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GST – Gujarat AAR – Classification and applicable GST rate on Paper Bags - Whether paper bags made of paper or paperboard, classifiable under Heading 4819 and specifically under Tariff Item 48194000, attract GST at 18% or whether they fall under Entry No. 319 of Schedule I to Notification No. 09/2025-Central Tax (Rate) at 5% - HELD - The paper bags are specifically classifiable under Sub-heading 48194000 as they fall within the definition of packing containers. The minutes of the 54th GST Council meeting reveals that Entry No. 319 was newly inserted in Schedule I of Notification No. 09/2025-Central Tax (Rate) dated 17.... [Read more]

GST – Gujarat AAR – Classification and applicable GST rate on Paper Bags - Whether paper bags made of paper or paperboard, classifiable under Heading 4819 and specifically under Tariff Item 48194000, attract GST at 18% or whether they fall under Entry No. 319 of Schedule I to Notification No. 09/2025-Central Tax (Rate) at 5% - HELD - The paper bags are specifically classifiable under Sub-heading 48194000 as they fall within the definition of packing containers. The minutes of the 54th GST Council meeting reveals that Entry No. 319 was newly inserted in Schedule I of Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025 to promote eco-friendly alternatives to plastic bags, including both paper sacks/bags and biodegradable bags. The Government's clear intention was to encourage the production of paper bags as environmentally friendly alternatives by providing a reduced GST rate of 5% - The paper bags manufactured by the applicant classifiable under Sub-heading 48194000, are covered under Entry No. 319 of Schedule I to Notification No. 09/2025-Central Tax (Rate) and attract GST at the rate of 5% - Ordered accordingly [Read less]

Central Excise - Clandestine Removal of Excisable Goods - Whether the charge of clandestine removal and manufacture can be established on the basis of discrepancies in pen drive data, unofficial records, and statements of employees without corroborative evidence of actual transportation, receipt of sale proceeds, excess procurement of raw materials, or excess consumption of electricity – HELD - The charge of clandestine removal is a serious charge which must be proved by the revenue through tangible evidence and not merely on presumptions, assumptions, or inferences. Revenue has failed to establish the fundamental criter... [Read more]

Central Excise - Clandestine Removal of Excisable Goods - Whether the charge of clandestine removal and manufacture can be established on the basis of discrepancies in pen drive data, unofficial records, and statements of employees without corroborative evidence of actual transportation, receipt of sale proceeds, excess procurement of raw materials, or excess consumption of electricity – HELD - The charge of clandestine removal is a serious charge which must be proved by the revenue through tangible evidence and not merely on presumptions, assumptions, or inferences. Revenue has failed to establish the fundamental criteria required to establish clandestine manufacture and clearance, namely, evidence of raw materials in excess of statutory records, actual instances of removal of unaccounted finished goods not inferential or assumed, discovery of such goods outside the factory, instances of sale to identified parties with receipt of sale proceeds, use of electricity far in excess of normal consumption, statements of buyers with details of illicit manufacture, proof of actual transportation of goods cleared without payment of duty, and links between recovered documents and factory activities - The electricity consumption data produced by the appellant demonstrated that only 490 units were required to manufacture one metric ton of MS ingots, which was not possible under any circumstances, and the production capacity of the machinery installed in the factory had not been considered by the adjudicating authority. No statement of transporters of raw materials or finished goods had been recorded, and the statements of buyers and suppliers which were relied upon were identically worded, not tested through cross-examination, and lacked independent corroborative support from documentary evidence, cash transaction records, or third party affirmations - In cases of clandestine removal, mere recovery of data from pen drives and private records without independent verification and corroboration cannot form the basis for confirming demands - The demand for duty along with interest and the penalties imposed on the appellants for alleged clandestine removal of excisable goods are set aside – The appeals are allowed [Read less]

Service Tax – Discharge of service tax liability by utilizing CENVAT credit on capital goods instead of making cash payment - Department denied the CENVAT credit utilization and sought recovery of the service tax amount, invoking the extended period of limitation, contending that the appellant, being the recipient of services, could not avail CENVAT credit for discharging service tax under Reverse Charge Mechanism as per Rule 3(4) of the CENVAT Credit Rules, 2004 read with the explanation added vide Notification No. 28/2012 effective from 1st July 2012 - Whether the appellant can discharge service tax liability under RCM... [Read more]

Service Tax – Discharge of service tax liability by utilizing CENVAT credit on capital goods instead of making cash payment - Department denied the CENVAT credit utilization and sought recovery of the service tax amount, invoking the extended period of limitation, contending that the appellant, being the recipient of services, could not avail CENVAT credit for discharging service tax under Reverse Charge Mechanism as per Rule 3(4) of the CENVAT Credit Rules, 2004 read with the explanation added vide Notification No. 28/2012 effective from 1st July 2012 - Whether the appellant can discharge service tax liability under RCM in respect of services received from outside India during the period prior to July 2012 by utilizing CENVAT credit – HELD - Under Rule 2(r) of the CCR, 2004 read with Rule 2(1)(d) of the Service Tax Rules, 1994, the Indian recipient of taxable services provided by a service provider located outside India becomes the "provider of taxable service" and consequently becomes eligible to utilize CENVAT credit for payment of service tax on such "output services" as defined in Rule 2(p). The explanation to Rule 3(4) of the CCR, 2004, which creates a substantive prohibition on utilization of CENVAT credit for payment of service tax where the person liable to pay tax is the service recipient, being substantive in nature, cannot be applied retrospectively to the period prior to 1st July 2012 when it came into force, as substantive provisions creating liabilities cannot have retrospective application - Further, Rule 5 of the Taxation of Services Rules, 2006, restricts only the availment of CENVAT credit and not its utilization. Prior to 1st July 2012 there was no restriction on discharging reverse charge liability by utilizing CENVAT credit. Since the appellant paid the entire service tax liability by utilizing CENVAT credit availed for the period prior to July 2012, such utilization is justified. Consequently, the department cannot invoke the extended period of limitation as the show cause notice itself stands barred by limitation - The order under challenge is set aside and the appeal is allowed [Read less]

Service Tax – Extended Period of Limitation – Revenue Neutral Case - Whether demand of service tax can be raised under extended period of limitation when the transaction is revenue neutral as the assessee could have immediately taken CENVAT credit of the service tax paid and utilized it to pay its own service tax liability, thus showing no intention to evade – HELD - Extended period notice can be issued only when non-payment of service tax is by reason of fraud or collusion or wilful mis-statement or suppression of facts or violation of the Act or Rules with intent to evade payment of service tax. When demand is on r... [Read more]

Service Tax – Extended Period of Limitation – Revenue Neutral Case - Whether demand of service tax can be raised under extended period of limitation when the transaction is revenue neutral as the assessee could have immediately taken CENVAT credit of the service tax paid and utilized it to pay its own service tax liability, thus showing no intention to evade – HELD - Extended period notice can be issued only when non-payment of service tax is by reason of fraud or collusion or wilful mis-statement or suppression of facts or violation of the Act or Rules with intent to evade payment of service tax. When demand is on reverse charge and the assessee could have immediately taken CENVAT credit of the service tax paid, the entire demand becomes revenue neutral and it cannot be alleged that the assessee had any intention to evade. The impugned order confirms demand made under extended period which is fully beyond the normal period of limitation and hence cannot be sustained on this ground alone - The appeal is allowed and the order is set aside - Whether amounts paid by the assessee to petty contractors for execution of work constitute manpower supply service attracting service tax under reverse charge – HELD - The nature of service depends on what was the contract for. Amounts paid to contractors for executing any work cannot be called a contract for supply of manpower. The assessee is not paying the contractors for supplying manpower but for the work itself. There is no privity of contract between the assessee and the workers as the workers work for the contractor and get paid by him. The contractor completes the work and the assessee pays him for work completion. This cannot be characterized as manpower supply service - The demand on this count is dropped - Manpower Supply – Direct Employment of Labourers - Whether amounts paid by the assessee to its labourers, whether regular or adhoc, constitute manpower supply service attracting service tax under reverse charge – HELD - The amounts paid directly by the assessee to its labourers, whether regular or adhoc, cannot be called manpower supply service. However, the verification is required to determine if someone acted as a manpower supplier and if wages in names of several labourers were received by a single person indicating that person as the supplier. If manpower supply service is established, the Commissioner must determine the exact amount of service tax payable under reverse charge. Any service tax determined and paid will be refundable to the assessee as per section 142(7)(b) of the CGST Act, 2017 - Reverse Charge – Works Contract Service – CA Certificate Break-up - Whether service tax under reverse charge can be charged on repair and maintenance expenses without separately identifying actual works contract services from other expenses – HELD - The assessee was not required to pay service tax on purchase of items as they are not services. Service tax also does not apply to pure repairs as they do not constitute works contracts. Where services were received from corporate bodies, no reverse charge applies. The assessee has already paid service tax under reverse charge on works contract services received from non-corporate service providers. In view of the CA certificate's break-up and explanation provided, the demand under this head cannot be sustained - The demand for works contract service is dropped - GTA Service – Absence of Consignment Note - Whether service tax under reverse charge can be charged on transport related expenses in the absence of a consignment note or involvement of a goods transport agency - HELD - Unless a goods transport agency is involved and a consignment note is issued, no service tax can be charged under reverse charge on the assessee. General transport expenses without consignment notes do not constitute GTA services - The demand for GTA service is dropped. [Read less]

Central Excise - Jurisdiction of Adjudicating Authority in Remand Order - Appellant challenges the order passed by Commissioner of CGST & Central Excise, Durgapur on the ground that the Hon'ble High Court in its remand order specifically directed the Commissioner of Central Excise & Service Tax, Bolpur to adjudicate the matter as the two show-cause notices issued by two different jurisdictions had overlapping periods, but the matter was adjudicated by Commissioner of CGST & Central Excise, Durgapur instead - Whether the impugned order passed by a different authority than the one directed by the High Court is sustainable in... [Read more]

Central Excise - Jurisdiction of Adjudicating Authority in Remand Order - Appellant challenges the order passed by Commissioner of CGST & Central Excise, Durgapur on the ground that the Hon'ble High Court in its remand order specifically directed the Commissioner of Central Excise & Service Tax, Bolpur to adjudicate the matter as the two show-cause notices issued by two different jurisdictions had overlapping periods, but the matter was adjudicated by Commissioner of CGST & Central Excise, Durgapur instead - Whether the impugned order passed by a different authority than the one directed by the High Court is sustainable in law – HELD - The High Court had specifically directed the Commissioner of Central Excise & Service Tax, Bolpur to adjudicate the matter to avoid conflicting decisions arising from overlapping periods covered by two show-cause notices issued by different jurisdictions. Although restructuring of the department took place subsequently, if the Department intended to change the adjudicating authority from the one directed by the High Court, it ought to have obtained a fresh order from the High Court to that effect, which the Revenue failed to do. The with adjudication by a different authority without obtaining necessary modification of the High Court's direction amounts to non-compliance with the judicial directive. Therefore, the impugned order is set aside and the appeal is allowed [Read less]

Customs Act – Levy of penalty for possession and harbouring of smuggled goods –Whether the appellant is liable to penalty under Section 112(a) and 112(b) of the Customs Act, 1962 for being concerned with the keeping, harbouring and dealing of goods liable to confiscation – HELD - Although the gold was recovered from the godown premises and not from the physical person of the appellant, the records clearly reveal that the appellant was found in charge of the premises at the relevant time and had access to and control over the godown from where the contraband was recovered. The complete absence of licit documents, the ... [Read more]

Customs Act – Levy of penalty for possession and harbouring of smuggled goods –Whether the appellant is liable to penalty under Section 112(a) and 112(b) of the Customs Act, 1962 for being concerned with the keeping, harbouring and dealing of goods liable to confiscation – HELD - Although the gold was recovered from the godown premises and not from the physical person of the appellant, the records clearly reveal that the appellant was found in charge of the premises at the relevant time and had access to and control over the godown from where the contraband was recovered. The complete absence of licit documents, the nature and purity of the seized goods, and the appellant's inability to offer any plausible explanation regarding the source and lawful possession thereof establish his culpability. Gold is a notified commodity under Section 123 of the Act, and once recovery of notified goods is established from premises under the possession, custody or control of a person, the burden shifts upon such person to establish the licit nature of possession, which burden remained wholly undischarged. The recovery of a substantial quantity of gold from premises under his control, coupled with the complete absence of licit documents and the attendant circumstances brought out during investigation, justify the conclusion that the appellant was concerned with the keeping, harbouring and dealing with goods liable to confiscation under the Act. However, considering that the seized gold did not bear any foreign markings and the statements relied upon by the Department were not subjected to the evidentiary safeguards contemplated under Section 138B of the Customs Act, the penalty is reduced substantially to serve the ends of justice – The appeal is partly allowed [Read less]

Customs - Classification of E-Rickshaw Components - Applicability of Rule 2(a) of General Rules for Interpretation - Appellant imported chassis frames, body shells, structural assemblies, wiring harnesses and other ancillary parts of e-rickshaws in separate consignments, admittedly without electric motors and batteries, which were declared and classified as parts and components under customs tariff heading 8714. The Revenue reclassified these goods as complete electrical tricycles in completely knocked down condition under tariff headings 87039010 and 87038040, demanding differential customs duty - Whether goods lacking es... [Read more]

Customs - Classification of E-Rickshaw Components - Applicability of Rule 2(a) of General Rules for Interpretation - Appellant imported chassis frames, body shells, structural assemblies, wiring harnesses and other ancillary parts of e-rickshaws in separate consignments, admittedly without electric motors and batteries, which were declared and classified as parts and components under customs tariff heading 8714. The Revenue reclassified these goods as complete electrical tricycles in completely knocked down condition under tariff headings 87039010 and 87038040, demanding differential customs duty - Whether goods lacking essential propulsion components, namely electric motors and batteries, can be classified as complete e-rickshaws in CKD condition under Rule 2(a) of the General Rules for Interpretation of the Customs Tariff, thereby attracting higher rate of duty – HELD - Rule 2(a) of the General Rules for Interpretation provides that any reference in a heading to an article includes that article when incomplete or unfinished, provided that as presented, the incomplete or unfinished article has the essential character of the complete or finished article. The essential character of an e-rickshaw is its ability to function as a self-propelled motorised vehicle through its propulsion system consisting of electric motor and battery. Without these fundamental components, the assembled structure remains an inert frame incapable of performing the basic function of movement or operation as required for classification as a vehicle. The imported goods in the present case do not include electric motors or batteries, which were never imported under any bill of entry but sourced domestically after importation. Consequently, the imported goods cannot be deemed to possess the essential character of a complete e-rickshaw - Without all essential functional components, goods cannot be classified under Rule 2(a) as complete articles. Bundling contents of eight separate bills of entry to construct a notional composite CKD kit violates the principle that each bill of entry represents a distinct customs transaction and must be classified independently - The reclassification of goods as complete e-rickshaws in CKD condition is set aside, the demand for differential customs duty is rejected, and confiscation of goods and redemption fine are set aside - The appeals filed by the Revenue are dismissed and the appeals filed by the importer and its Directors are allowed - Confiscation under Section 111 of the Customs Act - Applicability in Pure Classification Disputes - Revenue sought confiscation of imported goods under Section 111(m) of the Customs Act on the ground of mis-declaration, alleging that goods described as parts and components were in fact complete e-rickshaws in CKD condition - Whether confiscation under Section 111(m) can be ordered where there exists no mis-description of goods but only a difference of opinion regarding tariff classification – HELD – The Section 111(m) empowers confiscation where any statement in the bill of entry is found to be false in a material particular. A mis-declaration requires a false or misleading statement regarding the nature, description, quantity or value of goods actually imported. In the present case, the goods were truthfully described in the bills of entry as parts and components of e-rickshaws, and the goods physically imported matched this description exactly. The dispute pertains solely to the legal question of which tariff heading applies to accurately described goods. This constitutes a classification matter arising from difference of interpretation in applying tariff entries, not a mis-declaration of facts. It is well-settled that where there is no mis-description of goods and the dispute is purely one of tariff classification, Section 111 cannot be invoked for confiscation. Confiscation requires a finding of wilful suppression or false description of goods, which is absent here - Confiscation of goods under Section 111(m) is set aside as being unsustainable in the absence of any mis-declaration - Penalty under Section 112(a) - Parasitic Nature and Dependence on Confiscation - Penalties were imposed under Section 112(a) of the Customs Act against the appellant-importer and its directors on the ground that the goods rendered themselves liable to confiscation under Section 111 - Whether penalty under Section 112(a) can survive when the underlying confiscation order under Section 111 is not sustained – HELD – The Section 112(a) provides for penalty against any person who, in relation to goods, does or omits to do any act which renders such goods liable to confiscation under Section 111. The penalty under Section 112(a) is by its nature and legal structure parasitic upon confiscation, meaning it depends entirely upon the goods being liable to confiscation under Section 111 for its own validity. When the predicate condition of liability to confiscation is absent or set aside, the entire foundation for penalty under Section 112(a) collapses. Since in the present case the goods are not liable to confiscation owing to absence of mis-declaration, and the dispute is purely classificatory in nature, the condition precedent for invoking Section 112(a) does not exist - Penalty imposed under Section 112(a) is set aside as it necessarily falls away with the setting aside of the confiscation order - Penalty under Section 114AA - Applicability to Classification Disputes and Documentary Fraud - Penalty under Section 114AA was imposed on the grounds that the appellant company knowingly or intentionally made false declarations by describing complete e-rickshaws in CKD condition as parts and components - Whether penalty under Section 114AA can be imposed where the dispute is one of tariff classification and no specific document has been identified as deliberately falsified or forged – HELD – The Section 114AA of the Customs Act provides for penalty where any person knowingly or intentionally makes, signs or uses any declaration, statement or document which is false or incorrect in any material particular in the transaction of any business for purposes of the Act. The provision targets deliberate fabrication, forgery or falsification of documents and was introduced as a stringent anti-fraud measure. In the present case, the bills of entry correctly describe the goods as parts and components of e-rickshaws, which is factually accurate. The adjudicating authority has not identified any specific document alleged to have been fabricated, forged or knowingly made incorrect. The underlying dispute is one of tariff classification only, where there is a bona fide difference of opinion on whether goods possessing certain characteristics should be classified under one heading or another. A contested classification entry is not a false document within the meaning of Section 114AA. The Section 114AA cannot be imported into a pure classification dispute where no act of documentary fraud has been established - Penalty under Section 114AA is set aside as being wholly inapplicable to a tariff classification dispute - Personal Liability of Directors - Requirement of Specific Findings of Personal Involvement - Whether the Director of a company can be held personally liable for penalties under the Customs Act merely because of their directorial designation, in the absence of specific evidence of personal knowledge, direction or participation in the alleged violation - HELD - The Customs Act does not provide for automatic vicarious liability of directors for the acts of a company. Unlike certain taxation statutes that specifically impose joint and several liability on directors, the Customs Act imposes penal liability only on persons who personally commit or abet specific acts. The imposition of personal penalty upon a director requires affirmative evidence that the director personally and knowingly made any false declaration or abetted the making thereof, or [Read less]

Central Excise - Penalty for abetting wrongful availment of CENVAT credit based on unsubstantiated allegations of bogus supplies, Absence of tangible evidence of non-manufacture, Denial of opportunity to cross-examine witnesses - Whether the appellant can be held liable for penalty for allegedly abetting wrongful availment of CENVAT credit by recipients when the allegation is based solely on investigations conducted at the recipient's end without any investigation at the appellant's premises – HELD - Similar issues involving identical facts have been consistently decided in favour of manufacturers in Jammu & Kashmir by t... [Read more]

Central Excise - Penalty for abetting wrongful availment of CENVAT credit based on unsubstantiated allegations of bogus supplies, Absence of tangible evidence of non-manufacture, Denial of opportunity to cross-examine witnesses - Whether the appellant can be held liable for penalty for allegedly abetting wrongful availment of CENVAT credit by recipients when the allegation is based solely on investigations conducted at the recipient's end without any investigation at the appellant's premises – HELD - Similar issues involving identical facts have been consistently decided in favour of manufacturers in Jammu & Kashmir by this Tribunal and the Allahabad Bench. The evidence demonstrates that toll barrier entries certify movement of raw materials and finished goods, District Industry Centre officers regularly verified purchase consignments, Range staff conducted periodic checks at the factory and reported no adverse findings, and Pollution Control Department, District Industries Department and Electrical Department found the factory functioning - The Revenue failed to produce any investigation conducted at the appellant's premises and no concrete evidence has been brought on record to establish that the appellant was not a manufacturer. The allegations are based on presumption and assumption rather than substantive proof. The charge of abetting wrongful CENVAT credit requires tangible evidence, not merely inferences or unwarranted assumptions. The absence of cross-examination of witnesses undermines their reliability. When the allegation of bogus procurement and manufacture by Jammu-based units cannot be established, the allegation of bogus procurement cannot be sustained - The Original Authority appears to have been predetermined in its adjudication and failed to discharge its duty as an independent adjudicator by discarding concrete evidence – The impugned orders are set aside and the appeals are allowed [Read less]

Service Tax - Suppression of income, Extended period of Limitation - Appellant filed ST-3 returns declaring lower gross receipts compared to income tax returns filed with income tax department for the same period - Whether demand for service tax can be raised on basis of discrepancy between ST-3 returns and Income tax returns and whether extended period of limitation is invokable – HELD - The statute prescribes a specific manner for filing ST-3 returns wherein the appellant is required to declare exact amount received towards provision of taxable services and then claim abatements. The appellant by not filing returns in ... [Read more]

Service Tax - Suppression of income, Extended period of Limitation - Appellant filed ST-3 returns declaring lower gross receipts compared to income tax returns filed with income tax department for the same period - Whether demand for service tax can be raised on basis of discrepancy between ST-3 returns and Income tax returns and whether extended period of limitation is invokable – HELD - The statute prescribes a specific manner for filing ST-3 returns wherein the appellant is required to declare exact amount received towards provision of taxable services and then claim abatements. The appellant by not filing returns in prescribed manner deliberately and knowingly suppressed gross amounts received with intention to evade payment of service tax; the data sharing between CBIC and CBDT is in terms of approved government policy to track tax evasion and it is on basis of such data that short payment of service tax came to notice of department; had it not been for receipt of such data, short payment would never have come to notice as appellant never intended to reveal the same on own accord, therefore ingredients to invoke extended period of limitation were intrinsically inherent in facts of case - once established that ingredients to attract operation of section 78 of Finance Act, 1994 are present in a case, discretion to quantify amount of penalty ends and equivalent penalty under section 78 is automatically attracted; demand is upheld along with interest and penalty - Appeal dismissed - Liability under Reverse charge mechanism - Appellant provided works contract services to electricity distribution company which was service recipient; appellant claimed that service tax was liability of main contractor and under RCM fifty percent tax liability was to be discharged by appellant and fifty percent by service recipient – HELD - The position of law is settled by Larger bench of Tribunal that a sub-contractor is essentially a taxable service provider and fact that services provided by sub-contractors are used by main service provider for completion of work does not alter the fact of provision of taxable service by sub-contractor; services provided by sub-contractors are in nature of input services and service tax is leviable on any taxable services provided whether or not services are provided by person in capacity as sub-contractor; while main contractor may have paid service tax on entire amount, this does not exempt sub-contractor from paying service tax as cenvat credit rules allow a provider of output service to take credit of service tax paid at preceding stage, thereby avoiding double taxation; this position has been affirmed by supreme court and all decisions taking contrary view stand overruled - Demand upheld - Penalty under section 78 - Where extended period of limitation is invoked on ground of suppression of facts with intent to evade payment of service tax, penalty equal to amount of tax determined is mandatory and authority has no discretion in quantifying amount of penalty – HELD - Once established that ingredients to attract operation of section 78 of finance act are present in a case, discretion to quantify amount of penalty ends - Penalty under section 78 is not applicable to every case of non-payment or short-payment of duty but conditions mentioned in section should exist for penalty thereunder. Once conditions are satisfied and extended period is rightly invoked, authorities have no discretion on quantum and penalty equal to duty must be imposed - In present case, appellant deliberately suppressed gross amounts received in ST-3 returns with intention to evade payment of service tax and all ingredients for imposing penalty exist – Penalty is upheld - Penalty under Section 77 - Appellant failed to furnish information and documents called for by Department and failed to file ST-3 returns with proper values as prescribed – HELD - Penalty under section 77 read with rule 7 of service tax rules is leviable where registered assessee fails to furnish details and information at prescribed frequency and fails to correctly assess tax liability and pay service tax by due date; appellant failed to respond to summons issued by department and did not provide requisite documents; such failure constitutes breach of statutory obligation; penalty is imposed to ensure compliance of law and does not require element of mens rea in civil tax matters – Penalty is upheld. [Read less]

Service Tax - Cenvat Credit on Input Services including insurance, rent a cab, air travel, hotel accommodation, restaurant, telecommunication, and business support services utilized in rendering export services – Disallowance of credit for certain input services on the ground that they were not related to output services, and further disallowed amounts on grounds of limitation - Whether input services such as insurance, rent a cab, air travel, hotel accommodation, restaurant, telecommunication, and business support services utilized for rendering export services are eligible for Cenvat credit refund under Rule 2(l) of th... [Read more]

Service Tax - Cenvat Credit on Input Services including insurance, rent a cab, air travel, hotel accommodation, restaurant, telecommunication, and business support services utilized in rendering export services – Disallowance of credit for certain input services on the ground that they were not related to output services, and further disallowed amounts on grounds of limitation - Whether input services such as insurance, rent a cab, air travel, hotel accommodation, restaurant, telecommunication, and business support services utilized for rendering export services are eligible for Cenvat credit refund under Rule 2(l) of the Cenvat Credit Rules 2004 – HELD - Under Rule 2(l) of the Cenvat Credit Rules 2004, an input service means any service used by a provider of output service for providing an output service, and excludes only those services specified in the exclusion clauses such as personal consumption of employees. The insurance services were procured for the company and employees at work and do not fall within exclusion clauses; rent a cab services were utilized for pick-up and drop of employees to workplace, which is a corporate requirement essential for business operations; air travel services were utilized for employee movement to other countries for rendering SAP implementation and support services, thereby generating convertible foreign exchange; hotel accommodation and restaurant services were provided to employees on official visits for business purposes; telecommunication services were utilized for official communication essential for delivery of output services; and business support services were directly linked to exports undertaken - As long as services were used directly or indirectly in or in relation to provisioning of output service and were not covered within the scope of exclusion, they constitute input services - The order of the lower authority is set aside and the appeal is allowed [Read less]

Service Tax - Services performed outside India - Liability to pay Service Tax under Reverse Charge Mechanism - Appellant, engaged in manufacture and export of motor vehicle parts, entered into agreements with foreign service providers for handling exported goods including inspection, sorting, and rework. The respondent demanded service tax on reverse charge basis under Business Auxiliary Services for amounts paid to overseas service providers – HELD - The services which are physically performed outside India and consumed outside the taxable territory cannot be subjected to service tax under RCM. The Board's Circular date... [Read more]

Service Tax - Services performed outside India - Liability to pay Service Tax under Reverse Charge Mechanism - Appellant, engaged in manufacture and export of motor vehicle parts, entered into agreements with foreign service providers for handling exported goods including inspection, sorting, and rework. The respondent demanded service tax on reverse charge basis under Business Auxiliary Services for amounts paid to overseas service providers – HELD - The services which are physically performed outside India and consumed outside the taxable territory cannot be subjected to service tax under RCM. The Board's Circular dated 19.04.2006 clarifies that services must be received in India to be taxable under Section 66A - Although the impugned order classifies the services under sub-clause (v) and (vii) of Business Auxiliary Services definition, the fundamental issue that the services were entirely performed outside India makes the entire demand unsustainable - The demand for service tax is set aside and the appeal is allowed - Service Tax - Best Judgement Assessment - Absence of evidence of payment - Validity of assumption - Respondent adopted best judgement method under Section 72 of the Act to assess service tax liability for the period 2008-2011 by assuming doubled figures from base year 2006-07 and 2007-08 without any evidence of actual payments made during subsequent years - Whether best judgement method can be applied to assume fictitious payment figures in absence of evidence of actual payments in the assessment period – HELD - The best judgement assessment presupposes adoption of available figures adjusted by reasonable methodology, but cannot mean adopting fictitious figures without any evidential basis. The appellant had claimed no payments were made to foreign service providers after 2008-09, but the respondent proceeded to calculate liability by doubling the 2006-07 and 2007-08 figures cumulatively over subsequent years. No service tax could have been confirmed without evidence of actual payment in the subsequent years, and such arbitrary assumption of doubled figures is not sustainable in law. Accordingly, the best judgement assessment is set aside on this count - Service Tax - Invocation of Extended Period - Whether extended period can be invoked when the issue is detected during routine audit conducted on the premises of the appellant – HELD - The Central Board of Excise and Customs' Manual for Scrutiny clarifies that assessment remains the primary responsibility of assessing officers even in self-assessment regime, and that the failure to detect an issue during regular audits does not justify invoking extended period. The appellant had been subjected to audits multiple times and had been filing returns, and the respondent failed to raise any questions upon scrutinizing the returns. The argument that extended period should be invoked due to appellant's non-cooperation in providing documents cannot rescue the respondent's case when the issue itself was detected during routine audit. Accordingly, no case has been made by the respondent for invoking extended period of limitation and the appeal succeeds on limitation ground as well. [Read less]

Service Tax - Refund of Unutilized Input Service Credit on Export of Services - Whether refund of Cenvat credit availed after the date of last export invoice issued in a particular quarter is permissible under Notification No. 5/2006-CX (NT), dated 14th March 2006, Condition No. 4, which provides that refund is allowed only where a provider of output service is not in a position to utilize input service credit against goods exported during the quarter or month to which the claim relates – HELD - A narrow and restrictive interpretation of Condition No. 4 would defeat the very object of the notification and deprive the ass... [Read more]

Service Tax - Refund of Unutilized Input Service Credit on Export of Services - Whether refund of Cenvat credit availed after the date of last export invoice issued in a particular quarter is permissible under Notification No. 5/2006-CX (NT), dated 14th March 2006, Condition No. 4, which provides that refund is allowed only where a provider of output service is not in a position to utilize input service credit against goods exported during the quarter or month to which the claim relates – HELD - A narrow and restrictive interpretation of Condition No. 4 would defeat the very object of the notification and deprive the assessee of their rightfully intended benefit in law. The refund under the notification is considered on a quarterly basis and not on the basis of each singular export event. What is material and germane to the scheme is the ascertainment of the total unutilized input tax credit available at the end of the quarter - A mere timing difference in availing admissible Cenvat credit within the same quarter does not become a reason for denial of refund as long as the admissibility of such Cenvat credit is not disputed - The rejection of proportionate refund by giving the Notification a very restrictive interpretation is futile as Cenvat credit rejected against a claim of a particular quarter would certainly be available for refund in subsequent quarters - The order of the appellate authority is set aside, allowing refund of unutilized input service credit availed within the relevant quarter regardless of the timing of availment relative to the last export invoice date – The appeal is allowed [Read less]

GST - Best Judgment Assessment Order – Since the petitioner failed to file GSTR-3B returns for January 2024 and consequently, the Assistant Commissioner issued a best judgment assessment order under Section 62 of the CGST Act. The petitioner subsequently filed the return along with late fee and interest and challenged the assessment order contending that once the return is filed within sixty days of the assessment order, the assessment order stands deemed withdrawn under Section 62(2) of the GST Act – HELD – The Section 62(2) of the Act provides that if a registered person furnishes a valid return within sixty days o... [Read more]

GST - Best Judgment Assessment Order – Since the petitioner failed to file GSTR-3B returns for January 2024 and consequently, the Assistant Commissioner issued a best judgment assessment order under Section 62 of the CGST Act. The petitioner subsequently filed the return along with late fee and interest and challenged the assessment order contending that once the return is filed within sixty days of the assessment order, the assessment order stands deemed withdrawn under Section 62(2) of the GST Act – HELD – The Section 62(2) of the Act provides that if a registered person furnishes a valid return within sixty days of service of an assessment order, the said assessment order shall be deemed to have been withdrawn, though the liability for payment of interest and late fee shall continue. The High Court of Madras in a similar matter had held that in view of the amendment to Section 62(2), it is appropriate to condone the delay in filing GSTR-3B returns and consequently the assessment order is deemed to be withdrawn - Following the precedent set by the High Court of Madras the benefit of Section 62(2) is extended to the petitioner. Accordingly, the assessment order is deemed to have been withdrawn and set aside - The writ petition is allowed [Read less]

Service Tax - Valuation of Services - Reimbursable Expenses- Reimbursement of insurance premium and workmen compensation expenses - Whether reimbursable expenses incurred by the service provider on behalf of the service receiver can be included in the valuation of taxable services for charging service tax – HELD - the reimbursable expenses of insurance incurred by the appellants on behalf of the service receiver has been included by the Department in terms of Section 67 of the Finance Act read with Rule 5(1). It is pertinent to note that Rule 5(1) which provides for inclusion of expenditure or cost incurred by the servic... [Read more]

Service Tax - Valuation of Services - Reimbursable Expenses- Reimbursement of insurance premium and workmen compensation expenses - Whether reimbursable expenses incurred by the service provider on behalf of the service receiver can be included in the valuation of taxable services for charging service tax – HELD - the reimbursable expenses of insurance incurred by the appellants on behalf of the service receiver has been included by the Department in terms of Section 67 of the Finance Act read with Rule 5(1). It is pertinent to note that Rule 5(1) which provides for inclusion of expenditure or cost incurred by the service provider in the course of providing of taxable service has been held ultra vires of Sections 66 & 67 by the Delhi High Court in the case of Intercontinental Consultants and Technocrats Private Limited which have been upheld by the Hon’ble Supreme Court by dismissing the appeal of the Department - As Rule 5(1) has been declared ultra vires, the inclusion of reimbursable expenses in the value of taxable service is unsustainable. The revenue failed to establish the ingredients necessary for invoking the extended period of limitation, rendering the demand for the period prior to 30.09.2010 time-barred - The impugned orders are set aside and the appeal is allowed [Read less]

Service Tax - Reverse Charge Mechanism - Failure to pay service tax under the reverse charge mechanism for availing services of a goods transport agency - Whether the extended period of limitation under Section 73(1) of the Finance Act 1994 can be invoked and whether penalty is sustainable on the appellant – HELD - Since the impugned demand has been worked out by the revenue authorities from the books of accounts of the appellant itself, there exists no intent for suppression or concealment of information on the part of the appellant. It is a settled legal position that when the demand is based on balance sheet figures a... [Read more]

Service Tax - Reverse Charge Mechanism - Failure to pay service tax under the reverse charge mechanism for availing services of a goods transport agency - Whether the extended period of limitation under Section 73(1) of the Finance Act 1994 can be invoked and whether penalty is sustainable on the appellant – HELD - Since the impugned demand has been worked out by the revenue authorities from the books of accounts of the appellant itself, there exists no intent for suppression or concealment of information on the part of the appellant. It is a settled legal position that when the demand is based on balance sheet figures and other documents of the assessee available in the public domain, invocation of extended period on grounds of suppression with intent to evade payment of duty cannot be sustained - The appellant had voluntarily paid the entire demand with interest before the adjudication itself, demonstrating no deliberate evasion. As the situation is revenue neutral and the appellant is entitled to avail credit of the duty paid, the invocation of extended period is uncalled for and the demand becomes time-barred. There is nothing substantive to establish concealment or suppression on the part of the appellant, and therefore the penalty imposed is unjustified and set aside – The appeal is allowed [Read less]

GST - Whether the Tribunal has jurisdiction to condone the delay beyond the time period provided under sub-Section 4 of the Section 107 of the CGST Act, 2017 – HELD - The Registry is directed to immediately call for the particulars of all such appeals from the respective State Benches and place the same before this Bench on 20.07.2026 – Ordered accordingly

GST - Transfer Pricing Adjustment, Valuation of Supply - Petitioner, an importer and distributor of UPVC profiles, challenges an assessment order contending that price adjustments made to align with Transfer Pricing regulations cannot constitute part of the supply value unless the distributor undertakes specific performance obligations such as advertising campaigns and customer services - Whether price adjustments made for transfer pricing compliance purposes can be included in the value of supply under GST when such adjustments are linked to the performance of distributor obligations – HELD - The assessing officer has e... [Read more]

GST - Transfer Pricing Adjustment, Valuation of Supply - Petitioner, an importer and distributor of UPVC profiles, challenges an assessment order contending that price adjustments made to align with Transfer Pricing regulations cannot constitute part of the supply value unless the distributor undertakes specific performance obligations such as advertising campaigns and customer services - Whether price adjustments made for transfer pricing compliance purposes can be included in the value of supply under GST when such adjustments are linked to the performance of distributor obligations – HELD - The assessing officer has examined the distribution agreement and the CBIC Circular No.251/08/2025-GST dated 12.09.2025 and drawn a conclusion that the price adjustment is not only for transfer pricing alignment but is also linked to performance of distributor obligations, thereby justifying inclusion in supply value - While the petitioner may have an arguable case that such conclusions are erroneous and arise from misinterpretation of statute and Circular, such grievance should be carried before the Appellate authority rather than being entertained in writ jurisdiction – Further, on the issue of whether interest can be treated as part of the value of supply, the appropriate forum to carry such grievance is the appellate authority - The writ petition is disposed of without interference with the impugned order [Read less]

Karnataka Value Added Tax Act, 2003 - Input Tax Credit on Furnace Oil – Principle of Consistency and Estoppel – The respondent-assessee claimed ITC on furnace oil used as fuel in the manufacturing process - Assessing Authority initially disallowed the claim, but upon rectification application, accepted it raising nil demand. Subsequently, the same issue was reopened and the input tax credit was disallowed - The Tribunal allowed the assessee's appeal and set aside the orders of the lower authorities – Whether the Appellate Tribunal has erred in holding that there is no error on the part of the respondent in determinin... [Read more]

Karnataka Value Added Tax Act, 2003 - Input Tax Credit on Furnace Oil – Principle of Consistency and Estoppel – The respondent-assessee claimed ITC on furnace oil used as fuel in the manufacturing process - Assessing Authority initially disallowed the claim, but upon rectification application, accepted it raising nil demand. Subsequently, the same issue was reopened and the input tax credit was disallowed - The Tribunal allowed the assessee's appeal and set aside the orders of the lower authorities – Whether the Appellate Tribunal has erred in holding that there is no error on the part of the respondent in determining inadmissible input tax credit for purchase of furnace oil purchased both locally and inter-State – HELD - The respondent's method of computation for input tax credit on furnace oil has been consistently upheld by the Tribunal across multiple assessment years for 2006-07 to 2014-15, and the Revenue having not challenged the said methodology in those years but only challenging it for the year 2008-09 after a lapse of seven years amounts to picking and choosing, which is impermissible. The revenue is bound by the rule of consistency and is estopped from taking a contrary stand. Therefore, without going into the methodology adopted for computation of input tax credit, the revision petition is liable to be dismissed on this ground alone by confirming the order passed by the Tribunal. Accordingly, the revision petition filed by the Revenue is dismissed [Read less]

Central Excise – Eligibility to CENVAT Input Credit on Fuel Used in Manufacturing Intermediate Non-Dutiable Products - Appellant, a manufacturer of refractory products, manufactures Dead Burnt Magnesite (DBM), a nil-rated intermediate product at its Salem unit using furnace oil as fuel. The DBM is then stock-transferred to Appellant's Belpahar unit where it is used to manufacture dutiable final products such as refractory mortars, ramming mass and refractory bricks - Department denied CENVAT input credit on furnace oil claiming that since DBM is a nil-rated final good cleared from Salem unit, no input credit can be claim... [Read more]

Central Excise – Eligibility to CENVAT Input Credit on Fuel Used in Manufacturing Intermediate Non-Dutiable Products - Appellant, a manufacturer of refractory products, manufactures Dead Burnt Magnesite (DBM), a nil-rated intermediate product at its Salem unit using furnace oil as fuel. The DBM is then stock-transferred to Appellant's Belpahar unit where it is used to manufacture dutiable final products such as refractory mortars, ramming mass and refractory bricks - Department denied CENVAT input credit on furnace oil claiming that since DBM is a nil-rated final good cleared from Salem unit, no input credit can be claimed under Rule 57AD(1) which prohibits input credit on exempted or nil-rated goods - Whether CENVAT credit taken on fuel is required to be reversed when the exempted intermediate product is used for manufacture of dutiable goods that are ultimately cleared only on payment of Central Excise Duty – HELD - The DBM is an intermediary product and not a final product for the purpose of denying input credit, as the actual final products are the dutiable goods manufactured at Belpahar unit. The principle established in Escorts Limited case applies that where an intermediate product chargeable at nil-rate of duty comes into existence, credit is allowed so long as duty is paid on the final product - The term "within the factory of production" should be interpreted liberally to include another unit of the same manufacturer where both units are commonly owned with unified balance sheets, as a strict literal interpretation would create artificial distinctions contrary to the object of MODVAT and CENVAT schemes which aim to prevent cascading effect of taxes - Since the final products are excisable in nature, the bar under Rule 57AD(1) applicable only to exempted or nil-rated final goods does not apply, and the Appellant is entitled to claim CENVAT input credit on furnace oil - The Tribunal's order is set aside with the Commissioner of Central Excise (Appeals) order being restored in favour of the Appellant – The appeal is allowed - Stock Transfer or Sale - Whether the clearance of D.B.M. as such from Salem unit to Belpahar unit is a stock-transfer or sale – HELD – There was no consideration of any sort involved in the clearance of D.B.M. from Salem unit. Goods were merely shifted from one unit of the manufacturer to another unit of the very same manufacturer. Admittedly, the owners of the units are one and the same and the balance sheet is common for both. There is no sign of any trade whatsoever. Even in the clearance bills, it has been specified as stock-transfers. Anything contrary, the same has to be brought up by the Department. Hence, it is merely a stock-transfer, and not sale as alleged by the Department - Scope of expression "within the factory of production" - Whether input credit can be claimed when input utilised in one location and the final dutiable product is manufacture elsewhere – HELD - If the expression "within the factory of production" is interpreted strictly and narrowly to mean that every stage of manufacture must take place within the same factory premises, anomalous consequences would follow - When both the concerned units are owned by the same manufacturer and have a common balance sheet, if CENVAT input credit is to be denied on the mere ground that physical location of utilisation of the input and the physical location of manufacture of the final goods are different, then it would be detrimental to the very object of MODVAT and CENVAT Scheme which is to remove all the cascading effect of taxes by allowing manufacturers and service providers to claim credit for duties paid on inputs against their final output excise duty liability. Such a result would make the entitlement of credit depend not on the use of the input or its nexus with the final product, but merely on the physical distance between the very same manufacturer's facilities and also introduce an artificial distinction having no nexus with the object of the MODVAT/CENVAT scheme. Moreover, no prejudice or loss of due revenue would be caused to the Dept by following the wider interpretation. Therefore, the phrase "within the factory of production" is to be given a wider interpretation to include TRL's Belpahar unit as well and consequently, CENVAT input credit cannot be denied for the fuel - furnace oil on the ground that it was utilised in TRL's Salem unit while the final product was produced in its Belpahar unit. [Read less]

GST - Proceedings against non-existent entity after merger, Applicability of Section 87 of the CGST Act, 2017 — Petitioner, a company that had merged with another entity pursuant to a court-approved scheme of amalgamation, challenges an order-in-original confirming GST demand issued in the name of the transferor company which had ceased to exist following the merger - Respondent-Authorities initiated proceedings by issuing show cause notice against the non-existent transferor entity despite being informed of the merger - Whether a show cause notice and consequent order issued against a non-existent amalgamating company, ... [Read more]

GST - Proceedings against non-existent entity after merger, Applicability of Section 87 of the CGST Act, 2017 — Petitioner, a company that had merged with another entity pursuant to a court-approved scheme of amalgamation, challenges an order-in-original confirming GST demand issued in the name of the transferor company which had ceased to exist following the merger - Respondent-Authorities initiated proceedings by issuing show cause notice against the non-existent transferor entity despite being informed of the merger - Whether a show cause notice and consequent order issued against a non-existent amalgamating company, which had ceased to exist upon merger pursuant to a court-approved scheme of amalgamation, is sustainable in law – HELD - Any show cause notice issued to an amalgamating company after it has ceased to exist pursuant to its merger based on the scheme of amalgamation would be without jurisdiction. If proceedings are initiated against a non-existing company despite the assessing authority having knowledge of the amalgamation, such proceedings are void ab initio - The Section 87 of the CGST Act applies only to the intervening period from the date on which the merger order takes effect till the date of the order, and in no way authorizes the Department to issue show cause notice on a non-existent entity post-merger or amalgamation. Post-merger, the merged entity has no legal status and therefore no proceedings can be initiated against it – The show cause notice issued to an amalgamating company after the same had ceased to exist pursuant to its merger is without jurisdiction. Therefore, any proceeding initiated thereunder, is null and void. However, this order would not come in the way of the Authorities from initiating any proceeding, in accordance with law, for recovery of any unpaid GST dues, along with interest and penalty from the Writ Petitioner, if the same is otherwise permissible under the law - The impugned Order-in-Original is set aside and the writ petition is allowed [Read less]

GST - Limitation period for filing of Appeals, Exclusion of time spent in pursuing Rectification Application - Applicability of Section 14 of Limitation Act – Rejection of appeal by the Appellate Authority on ground of time-barred since it was filed beyond the prescribed period of limitation of three months plus one month extended period. Petitioner contended that the time spent in pursuing a Rectification Application under Section 161 of the CGST Act, 2017 should be excluded from computing period of limitation under Section 107 of CGST Act - Whether the principle of exclusion of time under Section 14 of the Limitation A... [Read more]

GST - Limitation period for filing of Appeals, Exclusion of time spent in pursuing Rectification Application - Applicability of Section 14 of Limitation Act – Rejection of appeal by the Appellate Authority on ground of time-barred since it was filed beyond the prescribed period of limitation of three months plus one month extended period. Petitioner contended that the time spent in pursuing a Rectification Application under Section 161 of the CGST Act, 2017 should be excluded from computing period of limitation under Section 107 of CGST Act - Whether the principle of exclusion of time under Section 14 of the Limitation Act, 1963 is applicable to exclude the period spent in pursuing a prior Rectification Application from the period of limitation prescribed under Section 107 of the CGST Act for filing an appeal before the Appellate Authority – HELD - While Section 5 of the Limitation Act stands excluded from application to special enactments like the CGST Act in view of Section 29(2) of the Limitation Act, the principle of exclusion of time embedded in Section 14 of the Limitation Act remains applicable to quasi-judicial proceedings as well. The principle of Section 14 requires that where a party prosecutes another proceeding bona fide with due diligence relating to the same matter, which ultimately proves abortive, the time spent in such proceeding must be excluded from the prescribed limitation period as otherwise the party would be penalized for pursuing a lawful remedy - In the present case, the Petitioner filed the Rectification Application within three months of the Order-in-Original, demonstrating due diligence, and supported the application with evidence showing that the supplier had filed delayed returns, demonstrating good faith and due care - When an appeal is presented beyond the normal period but within the extended period of limitation, the Appellate Authority must provide at least one opportunity to the appellant to explain the delay by filing an application for condonation, following the principle enunciated in procedural law, before dismissing the appeal as time-barred - The period of forty-eight days spent between 08.03.2025 and 24.04.2025 in pursuing the Rectification Application is excluded from the limitation period, extending the deadline to 20.06.2025. The appeal filed on 23.05.2025 falls within this extended period - The impugned Order-in-Appeal is set aside and quashed and the matter is remitted to the Appellate Authority to provide a reasonable opportunity to the Petitioner to file an application for condonation of delay and to consider the explanation before disposing of the appeal – The writ petition is allowed [Read less]

Tamil Nadu General Sales Tax Act, 1959 - Classification of Gold Coins - Bullion vs Articles of Gold – Department’s appeal challenging the order of the Sales Tax Appellate Tribunal which classified gold coins embossed with the picture of Goddess Lakshmi as bullion liable to tax at 1% instead of 4% as articles of gold - Whether gold coins embossed with the picture of Goddess Lakshmi and mixed with copper should be classified as bullion in uncoined form or as articles of gold – HELD – The term bullion, according to its ordinary and popular meaning, refers to gold or silver in the mass, either in raw form or as ingots ... [Read more]

Tamil Nadu General Sales Tax Act, 1959 - Classification of Gold Coins - Bullion vs Articles of Gold – Department’s appeal challenging the order of the Sales Tax Appellate Tribunal which classified gold coins embossed with the picture of Goddess Lakshmi as bullion liable to tax at 1% instead of 4% as articles of gold - Whether gold coins embossed with the picture of Goddess Lakshmi and mixed with copper should be classified as bullion in uncoined form or as articles of gold – HELD – The term bullion, according to its ordinary and popular meaning, refers to gold or silver in the mass, either in raw form or as ingots or bars, representing unwrought material. Whereas, Gold coins that have undergone a manufacturing process with specific markings and engraved pictures constitute value addition and lose the character of bullion, becoming finished metal items. The embossing or engraving of pictures carries inherent value addition that transforms the raw material into a different commercial product - In common trade practice, gold coins with engraved pictures are not sold at prices equivalent to bullion rates, but at prices reflecting value addition including making charges and wastage. The fact that the respondent-assessee itself realized that part of the turnover was taxable as gold jewellery and collected higher tax rates supports the position that such coins are articles of gold, not bullion – The words in tax legislation must be interpreted according to common parlance and popular sense, not in any technical or scientific sense. The assessment order passed by the Appellate Authority is restored, classifying the gold coins as articles of gold taxable at 4% - The order of the Sales Tax Appellate Tribunal is set aside and the Tax Case Appeal is allowed [Read less]

Customs - Customs Broker Licensing Regulations, 2018 – Violation of Regulations 10(d), 10(e) and 10(n) – Revocation of License - The licensing authority revoked the appellant's customs broker license, forfeited the security deposit, and imposed penalties, concluding that the appellant had actively connived with the exporter and violated regulations 10(d), 10(e) and 10(n) of the Customs Brokers Licensing Regulations, 2018, by failing to advise the client to comply with customs provisions, failing to exercise due diligence in ascertaining correctness of information, and failing to verify the antecedent and correctness of... [Read more]

Customs - Customs Broker Licensing Regulations, 2018 – Violation of Regulations 10(d), 10(e) and 10(n) – Revocation of License - The licensing authority revoked the appellant's customs broker license, forfeited the security deposit, and imposed penalties, concluding that the appellant had actively connived with the exporter and violated regulations 10(d), 10(e) and 10(n) of the Customs Brokers Licensing Regulations, 2018, by failing to advise the client to comply with customs provisions, failing to exercise due diligence in ascertaining correctness of information, and failing to verify the antecedent and correctness of the importer exporter code number and identity of the client - Whether the appellant customs broker has committed violations of regulations 10(d), 10(e) and 10(n) of the Customs Brokers Licensing Regulations, 2018, thereby warranting revocation of license – HELD - The findings of the licensing authority do not sustain on the grounds that the charge of not advising the client to comply with the Customs Act is not founded on any allegation that advice sought had not been rendered. The conclusion that the exporter could not have executed overvalued exports without collusion from the appellant is too far-fetched to accept as overvaluation of export goods is easily executed and does not necessarily require a fellow conspirator - The allegation of breach of obligation to exercise due diligence is not founded on any information sought by the client or accusation that the appellant had misinformed the client but is based on a sweeping presumption unsupported by factual narration. The appellant had produced requisite documents evidencing that the allegations for failure to comply with declarations and non-submission of documents are contrary to facts on record - The Customs broker has no locus standi in respect of transaction value of export goods which is negotiated between the overseas buyer and Indian exporter; the value of export goods is determined by the exporter or proper officer as per the Customs Valuation Rules and not by the customs broker who is neither authorized nor obligated to redetermine value – Further, separate penalties had already been imposed on the appellant under the Customs Act for the same conduct, and therefore, imposing penalty again in the licensing proceedings is not proper - The impugned order revoking the license is set aside and the appeal is allowed [Read less]

Central Excise - Cenvat Credit Eligibility and Extended Period of Limitation - Cenvat credit on service tax paid towards annual maintenance charges for software services procured from a foreign vendor - Recovery of Cenvat credit taken, alleging that the service tax was not leviable for services rendered prior to the prescribed date, and that the appellant had suppressed contractual obligations with the vendor - Whether the extended period of limitation under section 11A of the Central Excise Act can be invoked when there is no intention to evade duty – HELD - Where a taxpayer takes credit of erroneously paid service tax ... [Read more]

Central Excise - Cenvat Credit Eligibility and Extended Period of Limitation - Cenvat credit on service tax paid towards annual maintenance charges for software services procured from a foreign vendor - Recovery of Cenvat credit taken, alleging that the service tax was not leviable for services rendered prior to the prescribed date, and that the appellant had suppressed contractual obligations with the vendor - Whether the extended period of limitation under section 11A of the Central Excise Act can be invoked when there is no intention to evade duty – HELD - Where a taxpayer takes credit of erroneously paid service tax by suo motu availing credit instead of following the prescribed procedure of filing a refund claim, and furthermore suppresses material facts like contractual obligations from the Department, such conduct amounts to suppression of facts. The suppression of contractual obligation entered into between the vendor and the appellant (formerly known as Alstom) was not disclosed to the Department, and the service tax was paid belatedly followed by suo motu credit availed instead of claiming refund - Taking the entire transaction as a whole, suppression and fraudulent conduct get established, thereby attracting the extended period of limitation of five years under section 11A. The remedy available to a taxpayer for erroneously paid duty is to file a refund claim under section 11B, and not to suo motu take credit. Since the inspection and verification commenced prior to the notice, and the extended period was available due to suppression of facts, the notice issued during the extended period is valid and the penalty is also justified – The Tribunal Order is upheld and the appeal is dismissed [Read less]

Central Excise - Rebate of Central Excise Duty on Exported Goods - Loss of Moisture Content – Quantity of Metallurgical Coke actually exported, as reflected in the shipping bills, was less than the quantity cleared due to loss of moisture content during transit from the factory to the port. The appellant claimed rebate under Rule 18 of the Central Excise Rules, 2002 on the entire quantity cleared but respondent authorities sanctioned rebate only on the actual quantity exported as per shipping bills, disallowing rebate on the quantity lost due to moisture evaporation -Whether rebate of duty under Rule 18 of the Central Ex... [Read more]

Central Excise - Rebate of Central Excise Duty on Exported Goods - Loss of Moisture Content – Quantity of Metallurgical Coke actually exported, as reflected in the shipping bills, was less than the quantity cleared due to loss of moisture content during transit from the factory to the port. The appellant claimed rebate under Rule 18 of the Central Excise Rules, 2002 on the entire quantity cleared but respondent authorities sanctioned rebate only on the actual quantity exported as per shipping bills, disallowing rebate on the quantity lost due to moisture evaporation -Whether rebate of duty under Rule 18 of the Central Excise Rules, 2002 can be granted on the quantity of goods cleared from the factory or only on the actual quantity of goods exported out of India – HELD – The petitioner, as required by the provision of Rule-4 of the Rules, 2002, paid the duty on the goods which it manufactured, however, the goods exported were less in weight than the one which were loaded in the trucks at the factory premises - The rebate of duty is intrinsically connected with the export of goods. The plain reading of Rule 18 and its explanation clarifies that export means taking goods out of India to a place outside India - The Notification dated 06.09.2004 issued under Rule 18 mandatorily specifies that excisable goods shall be exported after payment of duty and rebate has to be processed and calculated on the quantity of goods actually exported. The petitioner failed to declare the loss of moisture content in the goods at the time of paying duty and clearing from the factory, and in the absence of such declaration at the relevant point, the Customs authorities cannot be expected to presume that substantial shortage in quantity was caused merely by moisture loss - Since the petitioner failed to calculate and declare the moisture content while loading goods from warehouse till they reached the dock for export, rebate cannot be processed on the quantity reduced on account of moisture. The respondent authorities correctly determined rebate on the actual quantity of goods exported as per shipping bills - The orders of the respondent authorities are upheld and the petitions are dismissed [Read less]

Central Excise - MODVAT/CENVAT Credit on Low Sulphur Heavy Stock (LSHS) used for Generation of Electricity – Eligibility when electricity is transferred to sister units of the same manufacturer for manufacturing final products - Appellant claimed MODVAT/CENVAT input credit on the LSHS used for electricity generation. Department reversed the credit contending that electricity generated in one factory cannot be transferred to sister units located outside the factory of production - Whether MODVAT/CENVAT input credit can be denied on LSHS used for generation of electricity for the manufacture of dutiable final products when... [Read more]

Central Excise - MODVAT/CENVAT Credit on Low Sulphur Heavy Stock (LSHS) used for Generation of Electricity – Eligibility when electricity is transferred to sister units of the same manufacturer for manufacturing final products - Appellant claimed MODVAT/CENVAT input credit on the LSHS used for electricity generation. Department reversed the credit contending that electricity generated in one factory cannot be transferred to sister units located outside the factory of production - Whether MODVAT/CENVAT input credit can be denied on LSHS used for generation of electricity for the manufacture of dutiable final products when such electricity is transferred to sister manufacturing units of the same company located at different geographical locations – HELD - The expansive definition of 'factory' under Section 2(e) of the Central Excise Act, 1944, includes multiple units of the same manufacturer at different locations. The expression 'within the factory of production' refers to the factory owned by the assessee and encompasses multiple units if they are engaged in manufacturing excisable goods. When one company has different units at different geographical locations and all units are manufacturing units, electricity generated in one unit and consumed in other units of the same company qualifies as captive generation and captive consumption - The phrase 'captive' is a qualification of the location where electricity is generated and not the location where it is consumed. Therefore, if electricity generated in a captive arrangement is used for manufacturing final products in any unit of the same company, the input credit cannot be denied merely because the units are located at different geographical locations - The definition of 'input' introduced by the Fourth Amendment to the Central Excise Rules, 1944, effective from 16.03.1995, specifically included inputs used for generation of electricity used within the factory of production for manufacture of final products or for any other purpose - Insofar as the surplus electricity used for lighting the housing colony, since it is not used for manufacturing of any final product dutiable, to that extent electricity transferred for lighting the housing colony, the denial of input credit is sustained - The Input credit on LSHS for electricity transferred to sister units for manufacturing final products is allowed. However, input credit is denied to the extent that electricity is used for lighting the staff housing colony, as such use is not for manufacturing any final product - The appeals are partly allowed - Extended Period of Limitation – Applicability when assessee suppresses information regarding diversion of electricity during inspection - The appellant challenged the applicability of the extended period of limitation, arguing that there was no intentional suppression aimed at evading duty - Whether the extended period of limitation under Section 11-A of the Central Excise Act, 1944, is invokable when the assessee discloses the diversion of electricity only after inspection of factory premises and not voluntarily – HELD - Since the assessee disclosed the transfer of electricity to sister units and housing colony only after the inspection of the factory premises by the Divisional Preventive Officers, an element of intentional suppression of the diversion is apparent. The expression 'suppression of facts' when used in the company of terms such as fraud, collusion and wilful misstatement must refer to a deliberate act of non-disclosure aimed at evading duty, requiring an element of intentional action. The timing of disclosure after inspection constituted a deliberate withholding of information that should have been disclosed when the credit was originally claimed. The non-voluntary nature of the disclosure and the timing thereof established the requisite element of intentional suppression necessary to invoke the extended five-year period of limitation under the proviso to Section 11-A(1) instead of the ordinary one-year period - The extended period of limitation is held to be applicable. The show cause notices issued beyond one year but within five years from the relevant date are legally sustainable. [Read less]

Customs Law – Delayed adjudication of show case notice - Classification of titanium graphite blocks, Eligibility to IGST Exemption – HELD - In view of the direction issued by the Hon'ble Supreme Court in the matter of Delayed adjudication of SCNs, directing High Courts and Tribunals not to proceed with matters involving classification of goods pending disposal of the SLP, and considering that similar issues arise before this Court, the respondents are directed to keep all proceedings pursuant to the impugned order-in-original in abeyance till the disposal of the said SLP by the Supreme Court. The respondents are furthe... [Read more]

Customs Law – Delayed adjudication of show case notice - Classification of titanium graphite blocks, Eligibility to IGST Exemption – HELD - In view of the direction issued by the Hon'ble Supreme Court in the matter of Delayed adjudication of SCNs, directing High Courts and Tribunals not to proceed with matters involving classification of goods pending disposal of the SLP, and considering that similar issues arise before this Court, the respondents are directed to keep all proceedings pursuant to the impugned order-in-original in abeyance till the disposal of the said SLP by the Supreme Court. The respondents are further restrained from taking any coercive steps for recovery of duty, interest, penalty or confiscation of goods pursuant to the impugned order till the disposal of the SLP – The Writ Petition disposed of with directions keeping the proceedings in abeyance [Read less]

GST – Cancellation of Registration based on Defective Show Cause Notice - Requirement of Record Reasons and Valid Personal Visit Report - Respondent issued Show Cause Notices based on personal visits to the registered business premises, followed by suspension and thereafter cancellation orders without affording the petitioners an opportunity of hearing on the Show Cause Notices – HELD - Rule 22(1) of the CGST Rules, 2017, mandatorily requires that before issuing a notice in Form GST REG-17, the proper officer must have recorded reasons to believe that the registration is liable to be cancelled under Section 29 of the C... [Read more]

GST – Cancellation of Registration based on Defective Show Cause Notice - Requirement of Record Reasons and Valid Personal Visit Report - Respondent issued Show Cause Notices based on personal visits to the registered business premises, followed by suspension and thereafter cancellation orders without affording the petitioners an opportunity of hearing on the Show Cause Notices – HELD - Rule 22(1) of the CGST Rules, 2017, mandatorily requires that before issuing a notice in Form GST REG-17, the proper officer must have recorded reasons to believe that the registration is liable to be cancelled under Section 29 of the CGST Act, 2017. The Show Cause Notices fail to satisfy this requirement as they are based on personal visit reports which are either defective, showing unrelated properties, or completely blank without any recorded particulars. Such defective reports cannot form the basis for recording valid reasons to believe - The petitioners are entitled to file documents demonstrating that they are conducting business at the registered premises and that they must be afforded a fair opportunity to respond to the SCNs. Since the cancellation orders are founded on Show Cause Notices issued without proper recorded reasons supported by valid documentary evidence, the cancellation orders cannot be sustained and quashed. Consequently, the suspension orders which preceded the cancellation also stand to be quashed - The proceedings are restored to the stage of Show Cause Notice – The petition is partly allowed [Read less]

GST – Odisha AAR - Forest land diversion – Payment of Net Present Value and Compensatory Afforestation charges – Activity in relation to electricity transmission and construction of transmission lines – Applicant was required to obtain forest clearance certificate for diverting forest land to undertake construction of electrical transmission infrastructure. As a mandatory condition for obtaining such forest clearance under the Forest (Conservation) Act, 1980 and the Compensatory Afforestation Fund Act, 2016 - Whether statutory deposits of Net Present Value (NPV), Compensatory Afforestation, Dwarf Plantation, Site S... [Read more]

GST – Odisha AAR - Forest land diversion – Payment of Net Present Value and Compensatory Afforestation charges – Activity in relation to electricity transmission and construction of transmission lines – Applicant was required to obtain forest clearance certificate for diverting forest land to undertake construction of electrical transmission infrastructure. As a mandatory condition for obtaining such forest clearance under the Forest (Conservation) Act, 1980 and the Compensatory Afforestation Fund Act, 2016 - Whether statutory deposits of Net Present Value (NPV), Compensatory Afforestation, Dwarf Plantation, Site Specific Wildlife Conservation Plan and other CAMPA-related charges required for obtaining forest clearance certificate constitute a consideration against supply of services under Section 7 of the CGST Act, 2017 – HELD – The diversion of forest land for non-forest purposes is prohibited except with prior approval under the Forest (Conservation) Act, 1980. The State holds natural resources in public trust. When a business entity requests diversion of forest land for commercial activities, the State evaluates the application and grants specific permission enabling the otherwise prohibited activity. The grant of approval by Government is not a passive sovereign act but a specific activity undertaken in favour of an identified applicant in furtherance of business - The deposits of NPV and other compensatory afforestation charges are not voluntary but mandatory conditions imposed for obtaining forest clearance. Without such deposits, approval would not be granted and forest land could not be delivered. Therefore, granting clearance or permission to use forest land is an activity performed in the furtherance of business and falls within the definition of service under Section 2(102) of CGST Act. The payment is intrinsically linked with the grant of approval. Under the definition of consideration in Section 2(31) of CGST Act, such payments constitute consideration as they are made in respect of, in response to, or for inducement of the supply of goods or services. The grant of permission therefore constitutes a supply of service by Government within the meaning of Sections 7 and 2(31) of the Act - The deposits towards Net Present Value (NPV), Compensatory Afforestation, Dwarf Plantation, Site Specific Wildlife Conservation Plan, Plantation of Dwarf Species and other CAMPA-related charges constitute consideration for supply of service under Section 7 of CGST Act, 2017. The same are not exempt under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and GST is payable under RCM in terms of Entry No. 5 of Notification No. 13/2017-CT (Rate) dated 28.06.2017, with the value on which GST is payable being the amount of NPV and other CAMPA-related charges deposited as consideration for obtaining permission for diversion of forest land – Ordered accordingly - Whether NPV and other CAMPA-related charges are exempt from GST under Entry Nos. 4 and 5 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 – HELD - The exemption notifications are in the nature of exceptions to charging provisions and must be construed strictly, with the burden lying upon the person claiming exemption to establish that the transaction squarely falls within the language of the exemption entry. Entry Nos. 4 and 5 of Notification No. 12/2017-CT (Rate) exempt specified services provided by Governmental authorities in relation to functions entrusted to Municipalities under Article 243W and Panchayats under Article 243G of the Constitution. The present transaction concerns diversion of forest land for a commercial transmission project, which is a statutory regulatory function exercised under the Forest (Conservation) Act, 1980 and the Compensatory Afforestation Fund Act, 2016, and not a municipal or panchayat function. Therefore, the services do not fall within the ambit of the exemption entries - Liability under Reverse Charge Mechanism – HELD - The Entry No. 5 of Notification No. 13/2017-Central Tax (Rate) provides that in respect of services supplied by the Central Government, State Government, Union Territory or local authority to a business entity located in the taxable territory, the liability to pay GST shall be discharged by the recipient under reverse charge mechanism, except in respect of certain specifically excluded services. All essential ingredients of Entry No. 5 are satisfied. The mere fact that consideration is deposited into the CAMPA Fund rather than directly retained by a particular Government department does not alter the nature of the transaction, as taxability under GST law is determined by examining the existence of a supply and the consideration paid in relation thereto, and the subsequent destination, accounting treatment or utilization of the amount received is not determinative of taxability. [Read less]

GST - Reasonable Opportunity to reply to Show Cause Notice, Correction in original notice, Service of notice on GST Portal - The petitioner was informed via email that a fresh notice would be issued due to errors in the initial DRC-01A notice, but the corrected notice (DRC-01) was issued without correcting the errors or informing the petitioner about the same - The physical copy of the notice sent by registered post with acknowledgment due was returned unserved – HELD - The petitioner was informed on 25.01.2024 that "a fresh notice" will be issued but not issued fresh DRC-01A. Further, it cannot be disputed that the phy... [Read more]

GST - Reasonable Opportunity to reply to Show Cause Notice, Correction in original notice, Service of notice on GST Portal - The petitioner was informed via email that a fresh notice would be issued due to errors in the initial DRC-01A notice, but the corrected notice (DRC-01) was issued without correcting the errors or informing the petitioner about the same - The physical copy of the notice sent by registered post with acknowledgment due was returned unserved – HELD - The petitioner was informed on 25.01.2024 that "a fresh notice" will be issued but not issued fresh DRC-01A. Further, it cannot be disputed that the physical copy of the notice is returned un-served. In the circumstances, the petitioner's case that it expected a fresh DRC-01A and therefore its consultant did not pay attention to the portal or the E-mail merits acceptance. There is a lack of opportunity, and for complete adjudication, the petitioner must have an opportunity to file a response within a reasonable time - The adjudication order is quashed the proceedings are restored for reconsideration – The petition is disposed of [Read less]