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2026-VIL-924-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - Cenvat Credit on input services including car booking software, servicing of company-owned vehicles, chartered aircraft, civil and interior works, demerger-related professional services, catering services, employee insurance, security and housekeeping services, services relating to immovable property, club membership, rent-a-cab services and marine insurance relating to exports – HELD - The eligibility of input services depends upon satisfaction of the criteria that such services must have a real and sufficient nexus with the assessee's output service and must not be utilized for personal use or consumption... [Read more]

2026-VIL-923-CESTAT-CHD-ST | CESTAT SERVICE TAX

Service Tax - Inclusion of Wall Rent in Assessable Value of Advertising Services – Appellant providing wall advertising and hoarding services to various clients makes payments to wall owners for rent of walls and recovers the same from clients through debit notes, but does not include wall rent in the invoiced service charges for the purpose of computing service tax liability - Whether expenses incurred by the advertising agency on wall rent should be included in the assessable value for the purposes of payment of service tax - HELD - Under Section 67 of the Finance Act, 1994, service tax is chargeable on the gross amount charged for providing taxable service - The wall rent must be included in the assessable value as it constitutes an essential and intrinsic component of the taxable advertising service that cannot be separated from the service rendered. The argument that wall rent represents reimbursable expenditure incurred as a "pure agent" fails because the appellant has not established any direct contractual arrangement between the clients and wall owners. The so-called "Agreement Form Cum Receipt" signed only by wall owners cannot constitute an agreement between contracting parties - The Rule 5(2) of the Service Tax Valuation Rules, 2006, which provides exclusion for a "pure agent," requires strict compliance with all prescribed conditions including tripartite or bipartite agreements, which are absent in this case. Since the wall rent was organically connected with the taxable service and constituted an essential ingredient thereof, it remains includible in the assessable value notwithstanding the manner of invoicing or the fact that amounts were recovered separately through debit notes – The demand for inclusion of wall rent in assessable value is upheld in favour of the revenue - Inclusion of Value of Printed Flex Material supplied by Related Entity - Whether the value of flexes supplied by the related entity should be included in the assessable value of the advertising service provided by the appellant - HELD - The value of printed flex material cannot be included in the assessable value of the advertising service. Although the entities share common management with a proprietor being both the proprietor of the advertising agency and Karta of the HUF, mere commonality of management does not justify clubbing of turnover or disregarding separate legal identity. The printed flex material constitutes identifiable movable goods separately invoiced and subjected to VAT/sales tax. Notification No. 12/2003-ST specifically exempts the value of goods sold during provision of taxable service subject to documentary proof. Since the transaction represents a separate sale of goods with separately ascertainable value, supplied by an entity other than the advertising agency, and applicable VAT/sales tax has been paid on the material, the value cannot be included in the service tax base merely because the goods are utilized in execution of the service – The demand for inclusion of the value of printed flex material is rejected in favour of the appellant - Invocation of Extended Period of Limitation - Whether the department is justified in invoking the extended period of limitation for issuing the Show Cause Notice on the grounds of suppression of facts - HELD - The requirement of "suppression of facts" and "wilful misstatement" under Section 73(1) demands deliberate intent and positive acts of evasion by the assessee, and the burden of proving satisfaction of these preconditions lies on the revenue. Mere negligence, bona fide mistakes, or divergent interpretations of law are insufficient grounds for invoking the extended period - The prior knowledge or capacity of the Department to acquire relevant knowledge through audits, filed returns, or site visits effectively negates any allegation of suppression. Since the Show Cause Notice was issued consequent to an audit, and the appellant was regularly filing returns and paying taxes, the Department cannot invoke the extended period by merely stating it is a case of self-assessment without having first called upon the assessee for information or scrutinized the correctness of duty assessed – The invocation of extended period of limitation is rejected, and consequently the penalties imposed cannot be sustained. [Read less]

2026-VIL-919-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax – Demand of Service Tax on Directors’ Remuneration under Reverse Charge Mechanism - Employer-employee relationship, tax deduction at source under section 192 of the Income Tax Act and issuance of Form 16 - Whether remuneration paid to whole-time directors functioning as employees attracts service tax under RCM – HELD - The demand of service tax on remuneration paid to whole-time directors cannot be sustained as the provision of service by an employee to the employer in the course of or in relation to his employment is specifically excluded from the definition of service under section 65B(44)(b) of the Finance Act, 1994. A whole-time director is recognized as key managerial personnel under the Companies Act and is held responsible for any default or violation, thereby establishing an essential employer-employee relationship - The fact that whole-time directors receive variable pay in the form of commission or profit-sharing does not alter their employee status. Tax deduction at source under section 192 of the Income Tax Act and issuance of Form 16 corroborate the employer-employee relationship – The whole-time Director is essentially an employee of the Company and accordingly, whatever remuneration is being paid in conformity with the provisions of the Companies Act, is pursuant to employer-employee relationship and the mere fact that the whole-time Director is compensated by way of variable pay will not in any manner alter or dilute the position of employer-employee status between the company /Appellant and the whole-time Directors - Further, when the original show cause notice on which the subsequent demands were based has been set aside by the Tribunal in the company's own earlier appeal, the subsequent demand notices relying on the same grounds cannot sustain - For non-whole-time directors, where the company has discharged service tax liability through its separate office and filed service tax returns disclosing the same, the demand cannot be made from another office in the absence of centralized registration and without any evidence showing that these directors also rendered services to that office during the relevant period - The impugned orders are set aside and the appeals are allowed [Read less]

2026-VIL-925-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs - Valuation of second-hand imported machinery – Load Port Chartered Engineer's Certificate – Rejection of declared transaction value – Import of used Fuji Printer Processors classifying under CTH No.90101000 - Customs authority enhanced value relying on local Chartered Engineer's Certificate – Whether the rejection of declared transaction value premised on Load Port Certificate and enhancement based on local Chartered Engineer's Certificate without independent basis is tenable – HELD - The Customs authorities have merely substituted the opinion of local Chartered Engineer for that of Load Port Chartered Engineer without any sufficient independent basis for such adoption. The local Certificate lacks details of market enquiry conducted, fails to elaborate the rationale for arrived value, silent on operational condition testing, and contradicts the Load Port Certificate which contains assessment/technical details and states machines to be in working condition. Further, Customs authorities have not impugned the Load Port Certificate as not genuine or fraudulently obtained – The Board Circular No.4/2008-Customs dated 12-02-2008 stipulates that in absence of proper Load Port Certificate, local Chartered Engineer's Certificate may be accepted, thereby indicating primacy of Load Port Certificate - There must be reasonable basis supported by cogent evidence for believing transaction value is unacceptable, which must be clearly communicated by reasoned order. Mere suspicion is antithetical to conducive business environment. The non-issuance of speaking order by Assistant Commissioner despite statutory mandate under Section 17(5) of Customs Act, 1962 and Appellate Authority's failure to controvert specific contentions constitutes violation of natural justice – Rejection of Load Port Certificate in favour of local Certificate is untenable, consequent rejection of transaction value and enhancement cannot sustain, and declared value is acceptable for assessment under Section 14 of Customs Act, 1962 – The impugned order is set aside and the appeal is allowed [Read less]

2026-VIL-921-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs law - EPCG Scheme – Validity of confiscation of imported capital goods and imposition of penalty for non-fulfilment of export obligation - Whether confiscation of imported capital goods and imposition of penalty are sustainable when the entire differential duty along with applicable interest stands paid by the importer for failure to fulfil the export obligation within the stipulated period under the EPCG Scheme – HELD - Upon payment of duty and interest, the importer exits the EPCG scheme and the goods cannot be held liable to confiscation under Section 111(o) of the Customs Act, 1962. Non-fulfilment of export... [Read more]

2026-VIL-914-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - Intellectual Property Services, Service Tax on Foreign Technology Transfer - Appellant entered into an International Technology Transfer Agreement with a foreign entity holding proprietary rights in technical knowledge for rotor blade manufacture. Under the agreement, the foreign entity provided drawings, technical information, and technical assistance of skilled personnel for a fee, while retaining copyright on documents and designs and granting the recipient exclusive rights to produce, sell and provide after-sales service in India - Whether the transfer of technical know-how, designs, and specifications from a foreign entity to an Indian entity constitutes "Intellectual Property Service" taxable under service tax on Reverse Charge basis when the technical know-how was not registered as an intellectual property right under Indian law – HELD - For a service to be taxable as intellectual property service under section 65(105)(zzr) read with section 65(55a) of the Finance Act, 1994, the intellectual property right must be "under any law for the time being in force", meaning it should be registered with trademark, patent or design authorities as recognized under Indian law. Since the technical know-how in the present case was admittedly not registered as an intellectual property right under any law in force in India, the Department failed to discharge its burden of proof that the activity was exigible to tax as intellectual property service – It is settled that registration with appropriate authorities is mandatory for taxation under the intellectual property service category, and absence of such registration means there exists no intellectual property right recognized under Indian law, thereby precluding service tax liability on reverse charge basis - The demand for service tax on intellectual property services is set aside - Scope of Consulting Engineering Services - Whether services rendered under a composite agreement involving collaborative development work, design, detailing, prototype-related activities and production start-up support constitute "Consulting Engineering Service" taxable under section 65(105)(g) of the Finance Act, 1994 – HELD – The Consulting Engineering service under section 65(105)(g) is limited to services rendered by a consulting engineer in relation to "advice, consultancy or technical assistance" in engineering disciplines, and does not extend to execution-oriented obligations or actual participation in the creation of deliverables. The definition employs the word "means", making it exhaustive and confining the levy only to services expressly enumerated therein – Applying the principle of noscitur a sociis, interpreting "technical assistance" by reference to the cognate terms "advice" and "consultancy", which require deliberation, conferring and rendering of opinion, but exclude actual performance of work - The contract could not be vivisected to isolate engineering skill embedded in performance and tax it as consulting engineering service. The erection, installation, commissioning and development work constitute execution of jobs and not consulting engineering service - The demand for service tax on consulting engineering services is set aside and the appeal is allowed in favour of the appellant. [Read less]

2026-VIL-49-SC-CE | Supreme Court CENTRAL EXCISE

Central Excise - Meaning and application of "manufacture" under Section 2(f) of Central Excise Act, 1944 – Transformation test – Two-fold test for determining manufacturing activity Cutting and grooving of aluminum composite panels – Appellant-assessee undertook the activity of importing pre-coated aluminum composite panels and cutting them into rectangular or square panels of required sizes according to design requirements, making grooves on the back side to enable affixing to buildings, and then erecting frames using angles, clamps and fasteners - Revenue contended that the process amounts to manufacture and attracts excise duty - Whether the process of cutting and grooving of aluminum composite panels amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944 – HELD - To ascertain excisability of goods, a two-fold test must be applied, first, whether the process results in emergence of goods with distinct commercial identity, name, character or use indicating transformation; and second, whether the transformed goods are marketable as distinct goods. Both tests must be satisfied cumulatively - The process undertaken does not result in emergence of distinct goods having their own character, identity or use and the essential character of goods remains entirely unchanged. The process of cutting, grooving and bending merely adapts the dimensions and shape for specific use and amounts to no more than preparation, sizing and installation for use as cladding or facade material. The final steps of erecting frame at site, fixing the cut and grooved panels onto frame using angles, clamps and sealing gaps are installation activities that do not result in creation of new distinct goods - The test of whether a distinct product has come into existence is not merely a test of physical transformation but a collective test of transformation into new product. The question is whether goods could be regarded as different commercially, not whether they look different. Mere cutting and adaptation of dimensions does not constitute manufacture. The location where the process is carried out and the fact that specifications are given by the assessee do not elevate such activities to the level of manufacture - The distinction between "processing" and "manufacturing" is critical. For an activity to amount to manufacture, it must produce a "transformation" resulting in a new and different article with a distinctive name, character or use, not merely process goods that retain their substantial identity - The process undertaken by the assessee does not result in a distinct product and therefore does not amount to manufacture under Section 2(f) of the CEA, 1944 - The impugned judgment is set aside and the appeal is allowed - Burden of proof – Marketability of goods – Burden and standard of proof required to be satisfied for establishing marketability of manufactured goods – HELD - The burden of establishing marketability of manufactured goods lies on the Revenue and must be discharged by demonstrating objective evidence that the goods are marketable - Marketable goods must be capable of standing alone in the market, recognized or traded on the basis of what they are, not on the basis of what they were. Goods are marketable when they are capable of being bought or sold in the market or are understood to be available in the market as a distinct and independent product known in commercial parlance or to the commercial community for purposes of buying and selling. Marketability must be established by objective evidence, not by assertion or assumption. The conduct of the assessee in paying excise duty in the past cannot serve as evidence of marketability. Mere mention in dictionaries or chemical directories does not establish marketability - Market enquiries must be substantiated with actual contents rather than mere reference to having conducted an enquiry. The Revenue must affirmatively demonstrate by placing adequate material on record - The burden of proving marketability of goods lies on the Revenue, and it must be discharged through objective evidence demonstrating that the goods are commercially known, capable of being bought and sold in the market as distinct products, according to a standard of proof calibrated to the specific nature and character of the goods in question - Jurisdiction of High Court under Section 35G of Central Excise Act, 1944 – Excisability of goods - Whether the High Court has jurisdiction to decide questions relating to excisability of goods under Section 35G of the Central Excise Act, 1944 – HELD - The High Court lacks jurisdiction to determine the excisability of goods under Section 35G of the Central Excise Act, 1944, as the question of excisability is intrinsically connected with the determination of rate of duty for purposes of assessment, which falls within the exclusive jurisdiction of the Supreme Court under Section 35L(1)(b) - The expression "determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment" in Section 35G must be interpreted to include questions of excisability, as excisability is a precursor to assessment and has direct and proximate relationship with rate of duty - The jurisdiction of the High Court is a creature of statute and conditions precedent to its exercise must be strictly construed. The mere fact that a question is framed as a question of law does not confer jurisdiction if the underlying subject matter of the order falls within the exclusionary bracket - The High Court therefore erred in entertaining the appeal on the question of excisability and the matter should have been brought before the Supreme Court - Clarificatory nature and retrospective application of sub-section (2) of Section 35L of Central Excise Act, 1944 - Section 35L(2) was inserted by Finance Act, 2014 to clarify that determination of disputes relating to taxability or excisability of goods is covered under the expression "determination of any question having a relation to rate of duty" – Whether sub-section (2) of Section 35L inserted by Finance Act, 2014 is clarificatory in nature and whether it has retrospective effect – HELD - The true test of whether an amendment is clarificatory depends not on the label attached to it but on whether the amendment, on purposive and contextual reading, makes explicit what was already implicit in the original provision - The Finance Bill Notes on Clauses specifically stated that the amendment seeks to clarify that determination of disputes relating to taxability or excisability is covered under the expression "determination of any question having a relation to rate of duty". The amendment does not create any new right of appeal, vest new jurisdiction in any court, impose new obligation upon assessees, or alter the mechanism of assessment. It merely clarifies that questions of excisability always fell within the expression "rate of duty," and any doubt to the contrary was unwarranted. The amendment was introduced to clarify the position of law, remove existing doubts, and correct judicial error, rendering it declaratory in nature. Procedural amendments and clarificatory amendments are presumed to be retrospective unless there is express indication to the contrary - The sub-section (2) of Section 35L operates retrospectively from the date the principal provision came into effect. [Read less]

2026-VIL-922-CESTAT-CHE-CE | CESTAT CENTRAL EXCISE

Central Excise - Clubbing of clearances of sister concerns – SSI exemption under Notification No. 8/2003 C.E. - Revenue identified three sister concerns operating from different premises with separate registrations, power connections, bank accounts and income tax returns – Authorities issued show cause notice to the main unit proposing to club the clearances of these three sister concerns to deny SSI exemption and demand excise duty without issuing separate show cause notices to the three sister concerns - Whether the clubbing of clearances of three sister concerns with that of the main unit for determining aggregate value of clearances for SSI exemption can be sustained – HELD – The clubbing of clearances of sister concerns cannot be sustained without issuing separate show cause notices to those units. The authority must put the sister concerns on statutory notice indicating the intention to treat them as dummy units and invite their reply with evidence to substantiate that they were independent manufacturers before clubbing their clearances. The one-sided approach to treat other units as dummy without putting them on statutory notice is unknown and unenforceable in law - Where turnover of multiple units is sought to be clubbed, all such units must be issued show cause notices. The principles of natural justice mandate that no person shall be condemned without an opportunity to present their case. The failure to comply with this legal requirement vitiates the order. The order clubbing clearances of the three sister concerns with the main unit is set aside as being in violation of natural justice and principles of law - The impugned order is set aside and the appeals are allowed - Reliance on retracted statements without corroborative evidence - Whether statements recorded by investigating officers during investigation, which are subsequently retracted by the declarants, can be relied upon in adjudication proceedings without examining the witnesses and providing cross-examination opportunity – HELD - The reliance on retracted statements without corroborative independent evidence cannot sustain findings in adjudication proceedings. The Central Excise Act, 1944 mandates under Section 9D that statements made during inquiry shall be relevant for proving the truth of facts contained therein only when such persons are examined as witnesses before the adjudicating authority and the authority forms an opinion that statements should be admitted in evidence, following which cross-examination opportunity must be provided. This procedure is mandatory and failure to comply means no reliance can be placed on statements recorded during investigation - The fact that statements were subsequently retracted further weakens the authority's reliance on them. The commissioner's reliance on such inadmissible statements without proper justification cannot be used against the appellant – The findings based on inadmissible retracted statements without independent corroborative evidence are set aside and cannot form the basis of any demand or penalty - Allegation of clandestine manufacture and removal - Whether charges of clandestine manufacture and removal of excisable goods can be sustained on the basis of statements, seized notebooks and speculation without documentary evidence – HELD - It is well settled legal position that charges of clandestine manufacture and removal must be established by marshaling material evidence substantiating unaccounted purchase of raw materials, evidence of manufacture, identity of buyers, transportation and delivery of goods to such buyers, and receipt of consideration. Mere speculation or assumption cannot form the basis for such serious allegations - In the present case, the comparison of seized notebooks with statutory RG1 and ER-3 returns completely negates the allegation as the statutory returns show far higher quantities than the notebooks. The revenue has not placed on record any documentary evidence regarding unaccounted raw material, unaccounted electricity consumption, unaccounted labour, or any material evidence substantiating clandestine operations - The findings of clandestine manufacture and clearance without payment of duty are set aside for want of substantiating documentary evidence - Demand of duty based on clubbing of clearances when unit itself within SSI limit - Whether duty can be demanded on the basis of aggregate clearances when the main unit's own clearances are within the SSI exemption limit – HELD - Since the main unit's own clearances as per ER-1 and ER-3 returns are within the SSI exemption limit and the demand of duty is based solely on clubbing the clearances of sister concerns which is unsustainable. Further, the unit has furnished all relevant data in its returns and the revenue department has not disputed or denied the figures. When facts are within the knowledge of the department and disclosed by the assessee in its returns, the department cannot later allege suppression of facts with intent to evade duty. If the unit was not eligible for SSI exemption on the basis of its own clearances for any particular period, the Department should have initiated proceedings immediately upon disclosure in returns rather than waiting for investigation and then alleging suppression. The longer period of limitation under Section 11A(4) cannot be invoked in such circumstances - The demand of duty based on clubbing of clearances is unsustainable and is set aside - Confiscation of goods - Whether goods can be confiscated under Rule 25 of Central Excise Rules, 2002 when the authority relies only on retracted statement of the possessor without any other admissible and relevant documentary evidence that the goods were non-duty paid. – HELD - The confiscation of goods requires substantiation that the goods are non-duty paid excisable goods. The authority cannot rely on retracted statements without other admissible and relevant documentary evidence to establish non-duty payment status of seized goods. In the present case, the proprietor had retracted his statement by filing an affidavit. No other documentary evidence has been placed on record to prove that the goods in question were manufactured and cleared by the main unit without payment of duty. The seizure proceeds are solely based on the retracted statement and the speculation regarding clandestine removal which stands disapproved - The order of confiscation of goods is set aside - Personal penalty under Rule 26 of Central Excise Rules, 2002 - Whether personal penalties can be imposed when the findings regarding clandestine manufacture and confiscation of goods are set aside – HELD - The personal penalty under Rule 26 of Central Excise Rules, 2002 is imposable only if two conditions are cumulatively satisfied: first, the person has personally dealt with excisable goods, and second, the person has personally dealt with excisable goods with knowledge or having reason to believe that the goods are liable for confiscation - The Rule 26 requires as a condition precedent that excisable goods which the person knows or has reason to believe are liable to confiscation. In the present case, the clubbing of clearances which forms the basis of all charges stands disapproved, the allegations of clandestine manufacture and removal stand disapproved, and consequently the confiscation order stands set aside. Since the goods are not liable for confiscation, the condition precedent for imposing personal penalty does not exist – The personal penalties imposed under Rule 26 are set aside. [Read less]

2026-VIL-915-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs - Classification of mono potassium phosphate as fertiliser — Appellant declared the classification under CTH 31056000, attracting duties of 5% BCD, 1% CVD and nil SAD. Revenue disputed this classification and re-classified the goods under CTH 28352400 by invoking CBEC Circular No. 44/2001 dated 06.08.2001 - Whether mono potassium phosphate should be classified under CTH 31056000 (fertilisers) as declared or under CTH 28352400 (chemical compounds) as reclassified by the Revenue – HELD – The CBEC Circular No. 44/2001 applies only to separate chemically defined single products like calcium nitrate and does not a... [Read more]

2026-VIL-920-CESTAT-ALH-ST | CESTAT SERVICE TAX

Service Tax - Exemption to water supply services to local authorities - Appellant entered into contracts with municipal water Departments for operation and maintenance of drinking water treatment plants at various locations - Whether the services for operation and maintenance of drinking water plants supplied to municipal authorities qualify for exemption under Entry No. 25 of the Mega Exemption Notification No. 25/2012-ST – HELD - The services rendered by the Appellant pertains to the operation of Nalkoop at different locations. The services rendered to municipal water Departments pertain to the supply of water, which c... [Read more]

2026-VIL-537-DEL | High Court SGST

GST – Failure to refund IGST on exports through foreign post offices – Whether the customs authorities are obligated under section 16(3) of the IGST Act, 2017 and Rule 96 of the CGST Rules, 2017 to process and grant refund of IGST paid on goods exported through foreign post offices when regulatory procedures for such refunds were not prescribed during the export period – HELD - While the customs officers appear handicapped due to the absence of prescribed procedures by the CBIC, this administrative failure does not absolve the respondents of their statutory obligation. The statutory mandate clearly entitle registered... [Read more]

2026-VIL-25-GSTAT-DEL-NAPA | Tribunal SGST

GST – Anti-Profiteering - Principles of res judicata, Maintainability of fresh investigation in Anti-Profiteering Proceedings - DGAP had already conducted a detailed investigation against the same respondent for the identical project and period, quantifying the profiteered amount - The complainant later requested unconditional withdrawal of his complaint after receiving possession of his flat, and a settlement deed between the parties was executed settling all disputes - Whether a fresh investigation is maintainable and required to be initiated on a complaint regarding profiteering when the subject matter of profiteering... [Read more]

2026-VIL-927-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs - Classification of Bluetooth Wireless Headsets under Customs Tariff – Appellant imported Bluetooth wireless headsets, earbuds and neckbands classifying under Customs Tariff Item 85176290 - Revenue contends that the goods are classifiable under Customs Tariff Item 85183000 as "headphones and earphones whether or not combined with a microphone" – Whether Bluetooth wireless headsets with mobile telephony function, which are transceivers capable of receiving radio frequency analog signals from other devices and converting them into digital signals and transmitting them back in a wireless network, are classifiable ... [Read more]

2026-VIL-926-CESTAT-CHD-CU | CESTAT CUSTOMS

Customs – Enhancement of Declared Value based on NIDB Data – Validity of enhancement in value based solely on NIDB data without corroborative evidence, contemporaneous import comparisons, or cogent material and without proper recording of reasons – HELD - The reasonable doubt contemplated under Rule 12 of the Customs Valuation Rules must be based on empirical and legally justifiable factors informed by objectivity. Mere reliance on NIDB data alone without independent, cogent evidence or corroborative material cannot form the basis for value reassessment - The acceptance of enhanced value under compulsion does not con... [Read more]

2026-VIL-917-CESTAT-CHD-ST | CESTAT SERVICE TAX

Service Tax - Refund of amounts deposited under protest during investigation proceedings when demand is subsequently dropped – Applicability of limitation period under Section 11B of the Central Excise Act, 1944 - Whether a refund claim filed after the dropping of tax demand is barred by the one-year limitation period under Section 11B of the Central Excise Act, 1944, where the amount was deposited during investigation without following the formal procedure of marking payments as "under protest" on challans – HELD - Any payment made under compulsion during investigation proceedings carries an inherent element of protes... [Read more]

2026-VIL-918-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - Valuation – Cum-duty benefit – Appellant engaged in renting of immovable properties within temple premises received rental consideration without separately levying service tax – Demand of service tax on the gross amount received. The assessee claimed that the consideration should be treated as inclusive of service tax (cum-duty valuation) under Section 67(2) of the Finance Act, 1994 - Whether cum-duty benefit could be extended when service tax was not separately collected or invoiced – HELD - Where service provider does not separately collect service tax from customers, the consideration received is deemed inclusive of service tax - Service tax being an indirect tax, when consideration is received for services rendered without separately collecting tax, such consideration is deemed to be inclusive of service tax payable by the ultimate consumer. The provisions of Section 67(2) of the Finance Act, 1994 apply and provide that where the gross amount charged is inclusive of service tax, the value of taxable service shall be the amount which, after adding service tax, equals the gross amount charged. Since no evidence exists that the assessee separately collected tax but failed to pay it, the consideration must be treated as cum-duty – The impugned order denying cum-duty benefit is set aside - Levy of Penalty – Absence of mens rea – Penalty under Section 78 of Finance Act, 1994 for suppression of facts or wilful misstatement – HELD - For invoking penalty under Section 78, it must be established through clear and positive evidence that the duty was not paid due to fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade payment. The mental element introduced by the word "willful" requires examining the state of mind of the assessee. The mere detection of short payment during an inspection, without any corroborative evidence demonstrating conscious and deliberate intent to evade tax, cannot ipso facto justify penalty. The severity of penalty under Section 78 indicates that the conduct must be of a serious and blameworthy nature. The imposition of penalty under Section 78 is unsustainable and set it aside - Extended period of limitation – HELD - The law recognises that the ingredients for invoking extended period of limitation, namely suppression of facts, wilful misstatement, or intent to evade, are the same as those required for imposing penalty under Section 78. Mere failure to pay service tax without evidence of fraud, collusion, or wilful misstatement is insufficient to attract extended period. Since the conduct of the assessee did not constitute suppression of facts or wilful intent to evade, the demand arising from both show cause notices must be confined to the normal period of limitation only, and the demand beyond the normal period is set aside - Per AJAYAN T.V. [Member (J)]: The relief sought in the appeal is, in essence, confined to the grant of cum-tax benefit and to the setting aside of the penalty imposed. Nevertheless, the Ld. Advocate for the appellant had made his submissions at the bar on the issue of invocation of the extended period. The discussion contained in paragraphs 4 to 10 may not be strictly necessary for the determination of the issues arising from the appeal. At the same time, in agreement with the reasoning and findings recorded and also concur with the ultimate conclusion and the directions. [Read less]

2026-VIL-908-CESTAT-CHD-CE | CESTAT CENTRAL EXCISE

Central Excise - Admissibility of Cenvat Credit - Nexus with Manufacturing - Cenvat credit on various input services including freight and clearing on export, construction service, insurance/mediclaim for staff, works contract service, mandap keeper's service, interior decorator service, club or association services, photography services, asset portfolio and fund management, repairing motor vehicle, architect service, outdoor catering service, and repair and maintenance service of motor vehicle – HELD - In the assessee’s own case, the Tribunal has allowed the Cenvat Credit to the assessee on most of the impugned input ... [Read more]

2026-VIL-916-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs - Classification of Liquid Crystal Display panels as components of automotive instrument clusters – Appellant imported Liquid Crystal Display (LCD) panels for use in manufacturing Automotive Instrument Clusters (AIC) and classifies them under Customs Tariff Heading (CTH) 9013 as Liquid Crystal Devices attracting nil duty - Revenue contends that since the LCD panels are solely designed and meant for use in motor vehicles, they should be classified under CTH 87089900/87149010 as parts and accessories of motor vehicles, attracting Customs duty - Whether LCD panels merit classification under CTH 90138010 as declared by the importer or under CTH 87089900/87149010 as parts of motor vehicles as contended by the Revenue – HELD - The goods must be assessed to duty in the condition in which they are imported and not how they become after use. The point of taxation is at the time of import and not at a later stage of manufacturing. The CTH 9013 specifically provides for Liquid Crystal Devices not constituting articles provided more specifically in other headings, and the Explanatory Notes clarify that such more specific description must be by nomenclature or naming of the product or group of products. The terms "parts and accessories" cannot be construed as a more specific description by nomenclature - The Section Note 2 clause (g) of Section XVII specifically excludes articles of Chapter 90 from the scope of Chapter 87, and Section Note 3 merely conveys that classification of parts and accessories under Chapter 87 is conditional upon satisfying the sole or principal use condition and cannot override other statutory factors for classification - Following the ratio of the Supreme Court in Videocon Industries Limited and other cases, it is held that CTH 9013 being specific to LCDs, and parts and accessories of motor vehicles under CTH 8708/8714 being generic and not more specific in heading, the LCD imported merits classification under CTH 9013. The decisions cited by the revenue pertaining to classification of nuts, bolts and nameplates are distinguished as those decisions involved classification of items already falling within the ambit of Chapter 87 under the Central Excise Tariff Act and not import of an item like LCD becoming a component of AIC for ultimate use in motor vehicles - The appeal is allowed - Charge of misdeclaration and suppression and applicability of extended period of limitation - Revenue contends that the importer has deliberately mis-declared the goods by not indicating the intended purpose or end-use in the Bills of Entry and has thereby suppressed information, justifying invocation of extended period of limitation under Section 28(4) of the Customs Act, 1962 – HELD – The Section 46 of the Customs Act does not mandate indication of the usage of items at the time of import. The Adjudicating Authority has sustained the charge of suppression on the ground that other importers mentioned end-use in their Bills of Entry, which is legally flawed as what should be declared must be statutorily mandated and voluntary declarations by others do not cast an obligation on others to do the same without statutory prescription - When an SCN relies on certain documents to level a serious charge of suppression, copies of such documents are expected to be furnished to the noticee, which was not done in the present case despite repeated requests. The importer has clearly described the goods in the Bills of Entry as LCD/Liquid Crystal Device/Liquid Crystal Display matching with the descriptions in the respective invoices issued by foreign suppliers. The goods were in most cases physically inspected by Customs officials before clearance, if officers had any doubt regarding correctness of classification, they should have called for further information and ensured correct declaration through re-assessment under Section 17 - Since the description of goods has been correctly stated, nothing has been suppressed from the knowledge of the Department. The issue being interpretational in nature, the extended period of limitation under Section 28(4) is unwarranted - The appeal is allowed on limitation as well. [Read less]

2026-VIL-911-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs - Import of Sanitary Products without BIS Certification – Applicability of Quality Control Order – Dept rejected the clearance on the ground that the goods were imported without valid BIS Registration Certificate and Standard Mark in violation of the Medical Textiles (Quality Control) Order, 2024 and Section 17 of the BIS Act, 2016 - Confiscation of the goods under Section 111(d) of the Customs Act, 1962 along with redemption fine and penalty - Whether the imported goods covered by the Medical Textiles (Quality Control) Order, 2024 were properly confiscated as prohibited goods when the importer claimed the status of a MSME entitled to extended timeline up to 01.04.2025 for compliance – HELD - While the Quality Control Order imposes a mandatory requirement for BIS certification and Standard Mark on imported sanitary products, the impugned order suffered from serious procedural defects. The Commissioner failed to analyse the guidance documents issued by the BIS and the concerned line ministry with requisite technical expertise, proceeded mechanically without following the QCO guidelines in letter and spirit, and neglected to verify the importer's claim of being a MSME despite the same being contended throughout the proceedings - The order was not a speaking order, particularly because it did not properly address the applicability of the extended timeline provisions to small enterprises, did not consider the date of import based on Bill of Lading and Shipping Bill as prescribed under Foreign Trade Policy, and failed to afford reasonable opportunity to the importer to place supporting evidence - While the goods must conform to Indian Standard IS 5405:2019 and bear BIS Standard Mark, the order required remand as it lacked proper analysis - The matter is remanded to the Commissioner to pass a fresh de-novo adjudication order, with strict adherence to principles of natural justice, proper consideration of the importer's MSME status and entitlement to extended timeline - the appeal is allowed by way of remand [Read less]

2026-VIL-931-CESTAT-CHD-ST | CESTAT SERVICE TAX

Service Tax - Exemption of Services under Notification No. 45/2010-ST for Transmission and Distribution of Electricity - Revenue contention that the services provided for setting up of power generation and transmission equipment prior to actual generation of electricity cannot be considered as services in relation to transmission and distribution of electricity - Whether services rendered for supply, erection, installation and commissioning of power transmission and distribution infrastructure constitute services "in relation to transmission and distribution of electricity" eligible for exemption under Notification No. 45/2010-ST, even when such services are provided during the preparatory phase before commencement of actual electricity generation and distribution - HELD – The services rendered fall squarely within the ambit of Notification No. 45/2010-ST which exempts services provided "in relation to" transmission and distribution of electricity. The phrase "in relation to" has been consistently interpreted by courts to include preparatory, enabling and supportive activities integrally connected to transmission and distribution networks. The fact that electricity generation and distribution had not commenced at the time of providing the services does not exclude such services from the exemption as the contracts were with entities engaged in transmission and distribution of electricity and the services were directly linked to establishing the infrastructure necessary for such transmission and distribution - The findings recorded by the Commissioner are well-reasoned and fully supported by statutory provisions and binding judicial precedents - The order-in-original dropping the entire service tax demand is upheld and the Revenue appeal is dismissed - Taxability of Transportation and Freight Charges as GTA Service - Whether separately quantified freight and insurance charges recovered for transportation, handling and delivery of equipment as part of supply and erection contracts constitute taxable Goods Transport Agency Service or Transport of Goods by Road Service, or whether such charges form an incidental and ancillary part of the composite erection contract exempt from taxation – HELD - The service tax is required to be paid as per the amount mentioned in the consignment note and the applicable statutory rules. Absent consignment notes and evidence of who the actual transporter or carrier was and whether the consignor or consignee was liable under the consignment note, service tax cannot be appropriately levied on the freight and insurance collected from clients - The transportation undertaken was incidental to the execution of erection contracts and does not constitute a standalone taxable service. The service provider did not qualify as a GTA under the statutory definition and the manner in which service tax was demanded on freight and insurance is against the provisions of the Service Tax Rules - The order-in-original dropping the GTA service demand is upheld and the Revenue appeal is dismissed [Read less]

2026-VIL-932-CESTAT-BLR-ST | CESTAT SERVICE TAX

Service Tax - Reconciliation of Commission Payments Across Multiple Offices - Service tax demand arising from discrepancies between commission amounts shown in trial balance vis-à-vis ST-3 returns for multiple assessment periods - Whether service tax liability can be confirmed based on journal entries in Trial Balance when the service tax on commission payments for some branches were considered and discharged by centralized offices – HELD - While the appellant is not disputing the levy of service tax on commission per se, it has brought to notice that it has a practice of discharging service tax liabilities at its Kolka... [Read more]

2026-VIL-910-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Extended period of limitation under Section 73 of Finance Act, 1994 - Invocation solely on basis of third-party TDS/ITR data - Whether a demand under Section 73 of the Finance Act, 1994 can be validly raised by invoking the extended period of limitation solely on the basis of third-party TDS/ITR data – HELD – The invocation of the extended period of limitation under the proviso to Section 73(1) is not a matter of course but a penal exception to the normal period that must be founded upon clear evidence of fraud, collusion, wilful mis-statement, or suppression of facts with intent to evade payment of tax. ... [Read more]

2026-VIL-909-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Statutory Levies, Consideration for Taxable Service - Appellant engaged in construction of transmission lines through forest areas deposited mandatory Net Present Value charges into Compensatory Afforestation Fund Management and Planning Authority as a statutory precondition for obtaining forest clearance from the Ministry of Environment – Demand of service tax on these deposits, contending that the Government's grant of forest clearance in exchange for these deposits constituted a taxable service - Whether mandatory statutory payments deposited into the Compensatory Afforestation Fund constitute consideration for a taxable service within the meaning of Section 65B(44) of the Finance Act, 1994 – HELD – The mandatory statutory payments cannot constitute consideration for any service. The concept of consideration in contract law and tax jurisprudence requires something given as a quid pro quo for a promise or act in a bilateral arrangement. However, the Net Present Value charges are levied and collected by operation of law under the Forest (Conservation) Act, 1980 and the Compensatory Afforestation Fund Act, 2016, without any element of choice or voluntary agreement. The funds are not retained by the Government Ministry for its own benefit but are disbursed for public purposes of compensatory afforestation, forest regeneration, and wildlife protection. The transaction lacks bilateral agreement, commercial character, and any element of quid pro quo – Further, the CBEC Circular No. 89/7/2006-ST clarifies that statutory levies collected by government authorities in discharge of regulatory duties do not constitute taxable services - The demand for service tax set aside and appeal is allowed - Sovereign Regulatory Act as Declared Service - Whether the grant of forest clearance by the Ministry of Environment constitutes an agreement to tolerate an act or situation within the meaning of Section 66E(e) of the Finance Act, 1994, thereby constituting a declared service exigible to service tax under reverse charge mechanism – HELD - The grant of forest clearance does not constitute a declared service under Section 66E(e). For a transaction to qualify as a declared service under this provision, four indispensable elements must be present: a consensual bilateral arrangement between two parties, voluntary agreement for consideration to refrain from an act or tolerate a situation, definite consideration flowing between parties, and a commercial or quasi-commercial character as opposed to purely statutory obligation - In the present case, the Ministry of Environment acts as a sovereign regulator discharging a statutory duty, not as a party to a consensual arrangement. The forest clearance is granted or refused on the basis of statutory criteria and policy considerations. The word agreeing in Section 66E(e) denotes a consensual act, not regulatory compulsion. Importing the concept of tolerance into a purely statutory and regulatory context where the Government performs its constitutional duty of regulating natural resources would distort the plain meaning of the statute - Appeal allowed and the demand for service tax set aside - Invocation of Extended Period and Levy of Penalty - Whether the extended period of limitation can be validly invoked and penalties imposed when the company had made statutory deposits in full compliance with law and disclosed all information in its books of account – HELD - The Net Present Value payments were made by the company in full compliance with the legal mandate under the Forest (Conservation) Act, 1980 and the Compensatory Afforestation Fund Act. These statutory deposits are on record and in conformity with law. The company disclosed all information in its books of account and has not suppressed any information or made any misrepresentation to the department. The revenue has produced no evidence of mala fide intent, wilful concealment, or fraud. The levy of penalty under Section 78 requires a finding of suppression, misstatement, or fraud, which is absent in this case - The penalties under Sections 77 and 78 are set aside along with interest under Section 75, and the appeal is allowed [Read less]

2026-VIL-929-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs - Penalty under Section 112(a) of the Customs Act, 1962 for non-declaration of retained onboard cargo - Appellant-steamer agent discovered that it retained onboard from a previous export voyage and had not been declared in the manifest. Upon learning of the retained onboard cargo from its principals, the appellant approached the Customs authorities seeking amendment of the manifest under Section 30(3) of the Customs Act. The master of the vessel subsequently admitted that he had not declared the retained onboard cargo in the boarding documents and accepted such omission as his own mistake - Whether penalty under Section 112(a) of the Customs Act, 1962 can be imposed on a steamer agent for non-declaration of retained onboard cargo – HELD - The penalty under Section 112(a) for aiding and abetting cannot be imposed in the absence of culpable conduct and mens rea. Mere procedural lapse, inadvertent omission or communication failure does not ipso facto attract penal consequences under this section. The role of a steamer agent is to declare goods as informed by the master of the vessel in the manifest. The master himself admitted that the omission to declare the retained onboard cargo was his mistake, and at no point did he allege any collusion, knowledge, intention or deliberate acts on the part of the steamer agent. The steamer agent's immediate action in filing an amendment application upon receiving confirmation of the retained onboard cargo demonstrates bona fide conduct and lack of fraudulent intent – Further, the retained onboard cargo never acquired the legal character of imported goods as it remained continuously onboard the vessel, was never unloaded in India, no B/E was ever filed for it, and it was ultimately discharged at foreign ports - The filing full and correct manifest primarily rests upon the master of the vessel and other agencies cannot be held liable for penal consequences where lapses arise from communication failure without fraudulent intent - The penalty imposed under Section 112(a) is set aside and the appeal is allowed [Read less]

2026-VIL-934-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Cenvat credit on running account bills, Invocation of extended period of limitation - Whether Cenvat credit can be availed based on running account bills and payment orders even if they are not specifically mentioned as prescribed documents under Rule 9(1) of the Cenvat Credit Rules, 2004 – Demand invoking extended period of limitation – HELD - The Cenvat credit availed on running account bills read with payment orders containing substantial particulars such as name and address of service provider, details of service recipient, description of service, service tax registration number, and service tax amoun... [Read more]

2026-VIL-913-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs - Validity of Customs Duty demand when Export Obligation Discharge Certificate (EODC) issued and bonds vacated - Whether Customs authorities can demand duty on the ground of non-fulfillment of export obligation when Export Obligation Discharge Certificates have been issued by the licensing authority after due verification in respect of all licenses and have not been revoked – HELD - The issuance of EODCs by the licensing authority is conclusive proof of fulfillment of export obligations. Once an EODC is issued and the customs bonds are vacated by the competent authority, the foundation for any demand under Section 28(4) of the Customs Act ceases to exist. The Department cannot approbate and reprobate by demanding the very duty whose security it has voluntarily released. The jurisdiction to determine fulfillment of export obligations vests exclusively in the licensing authority under the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy - The Customs authority's role is limited to verifying compliance with the conditions of the exemption notification. The EODC serves as conclusive proof that such conditions stand satisfied. If the Department was aggrieved with the issuance of EODC, the appropriate course was to approach the licensing authority for revocation, which was never done - The EODCs remain valid and subsisting, and the demand on the ground of violation of notification conditions is wholly unsustainable - The issue is answered in favor of the assessee; the duty demand is set aside - Contradiction between Department's own Contemporaneous Records on movement of goods - Whether the Customs demand can be sustained when the Department, in five contemporaneous Show Cause Notices to the Export Oriented Unit, has itself proceeded on the footing that goods were received by the EOU, thereby squarely contradicting the DRI hypothesis of no-movement of goods – HELD - The allegation that goods were diverted into the domestic market is not sustainable. The Show Cause Notices themselves explicitly acknowledge that the EOU received goods from the importer against various invoices and central excise receipts. These contemporaneous departmental records from a sister authority constitute direct contradiction to the theory that no goods ever moved from the importer to the EOU. The records establish that one wing of the same Department (Central Excise commissionerate) demanded duty from the EOU on the footing that goods were received, while another wing (DRI) sought to demand duty from the importer on the footing that the same goods were never received. Both positions cannot be simultaneously sustained. This violates the settled principle of administrative law that the state cannot approbate and reprobate or blow hot and cold simultaneously across its own divisions - The issue is answered in favor of the assessee; the diversion allegation is rejected - Denial of Cross-Examination of Witnesses whose statements form basis of Adverse Order – HELD - The denial of cross-examination is a gross violation of the principles of natural justice. To rely on statements of witnesses, the witnesses must be examined-in-chief and thereafter offered cross-examination to the accused. The revenue has failed to follow this procedure. The right to cross-examine flows from natural justice and is independent of statutory provisions. When statements made during investigation form the bedrock of an adverse adjudication, denial of cross-examination is a per se violation of natural justice and vitiates the proceedings - The issue is answered in favor of the assessee; the order is vitiated for violation of natural justice - Extrapolation of Duty Demand - Whether a duty demand on 100% of the consignments under 29 authorizations can be sustained by extrapolation from a vehicle enquiry that admittedly covered at best one-third of the consignments and was inconclusive in the bulk of that subset – HELD - The full duty demand cannot be sustained through extrapolation. A finding of alleged non-movement in a small and inconclusive subset of consignments cannot be extrapolated to cover the entire universe of consignments across all authorizations. The principle established in case law clearly holds that duty cannot be confirmed on extrapolation from a sample or partial enquiry. When the enquiry itself is admittedly inconclusive in the majority of the sample cases examined, the logical foundation for imposing duty on 100% of consignments does not exist. Such extrapolation violates the principle that findings of violation must be based on clear and cogent evidence rather than assumptions and inferences drawn from partial and inconclusive enquiries - The issue is answered in favor of the assessee; the extrapolation methodology is rejected - Invocation of Extended Period of Limitation – HELD - The extended period of limitation is not invokable. Section 28(4) can be invoked only on proof of collusion, wilful misstatement or suppression of facts with intent to evade duty. The assessee has not concealed anything as all relevant facts were openly and transparently placed before the department throughout the process. The issuance of authorizations by the licensing authority after scrutiny, filing of B/E through regular Customs channels, completion of assessments, registration and debiting of authorizations, and discharge of export obligations through deemed export supplies with proper documentation were all accomplished with full transparency. The issuance of EODC by the licensing authority after verification and the vacating of bonds by the Customs authority were themselves acts of the Government itself. There is no suppression of facts that were openly placed before the department. Mere non-payment of duty, even if any question of duty existed, is not equivalent to wilful default or fraudulent evasion. A bona fide difference on scheme interpretation cannot ground the invocation of extended period. The demand is barred by limitation - Confiscation and Redemption Fine when goods are validly exported – HELD - The goods cannot be confiscated and no redemption fine is imposable. The goods in question have been validly exported in fulfillment of the export obligations attached to the authorizations, as evidenced by the issuance of EODCs by the licensing authority and the discharge of customs bonds by the competent authority. Since the goods have been legally exported and the export obligations have been properly discharged, no violation of the provisions of the Customs Act or the notifications issued thereunder is established. Confiscation under Section 111(o) is applicable only when goods are in violation of customs law. Once goods are validly exported through the established legal mechanism and proper documentation, they cannot be subjected to confiscation proceedings. Consequently, there is no occasion for imposition of redemption fine, which is a substitute for confiscation. The proposal for confiscation itself has stood spent as the goods stand cleared and exported - The issue is answered in favor of the assessee. [Read less]

2026-VIL-535-ALH | High Court SGST

GST - Criminal Liability on Advocate, Bonafide Professional act, Payment of pre-deposit by from Electronic Credit Ledger, Lodging of FIR - Petitioner-Advocate, engaged by a client to file a statutory appeal takes a professional decision regarding the mode and manner of making pre-deposit of disputed tax - The Deputy Commissioner lodged a FIR nominating the petitioner as a conspirator with the assessee for allegedly committing tax evasion through an illegal course of action in making the pre-deposit from the Electronic Credit Ledger - Whether an advocate acting in his professional capacity in filing an appeal and advising clients on the mode of pre-deposit can be held criminally liable as a conspirator with the client for adopting a particular legal interpretation – HELD - An advocate by profession is authorized to represent his client in any matter suited to be argued in a Court. An advocate is duty-bound to discharge his professional responsibilities fearlessly. If an advocate is to be held in conspiracy with his client merely for performing a professional act like preferring an appeal, it would bring about the end of the very existence of the bar and would deprive citizens of their fundamental right to legal assistance under Articles 14 and 21 of the Constitution - The professional decision to make pre-deposit in a particular manner does not make the advocate a conspirator as it is purely a professional act based on a particular view of law - An advocate is authorized by profession to represent clients and advance legal arguments, irrespective whether those arguments are ultimately accepted or rejected. Such professional judgment cannot transform into criminal conspiracy merely because the legal position taken differs from the view held by administrative authorities - The first information report, charge-sheet, and cognizance order against the advocate are quashed in their entirety, with directions to make appropriate entries in the official records of the police station indicating the quashing of proceedings – The writ petition is allowed [Read less]

2026-VIL-928-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Availability of Cenvat Credit on Sales Commission services rendered by commission agents engaged in promoting, canvassing orders and effecting sales – Denial of credit on the ground that activities of commission agents constitute post-removal activities falling outside the scope of Rule 2(l) of the Cenvat Credit Rules, 2004 - Whether Cenvat credit is available on sales commission services – HELD - The Cenvat Credit Rules have been amended to include an explanation to Rule 2(l) clarifying that sales promotion includes services by way of sale of dutiable goods on commission basis. The aforesaid explanati... [Read more]

2026-VIL-933-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Entitlement of CENVAT Credit on the basis of Consolidated Challans – Appellant availed CENVAT credit on the basis of consolidated challans – Denial of CENVAT credit on the ground that the consolidated challans did not constitute proper documents as required under Rule 9(2) of the CENVAT Credit Rules, 2004 - Whether consolidated challans containing full details as required under Rule 9(2) of the CCR, 2004, constitute valid documents for availing CENVAT credit – HELD - The consolidated challans, having full details as required under Rule 9(2) of the CENVAT Credit Rules, 2004, are valid documents and th... [Read more]

2026-VIL-536-ALH | High Court VAT

U.P. Trade Tax Act - Classification of amusement rides - The assessing authority levied tax at 10% treating the goods as unclassified items instead of 2% as claimed by the revisionist-assessse - Whether goods manufactured for amusement parks, specifically amusement rides, swings and jhoolas, fall within entry 32 of the Notification dated 29.01.2001 and are taxable at 2% as classified items or at 10% as unclassified items – HELD - The amusement rides do not fall within the category of goods for indoor or outdoor games or sports. The popular commercial sense, indoor and outdoor games and sports are activities which develop... [Read more]

2026-VIL-50-SC | Supreme Court SGST

GST - Bail condition – Petitioner-accused arrested for fraudulently availing Input Tax Credit under Sections 132(1)(b)(c)(i) read with Sections 132(1)(i) and 135(5) of the CGST Act, 2017 is granted bail subject to furnishing security bond equal to the amount claimed as tax and penalty - Whether the condition imposing security bond equal to undetermined tax and penalty amount is valid and enforceable – HELD - The condition imposed is onerous and vague as the tax and penalty amount has not yet been determined. Imposing a condition for security equivalent to a yet-to-be-determined amount is vague and unreasonable - The ac... [Read more]

2026-VIL-912-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs - Smuggled goods - Jurisdiction of CESTAT - Whether appeal against Commissioner (Appeals) order relating to goods imported as baggage is maintainable before CESTAT when goods are characterized as smuggled – HELD - The statutory bar under the proviso to Section 129A(1) of the Customs Act excluding appeals relating to goods imported or exported as baggage applies irrespective of whether such goods are characterized as smuggled or contraband on merits. The distinction drawn by the appellant between smuggled goods and baggage goods is a merits argument and not a jurisdictional one. Goods found in the hand baggage of a passenger upon arrival at the airport remain goods imported as baggage for jurisdictional purposes, and the characterization of such goods as smuggled does not bring them outside the definition of baggage goods - However, when the Department itself has invoked Sections 110, 123, and 124 of the Act and alleged smuggling, and the Show Cause Notice proposes confiscatory provisions for smuggled goods rather than applying Baggage Rules. A strict interpretation of the exclusion clause should distinguish between imported goods under baggage regime and smuggled goods prosecuted under smuggling provisions. Since the Department consistently treated the goods as smuggled goods throughout the proceedings and did not rely upon baggage declarations or baggage allowance provisions, the goods cannot be characterized as goods imported as baggage. Therefore, the appeal is maintainable before CESTAT, and the appellant cannot be relegated to revision under Section 129DD – The appeal is maintainable - Valuation of goods - Reliance on manufacturer's invoice confirmed by email versus uncorroborated statements - Whether adjudicating authority should adopt valuation based on photocopy of invoice with blanks in critical columns submitted by witness or value confirmed by manufacturer's Chief Legal Officer through email – HELD - Where the Commissioner (Appeals) himself finds that the photocopy of invoice submitted by the witness contains blanks in columns for discount percentage, price, subtotal, and grand total, and such photocopy was never substantiated by the original document, the reliability and credibility of such photocopy stands questioned. In contrast, the manufacturer's Chief Legal Officer provided by email a complete invoice bearing all particulars including the discounted price, and this invoice was acknowledged in the Show Cause Notice itself. The credibility of the email from the manufacturer cannot be rejected merely on the ground that it is unsolicited when the same source had earlier provided information during investigation which was relied upon by the Department - The valuation based on the manufacturer's invoice confirmed through email should have been accepted – The Valuation is revised to the lower amount confirmed by manufacturer's email, and penalties are reduced accordingly - Redemption of confiscated goods - Imposition of condition of re-export as mandatory condition for redemption - Whether condition of re-export can be imposed while offering redemption of goods – HELD - No condition can be imposed while giving an offer for redemption of goods. The redemption provision provides an option to the appellant, and the confiscated goods may be redeemed either for home consumption on payment of duty, interest, fine, and penalties, or for re-export on payment of fine and penalties. The imposition of mandatory re-export condition restricts the statutory right of redemption and is therefore impermissible - The condition of mandatory re-export is struck down, and the appellant has the option to redeem goods either for home consumption or re-export - Quantum of penalty - Whether penalties under Sections 112(a), 112(b), and 114AA should be maintained at the level imposed by adjudicating authority – HELD - Considering the circumstances where the appellant consistently claimed ownership and imported status in judicial proceedings, deposited substantial amounts seeking release of goods for re-export, the Department failed to establish genuineness of photocopy invoice through proper evidence, and the valuation was based on uncorroborated statements that were subsequently disowned, the case merits reduction of penalties. The composite penalty under Sections 112(a) and 112(b) is excessive and should be reduced to reflect the actual contravention. The penalty under Section 114AA, which is imposable for non-declaration or misdeclaration of goods, should also be reduced proportionately in view of the factual findings regarding valuation – The Composite penalty under Sections 112(a) and 112(b) is reduced from Rs. 50 lakhs to Rs. 10 lakhs, and penalty under Section 114AA is reduced from Rs. 2 crores to Rs. 50 lakhs. Redemption fine of Rs. 50 lakhs is maintained. [Read less]

2026-VIL-930-CESTAT-ALH-CU | CESTAT CUSTOMS

Customs - Determination of Country of Origin – Rejection of Certificates of Origin without Verification from Exporting Country Authority - Whether Certificates of Origin issued by competent authorities of exporting countries can be rejected and the claimed country of origin can be disregarded without conducting proper verification from the issuing authorities of those countries and without evidence of fraudulent procurement of such certificates – HELD - The Certificates of Origin cannot be discarded or rejected without verification of their authenticity from the competent authorities of the exporting countries. When goods are accompanied by Certificates of Origin issued by the competent authorities of exporting countries, these certificates carry presumptive value as they are issued only after verification of the goods by those authorities. The proper procedure for verification is prescribed under Rule 6 of the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020, which requires the customs authorities to make a formal verification request to the Verification Authority of the exporting country when there is doubt regarding the genuineness or authenticity of the certificate. The tribunal observes that no such verification request has been placed on record in the present case - Since the only evidence relied upon to contradict the certificates is inadmissible electronic evidence without corroboration, the country of origin as certified in the valid Certificates of Origin must be accepted - The impugned order to the extent that it rejected the country of origin as declared in Certificates of Origin and concluded that goods were of Chinese origin without proper verification from exporting country authorities is set aside - Customs - Admissibility of Electronic Evidence – Computer Printouts from Hard Disk and Mobile Devices - Whether computer printouts obtained from seized electronic devices can be admitted as evidence in customs proceedings in the absence of a certificate issued under Section 138C(4) of the Customs Act, and whether such documents can be authenticated merely by the fact that the person involved signed the panchnama prepared by the revenue officers – HELD - Computer printouts from electronic devices are not admissible as evidence in customs proceedings without a proper certificate under Section 138C(4) of the Customs Act. Section 138C(4) prescribes a mandatory requirement that any electronic record must be accompanied by a certificate containing specific details about the device, the manner of production, and the conditions under which the computer was operated. The mere fact that the director signed a panchnama does not constitute compliance with this statutory requirement, nor does it authenticate the genuineness of the extracted documents. The signing of a panchnama in a separate room without the person's awareness of whether data was actually extracted does not satisfy the legal requirement for authentication. The oral evidence or panchnama signatures cannot substitute for the mandatory written certificate - The electronic devices were not produced before the adjudicating authority and therefore cannot be treated as primary evidence. Additionally, no independent enquiry was conducted from the persons mentioned in the alleged documents, making the printouts unreliable and unverified - The impugned order is set aside to the extent that it relied upon electronic evidence in the form of computer printouts and WhatsApp chats for establishing allegations against the importer - Valuation of Imported Goods – Application of Customs Valuation Rules to goods cleared for home consumption - Whether the Customs Valuation Rules, 2007 can be applied to determine or re-determine the value of goods that have already been cleared by customs for home consumption, and whether a proforma invoice can be used as the basis for enhancement of the declared value of imported goods – HELD - The Customs Valuation Rules, 2007 can be applied only to imported goods, and goods that have already been cleared by customs for home consumption cease to be imported goods. The definition of imported goods in Section 2(25) of the Customs Act clearly provides that goods brought from outside India remain as imported goods only till their clearance for home consumption. Once cleared by customs, they lose the character of imported goods and the valuation rules become inapplicable. Therefore, the re-determination of value of already-cleared goods cannot be justified - Furthermore, a proforma invoice is in the nature of a quotation or offer and does not constitute a valid basis for enhancement of value of imported goods. The proforma invoices relied upon were recovered from the hard disk in the absence of a valid certificate under Section 138C and are therefore inadmissible as evidence. Additionally, no evidence has been produced to show that the importer actually paid or was required to pay the higher value mentioned in the proforma invoices - The impugned order to the extent that it re-determined the declared value of goods already cleared for home consumption is set aside, and consequently, the differential duty demand based on such re-valuation is not sustainable - Admissibility of Statements – Voluntariness and Corroboration Requirement - Whether statements recorded under duress or coercion without proper procedural safeguards can be relied upon to support a demand of duty, and whether mere confession statements without independent corroborative evidence can form the basis of adjudication – HELD - The statements recorded under duress or coercion cannot be relied upon to support demands or penalties - The impugned order to the extent that it relied upon statements of the director without independent corroborative evidence and without addressing the issue of voluntariness and duress is set aside - Imposition of Penalty – Whether penalties can be imposed on company Directors when the main demand against the company has failed or when specific evidence of individual involvement of the officials is not brought on record – HELD - Since the main allegations against the importing company have not been sustained and the demand for duty is not maintainable, the imposition of penalty on the company under Section 114A is not justified. Furthermore, penalties on company officials cannot survive independently when the main case against the company fails, unless specific and independent evidence of individual involvement of such officials is brought on record. In the present case, no such independent evidence of individual involvement has been adduced against the Director. Mere role in signing documents or making statements when the underlying transaction is not established as fraudulent does not constitute sufficient evidence for imposing penalty on officials - The impugned order to the extent that it imposed penalties under Section 114A against the company and under Sections 112 and 114AA against the company Director is set aside. [Read less]

2026-VIL-20-AAAR | AAAR SGST

GST – Haryana AAAR - Export of Services or Intermediary Services – Supply of sales and marketing consulting and manpower/HR consulting services to foreign entity. The AAR order classified the services as intermediary services - The appellant claims the services qualify as export of services under Section 2(6) of the IGST Act, 2017 - Whether the services qualify as export of services or intermediary services – HELD - The appellant arranges and facilitates the supply of services between the foreign entity and the Indian client. There are three distinct parties involved and the services are performed and consumed within... [Read more]

2026-VIL-23-AAAR | AAAR SGST

GST – Haryana AAAR - Classification of Brake Hoses - The Advance Ruling Authority order held that the product merits classification under Chapter 87 - Whether brake hoses, despite being designed and used exclusively in automotive braking systems, should be classified as vulcanized rubber hoses under Chapter 40 or as motor vehicle parts under Chapter 87 – HELD – As per General Rule of Interpretation 3(b), the rubber component gives the product its essential character, being the principal determinant of its function and utility. The material composition reveals that the product is fundamentally a general-purpose vulcan... [Read more]

2026-VIL-538-BOM | High Court SGST

GST - Duty to pass reasoned order, Failure to consider submissions – In remand proceedings, the adjudicating authority again passed an order confirming the same demand without adverting to any of the submissions made by the petitioner during the personal hearing or in the written replies – Validity of the order passed by the adjudicating authority in remand proceedings – HELD - The Adjudicating Authorities' approach of not considering the petitioner's submissions even in the second round of litigation requires to be deprecated. When the High Court remands a matter for de novo consideration with express directions to ... [Read more]

2026-VIL-539-BOM | High Court SGST

GST - Service of Show Cause Notice at incorrect address and email-id - Violation of Natural Justice - Upon migration to the GST regime the petitioner updated its principal place of business and additional place of business addresses along with new email IDs on the GST registration certificate and portal. Despite maintaining updated address and email information with the tax authorities, the show cause notice was served at the old registered address and the old email ID - Whether an order passed by the tax authorities without serving the show cause notice at the correct and current registered address and email ID, as per th... [Read more]

2026-VIL-21-AAAR | AAAR SGST

GST – Rajasthan AAAR - Classification of Biodegradable Bags – Appellant is engaged in supply of compostable plastic bags having certifications from Pollution Control Board, and international testing agencies confirming biodegradability and compostability - Entitlement to concessional GST rate of 5 percent under Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025 inserted vide Serial No. 319 in Schedule-I for "Paper Sacks/Bags and Biodegradable Bags" under Chapters 39 and 48 - The AAR declined to conclusively determine biodegradability, holding that determination of biodegradability and compostability is a scie... [Read more]

2026-VIL-22-AAAR | AAAR SGST

GST - Liability to GST under Reverse Charge Mechanism on Government Services – GST on Permission, Road Cutting, Reinstatement and Ground Rent Charges – Appellant sought Advance Ruling regarding liability to pay GST under RCM on permission charges, road cutting charges, reinstatement charges and ground rent charges levied by the State PWD authorities for laying pipelines and cables – The AAR order held that GST is leviable on permission, charges, reinstatement charges, road cutting charges and ground rent charges - Whether GST is leviable on permission charges, reinstatement charges, road cutting charges and ground re... [Read more]

2026-VIL-19-AAAR | AAAR SGST

GST – Goa AAAR - Exemption to Supply of Drinking Water subjected to chlorination - Appellant supplies drinking water sourced from a PWD well or storage tank through water tankers in bulk quantities to an educational institution for students - Whether such supply of chlorinated water qualifies for exemption under Entry No. 99 of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017 – HELD - The term "purified" was omitted from the exclusion categories of Entry No. 99 vide amendment through Notification No. 7/2022-Central Tax (Rate) dated 13.07.2022 (effective from 18.07.2022). The Circular No. 56/26/2018-GST dated... [Read more]

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