract Works for Government Project - Appellant, a Government department, undertook a Government-funded project to construction of an artificial - The project was awarded to a foreign company and the appellant supervised and coordinated the implementation of the project on behalf of the Government - Whether the appellant is liable to pay service tax on the services received from the foreign company for the Government project – HELD – The project undertaken by the appellant was an EPC (Engineering, Procurement, and Construction) project, which falls under the category... [Read more]

Service Tax - Liability for Service Tax on Foreign Contract Works for Government Project - Appellant, a Government department, undertook a Government-funded project to construction of an artificial - The project was awarded to a foreign company and the appellant supervised and coordinated the implementation of the project on behalf of the Government - Whether the appellant is liable to pay service tax on the services received from the foreign company for the Government project – HELD – The project undertaken by the appellant was an EPC (Engineering, Procurement, and Construction) project, which falls under the category of Works Contract Services under Section 65(105)(zzzza) of the Finance Act, 1994. The appellant was aware of the tax liability, as it had mentioned the service tax, VAT, and other taxes in the price bid submitted to the foreign company. The appellant is liable to pay service tax on the services received from the foreign company for the Government project - The appellant had paid service tax at the compounding rate of 4.12% on the gross amount as per the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 read with Notification No. 32/2007-ST dated 22.05.2007, even though it was not opted for. This amount should be considered, and the penalty imposed by the adjudicating authority should be set aside - The matter is remanded to the adjudication authority for verification and re-determination of the duty liability after extending the benefit of Notification No. 32/2007-ST dated 22.05.2007 and considering the amount paid by the appellant – The appeal is partly allowed [Read less]

Service Tax - Classification of services as "Site Formation and Clearance, Excavation and Earthmoving and Demolition Services" or "Mining Services" - Providing of services to M/s. Rajasthan State Mines and Minerals Ltd., including overburden, excavation, and truck loading of lignite. The respondent-assessee argued that these activities were classifiable as "Mining Services", which were introduced with effect from 01.06.2007 and therefore, were not taxable prior to the said date - Whether the services provided by the respondent fall under "Site Formation and Clearance, Excavation and Earthmoving and Demolition Services" und... [Read more]

Service Tax - Classification of services as "Site Formation and Clearance, Excavation and Earthmoving and Demolition Services" or "Mining Services" - Providing of services to M/s. Rajasthan State Mines and Minerals Ltd., including overburden, excavation, and truck loading of lignite. The respondent-assessee argued that these activities were classifiable as "Mining Services", which were introduced with effect from 01.06.2007 and therefore, were not taxable prior to the said date - Whether the services provided by the respondent fall under "Site Formation and Clearance, Excavation and Earthmoving and Demolition Services" under Section 65(97a) of the Act, as claimed by the Revenue, or under "Mining Services" under Section 65(105)(zzzy) as classified by the respondent – HELD - The essential character of the work undertaken by the respondent was mining of minerals, and the activity would be classifiable under Mining Services w.e.f. 01.06.2007 - The activity of mining was not taxable prior to 1.06.2007 and the demand of service tax for the period prior to introduction of the mining services is unsustainable by incorporating it under the category of site formation – The CBEC Circular No.123/5/2010-TRU dated 24.05.2010 clarified that site formation, clearance excavation, earth, moving and demolition services are attracted only if the service providers provide the services independently and not as part of a complete work such as laying of cables under the road. A comprehensive contract cannot be vivisected for charging service tax relating to site formation service, as the activity of site formation was merely incidental to or in relation to the contract of mining of ore undertaken - The respondent has been paying service tax since 1.06.2007 under the category of “Mining Services” and the same has been accepted by the Department. In that view of the matter, it is not open to the Department to tax the same activity under a different category merely because the mining activity was not taxable at that time. The order passed by the Adjudicating Authority is confirmed and appeal filed by the Revenue is dismissed [Read less]

Service Tax - Renting of Immovable Property Services - The appellant had entered into a tripartite MoU with companies like BIGTEC and Micro Labs along with Indian Institute of Science for collaborating R&D programmes and implemented technologies using cross disciplinary expertise. The appellant rented out their buildings with the infrastructure to the participating companies and collected licence fees – Demand of service tax under 'Renting of Immovable Property Services' – HELD - The tripartite agreement cannot be considered as renting of immovable property against the appellant as the amounts collected are towards lic... [Read more]

Service Tax - Renting of Immovable Property Services - The appellant had entered into a tripartite MoU with companies like BIGTEC and Micro Labs along with Indian Institute of Science for collaborating R&D programmes and implemented technologies using cross disciplinary expertise. The appellant rented out their buildings with the infrastructure to the participating companies and collected licence fees – Demand of service tax under 'Renting of Immovable Property Services' – HELD - The tripartite agreement cannot be considered as renting of immovable property against the appellant as the amounts collected are towards licence fees and vary for each month depending upon the extent of research projects undertaken, unlike in a case of renting where a fixed amount is paid for renting of immovable property. Therefore, these amounts cannot be considered as payments towards renting of the infrastructure that belongs to IISC. The demand under this category is set aside - The appeal is partially allowed and remanded only for the purpose of calculation of interest for the amount confirmed and paid - Event Management Services - The appellant provided logistic support for conducting symposium and assistance discussions for the management for eradication of tropical diseases. The Revenue alleged that this service amounted to 'Event Management Services' – HELD - Since the services are for preventing certain tropical diseases, they do not fall under the definition of 'Event Management Services'. Accordingly, the demand against this is set aside - Scientific or Technical Consultancy Services - The appellant received amounts from various clients for conducting certain research on scientific and technical aspects through tripartite agreements between IISC, the appellant and various other organisations - HELD - Since these amounts are towards such research-oriented programmes, they are rightly classifiable 'Scientific or Technical Consultancy Services' and the demand on this account is upheld. The audit was conducted from September 2008 and the show-cause notice was issued invoking extended period of limitation demanding service tax for the period from 2004 to 2008. The fact that the appellant was into rendering Scientific or Technical Consultancy Services came to the knowledge of the department only after perusal of various documents, therefore, they are justified in invoking the extended period of limitation. The appellant has paid the tax and the 25% penalty towards the above demand but no interest payment has been brought to the notice. The matter is remanded for quantification of interest - The appeal is partially allowed and remanded only for the purpose of calculation of interest for the amount confirmed and paid. [Read less]

Service Tax - Secondment of employees by an overseas entity under Secondment of employee agreement - Appellant paid the entire salary of such seconded employees with other benefits while the foreign entity dispersed the other part of the salary - Whether the appellant is liable to pay service tax under the category of 'Manpower Recruitment or Supply Agency Service' under reverse charge mechanism for the manpower services received from their parent-company – HELD - The Supreme Court in the case of Northern Operating System Pvt. Ltd. held that in a typical secondment arrangement, where employees of an overseas entity are d... [Read more]

Service Tax - Secondment of employees by an overseas entity under Secondment of employee agreement - Appellant paid the entire salary of such seconded employees with other benefits while the foreign entity dispersed the other part of the salary - Whether the appellant is liable to pay service tax under the category of 'Manpower Recruitment or Supply Agency Service' under reverse charge mechanism for the manpower services received from their parent-company – HELD - The Supreme Court in the case of Northern Operating System Pvt. Ltd. held that in a typical secondment arrangement, where employees of an overseas entity are deputed to the host entity (Indian associate) on the latter's request to meet its specific needs, the payment made by the Indian company to the overseas employer would be treated as service by the overseas entity and taxed, even though the Indian company has operational or functional control over the seconded employees during the period of secondment - In the present case, the terms of the agreement between the appellant and its parent company clearly establish that the employees belong to the parent company and are sent on secondment to facilitate the operations of the appellant. The fact that the employees are under the control of the appellant during the secondment period does not change the nature of the relationship, as they continue to be on the payroll of the parent company under its international assignment policy - The impugned order is upheld to the extent of confirming the demand for the normal period, as no mala fide intention can be alleged against the appellant since any tax payment would be eligible for cenvat credit. The penalties imposed were set aside - The appeal is partially allowed [Read less]

Service Tax - Chargeability of service tax on commission received from multi-level marketing company - The appellants were associates of a multi-level marketing company and received commission, royalty, bonus etc. for sponsoring associates to join the company and increase sales of the company's products - Whether the commission, royalty, bonus etc. received by the appellants from the multi-level marketing company is liable to service tax – HELD - The Tribunal in its earlier decisions in Surendra Singh Rathore, Charanjeet Singh Khanuja and others, held that the activity of a distributor in a multi-level marketing company ... [Read more]

Service Tax - Chargeability of service tax on commission received from multi-level marketing company - The appellants were associates of a multi-level marketing company and received commission, royalty, bonus etc. for sponsoring associates to join the company and increase sales of the company's products - Whether the commission, royalty, bonus etc. received by the appellants from the multi-level marketing company is liable to service tax – HELD - The Tribunal in its earlier decisions in Surendra Singh Rathore, Charanjeet Singh Khanuja and others, held that the activity of a distributor in a multi-level marketing company of identifying and sponsoring other persons to join the company as distributors and thereby increasing the sales of the company's products constitutes "Business Auxiliary Service" as defined under Section 65(105)(zzb) of the Finance Act, 1994. The present case involves the post-negative era where any activity carried out by a person for another for consideration, including a declared service, is covered under the definition of 'service' in terms of Section 65B(44) of the Act. It is an admitted position that the appellants were to bring more and more associates/distributors so that the business of the company could be expanded, and the company in turn was making the requisite consideration to the appellants in the form of commission, royalty, bonus etc. Therefore, the appellants were rendering services to the company for consideration and were liable to discharge service tax – The matter is remanded to the Adjudicating Authority for re-calculation of the service tax liability. However, the extended period of limitation cannot be invoked as there was a bona fide belief in the mind of the assessee regarding the taxability of the commission, royalty, bonus etc. received from the multi-level marketing company, and the duty liability shall be restricted to the normal period – The appeal is partly allowed [Read less]

Service Tax - Non-reversal of CENVAT Credit on exempted, non-maintenance of separate records – HELD - The appellant was providing both taxable and exempted services, and was not maintaining separate accounts. Hence, the liability to pay 7% of exempted service arise under Rule 6(3) of the Cenvat Credit Rules, 2004 - The demand is upheld for the normal period - RCM on Rent-a-Cab - The appellant is liable to pay service tax under RCM in compliance of Sl. No.7(b) of Notification No. 30/2012 dated 20.06.2012. In view of the legal position, the demand for RCM on rent-a-cab is upheld for the normal period - Cenvat credit taken... [Read more]

Service Tax - Non-reversal of CENVAT Credit on exempted, non-maintenance of separate records – HELD - The appellant was providing both taxable and exempted services, and was not maintaining separate accounts. Hence, the liability to pay 7% of exempted service arise under Rule 6(3) of the Cenvat Credit Rules, 2004 - The demand is upheld for the normal period - RCM on Rent-a-Cab - The appellant is liable to pay service tax under RCM in compliance of Sl. No.7(b) of Notification No. 30/2012 dated 20.06.2012. In view of the legal position, the demand for RCM on rent-a-cab is upheld for the normal period - Cenvat credit taken on Rent-a-Cab, security and group health insurance for employees – HELD - The credit on rent-a-cab and security services is allowed as these were used for business purposes. The credit on group health insurance was also allowed as it fulfills the employer's obligation and supports the business - Claim of Credit basis debit notes - The department denied credit on the ground that debit notes are not valid documents under Rule 9 of the Cenvat Credit Rules, 2004. HELD - As long as the debit notes contained all the requisite information as prescribed under Rule 9(1), they should be considered on par with invoices and credit cannot be denied, especially when the tax has been paid by the provider. There is no evidence led by Revenue to establish that all mandatory details were not available in such debit notes. Hence, such credit taken on debit notes is correct - Inadmissible Credit on WCS - The department denied credit on the ground that the expenditure was on works contract services – HELD – The expenditure was incurred on routine repair work, maintenance and interior renovation work of the cargo terminal site. Following the CBEC Circular and Tribunal decisions, allowed the credit as the expenditure was on repair, renovation and maintenance of the cargo terminal site, which are eligible for Cenvat credit - Remission of license fees - Department treated the refund of license fees as consideration for tolerating an act under Section 66E of the Finance Act, 1994 - HELD - In this instant case, the refund of license fees was on the ground that the same was not due to be paid owing to delay in handing over by DIAL. This is merely a reversal of an earlier cost or expense and not consideration of service - The refund was merely a reversal of an earlier cost or expense and not consideration for any service. The demand on this count is set aside - Interest on advance - HELD - As per Rule 3 of Point of Taxation Rules, 2011, the appellant was liable to pay tax on the date of receipt of such advance. The Tribunal upheld the demand of interest on advance receipts. [Read less]

Customs - Limitation period for recovery of short-payment of duty - Benefit of duty-free imports under DFIA licenses - Revenue alleged that the DFIA licenses were issued on the basis of manipulated export documents/fraudulent export undertakings, and hence, the export incentives and benefits appeared to be inadmissible - Whether the demand confirmed in the impugned order is sustainable on the ground of limitation – HELD - The SCN was issued 2.5 years after the date of actual imports, and there was no allegation of suppression of facts in the SCN to invoke the extended period of limitation under Section 28 of the Customs ... [Read more]

Customs - Limitation period for recovery of short-payment of duty - Benefit of duty-free imports under DFIA licenses - Revenue alleged that the DFIA licenses were issued on the basis of manipulated export documents/fraudulent export undertakings, and hence, the export incentives and benefits appeared to be inadmissible - Whether the demand confirmed in the impugned order is sustainable on the ground of limitation – HELD - The SCN was issued 2.5 years after the date of actual imports, and there was no allegation of suppression of facts in the SCN to invoke the extended period of limitation under Section 28 of the Customs Act, 1962 - There was no discussion on the aspect of limitation in the impugned order. There was no basis for the Revenue to allege suppression of facts to invoke the extended period of limitation - The demand confirmed in the impugned order is not sustainable on the ground of limitation and set aside – The appeal is allowed [Read less]

Customs - Classification of 'Extraneal Peritoneal Dialysis Solution with 7.5% Icodestrin' under Customs Tariff Heading (CTH) 9018 or 3004 - Appellant imported goods described as "Extraneal Peritoneal Dialysis Solution with 7.5% Icodestrin" and sought classification under CTH 9018, which pertains to instruments and appliances used in medical, surgical, dental, or veterinary sciences – Dept reclassified the goods under CTH 3004, which covers medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, resulting in the denial of the benefit of exemption – HELD - The Tribunal, following its own... [Read more]

Customs - Classification of 'Extraneal Peritoneal Dialysis Solution with 7.5% Icodestrin' under Customs Tariff Heading (CTH) 9018 or 3004 - Appellant imported goods described as "Extraneal Peritoneal Dialysis Solution with 7.5% Icodestrin" and sought classification under CTH 9018, which pertains to instruments and appliances used in medical, surgical, dental, or veterinary sciences – Dept reclassified the goods under CTH 3004, which covers medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, resulting in the denial of the benefit of exemption – HELD - The Tribunal, following its own earlier order and the decision of the Supreme Court in the appellant's case, held that the classification of the goods under CTH 9018 stands settled. The Commissioner (Appeals) had already considered the facts and given a clear finding justifying the classification under CTH 9018, and similar views were also expressed by the Delhi and Kolkata Benches - the issue insofar as the classification of the goods in question is concerned, is no more res integra and hence, the impugned order is set aside – The appeal is allowed [Read less]

Customs - Determination of assessable value in ex-works price – Appellant declared the ex-works price as FOB value in the B/E and added the cost of local transport up to the port of export as well as the cost of transport up to the place of port of import and transit insurance - Department contended that the freight should have been calculated as 20% of the FOB value instead of 20% of the ex-works value, leading to short payment of duty – HELD - The contention of the importer that the value cannot be determined from ex-works price under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is inc... [Read more]

Customs - Determination of assessable value in ex-works price – Appellant declared the ex-works price as FOB value in the B/E and added the cost of local transport up to the port of export as well as the cost of transport up to the place of port of import and transit insurance - Department contended that the freight should have been calculated as 20% of the FOB value instead of 20% of the ex-works value, leading to short payment of duty – HELD - The contention of the importer that the value cannot be determined from ex-works price under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is incorrect. In this case, invoices were not issued on CIF or FOB basis but were issued on ex-works basis. As per Rule 10(2) of the Valuation Rules, the cost of transportation up to the place of import has to be included in the assessable value, which includes not only the cost of transport from the port of export but also the cost of transport up to the port of export. The FOB value includes all costs up to placing the goods on board the vessel/aircraft, i.e., the costs of transport from the factory have to be included to arrive at the FOB value. The method used by the importer to calculate the assessable value from the ex-works price is incorrect. The Revenue is correct in asserting that the cost of air freight that was to be included in the assessable value should have been 20% of the FOB value and not 20% of the ex-works price - It is certainly an oversight on the part of the appellant in not adding the cost of local transport upto the port of export to the ex-works price and declaring it as the FOB value. If there was an oversight by the importer, there was also an oversight by the officers who did not correct the declaration and assess the B/E correctly during this period. There is nothing on record to show that either the importer or the officers or the customs broker had any intention to evade duty or reduce the liability of duty. Since the entire period of demand was within the extended period of limitation, the same is set aside. Consequently, the penalty also needs to be set aside - The impugned orders are set aside and the appeal is allowed [Read less]

Central Excise – Eligibility to interest on refund on amount deposited pursuant to proceedings, which ultimately concluded in appellant’s favour - The Commissioner (Appeals) permitted the refund but restricted the grant of interest, treating only the amount being 7.5% of the confirmed demand as a pre-deposit and allowing interest only on this limited amount - Whether the appellant is entitled to interest on the entire refunded amount from the date of deposit till the date of refund, and whether the appellant is entitled to "interest on interest" - HELD - Based on the consistent legal approach of the High Courts and Sup... [Read more]

Central Excise – Eligibility to interest on refund on amount deposited pursuant to proceedings, which ultimately concluded in appellant’s favour - The Commissioner (Appeals) permitted the refund but restricted the grant of interest, treating only the amount being 7.5% of the confirmed demand as a pre-deposit and allowing interest only on this limited amount - Whether the appellant is entitled to interest on the entire refunded amount from the date of deposit till the date of refund, and whether the appellant is entitled to "interest on interest" - HELD - Based on the consistent legal approach of the High Courts and Supreme Court allowing interest even in the absence of statutory provisions, as compensation for the deprivation of funds, the appellant is entitled to interest on the entire deposited amount from the date of deposit till the date of actual refund, at the rate of 12% per annum. However, the refund shall be reduced to the extent of interest, if any, already paid. Further, no interest on interest shall be admissible. The original adjudicating authority is directed to compute and grant interest at the rate of 12% per annum from the date of deposit made during the course of investigation till the date of actual refund of the said amount - The appeal is allowed [Read less]

Central Excise - Determination of assessable value of excisable goods for captive consumption based on cost of production - The assessee, a manufacturer of automotive batteries, had stock-transferred lead oxide to its other unit for captive consumption - Revenue alleged that the assessee had wilfully suppressed the cost of production and adopted its own costing method instead of the mandated CAS-4 method, thereby short-paying the duty. The assessee contended that the cost certificates provided were for the relevant period and not based on previous periods, and that the cost of lead, being the major raw material, was determ... [Read more]

Central Excise - Determination of assessable value of excisable goods for captive consumption based on cost of production - The assessee, a manufacturer of automotive batteries, had stock-transferred lead oxide to its other unit for captive consumption - Revenue alleged that the assessee had wilfully suppressed the cost of production and adopted its own costing method instead of the mandated CAS-4 method, thereby short-paying the duty. The assessee contended that the cost certificates provided were for the relevant period and not based on previous periods, and that the cost of lead, being the major raw material, was determined based on the moving average price of the leading domestic producer – HELD – It is the case of the Revenue is that the Appellant did follow the costing method in terms of CAS-4; the Cost Statement prepared by the Appellant was not in conformity with the general principles of costing in CAS-4 and that the cost certificates furnished by the Appellant relate to the past periods and hence, same are not reliable. Whereas it is the case of the appellant that all the CAS-4 certificates were furnished for the relevant period as certified by Cost Accountant and that none of the CAS-4 certificates stated that the same were prepared based on the costing of any previous period/s - In the backdrop of the above arguments, the matter is remitted back to the Adjudicating Authority to verify the CAS-4 certificates submitted by the assessee and determine the assessable value accordingly. If the Cost Statements relate to the period in question, then perhaps the assertion of the appellant may have to be accepted. The demand could only be for the normal period and not the extended period, as there was no evidence of wilful suppression of facts – The Appeal stands disposed of [Read less]

Central Excise - Concrete Mix or Ready-Mix Concrete - Whether the appellant is eligible for the benefit of exemption notification No. 12/2012-CE dated 17.03.2012 in respect of the concrete mix claimed to be manufactured by them - Revenue's claim that appellant have manufactured Ready-Mix Concrete (RMC) at the site, hence, not eligible to the benefit of the said notification – HELD - The difference between the concrete mix and Ready-Mix Concrete mainly rests on the machinery used, the process of manufacture and use of retarders and plasticizers which enhances the setting time of Ready-Mix Concrete. The appellant had not a... [Read more]

Central Excise - Concrete Mix or Ready-Mix Concrete - Whether the appellant is eligible for the benefit of exemption notification No. 12/2012-CE dated 17.03.2012 in respect of the concrete mix claimed to be manufactured by them - Revenue's claim that appellant have manufactured Ready-Mix Concrete (RMC) at the site, hence, not eligible to the benefit of the said notification – HELD - The difference between the concrete mix and Ready-Mix Concrete mainly rests on the machinery used, the process of manufacture and use of retarders and plasticizers which enhances the setting time of Ready-Mix Concrete. The appellant had not added any retarders and plasticizers, which is quite essential in the case of Ready-Mix Concrete to increase the shelf life. Besides, it is the claim of the appellant that concrete mix manufactured by the appellant are as per IS 456: 2000; whereas for Ready-Mix Concrete is IS 4926:2003 - The Tribunal relied on the judgment of the Supreme Court in the case of Larsen and Toubro Ltd. v. CCE, Hyderabad and the CBEC Circular No. 368/19/98-CX dated 06.01.1998, and concluded that the product manufactured by the appellant at the site which is 2 km away is Concrete Mix and not Ready-Mix Concrete, and therefore, the appellant is eligible for the benefit of the exemption notification - Further, the demand is unsustainable in law as the Department issued the show-cause notice after 3.5 years of receiving the information from the appellant. When all the information was available with the department in the year 2015 itself, demanding differential duty after receiving the information for the subsequent period invoking suppression of facts, is unsustainable in law - The impugned order is set aside and the appeal is allowed [Read less]

GST - Validity of issue of Consolidated Show Cause Notice covering multiple financial years under Sections 73 and 74 of the CGST Act, 2017 – Revenue in appeal against Ld. Single Judge Order holding that issuance of consolidated notices is impermissible - Whether the issuance of consolidated show cause notices under Sections 73 and 74 of the CGST Act, 2017 covering multiple financial years is permissible – HELD - On a combined reading of the provisions of the CGST Act and particularly Sections 73 and 74 of the Act, the irresistible conclusion would be that the proceedings under Sections 73 and 74 of the Act were never i... [Read more]

GST - Validity of issue of Consolidated Show Cause Notice covering multiple financial years under Sections 73 and 74 of the CGST Act, 2017 – Revenue in appeal against Ld. Single Judge Order holding that issuance of consolidated notices is impermissible - Whether the issuance of consolidated show cause notices under Sections 73 and 74 of the CGST Act, 2017 covering multiple financial years is permissible – HELD - On a combined reading of the provisions of the CGST Act and particularly Sections 73 and 74 of the Act, the irresistible conclusion would be that the proceedings under Sections 73 and 74 of the Act were never intended to be confined to a financial year - The use of the expression "any period" in these provisions indicates that the proceedings are not confined to a specific tax period or financial year. The provisions governing filing of returns, assessment, audit, and determination of demand are structured independently for each tax period or financial year, but the consequential proceedings under Sections 73 and 74 are not restricted in the same manner - The prescription of limitation under sub-section (10) of Sections 73 and 74 operates within a limited sphere and does not control or restrict the scope of issuance of the notice. Mere reference to “financial year” in sub-section (10) neither indicates, nor can it be construed to mean, that Sections 73/74 are confined to a financial year. Such an interpretation is not borne out from a plain reading of the provisions - The reference to tax period or financial year in the Form-GST DRC-01 cannot be relied upon to say that SCN shall be confined to a financial year. It could at the best may be relevant for computation of limitation under Sub-Section (10) and it would not affect the exercise of power under Sections 73 and 74 of the Act – The SCNs issued under Sections 73/74 do not prohibit coverage of multiple financial years. Such notices are neither tax period–specific nor financial year–specific. There is no statutory bar to issuance of a common SCN covering multiple tax periods or financial years. Any interpretation to the contrary would amount to rewriting the language of Sections 73/74, which is impermissible – The Bench concur with the view taken by the High Courts of Delhi, Allahabad, and Jammu & Kashmir. For the reasons, not inclined to concur with the view taken by the High Courts of Bombay, Kerala, Madras, Andhra Pradesh, and Himachal Pradesh - The order of learned Single Judge is not sustainable and set aside. The writ appeal is allowed - Contention regarding pecuniary jurisdiction – HELD - The submission that, if show cause notices are confined to a financial year or tax period, the pecuniary jurisdiction would remain at a lower level, whereas aggregation would enhance the quantum and shift jurisdiction to a higher authority, is of no relevance. The assessee’s concern is only that the show cause notice be adjudicated by a proper officer vested with jurisdiction, whether territorial or pecuniary - It is settled position of law that an assessee has no right to chose the Adjudicating Authority. Merely because combining of more than one financial year, the pecuniary jurisdiction shifts to an officer of the higher rank, no prejudice would be caused to the assessee, since statutory safeguards, remedies and determination of tax would remain as it is. Therefore, the respondent/assessees contention with regard to pecuniary jurisdiction cannot be accepted. [para 40, 41] - Protection of limitation – HELD - If any portion of the period covered by the notice is demonstrated to be beyond the limitation stipulated under sub-section (10), the same would be liable to be excluded as being time-barred. However, issuance of a consolidated show cause notice would not dilute or take away the protection of limitation available under Sub-Section (10) of Sections 73 and 74 of the Act. Each period forming part of notice must satisfy scrutiny on the touchstone of limitation and any portion falling short of such test cannot be sustained. [para 42] [Read less]

GST - Refund of Input Tax Credit due to Inverted Duty Structure - Construction of metro rail works - Petitioner procured inputs and input services taxed at higher GST rates (18% and 28%) compared to the 12% GST rate applicable on its outward supply of works contract services, resulting in accumulation of ITC - Refund claims under Section 54(3)(ii) of the CGST Act, 2017 - Refund claims were rejected by the Original Authority and Appellate Authority without considering the effect of Notification No.14/2022, dated 5th July 2022 – HELD - The amendment made by Notification No.14/2022 dated 5th July 2022 to Rule 89(5) of the C... [Read more]

GST - Refund of Input Tax Credit due to Inverted Duty Structure - Construction of metro rail works - Petitioner procured inputs and input services taxed at higher GST rates (18% and 28%) compared to the 12% GST rate applicable on its outward supply of works contract services, resulting in accumulation of ITC - Refund claims under Section 54(3)(ii) of the CGST Act, 2017 - Refund claims were rejected by the Original Authority and Appellate Authority without considering the effect of Notification No.14/2022, dated 5th July 2022 – HELD - The amendment made by Notification No.14/2022 dated 5th July 2022 to Rule 89(5) of the CGST Rules, which modified the formula for calculation of refund of ITC on account of inverted duty structure, is clarificatory and retrospective in nature - The circular issued by the CBIC (Circular No.181/2022 dated 10th November 2022) providing that the amended formula would apply only prospectively from 5th July 2022 is contrary to the purport of the amendment and the intent behind it - The Petitioner's refund claims, which were filed within the prescribed time limit of two years under Section 54(1) of the CGST Act, are required to be considered as per the amended formula under Rule 89(5) as it existed after the amendment made by Notification No.14/2022 dated 5th July 2022 - The impugned orders rejecting the Petitioner's refund claims are quashed, and the Respondents are directed to grant the refund to the Petitioner as per the amended formula under Rule 89(5) – The petition is allowed [Read less]

GST - Alternate Remedy - Petitioner challenged an Order-In-Original issued under Section 74 of the CGST Act - Petitioner argued that the Order was without jurisdiction and violated principles of natural justice – HELD - The petitioner has an efficacious statutory remedy of appeal against the impugned Order, which it ought to have availed. This is not an exceptional case warranting the exercise of the Court's writ jurisdiction under Article 226 to bypass the alternate remedy - The alleged jurisdictional issues and violations of natural justice raised by the petitioner involved evaluation of factual aspects, which could be... [Read more]

GST - Alternate Remedy - Petitioner challenged an Order-In-Original issued under Section 74 of the CGST Act - Petitioner argued that the Order was without jurisdiction and violated principles of natural justice – HELD - The petitioner has an efficacious statutory remedy of appeal against the impugned Order, which it ought to have availed. This is not an exceptional case warranting the exercise of the Court's writ jurisdiction under Article 226 to bypass the alternate remedy - The alleged jurisdictional issues and violations of natural justice raised by the petitioner involved evaluation of factual aspects, which could be adequately addressed in the statutory appeal - The impugned Order could not be said to be wholly without jurisdiction or involving a patent breach of natural justice, which are the well-recognized exceptions to the rule of exhaustion of alternate remedies - The writ petition is dismissed granting the petitioner liberty to file the appeal within four weeks, with a direction to the Appellate Authority to consider the appeal on merits without adverting to the issue of limitation – The petition is dismissed [Read less]

Service Tax - Rejection of appeal on technical grounds without considering merits - Whether the Commissioner (Appeals) was justified in rejecting the appeal on technical grounds without providing an opportunity to rectify the defects – HELD - The defects pointed out by the Commissioner (Appeals) were curable in nature and the appellant should have been provided an opportunity to rectify them. The rejection of the appeal on technical grounds without hearing the appellant was not desirable - The fact show that three opportunities of personal hearings have been granted within a time gap of just 7 days, which is also against... [Read more]

Service Tax - Rejection of appeal on technical grounds without considering merits - Whether the Commissioner (Appeals) was justified in rejecting the appeal on technical grounds without providing an opportunity to rectify the defects – HELD - The defects pointed out by the Commissioner (Appeals) were curable in nature and the appellant should have been provided an opportunity to rectify them. The rejection of the appeal on technical grounds without hearing the appellant was not desirable - The fact show that three opportunities of personal hearings have been granted within a time gap of just 7 days, which is also against the principles of natural justice – The matter is remanded to learned Commissioner (appeals) to give opportunity to the party to rectify defects in their appeal and thereafter, the matter may be decided afresh by following the principles of natural justice - The appeal is allowed by way of remand [Read less]

Customs - Classification of Cold Rolled Stainless Steel Coils Grade J3 - Eligibility for exemption under Notification No. 50/2018-Cus – HELD - As per the precedent in M/s Shah Foils Ltd case, the goods in the instant case with Nickel content as low as 0.2% can be classified under CTH 7220 90 22 as Nickel Chromium Austenitic Type and the appellant is eligible for the exemption benefit under Notification No. 50/2018-Cus. However, the Tribunal in Gulshan Exim Pvt Ltd case had remanded the matter on classification aspect for a closer examination of the various processes undergone by the goods and their impact on the classifi... [Read more]

Customs - Classification of Cold Rolled Stainless Steel Coils Grade J3 - Eligibility for exemption under Notification No. 50/2018-Cus – HELD - As per the precedent in M/s Shah Foils Ltd case, the goods in the instant case with Nickel content as low as 0.2% can be classified under CTH 7220 90 22 as Nickel Chromium Austenitic Type and the appellant is eligible for the exemption benefit under Notification No. 50/2018-Cus. However, the Tribunal in Gulshan Exim Pvt Ltd case had remanded the matter on classification aspect for a closer examination of the various processes undergone by the goods and their impact on the classification. Therefore, issue of classification can only be decided after looking into various aspects as were directed to be looked into in Gulshan Exim Pvt Ltd case. The form in which goods are imported i.e. coils or otherwise as well as various surface treatments etc., are also relevant factors for looking into the details of tariff headings. In that matter, some portion of the demand was surviving otherwise also and was not hit by limitation and accordingly, interest and penal possibilities could not be ruled out, which is not the case in the present case as whole of the duty demand is barred by limitation and therefore, demand will get extinguished in total and issue of classification will get reduced to academic interest only - The appeal is allowed on limitation and valuation. The point of classification is left open to be decided in terms of our earlier order in Gulshan Exim Pvt Ltd – The appeal is allowed - Undervaluation of the Imported Goods - The department failed to establish the case of undervaluation as the conditions under Section 138C of the Customs Act for admission of the electronic evidence were not complied with. Further, the Department could not establish the goods imported by the appellant as comparable or similar to the goods imported by other parties as required under the Customs Valuation Rules. Accordingly, the Tribunal accepted the transaction value declared by the appellant - Invocation of Extended Period under Section 28(4) of the Customs Act - The extended period under Section 28(4) is not invokable in the present case as there was no suppression or collusion on the part of the appellant. The entire case of Dept was based on the Mill Test Certificates provided by the appellant itself, and hence, there was no suppression of any material information. The demand of duty is time-barred as the normal period of two years under Section 28(1) has lapsed. [Read less]

GST - Input Tax Credit – Denial of claim of ITC as being ineligible under Section 16(4) of the CGST Act, 2017 - Whether the petitioner is entitled to claim ITC even though the claim was made belatedly, in light of the insertion of Section 16(5) of the CGST Act through the Finance (No.2) Act, 2024 – HELD - The petitioner would be entitled to claim ITC as per the amended Section 16(5) of the CGST Act, which was inserted retrospectively with effect from 01.07.2017. The new sub-section (5) overrides the earlier time restriction prescribed under sub-section (4) and allows the registered person to claim ITC in any return fil... [Read more]

GST - Input Tax Credit – Denial of claim of ITC as being ineligible under Section 16(4) of the CGST Act, 2017 - Whether the petitioner is entitled to claim ITC even though the claim was made belatedly, in light of the insertion of Section 16(5) of the CGST Act through the Finance (No.2) Act, 2024 – HELD - The petitioner would be entitled to claim ITC as per the amended Section 16(5) of the CGST Act, which was inserted retrospectively with effect from 01.07.2017. The new sub-section (5) overrides the earlier time restriction prescribed under sub-section (4) and allows the registered person to claim ITC in any return filed up to 30.11.2021 in respect of invoices or debit notes pertaining to the financial years 2017-18 to 2020-21 - The returns having been filed by the petitioner within the cut-off date as stipulated under sub-clause (5) to Section 16 and relates to the period as mentioned therein, the petitioner would be entitled for such claim. The respondent is directed to reconsider the matter and re-look into the claim of ITC and to re-adjudicate the matter – The petition is disposed of [Read less]

Sec.54(1) does not bar a party from filing of more than one refund applications for the same tax period. When the basic condition of prescribed time limit is met, the technicalities cannot defeat the right to maintain the second refund application.

Service Tax - Issue of consolidated demand notice for multiple assessment years, Determination of Monetary limit, Maintainability of appeal before High Court – Revenue issued a consolidated demand notice for Service Tax covering multiple assessment years aggregating to Rs. 2.60Cr. However, the Service Tax demand for each individual assessment year was less than Rs. 2 crores - Whether it is permissible to club together the Service Tax demand for multiple assessment years and file an appeal on the consolidated Service Tax or whether the Service Tax demand has to be considered only in respect of each individual assessment y... [Read more]

Service Tax - Issue of consolidated demand notice for multiple assessment years, Determination of Monetary limit, Maintainability of appeal before High Court – Revenue issued a consolidated demand notice for Service Tax covering multiple assessment years aggregating to Rs. 2.60Cr. However, the Service Tax demand for each individual assessment year was less than Rs. 2 crores - Whether it is permissible to club together the Service Tax demand for multiple assessment years and file an appeal on the consolidated Service Tax or whether the Service Tax demand has to be considered only in respect of each individual assessment year - HELD - As per the CBIC instruction No. CBIC/160390/20/2024-JC-CBEC dated 6-8-2024, the appeal has to be filed in respect of each assessment year where the disputed tax amount exceeds Rs. 2 crores. A consolidated notice demanding Service Tax, covering various financial years, to enable the Revenue to reach the threshold of 2 crores is not permissible – Further, a consolidated notice covering multiple financial years is not permissible, unless there are exceptional circumstances involving fraud spanning across different years. If the demand for Service Tax in respect of one of the assessment years is beyond the limitation period, the time barred demand cannot be made a part of the consolidated show cause notice. Thus, even if it is assumed that a consolidated demand for Service Tax comprising many assessment years can be made, the time-barred claim cannot be a part of the consolidated claims - The Revenue appeal stands dismissed [Read less]

Service Tax - Delayed adjudication of Show Cause Notice – Challenge to Order-in-Original on the ground of delayed adjudication – The notice was issued on 29.09.2020 but the order was passed after 5 years. The petitioner contended that such delayed adjudication vitiates the order and that it is unable to make the pre-deposit required for an appeal against the order - Whether the delayed adjudication, by itself, is sufficient ground to quash the order-in-original – HELD - The Hon'ble Supreme Court is considering the larger issue of whether orders made after unreasonable delay can be quashed on that ground alone. Pendin... [Read more]

Service Tax - Delayed adjudication of Show Cause Notice – Challenge to Order-in-Original on the ground of delayed adjudication – The notice was issued on 29.09.2020 but the order was passed after 5 years. The petitioner contended that such delayed adjudication vitiates the order and that it is unable to make the pre-deposit required for an appeal against the order - Whether the delayed adjudication, by itself, is sufficient ground to quash the order-in-original – HELD - The Hon'ble Supreme Court is considering the larger issue of whether orders made after unreasonable delay can be quashed on that ground alone. Pending the Supreme Court's decision, the Court is not inclined to entertain the writ petition - The petitioner has raised several other grounds to challenge the order-in-original, apart from the issue of delayed adjudication. If the Supreme Court ultimately holds that delayed adjudication alone is not a ground to quash the order, then the petitioner will have to raise all its other challenges before the appellate authority, which would be a more comprehensive remedy than a piecemeal adjudication before the High Court – The petitioner is directed to avail of the alternate remedy of appeal. The right to appeal is subject to a pre-deposit and based upon the audited accounts alone, it cannot be accepted that the petitioner is unable to pay the pre-deposit amount, and to that extent, the alternate remedy is not efficacious. The jurisdiction under Article 226 of the Constitution cannot be exercised to frustrate the statutory regime provided in the Statute - The writ petition is disposed of with liberty to the petitioner to avail of the alternate remedy of appeal [Read less]

Tamil Nadu General Sales Tax Act, 1959 - Transit Sales and High Sea Sales with Hire Purchase Transactions - The assessee claimed exemption under Section 6(2) of the Central Sales Tax Act, 1956 for transit sales and under Section 5(2) for high sea sales – Department’s case that the assessee had camouflaged inter-state sales as transit sales and high sea sales to claim exemption, when the transactions were actually local sales under hire purchase agreements – Whether the transactions were in the nature of hire purchase agreements and therefore taxable under the Tamil Nadu General Sales Tax Act – HELD - The assessee's... [Read more]

Tamil Nadu General Sales Tax Act, 1959 - Transit Sales and High Sea Sales with Hire Purchase Transactions - The assessee claimed exemption under Section 6(2) of the Central Sales Tax Act, 1956 for transit sales and under Section 5(2) for high sea sales – Department’s case that the assessee had camouflaged inter-state sales as transit sales and high sea sales to claim exemption, when the transactions were actually local sales under hire purchase agreements – Whether the transactions were in the nature of hire purchase agreements and therefore taxable under the Tamil Nadu General Sales Tax Act – HELD - The assessee's documents showed that the transactions were not outright sales by transfer of documents of title, but were in the nature of hire purchase agreements where the goods remained the property of the seller. The assessee had raised two sale bills for the same transaction - one at the time of original sale under Section 6(2)(b) of the CST Act as a transit sale, and another at the termination of the hire purchase period as a local sale. This showed an attempt to camouflage the interstate sales as transit sales to claim exemption under Section 6(2) - Similarly, in the case of high seas sales, the Customs duty had been paid only on the import value and not on the high seas sale value, indicating that the high seas sale was a separate transaction from the import. The total amount financed by the assessee included the value of import, charges paid for clearance of the goods from customs, import duty paid and the assessee's profit margin. This showed that the import was a separate transaction and the hire purchase sale was a separate transaction - The movement of goods was not pursuant to any written contract, but the invoices to the customers were subsequent to the hire purchase agreement and included duty, interest and other charges. Therefore, the transactions were rightly held to be the first sale, taxable under the Tamil Nadu General Sales Tax Act. The penalty imposed for wilful suppression of facts is also upheld - The Tribunal's order disallowing the assessee's claims of transit sales and high sea sales exemptions, and imposing penalty for wilful suppression of facts, is upheld – The Tax Case (Revision) are dismissed [Read less]

Service Tax - Taxability of activities like segregation of coal from stones, crushing/sizing of coal – Vide the impugned order the Tribunal held that the activity undertaken by the appellant, including crushing/sizing of coal, amounts to "manufacture" of coal under Section 2(f) of the Central Excise Act, 1944 – Revenue in appeal – SC HELD - The Department has been levying Excise Duty on the same activity, besides States collecting VAT. Now, Service tax is sought to be imposed on the same value of goods, crushing and transportation charges. This will be a double levy of both Excise Duty and Service tax on the same tra... [Read more]

Service Tax - Taxability of activities like segregation of coal from stones, crushing/sizing of coal – Vide the impugned order the Tribunal held that the activity undertaken by the appellant, including crushing/sizing of coal, amounts to "manufacture" of coal under Section 2(f) of the Central Excise Act, 1944 – Revenue in appeal – SC HELD - The Department has been levying Excise Duty on the same activity, besides States collecting VAT. Now, Service tax is sought to be imposed on the same value of goods, crushing and transportation charges. This will be a double levy of both Excise Duty and Service tax on the same transaction. In view of the aforesaid, the Revenue’s appeal stands dismissed [Read less]

Tamil Nadu Value Added Tax, 2006 - Secured creditor status of tax authorities under Insolvency and Bankruptcy Code (IBC) - Statutory charge over the properties of the corporate debtor for unpaid tax dues - Whether the statutory charge created in favor of the tax authorities under the TNVAT Act can qualify them as 'secured creditors' under the definition provided in Section 3(30) of the IBC - HELD - The statutory charge created in favor of the tax authorities under the TNVAT Act does not make them 'secured creditors' under the IBC. The clarificatory amendment brought to the IBC in 2026, expressly states that a security inte... [Read more]

Tamil Nadu Value Added Tax, 2006 - Secured creditor status of tax authorities under Insolvency and Bankruptcy Code (IBC) - Statutory charge over the properties of the corporate debtor for unpaid tax dues - Whether the statutory charge created in favor of the tax authorities under the TNVAT Act can qualify them as 'secured creditors' under the definition provided in Section 3(30) of the IBC - HELD - The statutory charge created in favor of the tax authorities under the TNVAT Act does not make them 'secured creditors' under the IBC. The clarificatory amendment brought to the IBC in 2026, expressly states that a security interest shall exist only if it is created pursuant to an agreement or arrangement between parties, and not merely by operation of law - The Supreme Court's in State Tax Officer vs. Rainbow Papers Ltd., which had accorded the status of secured creditor to tax authorities, has been effectively overruled by the amendment - The tax authorities had failed to file their claim within the prescribed time limit during the liquidation proceedings, and therefore, their claim could not be revived based on the earlier attachment order. Accordingly, the attachment order passed by the tax authorities cannot be enforced against the property purchased by the appellant through the IBC liquidation process - The Writ Appeal filed is allowed [Read less]

GST – Non-filing of Form GSTR-9C along with the annual return in Form GSTR-9 - Levy of Late fee for delayed filing of reconciliation statement in Form GSTR-9C - Whether a late fee can be levied under Section 47 of the CGST Act, 2017 for delayed filing of Form GSTR-9-C – HELD - Since the petitioner’s turnover exceeded Rs.5 crores, a reconciliation statement in Form GSTR-9C was required to be filed along with the Annual Return. Section 44 mandates the filing of an annual return, which may include a reconciliation statement. The late fee is applicable if there is a failure to furnish the returns as required under Sectio... [Read more]

GST – Non-filing of Form GSTR-9C along with the annual return in Form GSTR-9 - Levy of Late fee for delayed filing of reconciliation statement in Form GSTR-9C - Whether a late fee can be levied under Section 47 of the CGST Act, 2017 for delayed filing of Form GSTR-9-C – HELD - Since the petitioner’s turnover exceeded Rs.5 crores, a reconciliation statement in Form GSTR-9C was required to be filed along with the Annual Return. Section 44 mandates the filing of an annual return, which may include a reconciliation statement. The late fee is applicable if there is a failure to furnish the returns as required under Section 44 of the Act - The Rule 80(3) of the CGST Rules, 2017 also specifies that the reconciliation statement (Form GSTR-9C) has to be furnished "along with" the annual return (Form GSTR-9), making it a mandatory requirement. Therefore, the non-filing of Form GSTR-9C would constitute non-filing of the returns as required under Section 44, enabling the levy of a late fee under Section 47 of the Act – In the Form GSTR-9-C the assessee has to self-reconcile the Turnover, Tax Paid, Input Tax Credit and other details on the basis of the audited Annual Financial Statement, which only completes the annual return in Form GSTR-9. Thus, if a person files Form GSTR-9 without Form GSTR-9-C, it would amount to non-filing of returns as required under Section 44 of the Act, entitling the authorities to impose the late fee. Since these questions in detail were not dealt with by the Kerala High Court in Anishia Chandrakanth case, unable to agree with the decision rendered therein - The writ petition is dismissed [Read less]

Customs - Import of self-adhesive tapes, Undervaluation - Rejection of declared value – Vide the impugned order the Tribunal held that Department has to prove undervaluation by evidence or information about comparable imports and casting suspicion on invoice produced by importer is not sufficient to reject it as evidence of value of imported goods. If charge of undervaluation cannot be supported either by evidence or information about comparable imports, benefit of doubt must go to importer – Revenue in appeal – SC HELD - Not inclined to interfere with the judgment and order of the Tribunal, hence, the Revenue appeal... [Read more]

Customs - Import of self-adhesive tapes, Undervaluation - Rejection of declared value – Vide the impugned order the Tribunal held that Department has to prove undervaluation by evidence or information about comparable imports and casting suspicion on invoice produced by importer is not sufficient to reject it as evidence of value of imported goods. If charge of undervaluation cannot be supported either by evidence or information about comparable imports, benefit of doubt must go to importer – Revenue in appeal – SC HELD - Not inclined to interfere with the judgment and order of the Tribunal, hence, the Revenue appeals are dismissed [Read less]

GST – Invoking of proceedings under Rule 86A of CGST Rules, 2017 based on information received from authorities outside the State - Petitioners' Electronic Credit Ledgers (ECrL) were blocked by invoking powers under Rule 86A of the CGST Rules based on information received from authorities outside the State that the suppliers of the petitioners were found to be non-existent or their registrations had been cancelled - Whether the proceedings initiated under Rule 86A were legally sustainable in the absence of the concerned officer's independent satisfaction about the genuineness of the transactions entered into by the petit... [Read more]

GST – Invoking of proceedings under Rule 86A of CGST Rules, 2017 based on information received from authorities outside the State - Petitioners' Electronic Credit Ledgers (ECrL) were blocked by invoking powers under Rule 86A of the CGST Rules based on information received from authorities outside the State that the suppliers of the petitioners were found to be non-existent or their registrations had been cancelled - Whether the proceedings initiated under Rule 86A were legally sustainable in the absence of the concerned officer's independent satisfaction about the genuineness of the transactions entered into by the petitioners – HELD - The Rule 86A contemplates invocation of the provision only in cases where the officer has reasons to believe that the credit of input tax has been fraudulently availed or is ineligible. Merely relying on information received from authorities outside the State regarding non-existence of suppliers or cancellation of their registrations is not sufficient to invoke the drastic measure under Rule 86A, without the officer's own satisfaction about the genuineness of the transactions entered into by the taxpayers. The officer concerned must have independent satisfaction about the existence of "reasons to believe" before invoking Rule 86A, and that such satisfaction cannot be based on borrowed satisfaction of another officer - The petitioners has produced relevant documents like invoices, e-way bills, and GSTR-2B entries to substantiate the genuineness of the transactions, which the respondents had not examined. In the absence of the officer's independent satisfaction about the transactions being bogus, the proceedings under Rule 86A are not legally sustainable. Further, the proceedings under Rule 86A cannot be a substitute for the proper recovery proceedings under Sections 73 and 74 of the CGST Act - The impugned orders blocking the petitioners' ECrL are set aside and the Respondents are directed to make the credit ledgers operative forthwith. However, this would not preclude the respondent authorities from initiating fresh proceedings under Rule 86A or Sections 73 and 74 of the CGST Act, if there are proper materials to show that the specific transactions entered into by the petitioners were bogus - Blocking of credit ledger with negative balance Fact - In one of the writ petitions (W.P.C. No.12186 of 2026), the petitioner contended that the credit ledger which was blocked had a negative balance - Whether blocking of the credit ledger with negative balance is legally valid – HELD - The blocking of the credit ledger with negative balance is not legally valid, following the principles laid down in the judgments relied upon by the petitioner. The decision of the Delhi High Court in Karuna Rajendra Ringshia case was also upheld by the Supreme Court. The respondents to make the electronic credit ledgers of the petitioners operative forthwith, including the credit ledger with negative balance. [Read less]

GST - Applicability of amendment to Rule 96(10) of the CGST Rules under Notification No. 54/2018 - Recovery of the refund amounts relying on the Gujarat High Court's judgment in Cosmo Films Ltd. v. Union of India which held that Notification No. 54/2018 was effective from October 23, 2017. Petitioner’s case that the Gujarat High Court later modified its earlier judgment, clarifying that the notification came into effect only from October 9, 2018 – HELD - All the transactions for which the show cause notice and order were issued were before October 9, 2018, the date from which the amendment to Rule 96(10) under Notific... [Read more]

GST - Applicability of amendment to Rule 96(10) of the CGST Rules under Notification No. 54/2018 - Recovery of the refund amounts relying on the Gujarat High Court's judgment in Cosmo Films Ltd. v. Union of India which held that Notification No. 54/2018 was effective from October 23, 2017. Petitioner’s case that the Gujarat High Court later modified its earlier judgment, clarifying that the notification came into effect only from October 9, 2018 – HELD - All the transactions for which the show cause notice and order were issued were before October 9, 2018, the date from which the amendment to Rule 96(10) under Notification No. 54/2018 came into effect. Since the earlier judgment relied upon by the respondents was subsequently modified, the transactions of the petitioner cannot be subjected to the conditions in the Notification - The petitioner is entitled to the IGST refunds claimed, as the transactions were made before the date from which the amendment to Rule 96(10) under Notification No. 54/2018 came into effect - The show cause notice and order are quashed and the petition is allowed [Read less]

GST – Validity of blocking of input tax credit in electronic credit ledger (ECL) beyond one year from date of imposition of restriction under Rule 86A(3) of the CGST Rules, 2017 – Requirement of pre-decisional hearing before blocking the ITC - HELD - The blocking of ITC in the ECL of the petitioner beyond the period of one year is against the mandate of Rule 86A(3) of the CGST Rules. The Rule 86A(3) clearly provides that the restriction on the electronic credit ledger cannot continue beyond a period of one year from the date of imposition of such restriction – Further, the absence of a pre-decisional hearing to the p... [Read more]

GST – Validity of blocking of input tax credit in electronic credit ledger (ECL) beyond one year from date of imposition of restriction under Rule 86A(3) of the CGST Rules, 2017 – Requirement of pre-decisional hearing before blocking the ITC - HELD - The blocking of ITC in the ECL of the petitioner beyond the period of one year is against the mandate of Rule 86A(3) of the CGST Rules. The Rule 86A(3) clearly provides that the restriction on the electronic credit ledger cannot continue beyond a period of one year from the date of imposition of such restriction – Further, the absence of a pre-decisional hearing to the petitioner before blocking the ITC in the ECL would be in violation of the principles of natural justice, as it entails civil consequences and would have a crippling effect on the business of the petitioner. The provisional attachment order is quashed. The Dept is directed to unblock the petitioner's ECL, and defreezed the petitioner's bank accounts - The writ petition is disposed of [Read less]