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GST - Revision jurisdiction and period of limitation under Section 108(2)(b), Applicability of Supreme Court exclusion period to departmental proceedings, Extension of limitation during COVID-19 pandemic - Revisional Authority issued notice on 11.8.2021 proposing to reverse order of Appellate Authority passed on 25.3.2021 wherein penalty imposed by proper officer was reduced. Appellant pleaded that revision order dated 31.8.2024 was barred by limitation as it was passed beyond 3 years from date of appellate order. Appellant contended that directions given by Supreme Court excluding period from 15.3.2020 to 28.2.2022 for li... [Read more]

GST - Revision jurisdiction and period of limitation under Section 108(2)(b), Applicability of Supreme Court exclusion period to departmental proceedings, Extension of limitation during COVID-19 pandemic - Revisional Authority issued notice on 11.8.2021 proposing to reverse order of Appellate Authority passed on 25.3.2021 wherein penalty imposed by proper officer was reduced. Appellant pleaded that revision order dated 31.8.2024 was barred by limitation as it was passed beyond 3 years from date of appellate order. Appellant contended that directions given by Supreme Court excluding period from 15.3.2020 to 28.2.2022 for limitation purposes do not apply to statutory authorities - Whether the proceedings of Revisional Authority reversing order of Appellate Authority are barred by period of limitation fixed under Section 108(2)(b) of the Act and whether Supreme Court exclusion period for COVID-19 lockdown applies to departmental proceedings - HELD - Section 108(2)(b) places restriction that Revisional Authority cannot exercise its powers after 3 years from passing of order - Supreme Court in Cognizance for Extension of Limitation directed that period from 15.3.2020 to 28.2.2022 shall stand excluded for purposes of limitation in all judicial and quasi-judicial proceedings. This exclusion period applies to departmental proceedings as confirmed by Supreme Court in G.R. Infra Projects Limited case which specifically applied exclusion period to departmental show cause notice. Period from 26.3.2021 to 28.2.2022 approximately 11 months has to be excluded in computing limitation. Therefore Revisional Authority could pass order under Section 108 on or before 26.2.2025. Order dated 31.8.2024 falls within extended limitation period and is not barred by limitation – The appeal is dismissed - Movement of goods without statutory documents, Invocation of detention and penalty under Section 129 - Consignment was intercepted during transit and found being unloaded at premises other than mentioned in destination address - Appellant claimed e-way bill could not be generated due to technical glitches and pleaded that transactions were genuine as all parties were registered dealers - Whether Revisional Authority was justified in reversing order of Appellate Authority which had reduced penalty and in upholding invocation of Section 129 by proper officer for transportation of goods without statutory documents - HELD - Section 68(1) requires that person in charge of conveyance must carry e-way bill and prescribed documents during transit. Rule 138(1) mandates that Part A of e-way bill must be generated before commencement of movement of goods. At time of interception goods were accompanied by documents for movement from supplier to appellant but e-way bill and tax invoice for unloading at third-party premises were generated only on 1.33 PM after interception. No evidence was furnished to support plea that e-way bill could not be generated due to technical glitches - Appellant was fully aware of procedure but had deliberately not raised documents for delivery to third-party premises. Absence of statutory documents at time of interception constitutes willful act to evade payment of taxes. Generation of e-way bill after interception was only afterthought to cover-up contravention. While distinction exists between serious substantive violations and minor procedural violations in determining penalty quantum, absence of statutory documents at time of movement itself constitutes substantive violation indicating intent to evade taxes as such documents are mandate of law - Imposition of penalty under Section 129(1) is legal and valid - The order of Revisional Authority confirming penalty imposed under Section 129 is valid and upheld - Appeal is dismissed. [Read less]

Central Excise – Rule 6 of CENVAT Credit Rules, 2004 – Classification of manufactured intermediate products – Appellants, manufacturers of sugar confectionery, manufactured processed milk which was either captively consumed in the manufacture of sugar-boiled confectionery or supplied to job workers for further use; Processed milk was exempt from duty under Notification No.03/2006-CE and the Department alleged non-maintenance of separate accounts for common input service credit, proposing recovery of duty with penalty – Whether processed milk constitutes an exempted final product for the purposes of Rule 6 of the CE... [Read more]

Central Excise – Rule 6 of CENVAT Credit Rules, 2004 – Classification of manufactured intermediate products – Appellants, manufacturers of sugar confectionery, manufactured processed milk which was either captively consumed in the manufacture of sugar-boiled confectionery or supplied to job workers for further use; Processed milk was exempt from duty under Notification No.03/2006-CE and the Department alleged non-maintenance of separate accounts for common input service credit, proposing recovery of duty with penalty – Whether processed milk constitutes an exempted final product for the purposes of Rule 6 of the CENVAT Credit Rules, 2004 – HELD – Processed milk is an intermediate product forming an integral part of the continuous manufacture of sugar-boiled confectionery and not an independent final product, as it is neither manufactured nor cleared as a separate product. The tribunal relied on the principle established in Collector of Central Excise Vs Eastend Paper Industries Ltd. that where a process is so integrally connected with ultimate production that manufacture would be commercially inexpedient without it, articles required in such process fall within the expression 'in the manufacture of goods'. Further, as per Rallis India Ltd. and Union of India Vs Hindustan Zinc Ltd., a product emerging as a technological necessity in the course of manufacture of the principal product constitutes a by-product and Rule 6 obligation is not attracted merely because such by-product is exempted. Captive consumption or removal to job workers does not alter the character of processed milk as an intermediate product. Therefore, processed milk cannot be treated as an exempted final product for invoking Rule 6 – The impugned orders are set aside and the appeals are allowed [Read less]

GST - Invocation of extended period under Section 74, Imposition of penalty for wrongful availment of ITC, Applicability of Section 74 when tax is paid prior to show cause notice, Distinction between Section 73 and Section 74 - Appellant claimed excess input tax credit resulting from mismatch between Form GSTR 3B and Form GSTR 2A which was brought to light during verification by anti-evasion wing - Appellant admitted the excess ITC and paid tax along with interest prior to issuance of SCN. Adjudicating Authority invoked extended period under Section 74 and imposed penalty equal to amount of excess ITC alongside confirming ... [Read more]

GST - Invocation of extended period under Section 74, Imposition of penalty for wrongful availment of ITC, Applicability of Section 74 when tax is paid prior to show cause notice, Distinction between Section 73 and Section 74 - Appellant claimed excess input tax credit resulting from mismatch between Form GSTR 3B and Form GSTR 2A which was brought to light during verification by anti-evasion wing - Appellant admitted the excess ITC and paid tax along with interest prior to issuance of SCN. Adjudicating Authority invoked extended period under Section 74 and imposed penalty equal to amount of excess ITC alongside confirming the demand. - Whether the invocation of Section 74 and imposition of penalty at 100 percent is justified when entire tax and interest was paid prior to issuance of show cause notice and the excess availment resulted from mismatch due to third-party default rather than deliberate suppression of facts by taxpayer - HELD - Section 73 applies where tax is wrongly availed for reasons other than fraud, willful misstatement or suppression while Section 74 applies where such wrongful availment is due to fraud, willful misstatement or suppression of facts. Supreme Court in Tata Steel Limited has held that for invoking Section 74, the Assessing Officer must be satisfied that fraud, willful misrepresentation or suppression led to mismatch - Mere mechanical use of such language without establishing foundational facts is not sufficient. The term ‘suppression’ means non-declaration of facts or information required to be declared in returns or failure to furnish information on being asked. Mismatch arising from third-party default cannot be attributed to taxpayer to sustain charge of suppression - When tax and interest are paid pursuant to departmental verification prior to show cause notice under Section 73(5), proceedings are concluded and Section 74 would apply only if conditions stipulated in Section 73 are not met - In present case, appellant paid entire tax and interest after receiving information from proper officer during verification. No link was established between mismatch and alleged fraud or suppression as dispute did not concern genuineness of transactions. Excess availment resulted from third-party supplier default not from taxpayer's deliberate action. Therefore, Section 73 and not Section 74 applies to the case – The penalty imposed under Section 74 is set aside. The case is governed by Section 73 of CGST Act - The appeal is allowed [Read less]

GST - Imposition of penalty under Section 74, Invocation of extended period of limitation, Effect of voluntary pre-SCN payment of tax and interest, Applicability of Sections 73 and 74 - Appellant was subjected to audit under Section 65 on three distinct issues relating to excess ITC in GSTR-3B versus GSTR-2A, ineligible ITC under Section 17(5), and irregular transitional credit under TRAN-1. Appellant voluntarily deposited agreed tax and applicable interest via Form GST DRC-03, prior to issuance of Show Cause Notice - Whether the First Appellate Authority was justified in imposing penalty under Section 74 when all records ... [Read more]

GST - Imposition of penalty under Section 74, Invocation of extended period of limitation, Effect of voluntary pre-SCN payment of tax and interest, Applicability of Sections 73 and 74 - Appellant was subjected to audit under Section 65 on three distinct issues relating to excess ITC in GSTR-3B versus GSTR-2A, ineligible ITC under Section 17(5), and irregular transitional credit under TRAN-1. Appellant voluntarily deposited agreed tax and applicable interest via Form GST DRC-03, prior to issuance of Show Cause Notice - Whether the First Appellate Authority was justified in imposing penalty under Section 74 when all records were available on departmental portal, Appellant had voluntarily discharged entire agreed tax and interest prior to issuance of SCN, no positive act of deliberate suppression or misstatement was established, and the SCN failed to disclose foundational facts demonstrating conscious deliberate device to evade tax - HELD - Section 74 is extraordinary provision conditioning exercise of extended period and penal provisions of 100 percent upon existence of specific positive mens rea elements being fraud, willful misstatement or suppression of facts with intent to evade tax - Supreme Court in Tata Steel Limited has established three inviolable principles for Section 74. In present case OIO made explicit findings that all records including GSTR-3B, GSTR-2A and TRAN-1 declarations were fully available on departmental portal and there was no positive act of deliberate suppression or intentional misstatement - Appellate Authority erred in holding that original authority had no option but to impose Section 74 penalty once tax was confirmed. Section 74 requires independent satisfaction of mens rea and issuance of SCN under Section 74 does not automatically bind adjudicator to confirm penal liabilities where deliberate intent is absent - When facts are known to both parties or accessible via statutory records, non-disclosure does not amount to suppression. Appellant voluntarily discharged entire agreed tax and applicable interest months prior to issuance of SCN. Where tax and interest are fully discharged prior to SCN and allegations of fraud or suppression are unsustainable, statutory mechanism under Section 73(5) read with Section 73(8) operates and intends to grant immunity from penalty to taxpayers who settle obligations prior to formal adjudication provided there is no deliberate intent to evade - The Appellate Authority's imposition of Section 74 penalty is set aside. The credit reversed and interest paid on are held to be payments under Section 73(5) of CGST Act - The appeal is allowed [Read less]

GST - Interpretation of Section 73(2) of CGST Act, 2017 - Determination of timely issuance of Show Cause Notice - Computation of prescribed period of three months - Petitioner issued notice under Section 73(1) proposing demand for wrongful availment of Input Tax Credit; terminal date for issuing order under Section 73(10) was 28.02.2025 - Petitioner contended that notice should have been issued at least three months prior to 28.02.2025 i.e. by 28.11.2024 and notice issued on 29.11.2024 was beyond prescribed time - Whether the expression three months in Section 73(2) requires calculation using corresponding date principle w... [Read more]

GST - Interpretation of Section 73(2) of CGST Act, 2017 - Determination of timely issuance of Show Cause Notice - Computation of prescribed period of three months - Petitioner issued notice under Section 73(1) proposing demand for wrongful availment of Input Tax Credit; terminal date for issuing order under Section 73(10) was 28.02.2025 - Petitioner contended that notice should have been issued at least three months prior to 28.02.2025 i.e. by 28.11.2024 and notice issued on 29.11.2024 was beyond prescribed time - Whether the expression three months in Section 73(2) requires calculation using corresponding date principle with notice date falling exactly three calendar months before terminal date or whether the requirement is satisfied when three calendar months are available between issuance of notice and terminal date - HELD - The expression three months in Section 73(2) of CGST Act means calendar months and not a period of days. Where a statutory period is prescribed from a specified date, the date from which period commences is ordinarily excluded in accordance with Section 9 of General Clauses Act 1897. Section 73(2) prescribes the minimum interval that must be available between initiation of adjudicatory proceeding by issuance of notice under Section 73(1) and outer limit fixed for culmination under Section 73(10) and not an independent period expiring on a corresponding date calculated backward from terminal date - Application of rigid corresponding date principle whereby notice issued on 29.11.2024 would be deemed one day beyond limitation merely because calculated corresponding date was 28.11.2024 introduces unjustified rigidity into the statutory provision - Section 73(2) does not expressly provide that corresponding date arrived at by counting backward is the cut-off for issuance of notice; if that was the legislative intention language clearly fixing such date would have been employed. The statutory requirement under Section 73(2) is satisfied when three full calendar months are available after excluding date of issuance of notice and before expiry of terminal date - In the present case excluding date of issuance 29.11.2024, the intervening period comprises remainder of November and full calendar months of December, January and February ending on 28.02.2025, thereby providing the required minimum adjudicatory interval - The notice dated 29.11.2024 was validly issued within the time prescribed under Section 73(2) of CGST Act – The writ appeal is dismissed [Read less]

Service Tax - Advertising Agency Service and other taxable services, Suppression of taxable value, Invocation of extended period of limitation, Threshold exemption, Cum-tax benefit, CENVAT Credit - Appellant engaged in providing Advertising Agency Services through registered firm and also provided taxable services through unregistered firm during F/Y 2016-17, ST-3 returns showed gross receipt of Rs.15,39,884/- with claimed threshold exemption of Rs.10,00,000/- and paid service tax on remaining amount, Department through verification observed actual gross receipt was Rs.25,98,374/- from both firms with the receipts from unr... [Read more]

Service Tax - Advertising Agency Service and other taxable services, Suppression of taxable value, Invocation of extended period of limitation, Threshold exemption, Cum-tax benefit, CENVAT Credit - Appellant engaged in providing Advertising Agency Services through registered firm and also provided taxable services through unregistered firm during F/Y 2016-17, ST-3 returns showed gross receipt of Rs.15,39,884/- with claimed threshold exemption of Rs.10,00,000/- and paid service tax on remaining amount, Department through verification observed actual gross receipt was Rs.25,98,374/- from both firms with the receipts from unregistered firm not disclosed in ST-3 returns, Show Cause Notice was issued demanding service tax with interest and penalties, Appellant contended that SCN is barred by limitation under Section 73(1) of Finance Act 1994 and that extended period cannot be invoked without fraud, collusion or willful mis-statement - Whether the extended period of limitation was properly invoked by the Department and whether the appellant is entitled to threshold exemption, cum-tax benefit and CENVAT credit claim - HELD - The extended period of 5 years was correctly invoked as the appellant admitted that the correct taxable value was not disclosed in the ST-3 returns and the amount from the second unregistered firm was not shown in the returns due to oversight and clerical mistake - The failure to disclose the correct taxable value in ST-3 returns clearly establishes the appellant's intent to evade service tax - Once a person is registered with the Service Tax Department, the question of threshold limit exemption does not arise and the appellant wrongly availed the threshold exemption of Rs.10,00,000/- which the appellant themselves admitted was claimed due to mistake or oversight - The appellant claimed cum-tax benefit on receipt of Rs.8,34,550/- from the unregistered firm but has not submitted proper documentary evidence in support of the claim, the sample invoices submitted lacked required details and no documentary evidence was adduced before the Tribunal - The appellant sought CENVAT credit of Rs.59,997/- at a much later stage which was not availed within the prescribed time limit in ST-3 returns as required under Finance Act 1994 read with CENVAT Credit Rules 2004 and no fresh evidence has been submitted to establish eligibility for the credit - The impugned order is upheld - Appeal is dismissed [Read less]

Central Excise – Clandestine manufacture and removal of Pan Masala and Scented Chewing Tobacco, Admissibility of third-party private documents, Burden of proof, Applicability of Section 11A, 11AA and 11AC of Central Excise Act, 1944 – The Department issued Show Cause Notice alleging that Appellant engaged in clandestine manufacture and supply of Pan Masala and Scented Jarda Tobacco, raising demands for Basic Excise duty and NCCD totaling approximately Rs.27 crores based primarily on File No.17 recovered from a third-party transporter and alleged market practices – Whether the Revenue has discharged the burden of prov... [Read more]

Central Excise – Clandestine manufacture and removal of Pan Masala and Scented Chewing Tobacco, Admissibility of third-party private documents, Burden of proof, Applicability of Section 11A, 11AA and 11AC of Central Excise Act, 1944 – The Department issued Show Cause Notice alleging that Appellant engaged in clandestine manufacture and supply of Pan Masala and Scented Jarda Tobacco, raising demands for Basic Excise duty and NCCD totaling approximately Rs.27 crores based primarily on File No.17 recovered from a third-party transporter and alleged market practices – Whether the Revenue has discharged the burden of proving by legally admissible and cogent evidence that the Appellant clandestinely manufactured and cleared Pan Masala and Scented Chewing Tobacco during December 2020 to May 2021 – HELD – File No.17, the principal document relied upon, was a third-party private record without established authenticity, authorship or evidentiary value and recovered from a person whose legal status, authority and relationship with the transporter company remained unexplored, and mere existence of an entry in a private record maintained by a third party does not ipso facto establish actual movement or delivery of goods. The Department failed to establish the essential links in the chain of evidence – delivery of alleged laminate to Appellant's factory, receipt, consumption in manufacture, actual manufacture of alleged quantity and clandestine clearance. No documentary evidence or corroborative material was placed on record to substantiate the assertion that the said pages contain details of transportation of laminates from any secret premises. The demand for chewing tobacco was computed solely on the basis of presumed market practice that pouches of Pan Masala and Chewing Tobacco are always sold in equal numbers without any direct evidence of procurement, manufacture, clearance, transportation or sale of chewing tobacco. The investigation is conspicuously silent regarding actual receipt of laminate at factory, unloading records, gate registers, weighbridge slips, inward registers or warehouse records and no transporter stated that disputed consignments were actually unloaded at Appellant's premises. The methodology adopted for determining the alleged weight of laminate from number of boxes by applying an average calculated from selected entries was arbitrary, statistically unreliable and legally unsafe for sustaining a charge as serious as clandestine manufacture and removal, more so when the Department's own data showed that identical number of boxes had different weights, establishing that uniformity of contents and weight has not been established. Clandestine manufacture cannot be alleged on basis of presumptions, general market practices or unverified third-party statements and must be supported by concrete evidence such as procurement of excess raw materials, manufacture of excess finished goods, availability of adequate infrastructure, abnormal consumption of electricity or fuel, deployment of additional labour, transportation of clandestinely manufactured goods, identification of buyers, receipt of consideration and corresponding financial flow-back. A presumption cannot be founded upon another presumption and suspicion cannot substitute legal proof. Allegations of clandestine manufacture and removal cannot be sustained on probabilities, assumptions, market perceptions or mathematical calculations but must rest upon positive, cogent and independent evidence establishing every constituent element of alleged clandestine activity. The findings recorded by Adjudicating Authority, as affirmed by Commissioner (Appeals), call for no interference – The departmental appeal is dismissed and Order-in-Original dropping the proceedings, as affirmed by Commissioner (Appeals), is upheld [Read less]

Customs - Train Protection and Warning System, Eligibility for concessional rate of duty, Disc Brake Units and Pole Wheels, Classification under Notification No. 50/2017-Cus - Appellant imported Disc Brake Units and Pole Wheels for manufacturing Axle Mounted Disc Brake Systems for installation in high-speed coaches supplied to Indian Railways, availing concessional Basic Customs Duty rate of 7.5% under Sl. No. 521 of Notification No. 50/2017-Cus claiming the goods constitute Train Protection and Warning System. Post-clearance audit raised objections on the exemption availment and Show Cause Notice was issued proposing dema... [Read more]

Customs - Train Protection and Warning System, Eligibility for concessional rate of duty, Disc Brake Units and Pole Wheels, Classification under Notification No. 50/2017-Cus - Appellant imported Disc Brake Units and Pole Wheels for manufacturing Axle Mounted Disc Brake Systems for installation in high-speed coaches supplied to Indian Railways, availing concessional Basic Customs Duty rate of 7.5% under Sl. No. 521 of Notification No. 50/2017-Cus claiming the goods constitute Train Protection and Warning System. Post-clearance audit raised objections on the exemption availment and Show Cause Notice was issued proposing demand of differential customs duty - Whether Disc Brake Units and Pole Wheels, as components of Axle Mounted Disc Brake Systems, constitute Train Protection and Warning System and are eligible for concessional rate of duty under Sl. No. 521 of Notification No. 50/2017-Cus - HELD - Train Protection and Warning System has a specific, well-recognised technical meaning in the railway engineering domain and is not defined by mere dictionary meanings of protection and warning. Per Indian Railways Specification RDSO/SPN/183/2016, the Disc Brake Unit is listed as interface to existing brake control system rather than as TPWS component. TPWS equipment comprises track side system with Balises, Line side Electronic Unit and communication links, and on-board system with On Board Computer, Driver Machine Interface, Balise Transmission Module and interface to existing brake control system. The impugned goods serve the function of preventing wheel lock and derailment whereas TPWS is designed to prevent Signal Passed at Danger and collision. TPWS is governed by Signal and Telecom Department while braking systems are governed by Mechanical and Rolling Stock Department, reflecting that they belong to entirely different technical and administrative domains within Indian Railways. Exemption notification must be interpreted strictly and the burden is on the claimant of exemption to prove that the goods squarely fall within the notification. Therefore, the impugned goods do not form a part of Train Protection and Warning System and are not eligible for concessional rate of duty. However, the demand for differential duty can only be upheld for Bills of Entry falling within the normal period of limitation of two years prior to the Show Cause Notice dated 18.09.2020 - Appellant is not eligible for the concessional rate of duty under Sl. No. 521 of Notification No. 50/2017-Cus. The demand for differential duty is limited to the normal period of limitation - Appeal is allowed to the extent that the impugned order stands modified accordingly [Read less]

Customs - Advance Authorization scheme, Duty exemption, Export obligation, Physical incorporation of materials, Use of packaging materials, Violation of Notification No. 96/2009-Cus - Appellant imported Vetted Malt Scotch under Advance Authorization for manufacture of Indian Made Foreign Liquor and also procured glass bottles, caps and labels domestically under Annexure-45 under Rule 19(2) of Central Excise Rules 2002. Department alleged violation of condition (viii) of Notification No. 96/2009-Cus dated 11.09.2009 by using both imported duty-free inputs and domestically procured duty-free goods in conjunction and issued S... [Read more]

Customs - Advance Authorization scheme, Duty exemption, Export obligation, Physical incorporation of materials, Use of packaging materials, Violation of Notification No. 96/2009-Cus - Appellant imported Vetted Malt Scotch under Advance Authorization for manufacture of Indian Made Foreign Liquor and also procured glass bottles, caps and labels domestically under Annexure-45 under Rule 19(2) of Central Excise Rules 2002. Department alleged violation of condition (viii) of Notification No. 96/2009-Cus dated 11.09.2009 by using both imported duty-free inputs and domestically procured duty-free goods in conjunction and issued Show Cause Notice proposing recovery of customs duty, interest and penalty - Whether the appellant violated the conditions of Advance Authorization notification by using imported inputs under Advance Authorization and domestically procured packaging materials under Annexure-45 in manufacture and export of resultant products - HELD - Advance Authorization specifically requires goods to be physically incorporated in the export product. The definition of Materials in the notification makes a differentiation between goods required for manufacture of resultant product being raw materials, components, intermediates, consumables, catalysts and parts covered under sub-clause (a) and goods used for packaging being packaging materials required for packing of resultant product covered under sub-clause (d) - In the present case, Vetted Malt Scotch was the raw material imported for manufacture of resultant product IMFL and only this material falls under the export obligation condition of the notification. Bottles, caps and labels were packaging materials procured domestically under Annexure-45 and not imported - Since the condition of the notification applies only to materials that are physically incorporated in the resultant product, and packaging materials are not physically incorporated in the product itself, the use of domestically procured packaging materials does not constitute a violation of the Advance Authorization conditions - The decision in R.P. International vs Union of India clarifies that whereas the Duty Free Import Authorization Scheme permits duty free import of inputs required for production of export product, the Advance Authorization allows duty free import of inputs which are physically incorporated in the export product. Consequently, the export of IMFL manufactured using imported Vetted Malt Scotch and domestically procured packaging materials correctly fulfills the export obligation without violating the notification - Impugned Order-in-Original dated 30.08.2019 is set aside - The findings that appellant violated the conditions of Notification No. 96/2009-Cus are liable to be set aside - Appeal is allowed [Read less]

GST - Statutory requirement of Show Cause Notice, Form DRC-01 as summary cannot substitute SCN, Validity of adjudication proceedings without proper SCN - Appellant contended no proper SCN issued to them and entire proceedings invalid - Whether Form DRC-01, being summary of SCN, can substitute statutory requirement of SCN under Section 73(1) of CGST Act, 2017 - HELD - Show Cause Notice is bedrock of adjudication proceedings for determining tax, interest and penalty and serves important safeguard of natural justice. Section 73(1) mandates that proper officer shall serve notice on person chargeable requiring to show cause usi... [Read more]

GST - Statutory requirement of Show Cause Notice, Form DRC-01 as summary cannot substitute SCN, Validity of adjudication proceedings without proper SCN - Appellant contended no proper SCN issued to them and entire proceedings invalid - Whether Form DRC-01, being summary of SCN, can substitute statutory requirement of SCN under Section 73(1) of CGST Act, 2017 - HELD - Show Cause Notice is bedrock of adjudication proceedings for determining tax, interest and penalty and serves important safeguard of natural justice. Section 73(1) mandates that proper officer shall serve notice on person chargeable requiring to show cause using word shall which indicates promise or obligation that cannot be diluted by tax administration. Form DRC-01 is only summary of SCN and cannot stand independently dispensing with statutory requirement mandated by legislature. DRC-01 cannot replace proper Show Cause Notice - Validity of SCN requires examination of six points: who is person proceeded against, what tax or ITC alleged wrong, for which period, under which statutory provision, on what factual and evidentiary basis and whether taxpayer given real opportunity to answer allegation - In present case SCN attached with DRC-01 addressed to different taxpayer and no separate SCN issued to appellant. Appellant left in dark as to cause against which to address replies. Absence of proper SCN rendered appellant's opportunity being denied fundamental right of natural justice - Entire proceedings set aside as invalid and void ab initio due to absence of proper Show Cause Notice. Adjudication proceeding cannot sustain without statutory SCN properly issued to taxpayer. Orders-in-Original and Order-in-Appeal set aside – The appeal is allowed - GST - Demand of IGST arising from mismatch between GSTR-1 and GSTR-3B, Sustainability of demand in absence of reasoning and verification - Appellant reported taxable supply value of Rs.1,12,500/- in GSTR-3B but had reported only Rs.1,12,000/- in GSTR-1 creating difference of Rs.500/-. Corresponding difference in IGST created mismatch of Rs.20,250.54. Department issued DRC-01 and adjudicating authority demanded reversal of IGST - Whether demand of reversal of IGST can be sustained when no reasoning provided in adjudication order and mere upholding of demand without line of reasoning by appellate authority amounts to valid adjudication - HELD – In the absence of proper SCN and absent any line of reasoning in order-in-original justifying the amount as excess IGST, and bland upholding of order-in-original by first appellate authority without addressing merits, adjudication order cannot be sustained. Tribunal unable to appreciate how demand for IGST reversal can be justified when no factual or legal basis provided at any level of adjudication. Mere tabulation of figures without supporting reasoning or evidentiary foundation does not constitute valid adjudication order. Examination of applicability of case laws and principles necessarily becomes superfluous in case where foundational adjudication order lacks any substantive reasoning - Demand of IGST not sustainable. Order-in-original and Order-in-Appeal demanding reversal of IGST liability is set aside - Demand for reversal of CGST and SGST based on mismatch between GSTR-2A and GSTR-3B, Application of procedure under Circular No.183/15/2022-GST - Supplier inadvertently reported supply in GSTR-1 against different GSTIN instead of appellant's GSTIN resulting in mismatch between GSTR-2A and GSTR-3B – Demand for reversal of ITC based solely on mismatch without examining actual receipt or validity of invoice - Whether demand for reversal of CGST and SGST ITC based solely on mismatch between GSTR-2A and GSTR-3B can be sustained without compliance with procedure prescribed in Circular No.183/15/2022-GST requiring examination of conditions under Section 16 of CGST Act, 2017 - HELD - Circular No.183/15/2022-GST Para 4 prescribes that proper officer shall first seek details from registered person regarding invoices where ITC availed in GSTR-3B but not reflecting in GSTR-2A and then ascertain fulfilment of conditions under Section 16 of CGST Act for such ITC - Mere mismatch cannot be ground for denial of ITC without proper examination and verification per prescribed procedure. Respondent should have taken note of procedure prescribed in Circular before issuing demand – The demand for reversal of CGST and SGST ITC based on mismatch set aside. Mere mismatch between GSTR-2A and GSTR-3B not sufficient ground for ITC reversal without compliance with procedure prescribed in Circular requiring verification of conditions under Section 16 of CGST Act and examination of actual receipt of goods and invoices. [Read less]

GST - Availment of Input Tax Credit under incorrect tax head, Invocation of Section 73 for mismatch in ITC reporting - Appellant availed Input Tax Credit reflected as IGST in GSTR-2A but inadvertently claimed under CGST and SGST heads in GSTR-3B due to clerical error - Show cause notice issued under Section 73 alleging incorrect availment of ITC arising from mismatch in GSTR-2A and GSTR-3B - First appellate authority sustained the disallowance of CGST and SGST components of ITC while allowing only the IGST component - Whether Input Tax Credit can be disallowed merely because it was claimed under an incorrect tax head when ... [Read more]

GST - Availment of Input Tax Credit under incorrect tax head, Invocation of Section 73 for mismatch in ITC reporting - Appellant availed Input Tax Credit reflected as IGST in GSTR-2A but inadvertently claimed under CGST and SGST heads in GSTR-3B due to clerical error - Show cause notice issued under Section 73 alleging incorrect availment of ITC arising from mismatch in GSTR-2A and GSTR-3B - First appellate authority sustained the disallowance of CGST and SGST components of ITC while allowing only the IGST component - Whether Input Tax Credit can be disallowed merely because it was claimed under an incorrect tax head when the substantive eligibility of the credit is not disputed – Validity of invocation of provisions of Section 73 - HELD - Where ITC reflected in GSTR-2A under IGST head is claimed in GSTR-3B under CGST and SGST heads, such availment under incorrect heads constitutes a disallowable item regardless of whether the total amount was accounted for in returns and records. The statutory scheme does not permit reallocation of ITC between different tax heads merely because the taxpayer made an error in reporting. The substantive eligibility of credit cannot override the requirement that the credit must be claimed under the corresponding tax head for the inward supply - The provisions of Section 73 are attracted wherever there is incorrect availment of Input Tax Credit whether arising from intentional misstatement or inadvertent error. The distinction between fraudulent availment and bona fide error does not absolve the taxpayer of the tax demand but may be relevant only for consideration of penalty - Where a taxpayer has claimed ITC under incorrect tax heads, the reversal of such credit and the confirmation of tax liability under the appropriate head is justified. The authorities have correctly applied the law in reversing ITC claimed under CGST and SGST heads when the corresponding credit was available under IGST head - The absence of revenue loss to Government cannot be a ground to condone the incorrect availment of credit under wrong tax heads. Interest and penalty are rightly imposable when ITC is incorrectly claimed and subsequently reversed by the authorities - The disallowance of Input Tax Credit claimed under CGST and SGST instead of IGST, along with the levy of applicable interest and penalty, is upheld – The appeal is dismissed [Read less]

Service Tax - Works Contract Service and Manpower Labour Supply Service, Re-quantification of demand, Compliance with Tribunal's directions, Service Tax (Determination of Value) Rules 2006 - Appellant provided Works Contract Service and Manpower Labour Supply Services for construction activities, Show Cause Notice was issued proposing service tax demand with penalty, First order was passed confirming the demand and penalty, Tribunal remanded the matter for re-quantification under Construction Services in terms of Rule 2A of Service Tax (Determination of Value) Rules 2006 and for extending benefit of Notification No. 30/201... [Read more]

Service Tax - Works Contract Service and Manpower Labour Supply Service, Re-quantification of demand, Compliance with Tribunal's directions, Service Tax (Determination of Value) Rules 2006 - Appellant provided Works Contract Service and Manpower Labour Supply Services for construction activities, Show Cause Notice was issued proposing service tax demand with penalty, First order was passed confirming the demand and penalty, Tribunal remanded the matter for re-quantification under Construction Services in terms of Rule 2A of Service Tax (Determination of Value) Rules 2006 and for extending benefit of Notification No. 30/2012-ST under reverse charge mechanism - Whether the de-novo adjudication order properly followed the Tribunal's remand directions for re-quantification of service tax demand under Construction Services and whether the Appellant remains liable for the confirmed demand after reconciling differences and depositing balance tax - HELD - The Learned Adjudicating Authority in the de-novo order failed to follow the specific and clear directions of the Tribunal for re-quantification under Construction Services in terms of Rule 2A of the Service Tax (Determination of Value) Rules 2006 - The de-novo order was merely a copy-paste of the earlier order without conducting any fresh re-quantification as mandated by the Tribunal's remand directions - The justification that no additional documentary evidence was furnished by the Appellant was not a valid reason for the Adjudicating Authority to ignore the Tribunal's specific directions for re-quantification - The Appellant has already reconciled the entire difference between Form 26AS and Books of Accounts and submitted detailed year-wise reconciliation showing the tax short-assessed - The Appellant has also deposited the balance tax and consequently no further tax remains payable. An appellate remedy or forum created by the Statute is meant to rest the dispute and not to accelerate the same for higher forum - Impugned Order-In-Original dated 27.01.2021 is set aside - Appeal is allowed [Read less]

Central Excise – Rebate claim on export of goods - Adjudicating authority's obligation to consider operative orders of appellate forums when confirming demands - Although the rebate had initially been sanctioned, the Petitioner, acting upon the advice of the Department, had repaid the rebate amount along with interest. Thereafter, the petitioner continued to pay duty on the exported goods by debiting its CENVAT account and had taken credit of the duty so paid - Vide the impugned Order the Tribunal expressly held that petitioner was entitled to refund under Rule 5 of CENVAT Credit Rules 2004 – Dept confirmed the demand ... [Read more]

Central Excise – Rebate claim on export of goods - Adjudicating authority's obligation to consider operative orders of appellate forums when confirming demands - Although the rebate had initially been sanctioned, the Petitioner, acting upon the advice of the Department, had repaid the rebate amount along with interest. Thereafter, the petitioner continued to pay duty on the exported goods by debiting its CENVAT account and had taken credit of the duty so paid - Vide the impugned Order the Tribunal expressly held that petitioner was entitled to refund under Rule 5 of CENVAT Credit Rules 2004 – Dept confirmed the demand without considering the CESTAT's decision despite being apprised of the same - Whether an adjudicating authority can confirm a demand based on an appellate order that has been subsequently set aside by a higher appellate Tribunal - HELD - An adjudicating authority exercising statutory powers is necessarily required to take into account operative orders of appellate authorities having appellate jurisdiction over it and cannot disregard a subsequent appellate determination which directly bears upon the very issue under adjudication. Once the Order-in-Appeal dated 16.12.2019 which had set aside the Refund Order dated 06.05.2019 was itself set aside by the CESTAT vide Final Order dated 01.08.2024, the same could not thereafter be treated as an operative determination adverse to the petitioner - The CESTAT did not merely set aside the Order-in-Appeal on a technical ground but examined the substantive entitlement and expressly held that the petitioner was entitled to refund under Rule 5 of CENVAT Credit Rules 2004 and had specifically considered and decided the question of limitation in favour of the petitioner - The impugned order proceeds on a legal and factual premise which was no longer available. The Additional Commissioner committed a manifest error in confirming the demand without giving effect to the CESTAT's Final Order dated 01.08.2024 despite being specifically informed about it - The Order-in-Original and the Demand-cum-Show Cause Notice are set aside; The Respondent is directed to refund the amount together with applicable interest, in accordance with law – The writ petition is allowed [Read less]

Customs - Valuation of imported goods, Transaction value, Rejection of declared value, Enhancement on basis of acceptance letter, Compliance with Rule 12(2) of CVR 2007, Right to appeal, Speaking Order - Appellant imported Polyester Knitted Fabrics from China declaring transaction value as per commercial invoice, Proper Officer enhanced the valuation based on contemporaneous import data, Appellant initially requested clearance provisionally or finally under protest but was coerced to submit letters of consent to enhanced valuation, Commissioner (Appeals) rejected appeals holding that acceptance in writing exempts issuance ... [Read more]

Customs - Valuation of imported goods, Transaction value, Rejection of declared value, Enhancement on basis of acceptance letter, Compliance with Rule 12(2) of CVR 2007, Right to appeal, Speaking Order - Appellant imported Polyester Knitted Fabrics from China declaring transaction value as per commercial invoice, Proper Officer enhanced the valuation based on contemporaneous import data, Appellant initially requested clearance provisionally or finally under protest but was coerced to submit letters of consent to enhanced valuation, Commissioner (Appeals) rejected appeals holding that acceptance in writing exempts issuance of Speaking Order under Section 17(5) and forecloses right to question assessment - Whether enhancement of valuation can be sustained when proper officer failed to follow mandate of Rule 12(2) of CVR 2007 to intimate grounds in writing and whether acceptance letter bars the right to appeal against enhancement or only exempts the procedural requirement of Speaking Order - HELD - The mandate of Rule 12(2) of CVR 2007 to intimate the importer in writing the grounds for doubting the truth or accuracy of the declared value cannot be ignored or waived. The proper officer was duty bound to communicate the reasons for rejection of transaction value in writing. The letters of acceptance were obtained under pressure and not voluntarily as the Proper Officer ignored requests for provisional assessment and the letters merely state that grounds were narrated and contemporaneous import data shown without disclosing actual details - The critical distinction between the limited procedural waiver under Section 17(5) of Customs Act relating to the requirement of Speaking Order and the independent substantive right of appeal under Section 128 of Customs Act must be maintained. Acceptance letter only exempts the requirement of Speaking Order but does not bar the statutory right to appeal against the enhancement itself - The Delhi High Court in Niraj Silk Mills vs Commissioner of Customs (ICD) Patparganj has held that the right to question the correctness of the decision of the proper officer, whether with respect to formation of opinion or on merits, is protected by statute and cannot be waived. There is no estoppel in taxation matters against assertion of statutory rights - The Allahabad High Court judgment in S.S. Overseas is confined to the narrow issue of mandamus for Speaking Order and does not foreclose the statutory right of appeal - The impugned Orders-in-Appeal are set aside - Appeals are allowed [Read less]

GST – Scope of expression ‘things’ contained in Section 67(2) of the CGST Act, 2017 - Seizure of currency during search and seizure operations - Officers seized cash during search and seizure operation - Whether the respondent authorities had jurisdiction or authority to seize cash or currency in the course of search and seizure under Section 67(2) of the CGST Act, 2017 - HELD - The expression ‘things’ in Section 67(2) of the CGST Act does not include cash or currency or money found or recovered during the course of search and seizure and the respondents did not have jurisdiction or authority to confiscate or ret... [Read more]

GST – Scope of expression ‘things’ contained in Section 67(2) of the CGST Act, 2017 - Seizure of currency during search and seizure operations - Officers seized cash during search and seizure operation - Whether the respondent authorities had jurisdiction or authority to seize cash or currency in the course of search and seizure under Section 67(2) of the CGST Act, 2017 - HELD - The expression ‘things’ in Section 67(2) of the CGST Act does not include cash or currency or money found or recovered during the course of search and seizure and the respondents did not have jurisdiction or authority to confiscate or retain cash or currency money during such process. The object of Section 67(2) is examination of documents and books for purposes of enquiry or proceedings under the Act and not to unearth unaccounted wealth nor to recover tax by seizing assets when separate mechanisms exist under Sections 73, 74, 78 and 79 of the CGST Act for that purpose and consequently any seizure or retention of cash or currency would be illegal and arbitrary and in clear contravention of the provisions of Section 67(2) of the CGST Act - The seizure of cash is held to be illegal and since the cash had been illegally withheld from the date of seizure till the date of refund, the petitioner would be entitled to interest accrued on the illegally withheld sum – The writ petition is disposed of - Retention of seized articles beyond the stage of issuance of show cause notice - Scope of powers under Section 67(3) - Officers retained two mobile phones, three pen drives and bank card even after issuance of show cause notice - Whether the respondent authorities were entitled to retain the seized articles after the show cause notice had been issued to the petitioner - HELD - With the issuance of the show cause notice, the necessity for retaining the goods or articles enumerated which included mobile phones, pen drives and bank card had ended as the investigation had been completed and culminated in the demand cum show cause notice and the articles could not be retained any further and were required to have been returned at least immediately after the show cause notice had been issued or served upon the petitioner as the provisions of Section 67(3) contemplate retention only for so long as may be necessary for examination and for enquiry or proceedings under the Act - The Investigating Officer shall forthwith arrange for return of the said articles to the petitioner. [Read less]

GST - Dismissal of appeal by First Appellate Authority on ground of limitation - Condonation of delay under Section 107 of CGST Act - Whether First Appellate Authority justified in dismissing appeal solely on ground of limitation without considering sufficient cause demonstrated through medical documents and mandatory pre-deposit - HELD - The dismissal of appeal solely on ground of limitation prescribed under Section 107(1) and 107(4) without considering sufficient cause shown by petitioner and substantial compliance with Section 107(6) amounts to hyper technical approach defeating the very purpose of appellate remedy unde... [Read more]

GST - Dismissal of appeal by First Appellate Authority on ground of limitation - Condonation of delay under Section 107 of CGST Act - Whether First Appellate Authority justified in dismissing appeal solely on ground of limitation without considering sufficient cause demonstrated through medical documents and mandatory pre-deposit - HELD - The dismissal of appeal solely on ground of limitation prescribed under Section 107(1) and 107(4) without considering sufficient cause shown by petitioner and substantial compliance with Section 107(6) amounts to hyper technical approach defeating the very purpose of appellate remedy under the statute. Once the mandatory pre-deposit stands satisfied and the amount has been debited from the petitioner's account, the appellate remedy cannot be rendered illusory by refusing to hear the appeal on the mere technical ground of delay - The petitioner had demonstrated through medical documents annexed to the writ petition that the authorized person entrusted with looking after business affairs had fallen seriously ill, which resulted in the petitioner remaining unaware of the order communicated through the portal, thereby establishing sufficient cause for the delay - The First Appellate Authority while exercising power to condone delay is required to apply principles of natural justice and balance equities to secure ends of justice rather than adopting a rigid and mechanistic approach towards limitation periods - The order dismissing the appeal is quashed and set aside; the delay in filing the appeal from the date of communication of the order is condoned - The First Appellate Authority is directed to admit and hear the appeal on merits and pass a reasoned order in accordance with law affording opportunity of hearing to the petitioner - The writ petition is disposed of [Read less]

GST – Gujarat AAR - Liability to collect GST on supply of aircrafts manufactured in India, Scope of supply under Section 7 of CGST Act - Applicant was awarded a contract for supply of 56 aircrafts out of which 40 were to be manufactured in India by Indian Aircraft Contractor at Vadodara, Gujarat and supplied to Ministry of Defence ex-works at facility in Gujarat - Whether the applicant is liable to pay GST on supplies of aircrafts made to Ministry of Defence pursuant to the contract - HELD - As per Section 7(1)(a) of CGST Act, supply includes all forms of supply of goods such as sale made for consideration by a person in... [Read more]

GST – Gujarat AAR - Liability to collect GST on supply of aircrafts manufactured in India, Scope of supply under Section 7 of CGST Act - Applicant was awarded a contract for supply of 56 aircrafts out of which 40 were to be manufactured in India by Indian Aircraft Contractor at Vadodara, Gujarat and supplied to Ministry of Defence ex-works at facility in Gujarat - Whether the applicant is liable to pay GST on supplies of aircrafts made to Ministry of Defence pursuant to the contract - HELD - As per Section 7(1)(a) of CGST Act, supply includes all forms of supply of goods such as sale made for consideration by a person in course or furtherance of business. Aircrafts fall within definition of goods under Section 2(52) as movable property. There is consideration payable by MoD for the transaction of supply of aircrafts - As per Section 7(1A) read with Entry 1(a) of Schedule II, any transfer of title in goods is a supply of goods and title and ownership transfer takes place in Gujarat upon signature of Acceptance Certificate. Transaction qualifies as supply under Section 7 of CGST Act. Notification No. 10/2025 provides exhaustive list of exempted goods and aircrafts are not covered under any entry, hence no exemption is available - Transaction of supply of aircrafts by applicant to MoD is liable to GST - The applicant is liable to pay GST on supplies of aircrafts made to Ministry of Defence – Ordered accordingly - Registration requirement under Sections 22 and 25 of CGST Act, Place of supply and application for registration in State of supply - Entire process of manufacture and supply of aircrafts to Ministry of Defence is undertaken by applicant in State of Gujarat and applicant has already obtained registration in Haryana - Whether the applicant is required to obtain GST registration in state of Gujarat for making supplies of aircrafts - HELD - As per Section 22 of CGST Act, every supplier is liable to be registered in State from where he makes taxable supply if aggregate turnover exceeds Rs. 20 lakhs. Section 25(1) mandates that every person liable for registration shall apply in every such State where liable within thirty days from date on which he becomes liable - Entire manufacture and supply of aircrafts to MoD is carried out in Gujarat. Transaction value of aircrafts to be supplied is much higher than threshold limit of Rs. 20 lakhs. Therefore applicant will be required to obtain registration in state of Gujarat for supply transaction undertaken therein - The applicant is required to obtain GST registration in State of Gujarat. [Read less]

GST - Gujarat AAR - Classification and applicable rate of GST of Papad Khar - Whether Papad Khar should be classified under HSN 2501 (Common Salts) at 5% GST or HSN 2102 (Prepared Food Additives) at 5% GST on ground that it is alkaline salt used as food ingredient, or whether it qualifies for GST exemption under Notification 2/2017-CT entries 96 or 23 as ingredient essential for manufacture of papad - HELD - Papad Khar containing 70% sodium chloride, 15% sodium carbonate and 15% sodium bicarbonate does not fall under HSN 2501 as it is not common salt or rock salt which contain pure or near-pure sodium chloride. The product... [Read more]

GST - Gujarat AAR - Classification and applicable rate of GST of Papad Khar - Whether Papad Khar should be classified under HSN 2501 (Common Salts) at 5% GST or HSN 2102 (Prepared Food Additives) at 5% GST on ground that it is alkaline salt used as food ingredient, or whether it qualifies for GST exemption under Notification 2/2017-CT entries 96 or 23 as ingredient essential for manufacture of papad - HELD - Papad Khar containing 70% sodium chloride, 15% sodium carbonate and 15% sodium bicarbonate does not fall under HSN 2501 as it is not common salt or rock salt which contain pure or near-pure sodium chloride. The product is obtained by manufacturing process involving mixing and chemical processing beyond the scope of heading 2501 which covers only products in crude state or subjected to limited mechanical or physical processing without roasting or calcining or mixing - Papad Khar does not fall under HSN 2102 as it is fundamentally different from yeasts and baking powders in chemical composition, functional use and resulting effect on dough - The product contains sodium carbonate and sodium bicarbonate as active ingredients while yeasts are living microorganisms and baking powders are leavening agents. Papad Khar correctly falls under HSN 28362090 (Carbonates and Peroxocarbonates) as the chemically active components of sodium carbonate and sodium bicarbonate form 30% of the product composition and the product is mixable derivative of carbonates and bicarbonates falling within the scope of heading 2836 - The principle that raw materials and finished products are separate items with independent HSN codes and that rates are determined by their specific tariff entries and not by position in supply chain does not support contention that raw materials should be taxed at nil rate because finished product is exempt - Papad Khar does not qualify for exemption under Notification 2/2017-CT as the exemption for papad relates only to the final product and not to raw materials or ingredients used in its manufacture - Papad Khar is classifiable under HSN 28362090 under Entry No. 35 of Schedule II of Notification 09/2025-Central Tax (Rate) and is liable to 18% GST – Ordered accordingly [Read less]

Central Excise - Denial of concessional rate notification benefit based on availment of CENVAT credit, Applicability of credit conditions to inputs used in waste processing - Whether concessional rate notification condition against CENVAT credit applies to inputs used in waste product processing when CENVAT credit availed only for manufacture of primary product Gelatin and not specifically for inputs going into waste product conversion - HELD – The Show Cause Notice and adjudication order neither specific nor established which inputs used exclusively in manufacture of Nutri Gold. Inputs used to clean waste product sludge... [Read more]

Central Excise - Denial of concessional rate notification benefit based on availment of CENVAT credit, Applicability of credit conditions to inputs used in waste processing - Whether concessional rate notification condition against CENVAT credit applies to inputs used in waste product processing when CENVAT credit availed only for manufacture of primary product Gelatin and not specifically for inputs going into waste product conversion - HELD – The Show Cause Notice and adjudication order neither specific nor established which inputs used exclusively in manufacture of Nutri Gold. Inputs used to clean waste product sludge were part of inputs used in Gelatin manufacture. Where inputs used in manufacture of final product also used for processing waste products to manufacture dutiable product, CENVAT credit cannot be denied - Supreme Court in Union of India v Hindustan Zinc held that terms used such as inputs, final products, by-product and waste products used taking into account commercial reality and that Rule did not contemplate application where by-product emerged as technological necessity. Notification condition against CENVAT credit cannot be applied unless evidence established that inputs were purchased and used exclusively for Nutri Gold manufacture - In the present case, there is no evidence on record to state that inputs were purchased and used exclusively for the manufacture of Nutri Gold. Accordingly, the impugned orders cannot be sustained and set aside – The appeal is allowed [Read less]

Service Tax - Limitation period for refund claims under Rule 5 of CENVAT Credit Rules, Application of Larger Bench decision in Span Infotech after amended notification - Appellant filed refund claims for CENVAT credit of Service Tax in respect of FIRCs received between first January 2017 and thirtieth June 2017 – Rejection of refund on ground that amended Notification No. 14/2016-CE dated first March 2016 expired limitation one year from receipt of individual FIRC - Whether limitation period for refund claims filed quarterly is computed from date of individual FIRC receipt or from end of quarter in which FIRC received an... [Read more]

Service Tax - Limitation period for refund claims under Rule 5 of CENVAT Credit Rules, Application of Larger Bench decision in Span Infotech after amended notification - Appellant filed refund claims for CENVAT credit of Service Tax in respect of FIRCs received between first January 2017 and thirtieth June 2017 – Rejection of refund on ground that amended Notification No. 14/2016-CE dated first March 2016 expired limitation one year from receipt of individual FIRC - Whether limitation period for refund claims filed quarterly is computed from date of individual FIRC receipt or from end of quarter in which FIRC received and whether Span Infotech principle applies after Notification No. 14/2016-CE - HELD - Larger Bench decision in Span Infotech held that where refund claims filed quarterly, relevant date for limitation is end of quarter in which FIRC received. This enables consolidation of all FIRCs during quarter in single claim without becoming time barred if FIRCs received near quarter end - Amended Notification No. 14/2016-CE was brought to give effect to Span Infotech decision not to reverse it. Statutory scheme permitting only one refund application per quarter remains unchanged. Principle laid down in Span Infotech remains applicable and unaltered even after amended notification. - The impugned order rejecting refund claim is set aside. The appellant entitled to refund with applicable interest – The appeal is allowed [Read less]

Service Tax - Taxability of delayed payment surcharges and meter-testing charges collected by electricity distribution utility - Notice proposing service tax on delayed payment charges as consideration for agreeing to tolerate an act or situation under Section 66E(e) and on meter-testing charges as an independent service under Section 65B(44) - Whether additional surcharges collected for delayed payment of electricity bills are taxable consideration for a declared service under Section 66E(e) of Finance Act - HELD - The scope of exemption available to electricity transmission and distribution utilities under Section 66D(k)... [Read more]

Service Tax - Taxability of delayed payment surcharges and meter-testing charges collected by electricity distribution utility - Notice proposing service tax on delayed payment charges as consideration for agreeing to tolerate an act or situation under Section 66E(e) and on meter-testing charges as an independent service under Section 65B(44) - Whether additional surcharges collected for delayed payment of electricity bills are taxable consideration for a declared service under Section 66E(e) of Finance Act - HELD - The scope of exemption available to electricity transmission and distribution utilities under Section 66D(k) extends not only to the principal service of distribution but also to all activities having direct and close nexus with transmission or distribution of electricity when naturally bundled with the principal service under Section 66F(3) - For Section 66E(e) to apply, there must be an agreement express or implied under which one party assumes obligation to tolerate an act or situation and consideration is paid for such tolerance. A mere flow of money consequent upon breach or default is not sufficient - Delayed payment surcharge is imposed only upon failure to comply with the statutory obligation to pay electricity bills by due date. Its object is to secure timely payment and discourage default. Neither consumer desires to purchase service of tolerance nor does respondent undertake delayed payment as activity for consumer. Continuation of electricity supply in accordance with Electricity Act cannot be regarded as agreement to tolerate delayed payment. Surcharge bears direct nexus with electricity bill and is collected as part of mechanism for recovery of charges for distribution - Delayed payment surcharges are not taxable as consideration under Section 66E(e). Meter-testing charges are directly connected and naturally bundled with distribution of electricity receiving same tax treatment as principal service. Extended period of limitation is not available. No interest or penalty is recoverable – The impugned dropping proceedings is upheld and Revenue appeal is dismissed - Whether meter-testing charges constitute an independent taxable service or form part of the exempted service of distribution of electricity under Section 66D(k) – HELD - Testing of meter is not unrelated consultancy service but undertaken in capacity as distribution utility in furtherance of statutory functions. Essential character of activity is not altered by fact that separately prescribed fee is recovered. Separate pricing and separate accounting does not result in separate taxable service when activity naturally bundled with and ancillary to principal service. [Read less]

Customs - Adjustment of refund of Special Additional Duty against unfinalized demand for recovery of duty drawback under Section 142 of Customs Act - Whether refund of Special Additional Duty can be adjusted and appropriated under Section 142 of Customs Act against a demand for recovery of duty drawback that has not reached finality - HELD - Adjustment under Section 142 of Customs Act can be invoked only when the demands against which adjustment is sought have reached finality and should never be invoked at initial stage when the order is mere claim that gets confirmed through an appealable order. Demands that are subject ... [Read more]

Customs - Adjustment of refund of Special Additional Duty against unfinalized demand for recovery of duty drawback under Section 142 of Customs Act - Whether refund of Special Additional Duty can be adjusted and appropriated under Section 142 of Customs Act against a demand for recovery of duty drawback that has not reached finality - HELD - Adjustment under Section 142 of Customs Act can be invoked only when the demands against which adjustment is sought have reached finality and should never be invoked at initial stage when the order is mere claim that gets confirmed through an appealable order. Demands that are subject to appeal or revision cannot be regarded as having reached finality. Every Order-in-Original is appealable and subject to revision. Therefore at first stage of confirmation of demand no finality has been reached. Demands cannot be called as arrears until they have attained finality - Adjustment of refund against non-finalized or pending demands is against legal provisions and settled judicial pronouncements - Failure to release appropriated refund amount when the demand ceases to exist constitutes delayed refund for which interest is payable under Section 11BB of Customs Act - Respondent is directed to refund the SAD along with applicable interest as per law – The appeal is allowed [Read less]

Customs - Computation of limitation period for refund claim under Section 27(1B)(c) for provisionally paid duty, Date of communication versus date of passing order, Proof of service requirements - Respondent imported non-coking coal assessed provisionally. Order-in-Original dated thirtieth April 2014 finalized provisional assessment directing refund of. Respondent filed refund claim on thirteenth May 2015 - Department rejected as time barred contending limitation ran from thirtieth April 2014 - Whether limitation period of one year under Section 27(1B)(c) for refund of provisionally paid duty is computed from date order is... [Read more]

Customs - Computation of limitation period for refund claim under Section 27(1B)(c) for provisionally paid duty, Date of communication versus date of passing order, Proof of service requirements - Respondent imported non-coking coal assessed provisionally. Order-in-Original dated thirtieth April 2014 finalized provisional assessment directing refund of. Respondent filed refund claim on thirteenth May 2015 - Department rejected as time barred contending limitation ran from thirtieth April 2014 - Whether limitation period of one year under Section 27(1B)(c) for refund of provisionally paid duty is computed from date order is passed or from date order is communicated to the assessee - HELD - Limitation period runs from date order is communicated to person entitled to refund, not from date order is passed. Communication is essential element for limitation to commence as assessee cannot be bound by order before knowledge thereof - Mere despatch without proof of delivery is insufficient. Burden lies on Revenue to prove service as per prescribed method. Assessee's postal cover bearing postal department seal establishing receipt on tenth June 2015 cannot be disputed by bare surmise that it may have contained other correspondence. Refund claim filed fifteenth May 2015 falls within one year from tenth June 2015, the date of communication - The Order-in-Appeal allowing refund claim is upheld and the Revenue appeal is dismissed [Read less]

Service Tax - Transfer of Development Rights, Nature of transaction, Immovable property, Service, CENVAT Credit, Input service, Extended period of limitation - Appellant engaged in trading of lubricants and motor vehicles, transferred development rights of land in return for specified share of built up area of project, marketed and sold share of flats and treated amount as consideration for construction services, paid service tax after availing 75% abatement under Notification No. 26/2012-ST, availed CENVAT credit on administrative charges and construction services provided by developer, Department contended that transfer ... [Read more]

Service Tax - Transfer of Development Rights, Nature of transaction, Immovable property, Service, CENVAT Credit, Input service, Extended period of limitation - Appellant engaged in trading of lubricants and motor vehicles, transferred development rights of land in return for specified share of built up area of project, marketed and sold share of flats and treated amount as consideration for construction services, paid service tax after availing 75% abatement under Notification No. 26/2012-ST, availed CENVAT credit on administrative charges and construction services provided by developer, Department contended that transfer of development rights was a service liable to service tax without abatement - Whether transfer of development rights constitutes a service liable to service tax or is a transaction in immovable property and whether CENVAT credit was rightly availed - HELD - Following Chheda Housing Development Corporation vs Bibijan Shaikh Farid, development rights are a benefit arising out of land and fall under the definition of immovable property under Section 3(26) of General Clauses Act 1897 - Transfer of development rights is a transaction in immovable property and not a service at all. It is neither construction service nor any other service. Therefore, no service tax is payable on transfer of development rights. Since the transfer of development rights was not an output service, the service tax paid by the developer on Works Contracts and Administrative charges were not input services at the hands of the appellant - Therefore, the appellant was not entitled to CENVAT credit on these amounts. The extended period of limitation cannot be invoked in this case because the appellant was of the view that it was liable to pay service tax on the transfer as construction services and for that reason availed the CENVAT credit. The appellant's position was based on a reasonable interpretation of law and there was no wilful suppression or fraud. The demand of service tax and penalties under Sections 77 and 78 and Rule 15 are liable to be set aside. The appellant can claim refund of the service tax wrongly paid on transfer of development rights with effect from the date of this order - Demand of service tax under Section 73 set aside - Penalties under Sections 77 and 78 and Rule 15 set aside - Denial and recovery of CENVAT credit upheld for normal period of limitation only - Appellant entitled to claim refund of service tax paid - Appeal partly allowed [Read less]

Maharashtra VAT Act, 2002 - Periodicity of filing returns under MVAT Act, Levy of interest for alleged delayed payment of tax - Petitioner obtained registration voluntarily and became eligible to file six-monthly returns under Rule 17(4) read with Rule 41 of the MVAT Rules, 2005, based on previous year's tax liability being below the prescribed threshold - Petitioner filed six-monthly returns for the relevant financial year and discharged tax liability within the due dates - Respondent levied interest under Section 30(2) of the MVAT Act, 2002 on the premise that petitioner ought to have paid tax on monthly basis and had th... [Read more]

Maharashtra VAT Act, 2002 - Periodicity of filing returns under MVAT Act, Levy of interest for alleged delayed payment of tax - Petitioner obtained registration voluntarily and became eligible to file six-monthly returns under Rule 17(4) read with Rule 41 of the MVAT Rules, 2005, based on previous year's tax liability being below the prescribed threshold - Petitioner filed six-monthly returns for the relevant financial year and discharged tax liability within the due dates - Respondent levied interest under Section 30(2) of the MVAT Act, 2002 on the premise that petitioner ought to have paid tax on monthly basis and had thereby unjustly enriched itself by deferring substantial tax revenue. - Whether interest under Section 30(2) of the MVAT Act can be levied where the assessee has filed returns and paid tax in compliance with the statutory periodicity prescribed under Rule 17(4) and the due date prescribed under Rule 41 of the MVAT Rules - HELD - Section 30(2) provides for compensatory interest on the amount of tax not paid within the time specified by or under the Act, and the sine qua non for levy of interest is failure to pay tax within the time specified in the Act. Section 32 read with Rule 41 prescribe that tax be paid on or before the date specified for submission of return. Section 20 read with Rule 17 prescribe that every registered dealer whose tax liability during the previous year was below the threshold shall file a six-monthly return and thus is required to pay tax on a six-monthly basis - Once the Rules prescribe the periodicity of filing return and due date for payment of tax, the same are binding both on the assessee and the respondents. The respondent has no jurisdiction to decide or alter such periodicity based on his own surmises or perceptions unless supported by very cogent materials or the sanction of law - The MVAT Act does not create any concept of unjust enrichment in relation to return periodicity or timing of tax payment where the dealer has acted strictly in accordance with the prescribed Rules. Payment of tax within the legally prescribed due date cannot be characterised as deferment or enrichment merely because the turnover during the relevant year was substantial - The levy of interest is dehors the statutory provisions and therefore is constitutionally impermissible. The interest is a fiscal levy and can be imposed only with the authority of law – The levy of interest under Section 30(2) of the MVAT Act is set aside – The writ petition is allowed [Read less]

Central Excise - Eligibility of CENVAT credit for Clearing and Forwarding services, Determination of place of removal in FOR-destination transactions, Invocation of extended period - Appellant manufacturer of cement cleared cement from factory and stock-transferred to depots managed by clearing and forwarding agents. Appellant availed CENVAT credit on service tax paid for C&F services. Department disallowed credit contending services were rendered beyond place of removal which was factory or depot - Whether C&F services relating to storage, handling, loading at depots constitute eligible input services and whether services... [Read more]

Central Excise - Eligibility of CENVAT credit for Clearing and Forwarding services, Determination of place of removal in FOR-destination transactions, Invocation of extended period - Appellant manufacturer of cement cleared cement from factory and stock-transferred to depots managed by clearing and forwarding agents. Appellant availed CENVAT credit on service tax paid for C&F services. Department disallowed credit contending services were rendered beyond place of removal which was factory or depot - Whether C&F services relating to storage, handling, loading at depots constitute eligible input services and whether services for transportation and delivery at customer premises are covered under place of removal where cement sold on FOR-destination basis - HELD - Section 4(3)(C) of the CEA, 1944 includes depot and premises where excisable goods sold after clearance as place of removal. Services relating to receipt, unloading, storage, handling and loading at depots directly nexus with business of manufacture and sale and are eligible input services. For FOR-destination transactions, place of removal must be determined by examining contract terms applying principles that controlling factors include point of title passage, risk of loss, freight and insurance treatment and whether delivery at buyer premises was essential condition. Mere use of FOR-destination expression not conclusive - Matter requires limited factual verification per individual contracts. Dispute involves statutory interpretation and divergent judicial views existed. No positive fraud or deliberate suppression established. Extended period not invocable. Equivalent penalty also set aside - Eligibility of credit for transportation and delivery at customer premises remanded for verification of actual place of removal per contract terms – The appeal is allowed by remand [Read less]

Central Excise – Failure to disclose shortages or excesses reflected in the Cost Audit Report, Invocation of extended period of limitation under proviso to Section 11A(1) for suppression of facts, Relevance of departmental knowledge - Despite possessing full information, Department issued Show Cause Notices invoking extended period claiming appellant suppressed facts by not disclosing shortages. Adjudicating Authority confirmed demand. Commissioner (Appeals) set aside on limitation - Tribunal reversed the order holding extended period available - Whether extended period of limitation under proviso to Section 11A(1) can b... [Read more]

Central Excise – Failure to disclose shortages or excesses reflected in the Cost Audit Report, Invocation of extended period of limitation under proviso to Section 11A(1) for suppression of facts, Relevance of departmental knowledge - Despite possessing full information, Department issued Show Cause Notices invoking extended period claiming appellant suppressed facts by not disclosing shortages. Adjudicating Authority confirmed demand. Commissioner (Appeals) set aside on limitation - Tribunal reversed the order holding extended period available - Whether extended period of limitation under proviso to Section 11A(1) can be invoked based on non-disclosure in statutory returns of matters not required to be disclosed - HELD - Extended period comes into play only when suppression is established or admitted as deliberate act of withholding information. Suppression presupposes person from whom something is kept back and one cannot suppress from another that which the other already possesses. Where Department attends stock verification at assessee's invitation and records physical position, conduct is antithesis of concealment - Statutory returns require no disclosure of shortages or excesses reflected in Cost Audit Report as no column prescribed disclosure thereof. Demand built entirely on statutory record which assessee bound to prepare, preserve and produce cannot simultaneously be demand built on suppression – The extended period unavailable where entire basis of demand is information in assessee's own books, financial statements or statutory records – Further, the Show Cause Notice must specifically plead ingredients of suppression so assessee may meet allegation. Single sentence averment identifying no fact suppressed, no obligation breached, no act of concealment and no intent to evade is insufficient. – The extended period not available and the demand is barred by limitation of one year – The order passed by the Tribunal is set aside and the appeal is allowed [Read less]

Central Excise - Excisability of waste materials and residues arising incidentally during manufacture, Distinction between manufacture and marketability - During manufacture of sponge iron waste material and iron ore fines emerged and were cleared without duty. Department contended materials were marketable excise goods - Commissioner (Appeals) set aside holding disputed materials did not arise as result of any process of manufacture. Department appealed contending goods have distinct names, commercial utility, sold for consideration and covered by tariff entries - Whether waste materials and residues arising inevitably du... [Read more]

Central Excise - Excisability of waste materials and residues arising incidentally during manufacture, Distinction between manufacture and marketability - During manufacture of sponge iron waste material and iron ore fines emerged and were cleared without duty. Department contended materials were marketable excise goods - Commissioner (Appeals) set aside holding disputed materials did not arise as result of any process of manufacture. Department appealed contending goods have distinct names, commercial utility, sold for consideration and covered by tariff entries - Whether waste materials and residues arising inevitably during manufacture of primary product can be subjected to Central Excise duty merely because they are marketable and specified in tariff - HELD - Manufacture or production is foundational taxable event. For activity to amount to manufacture, it must result in emergence of new and distinct commodity having different name, character or use from original inputs. Explanation to Section 2(d) of CEA, 1944 expands concept of goods and marketability but does not dispense with statutory requirement that goods must be manufactured or produced - Marketability and manufacture are separate conditions and existence of one does not establish other. Dolochar, partially burnt coal remaining in rotary kiln during sponge iron manufacture, emerges inevitably and not result of independent manufacturing process. Fly ash arises from burning coal for heat and burning does not amount to manufacture of residue. Burning coal to generate electricity does not constitute process for manufacture of fly ash. Iron ore fines arise through handling and screening without benefication - Mere reduction or segregation does not amount to manufacture. Subsequent payment of duty by respondent cannot constitute admission against correct legal position as there is no estoppel against law. Even if dolochar treated as excisable, unconditionally exempt under Notification No. 4/2006 and Notification No. 12/2012 as waste from manufacture of iron or steel - No positive fraud or deliberate suppression with intent to evade established. Mere non-payment without deliberate act cannot justify extended period – The impugned Order-in-Appeal upholding that disputed materials not liable to Central Excise duty affirmed – Revenue appeal is dismissed [Read less]

Service Tax - Classification of composite construction contract as Works Contract Service, Distinction between composite contract and statutory definition of taxable service - Appellant constructed residential flats under development agreements with land owners and individual agreements with perspective purchasers for period October 2007 to March 2013. Department issued Show Cause Notice proposing service tax demand on ground that construction contracts were composite contracts involving supply of goods and services classifiable as Works Contract Service - Whether contracts involving both supply of goods and construction s... [Read more]

Service Tax - Classification of composite construction contract as Works Contract Service, Distinction between composite contract and statutory definition of taxable service - Appellant constructed residential flats under development agreements with land owners and individual agreements with perspective purchasers for period October 2007 to March 2013. Department issued Show Cause Notice proposing service tax demand on ground that construction contracts were composite contracts involving supply of goods and services classifiable as Works Contract Service - Whether contracts involving both supply of goods and construction services necessarily constitute taxable Works Contract Service merely on account of being composite in nature - HELD - Supreme Court in Larsen & Toubro held that indivisible composite works contracts after first June 2007 taxable under Works Contract Service subject to satisfaction of statutory requirements. Mere existence of composite contract does not conclude question of taxability. To fall within Works Contract Service in relation to residential construction, subject construction must satisfy statutory description of Residential Complex as defined in Section 65(91a). Composite nature of contract cannot enlarge or override statutory meaning of taxable service categories - Construction for taxability under Works Contract Service must satisfy statutory definition of Residential Complex - Service Tax - Definition and statutory scope of Residential Complex, Requirement of more than twelve residential units - Whether construction of building or independently identifiable project comprising twelve or fewer residential units can be subjected to service tax under Works Contract Service category when statutory definition requires more than twelve residential units - HELD - Section 65(91a) as applicable during material period contemplated complex comprising building or buildings having more than twelve residential units, common area and one or more prescribed common facilities. Where project or independently identifiable building consists of twelve or fewer residential units and does not otherwise constitute residential complex as statutorily defined, construction cannot be subjected to tax merely by describing as works contract. Special entry of Works Contract Service cannot enlarge statutory meaning of Residential Complex - Construction of building or independently identifiable project having twelve or fewer residential units outside scope of construction of residential complex service and not taxable under Works Contract Service - Service Tax - Effect of deeming explanation inserted on 01.07.2010, Retrospective application of statutory provisions to earlier periods - Appellant's construction services for period prior to first July 2010 were treated as taxable. Department relied on explanation to Section 65(105)(zzzh) which deemed construction by builder to be taxable service where amount received from perspective buyer before grant of completion certificate - Whether deeming explanation inserted on first July 2010 deeming construction by builder as taxable service can be applied retrospectively to construction services undertaken prior to that date - HELD - Explanation to Section 65(105)(zzzh) creating deeming fiction that construction by builder taxable where amount received before completion certificate was inserted with effect from first July 2010. Said provision created deeming fiction and cannot be applied retrospectively to earlier period - Issue stands covered by consistent decisions of Tribunal that construction of residential flats by builder for perspective buyers was not liable to service tax prior to first July 2010 in absence of statutory deeming provision. Mere fact that contracts involved composite elements does not substitute requirement of statutory deemed taxability for earlier period - Demand under Construction of Residential Complex Service for period prior to first July 2010 not sustainable - Service Tax - Construction under individual agreements for personal residential use, Scope of statutory exclusion for residential units intended for personal use - Appellant entered into separate individual agreements with perspective purchasers for completion and finishing of residential units. Department contended all construction was taxable service - Whether construction undertaken under separate individual agreements with purchasers for completion of residential units intended for personal use of purchaser falls within statutory exclusion from Construction of Residential Complex Service even where multiple units form part of same development - HELD - Definition of Residential Complex excluded complex constructed by person directly engaging another for designing, planning and construction where complex intended for personal use as residence by that person. Explanation clarified that personal use includes permitting complex for use as residence by another person on rent or without consideration. Residential Unit separately defined to mean single house or apartment intended for use as place of residence. Construction undertaken pursuant to individual contracts for completing residential units intended for personal use of respective purchasers falls within exclusion. Immaterial whether individual purchaser personally occupies unit or permits another person to use as residence on rent. Mere fact that several individual units form part of one development does not negate personal-use exclusion where separate construction agreements entered with individual purchasers for completion of respective residences - Demand on construction undertaken under separate individual agreements with purchasers for completion of residential units intended for personal use set aside. Service Tax not payable on consideration received under such individual agreements for construction or completion of residential units intended for personal use - Service Tax - Taxability of construction rendered for land owners under development agreements, Valuation of non-monetary consideration in form of development rights, Prevention of double taxation - Appellant under development agreements with land owners provided flats to land owners without monetary consideration. Department sought to levy service tax on value of flats allotted to land owners - Whether service tax can be levied on consideration received in form of flats allotted to land owners under development agreements when value of development rights or land already incorporated in assessable value on which appropriate tax discharged - HELD - Tribunal in Vasantha Green Projects examined comparative joint-development arrangement and held that where value attributable to development rights or acquisition of land embedded in value of flats sold to independent purchasers and appropriate service tax discharged on gross amount, separate demand on flats allotted to land owners would result in double taxation. Principle subject to verification that value of land or development rights was in fact incorporated in assessable value and appropriate tax discharged on such value. Blanket conclusion that land owner's share invariably non-taxable without examining manner of valuation not correct - In present case impugned order does not establish that any part of consideration escaped taxation despite corresponding value having already been included in assessable value of developer's share. In absence of such evidence second levy upon land owner's share cannot be sustained - Separate demand on flats allotted to land owners unsustainable where value of development rights or land embedded in value subjected to service tax. Where value of development rights or land already incorporated in assessable value of developer's share and appropriate tax discharged, further demand results in double taxation and not permissible - Service Tax - Applicability of extended period for limitation - HELD - Dispute involves classificati [Read less]

GST - Jurisdiction of High Court to entertain writ petitions - Res judicata and preclusion based on Supreme Court judgment – Writ Petitions challenging the Constitutional validity of Section 16(2)(c) of CGST Act, 2017 - Supreme Court vide order in Bhandari Scrap Traders v. Union of India had already upheld constitutional validity of Section 16(2)(c) of CGST Act - Whether High Court should entertain writ petitions questioning Constitutional validity of statutory provision when Supreme Court has already upheld such validity - HELD - Once the Supreme Court has adjudicated the Constitutional validity of a statutory provision... [Read more]

GST - Jurisdiction of High Court to entertain writ petitions - Res judicata and preclusion based on Supreme Court judgment – Writ Petitions challenging the Constitutional validity of Section 16(2)(c) of CGST Act, 2017 - Supreme Court vide order in Bhandari Scrap Traders v. Union of India had already upheld constitutional validity of Section 16(2)(c) of CGST Act - Whether High Court should entertain writ petitions questioning Constitutional validity of statutory provision when Supreme Court has already upheld such validity - HELD - Once the Supreme Court has adjudicated the Constitutional validity of a statutory provision and upheld its constitutionality, the High Court cannot entertain writ petitions seeking declaration of invalidity of the same provision as relief sought is already adjudicated. The Supreme Court's judgment declaring Section 16(2)(c) of CGST Act Constitutionally valid is binding on all subordinate courts and no writ petition challenging such declaration can be entertained - Further, where an administrative order has been passed and a statutory appellate remedy is available before the Commissioner (Appeals), the High Court should not exercise extraordinary writ jurisdiction to entertain the same grievance thereby bypassing the hierarchical statutory mechanism created by the legislation. The proper course is for the aggrieved party to exhaust the statutory appellate remedy – The writ petitions are dismissed [Read less]

GST - Validity of show cause notice under Section 74(9), Requirement to disclose foundational facts establishing fraud or wilful misrepresentation - Petitioners challenged show cause notices alleging availment of input tax credit by issuing fake invoices without actual supply of goods - Whether show cause notices issued under Section 74(9) of GST Act for invoking extended period of limitation can be sustained when they mechanically employ words indicating fraud or wilful misrepresentation without disclosing foundational facts and specific evidence supporting such allegations - HELD - The extended limitation period provided... [Read more]

GST - Validity of show cause notice under Section 74(9), Requirement to disclose foundational facts establishing fraud or wilful misrepresentation - Petitioners challenged show cause notices alleging availment of input tax credit by issuing fake invoices without actual supply of goods - Whether show cause notices issued under Section 74(9) of GST Act for invoking extended period of limitation can be sustained when they mechanically employ words indicating fraud or wilful misrepresentation without disclosing foundational facts and specific evidence supporting such allegations - HELD - The extended limitation period provided under Section 74(9) for recovery of excess benefit availed, short payment or excess refund is made available only when foundational facts establishing fraud, wilful misrepresentation or suppression are evident from the notice itself - The words fraud, wilful misrepresentation and suppression are not to be mechanically recited in the notice merely as lip service to the statutory provisions. Mere employment of such terminologies without assignment of sufficient reasons and without disclosure of foundational facts underlying the allegations does not indicate any application of mind by the authority and does not constitute the satisfaction required under the statute for invoking the extended period - The requirement to disclose foundational facts is mandatory and cannot be circumvented through mechanical recitation of allegations without supporting evidence or reasoning – The SCNs issued under Section 74(9) of CGST Act, 2017 are quashed for failure to disclose foundational facts establishing fraud, wilful misrepresentation or suppression. Respondent authority is at liberty to issue fresh notices strictly in accordance with law and with proper disclosure of foundational facts if so advised – The writ petitions are allowed [Read less]

GST – West Bengal AAR - Classification of works contract services, Determination of applicable SAC and GST rate, Interpretation of exemption notifications for services to governmental authorities, Distinction between supply of services and activities ancillary to specified services - Applicant executed composite works contract services for setting up new main water pipeline for upcoming campus and revamping water pipeline distribution network at educational institute. Material component constituted approximately 75% of total contract value and service component constituted approximately 25% - Whether the works undertaken... [Read more]

GST – West Bengal AAR - Classification of works contract services, Determination of applicable SAC and GST rate, Interpretation of exemption notifications for services to governmental authorities, Distinction between supply of services and activities ancillary to specified services - Applicant executed composite works contract services for setting up new main water pipeline for upcoming campus and revamping water pipeline distribution network at educational institute. Material component constituted approximately 75% of total contract value and service component constituted approximately 25% - Whether the works undertaken by Applicant for setting up water pipeline and revamping water pipeline distribution network should be classified under composite works contract services - HELD - The works done by applicant constitute works contract as defined in Section 2(119) of CGST Act, 2017 as they involve construction, fabrication, completion, erection and maintenance of immovable property wherein transfer of property in goods is involved in execution of contract. For the supply of works contract services involving construction of water mains and lines, the appropriate SAC is 995422. For revamping of water pipeline which is essentially repair and maintenance service, the appropriate SAC is 995429 - The recipient, being an institute set up by an Act of Parliament, is a Governmental Authority within the meaning of Notification No. 12/2017. However, exemption from GST under specified exemption entries cannot be claimed because neither the supply of pure services excluding works contract services is involved nor can the supply be classified as direct supply by way of water supply within the narrow construction of phrase by way of specified in the notification - The revamping of water pipeline distribution network and setting up of new water pipeline are ancillary to water supply infrastructure but do not constitute direct supply by way of water supply. The supply being taxable service under serial number 3(ii) of Notification 11/2017-CT(Rate), it attracts 18% GST – Ordered accordingly [Read less]

GST - West Bengal AAR - Classification of electrically operated vehicles, Requirement of battery fitting as mandatory precondition for classification as electric vehicle - Classification and applicable GST rate on battery-operated two-wheeled and three-wheeled vehicles, whether supplied with or without battery pack - Whether battery-operated two-wheeled and three-wheeled vehicles sold with or without battery attachment are classifiable under tariff headings 8703 and 8711 and are taxable at five percent GST rate - HELD - Electrically operated vehicles are those which derive their traction energy solely from electrical energ... [Read more]

GST - West Bengal AAR - Classification of electrically operated vehicles, Requirement of battery fitting as mandatory precondition for classification as electric vehicle - Classification and applicable GST rate on battery-operated two-wheeled and three-wheeled vehicles, whether supplied with or without battery pack - Whether battery-operated two-wheeled and three-wheeled vehicles sold with or without battery attachment are classifiable under tariff headings 8703 and 8711 and are taxable at five percent GST rate - HELD - Electrically operated vehicles are those which derive their traction energy solely from electrical energy derived from an external source or one or more electrical batteries fitted to such road vehicles and run entirely on battery-powered electric drivetrain. If an electrically operated vehicle has motor, inverter, control module and drivetrain fitted on a chassis along with the body and is capable of transporting people and goods, it retains its original character as goods referred to in customs tariff heading 8703 in case it is a three-wheeled vehicle and 8711 in case it is a two-wheeled vehicle. It is immaterial whether battery is fitted or not with the vehicle at the time of supply - The explanation to the entry for electrically operated vehicles makes it evident that a vehicle runs solely on electrical energy derived from an external source or from electrical batteries and therefore the fitting of batteries cannot be considered as a concomitant factor for defining a vehicle as an electrically operated vehicle - The HSN Explanatory Notes have not considered batteries to be a component whose absence changes the essential character of an incomplete, unfinished or unassembled vehicle. Where an electrically operated vehicle has all essential components in place including motor, drivetrain and control module, the absence of battery pack does not convert the vehicle into a mere chassis or strip it of its essential character as an electrically operated vehicle – Further, the Circular No. 179/11/2022-GST dated 03.08.2022 specifically clarifies that electrically operated vehicles are to be classified under HSN 8703 even if the battery is not fitted to such vehicle at the time of supply - All battery-operated two-wheeled and three-wheeled vehicles, whether supplied with or without battery attachment, are classifiable under tariff headings 8703 and 8711 as electrically operated vehicles and are taxable at 5% GST – Ordered accordingly [Read less]

GST – West Bengal AAR - Valuation of imported services from related foreign entity under reverse charge mechanism, Applicability of deeming provision where full input tax credit available, Distinction between commercial invoice value and self-invoice value – Applicant received IT support services comprising software and IT infrastructure maintenance from related foreign entity on cost-to-cost basis. Applicant discharges tax under RCM by issuing self-invoice under Section 31(3)(f) of CGST Act, 2017 claiming full input tax credit - Whether value mentioned in self-invoice raised by Applicant for discharging reverse charge... [Read more]

GST – West Bengal AAR - Valuation of imported services from related foreign entity under reverse charge mechanism, Applicability of deeming provision where full input tax credit available, Distinction between commercial invoice value and self-invoice value – Applicant received IT support services comprising software and IT infrastructure maintenance from related foreign entity on cost-to-cost basis. Applicant discharges tax under RCM by issuing self-invoice under Section 31(3)(f) of CGST Act, 2017 claiming full input tax credit - Whether value mentioned in self-invoice raised by Applicant for discharging reverse charge liability can be deemed as open market value for GST purposes where such value differs from commercial invoice value from related foreign supplier - HELD - Import of services from related foreign person where supplier located outside India and recipient located in India constitutes supply under Section 7(1)(b) of CGST Act and falls within scope of RCM under Notification No. 10/2017 - Valuation of supply between related persons is governed by Rule 28 of CGST Rules, 2017. Second proviso to Rule 28(1) provides that where recipient is eligible for full ITC, the value declared in the invoice shall be deemed to be the open market value of the goods or services. Circular No. 210/4/2024-GST dated 26.06.2024 clarifies that this deeming provision applies equally to import of services from foreign related entities where full input tax credit is available to domestic recipient - The self-invoice issued by recipient under Section 31(3)(f) of CGST Act constitutes the relevant invoice for purposes of applying second proviso to Rule 28(1). The deeming provision operates on the basis of recipient's eligibility for full ITC and operates independently of whether value declared in self-invoice corresponds with commercial amount charged by foreign supplier. Once recipient is eligible for full input tax credit and has declared value in self-invoice, that value is required to be treated as deemed open market value for GST purposes - Value mentioned in self-invoice raised by applicant can be deemed as open market value for payment of GST under RCM, subject to condition that applicant is eligible to avail full amount of Input Tax Credit – Ordered accordingly [Read less]

GST – West Bengal AAR - Transfer of business from proprietorship to partnership as going concern, Scope of supply, Applicability of exemption for going concern transfers – Proprietor proposed transfer of entire proprietorship business as going concern to LLP firm in which proprietor is partner - Whether permanent transfer of proprietorship business to partnership firm by merger without consideration, involving transfer of all assets, liabilities and employees for continuation of business, constitutes supply under GST and, if so, whether it qualifies for exemption under Entry No. 2 of Notification No. 12/2017-Central Ta... [Read more]

GST – West Bengal AAR - Transfer of business from proprietorship to partnership as going concern, Scope of supply, Applicability of exemption for going concern transfers – Proprietor proposed transfer of entire proprietorship business as going concern to LLP firm in which proprietor is partner - Whether permanent transfer of proprietorship business to partnership firm by merger without consideration, involving transfer of all assets, liabilities and employees for continuation of business, constitutes supply under GST and, if so, whether it qualifies for exemption under Entry No. 2 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - HELD - Transfer of business by way of merger, even if made without consideration and not in the usual course of business, constitutes supply within the scope of Section 7 of CGST Act by virtue of the inclusive definition of supply which goes beyond the normal course or furtherance of business. The transaction does not constitute supply of goods because business itself cannot be regarded as movable property and therefore does not meet definition of goods. By operation of Schedule II, where transfer of business as going concern to another person is effected, such transfer cannot be supply of goods. Since anything other than goods, money and securities constitutes services under the Act, the transfer of business must be treated as supply of services - Transfer of business is covered under Entry No. 2 of Notification No. 12/2017-CT (Rate) providing exemption for services by way of transfer of going concern, subject to the essential condition that the business qualifies as going concern by all standards - Going concern is not defined in the GST Act but must be understood in common parlance and financial standards. If the business fails to qualify as going concern, the transfer of stock, closing stock of assets and fixed assets would be treated as supply of goods under Schedule II Entry 4(c) and taxed at rates applicable to respective goods - Transfer of proprietorship business to partnership firm as going concern constitutes supply of services and is covered under Entry No. 2 of Notification No. 12/2017 providing for nil rate of tax, subject to condition that business qualifies as going concern. If business does not qualify as going concern, transfer of goods and assets would be taxable as supply of goods under respective applicable rates – Ordered accordingly [Read less]

Customs – Refund of Special Additional Duty (SAD) under Notification No.102/2007-Cus. – Correlation between imported and sold goods – Appellant, a trader in plastic granules, imported goods mentioned as specific grades (HDPE, LDPE, LLDPE) in Bills of Entry in March 2009; the appellant filed a refund claim for 4% SAD amounting to Rs.5,02,579/-; the original authority sanctioned the refund after examining Bills of Entry, sale invoices, Chartered Accountant's certificate and VAT/CST payments; Commissioner (Appeals) set aside the refund on the ground that sale invoices described the goods generically as "plastic granules... [Read more]

Customs – Refund of Special Additional Duty (SAD) under Notification No.102/2007-Cus. – Correlation between imported and sold goods – Appellant, a trader in plastic granules, imported goods mentioned as specific grades (HDPE, LDPE, LLDPE) in Bills of Entry in March 2009; the appellant filed a refund claim for 4% SAD amounting to Rs.5,02,579/-; the original authority sanctioned the refund after examining Bills of Entry, sale invoices, Chartered Accountant's certificate and VAT/CST payments; Commissioner (Appeals) set aside the refund on the ground that sale invoices described the goods generically as "plastic granules" instead of reproducing the specific grades, and that sales were made through consignment agents – Whether the difference between the specific grades mentioned in Bills of Entry and the generic expression "plastic granules" in sale invoices is sufficient to establish that the imported goods were not subsequently sold, and whether sales through consignment agents disentitle the appellant to SAD refund under the Notification – HELD – The substantive conditions of Notification No.102/2007-Cus. do not require sale invoices to reproduce verbatim every grade or specification mentioned in Bills of Entry when the imported goods were subsequently sold with payment of applicable sales tax, as recorded by the original authority after documentary verification. The absence of grade number in the domestic sale invoice does not establish that the goods sold were different from those imported, particularly when Bills of Entry, sale invoices, reconciliation statement and Chartered Accountant's certificate correlate the goods. The circular recognises sales through consignment agents and prescribes the manner of establishment which was satisfied here; the mere fact that sales were effected through consignment agents cannot defeat the refund when VAT/CST payments were certified and correlated with the sales invoices and imported quantities – The Hon'ble Madras High Court in P.P. Products Ltd. v. Commissioner of Customs held that refund cannot be rejected merely on nomenclature differences when the adjudicating authority found no evidence that goods sold were different from imported goods – The impugned order is set aside and the refund sanctioned by the original authority is restored – The appeal is allowed [Read less]

GST - Requirement of notice under Section 61 as precondition to proceed under Section 74, Application of Section 279 of Companies Act to pending proceedings after winding-up order - Disposal of appeals in ex-parte manner without hearing the liquidator - Whether notice under Section 61(3) is a mandatory precondition before proceeding under Section 74 of the CGST Act, 2017 and whether Section 279 of Companies Act, 2013 restricts continuation of pending legal proceedings after winding-up order and whether counsel appointed by company can continue representation after liquidation - HELD - Section 61 regulating scrutiny of retu... [Read more]

GST - Requirement of notice under Section 61 as precondition to proceed under Section 74, Application of Section 279 of Companies Act to pending proceedings after winding-up order - Disposal of appeals in ex-parte manner without hearing the liquidator - Whether notice under Section 61(3) is a mandatory precondition before proceeding under Section 74 of the CGST Act, 2017 and whether Section 279 of Companies Act, 2013 restricts continuation of pending legal proceedings after winding-up order and whether counsel appointed by company can continue representation after liquidation - HELD - Section 61 regulating scrutiny of returns and Section 74 dealing with fraud or wilful misstatement are two separate and distinct statutory exigencies. The scrutiny proceedings under Section 61 and proceedings under Section 74 are independent of each other. Issuance of notice under Section 61(3) disclosing deficiency is not a condition precedent for initiation of action under Section 74. The statutory scheme contemplates that department can directly proceed under Section 74 without first issuing notice under Section 61 where proper tax has not been deposited Section 279 of Companies Act, 2013 employs the expression if pending at the date of winding up order meaning that the bar applies equally to pending proceedings as well as fresh proceedings - Once company stands liquidated and winding-up order passed, the only competent authority to appoint or engage lawyer or advocate for prosecution of proceedings is the liquidator. The counsel appointed by company or directors prior to liquidation does not retain the authority to represent the company after winding-up without appointment by liquidator. Appeals cannot be decided in ex-parte manner without hearing the liquidator who is the legal representative of the company post-liquidation, as this violates principles of natural justice – Impugned orders are set aside and matter is remitted back to the appellate authority to pass fresh orders – The petition is disposed of [Read less]

Central Excise - Statutory interest payable on refunds - Whether statutory interest under Section 11BB of CEA, 1944 accrues from the date of favourable appellate order or from the expiry of three months from the date of receipt of the original refund application under Section 11B of the Act - HELD - Section 11BB of CEA, 1944 Act comes into play only after an order for refund has been made under Section 11B of the Act. The provision provides that if duty paid is found refundable and if the duty is not refunded within a period of three months from the date of receipt of the application submitted under Section 11B, then the a... [Read more]

Central Excise - Statutory interest payable on refunds - Whether statutory interest under Section 11BB of CEA, 1944 accrues from the date of favourable appellate order or from the expiry of three months from the date of receipt of the original refund application under Section 11B of the Act - HELD - Section 11BB of CEA, 1944 Act comes into play only after an order for refund has been made under Section 11B of the Act. The provision provides that if duty paid is found refundable and if the duty is not refunded within a period of three months from the date of receipt of the application submitted under Section 11B, then the applicant shall be paid interest at the fixed rate on expiry of three months from the date of receipt of the application. The Explanation to Section 11BB introduces a deeming fiction regarding when an order is deemed made for purposes of this Section, but it has nothing to do with postponement of the date from which interest becomes payable. Interest under Section 11BB becomes payable on the expiry of three months from the date of receipt of the application under Section 11B of the Act and not from the date of the favourable order passed by the Appellate Tribunal or higher authority - A communication after the original application, even if styled as a reminder or continuation, cannot be construed as a fresh refund claim to reset the three-month period for interest accrual - Order denying statutory interest is quashed and set aside. Respondent directed to refund the amount alongwith statutory interest thereon till the date of actual refund – The writ petition is allowed [Read less]

Central Excise - Invocation of extended period of limitation under Section 11A - Appellant imported goods classified as inputs but directly sold in open market without being received in factory premises - Appellant claimed CENVAT credit on 4% Additional Customs Duty by making false entries in RG 23A register showing goods received and issued for manufacturing though goods were directly dispatched to buyers from port of import - Department issued Show Cause Notice proposing disallowance of CENVAT credit and invoked extended period of five years under Section 11A - Whether appellant made wilful misstatement and suppression o... [Read more]

Central Excise - Invocation of extended period of limitation under Section 11A - Appellant imported goods classified as inputs but directly sold in open market without being received in factory premises - Appellant claimed CENVAT credit on 4% Additional Customs Duty by making false entries in RG 23A register showing goods received and issued for manufacturing though goods were directly dispatched to buyers from port of import - Department issued Show Cause Notice proposing disallowance of CENVAT credit and invoked extended period of five years under Section 11A - Whether appellant made wilful misstatement and suppression of facts sufficient to invoke extended period of limitation under Section 11A of Central Excise Act – HELD - Clear misdeclaration exists as appellant showed imported goods as inputs in RG 23A register and issued chits and slips indicating use in manufacture when goods never reached factory premises and were directly sold to buyers from port of import. This constitutes wilful misstatement and suppression of facts sufficient to invoke extended period under Section 11A as appellant knew that goods were not eligible for CENVAT credit under Rules 3 and 4 of CENVAT Credit Rules 2004 - Plea of bona-fide belief based on Budget Speech is not tenable as the statutory requirements for claiming CENVAT credit were unambiguously prescribed in Rules 3 and 4 of CENVAT Credit Rules 2004 - The fact that Department did not query false entries during earlier audits does not absolve appellant from making misdeclaration as responsibility lay with appellant not to claim credit when not entitled. Appellant continued to claim credit knowingly till the same was found during audit conducted in 2009, when appellant immediately reversed credit, demonstrating knowledge of wrongfulness of the claim - Notification No. 102/2007 providing for refund of 4% SAD is a separate and distinct process from availing CENVAT credit and cannot be conflated to constitute a revenue-neutral exercise. The elaborate manipulation evidenced by false entries in registers, issue slips and chit numbers to indicate manufacturing use when goods were directly diverted to buyers clearly establishes wilful misstatement and fraud within the scope of Section 11A - The extended period of limitation under Section 11A of CEA, 1944 was rightly invoked - The demand confirmed is upheld and the appeal is dismissed [Read less]