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GST - Maintainability of departmental appeal before the Tribunal - Monetary limit in the CBIC Circular on litigation policy and the exclusion where the Board has taken a view to contest - Department filed an appeal before the Tribunal involving an amount below the monetary limit in the Circular N0. 207/1/2024-GST – Dept contended that the case falls under the exclusion in paragraph 4(vi) of the Circular, as the Department had filed a petition before the Supreme Court against a decision of the High Court on an identical issue in a different case - Whether the departmental appeal falls within the exclusion category of the ... [Read more]

GST - Maintainability of departmental appeal before the Tribunal - Monetary limit in the CBIC Circular on litigation policy and the exclusion where the Board has taken a view to contest - Department filed an appeal before the Tribunal involving an amount below the monetary limit in the Circular N0. 207/1/2024-GST – Dept contended that the case falls under the exclusion in paragraph 4(vi) of the Circular, as the Department had filed a petition before the Supreme Court against a decision of the High Court on an identical issue in a different case - Whether the departmental appeal falls within the exclusion category of the Circular so as to be maintainable despite the monetary limit - HELD - Merely filing an appeal or petition before the Supreme Court in a different case cannot be construed as a uniform opinion of the Board. The Board needs to issue a specific Circular guiding the field formation about its opinion on an issue on merits and to contest the matter before the higher forums. There is also no record of any stay granted by the Supreme Court from the operation of the decision in that case - The present case therefore does not fall under the exclusion category provided in the Circular. The departmental appeal is dismissed on the monetary limit [Read less]

GST - Rejection of first appeal as time barred - Mode of payment of pre-deposit under Notification No. 53/2023-Central Tax dated 02.11.2023 - Appellant filed appeal within the extended window allowed by the Notification, with a pre-deposit of 12.5% of the tax in dispute paid wholly through the Electronic Credit Ledger, though at least 20% of it was to be paid through the Electronic Cash Ledger - Appellate Authority rejected the appeal as time barred and held that the delay could not be condoned whereas the Appellant contended that the defect in the mode of payment was curable - Whether a first appeal filed within limitatio... [Read more]

GST - Rejection of first appeal as time barred - Mode of payment of pre-deposit under Notification No. 53/2023-Central Tax dated 02.11.2023 - Appellant filed appeal within the extended window allowed by the Notification, with a pre-deposit of 12.5% of the tax in dispute paid wholly through the Electronic Credit Ledger, though at least 20% of it was to be paid through the Electronic Cash Ledger - Appellate Authority rejected the appeal as time barred and held that the delay could not be condoned whereas the Appellant contended that the defect in the mode of payment was curable - Whether a first appeal filed within limitation under the notification becomes time barred because 20% of the 12.5% was paid through the Electronic Credit Ledger - HELD - The Notification is an amnesty for appeals beyond the period under Section 107, so delay is the very premise on which it operates - The decisions relied on by the Appellate Authority concerned appeals filed beyond Section 107 and did not deal with the notification or the mode of payment of pre-deposit. Paragraph 3 of the notification regulates the quantum and mode of pre-deposit and does not prescribe limitation, which is provided in paragraph 2. Nothing in the notification treats a shortfall or use of the wrong ledger as making the appeal out of time, and reading such a consequence into it would add words to it - A curable deficiency in a payment accompanying a proceeding filed in time can be made good later. The condition is one of deposit and not of limitation. The payment of the cash component through the wrong ledger was a deviation in the mode of payment, not a defect of limitation - The Appellate Authority ought to have specified the deficiency and allowed an opportunity to make it good - The appeal was filed within the timeline of the notification and the rejection of the first appeal is set aside - Requirement of further payment of the cash component of the pre-deposit under the special procedure Notification No. 53/2023-Central Tax - Whether the Appellant is now required to pay 20% of the 12.5% through the Electronic Cash Ledger to avail the benefit of the notification - HELD - The notification fixes the deposit at 12.5% of the tax in dispute, which was paid in full within the window. The amount debited to the Electronic Credit Ledger is not a mere book entry, as Section 49(4) permits tax payable as a result of proceedings to be paid from that ledger, which is a valid mode of pre-deposit under Section 107(6). Neither the Act nor the Rules prescribe payment of pre-deposit only through the Electronic Cash Ledger, and the condition arises only from the notification - A further cash deposit would raise the total pre-deposit beyond what the notification prescribes. Strict construction requires conditions to be read as written and forbids adding to them. No prejudice was caused to the Revenue, as it had also received an amount in cash at the stage of the second appeal, so the objective of the cash component stands secured - With reference to Notification No. 53/2023-Central Tax, the deposit of 12.5% of the tax in dispute made through the Electronic Credit Ledger before the first appeal was filed, was a sufficient compliance of the requirement of 12.5% of disputed tax towards the pre deposit for the first appeal to be entertained, and that no further payment in cash is required, at this stage – Ordered accordingly - ITC of IGST paid on imported goods - Denial on mismatch with GSTR-2A or Table 8A of GSTR-9 and on supplier's failure to file GSTR-1 - Section 16(2) of the CGST Act, 2017 - The ex parte order confirmed the demand on the ground that the supplier neither paid the tax nor disclosed the supply in GSTR-1 - Whether ITC of IGST paid on imported goods, supported by bills of entry and reflected in GSTR-2A, can be denied on a mismatch with GSTR-2A or Table 8A of GSTR-9 or on the supplier's failure to file GSTR-1 - HELD - Rule 36(1)(d) of the CGST Rules, 2017 recognises the bill of entry as a document on the basis of which credit may be availed - The goods having been cleared for home consumption, indicates the payment of IGST. The tax on which credit is claimed has thus reached the Government in full. Even on the Respondent’s own test in section 16(2)(c), that the tax charged has been actually paid to the Government, the condition is satisfied - The credit was reported correctly, so there was no mismatch even on the method of the Respondent. The denial of ITC of IGST paid on imports is unsustainable and set aside. The demand of tax, interest and penalty is quashed and the appeal is allowed - Reporting of import credit under the head All other ITC instead of Import of goods in GSTR-3B - Effect on entitlement to ITC - For two months the IGST paid on imports was reported in row 4(A)(5) of GSTR-3B instead of row 4(A)(1), which the Appellant stated was a clerical error - Whether reporting of credit in row 4(A)(5) instead of row 4(A)(1) of GSTR-3B disentitles the availment of such credit - HELD - Where import credit is reported under All other ITC instead of Import of goods, it will necessarily appear as credit in excess of Table 8A of GSTR-9, though it is supported by bills of entry. The Circulars contemplate that IGST on imports is to be reported in row 4(A)(1) and that differences for the year 2018-19 are to be verified on facts. Such misreporting affects only the classification of the credit in the return and does not convert an eligible import credit into excess or ineligible credit. 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Service Tax - Remand for verification of fresh documentary evidence claiming exemption for road construction services under Sl. No. 13(a) of Notification No. 25/2012-ST, where demand was confirmed ex parte on the basis of Income Tax Department third-party data - Demand of Service Tax was confirmed on gross receipts reflected in CBDT data, with extended period invoked, interest and penalties imposed, as the Appellant neither furnished documents during investigation nor replied to the SCN nor appeared before the adjudicating authority. Before the Tribunal, the Appellant contended that its receipts pertained to construction a... [Read more]

Service Tax - Remand for verification of fresh documentary evidence claiming exemption for road construction services under Sl. No. 13(a) of Notification No. 25/2012-ST, where demand was confirmed ex parte on the basis of Income Tax Department third-party data - Demand of Service Tax was confirmed on gross receipts reflected in CBDT data, with extended period invoked, interest and penalties imposed, as the Appellant neither furnished documents during investigation nor replied to the SCN nor appeared before the adjudicating authority. Before the Tribunal, the Appellant contended that its receipts pertained to construction and repair of roads for Government departments and local authorities, and produced work orders, lists signed by the Governmental bodies, Form 26AS particulars and a reconciliation statement. The Respondent objected that these documents had not been produced before or verified by the adjudicating authority - Whether the matter should be remanded for verification of the documents produced for the first time before the Tribunal, to determine whether the receipts pertain to road construction works exempt under Sl. No. 13(a) - HELD - The adjudicating authority had no occasion to examine the documents now produced, as the Appellant furnished no material or defence before it. The Respondent's contention that the documents were not available for scrutiny at the original stage has substance. However, the mere circumstance that the documents were not produced earlier cannot by itself be a sufficient basis for rejecting them outright, as the Appellant relies on them to demonstrate the nature of the transactions forming the foundation of the demand. Whether the receipts pertain to exempt road construction works requires examination of the underlying contractual and contemporaneous documentary evidence. Verification is necessary to ascertain genuineness and to correlate individual receipts in the Income Tax and Form 26AS records with the work orders, contracting entities, nature of work and consideration received. No final opinion is expressed on the merits - The impugned order is set aside and the matter is remanded for fresh adjudication after due verification, with a reasonable opportunity of personal hearing, leaving all issues open - The appeal is disposed of by way of remand [Read less]

GST - Power to conduct audit under Section 65 of the CGST Act, 2017 for a period after the date from which registration was subsequently cancelled with retrospective effect - Petitioner was registered in 2017 and applied for cancellation of registration on closure of business with effect from 31.12.2019, but the application remained pending. While it was pending, the Respondent issued notice in Form GST ADT-01 under Section 65 proposing audit for the period from 01.07.2017 to 31.03.2021 - The registration was later cancelled with effect from 31.12.2019 - Whether the subsequent retrospective cancellation of registration pre... [Read more]

GST - Power to conduct audit under Section 65 of the CGST Act, 2017 for a period after the date from which registration was subsequently cancelled with retrospective effect - Petitioner was registered in 2017 and applied for cancellation of registration on closure of business with effect from 31.12.2019, but the application remained pending. While it was pending, the Respondent issued notice in Form GST ADT-01 under Section 65 proposing audit for the period from 01.07.2017 to 31.03.2021 - The registration was later cancelled with effect from 31.12.2019 - Whether the subsequent retrospective cancellation of registration prevents the Respondent from proceeding with the audit notice, either altogether or for the period after the effective date of cancellation - HELD - An application for cancellation does not bring the registration to an end, as under Rule 21A the registration is deemed to be suspended pending completion of the proceedings, and the person continues to be described as a registered person. The expression registered person in Section 65 must be read in the context of Section 2(13), since an audit looks backwards and examines records maintained, returns furnished, credits availed and refunds claimed under a registration. It cannot be confined to a person whose registration continues to be effective when the examination takes place - A period covered by a registration which had been granted and was not cancelled when the audit was proposed is distinct from a period in which no registration existed, and cancellation determines the legal effectiveness of the registration but does not erase the historical fact that it was granted or the acts undertaken under it - Where registration had been granted and not yet cancelled during the period proposed for audit, that factual nexus satisfies Section 65 even if the registration is later cancelled retrospectively - The treatment of the returns as void and non-est does not place the underlying records beyond examination. The audit does not itself determine liability, and nothing permits the Respondent to treat the returns after the effective date of cancellation as valid or to assume that taxable supplies were made - The contention that retrospective cancellation renders the notice without jurisdiction, wholly or for the later portion of the period, is rejected - The Writ Petition is dismissed - Denial of discretionary relief in a writ petition for non-disclosure of a pending audit notice in the earlier writ petition under which cancellation of registration was obtained - The Petitioner had filed an earlier writ petition seeking directions for cancellation of registration with effect from 31.12.2019 without disclosing the audit notice, although it had replied to the notice a day before the order in the earlier petition and was aware of it. The Petitioner then relied on the directions obtained to seek quashing of the very notice. The Respondent contended that the Petitioner did not approach the Court with clean hands - Whether the Petitioner is entitled to discretionary relief - HELD - The Petitioner's general denial did not specifically state that the notice was disclosed, and the reliance on the delay of the Department in processing the application does not answer the allegation of non-disclosure. The pending audit was material to the relief sought in the earlier petition, and the delay of the Department did not absolve the Petitioner of its obligation to disclose the notice. Having failed to do so, the Petitioner cannot rely on the directions obtained in those proceedings to seek quashing of that very notice. [Read less]

GST - Imposition of penalty under a provision different from the one proposed in the SCN - Invocation of Section 74 along with Section 122(2)(a) - The SCN invoked Section 74(1) to propose recovery of transitional credit and proposed penalty under Section 122(2)(a). The Adjudicating Authority and the FAA imposed and confirmed a penalty under Section 74 read with Section 122(2)(b) - Appellant contended that the SCN was internally inconsistent and that the orders travelled beyond the proposals in the SCN - Whether the FAA was correct in imposing penalty under Section 122(2)(b) when the SCN proposed it under Section 122(2)(a) ... [Read more]

GST - Imposition of penalty under a provision different from the one proposed in the SCN - Invocation of Section 74 along with Section 122(2)(a) - The SCN invoked Section 74(1) to propose recovery of transitional credit and proposed penalty under Section 122(2)(a). The Adjudicating Authority and the FAA imposed and confirmed a penalty under Section 74 read with Section 122(2)(b) - Appellant contended that the SCN was internally inconsistent and that the orders travelled beyond the proposals in the SCN - Whether the FAA was correct in imposing penalty under Section 122(2)(b) when the SCN proposed it under Section 122(2)(a) - HELD - Section 122(2)(a) applies to cases other than fraud, wilful misstatement or suppression of facts, whereas Section 122(2)(b) and Section 74 apply to cases involving those ingredients, so the two cannot go together and the proposal in the SCN is itself self-contradictory. Both the Order-in-Original and the Order-in-Appeal travelled beyond the specific proposal in the SCN, which is contrary to Section 75(7) – Further, even in SCN, there is an inherent contradiction. While the SCN has invoked Sec.74(1), which is invoked when ingredients such as fraud, misstatement etc. are alleged, Sec 122(2)(a) is for situations which do not contain these ingredients. Thus, both Sec 74(1) and Sec 122(2)(a) do not go together. Hence, the proposal in SCN itself is self-contradictory and bad in law - The imposition of penalty under Section 74 read with Section 122(2)(b) cannot be sustained and set aside – The ground of appeal is allowed - Disallowance of transitional credit under the proviso to Section 140(1) of the CGST Act, 2017 for non-filing of one return under the existing law due to technical glitches in the departmental portal - The Appellant did not file the ER-1 return for April 2017 due to technical glitches in the ACES portal, although it had written to the Department, lodged tickets with the helpdesk and filed the returns for the subsequent months in which the closing balance was carried forward. The return was ultimately filed at the first available opportunity. The Department disallowed the credit under clause (ii) of the first proviso to Section 140(1) - Whether undisputed CENVAT credit can be disallowed solely for the failure to file ER-1 return before the appointed date due to technical glitches - HELD - The legislative intent behind clause (ii) is to deny transitional credit to negligent taxpayers who abandon their filing obligation for a continuous period of six months and not a diligent taxpayer who faced systemic blockages and informed the Department - The maxim that law does not compel a person to do what is impossible applies, and the technical glitch of the Government's own portal cannot be used to disallow vested transitional credit. When substantial compliance was done, though belatedly, at the first opportunity, insistence on an absolute and literal timeline is misdirected - The transitional credit is to be allowed - Invocation of Section 74 of the CGST Act, 2017 for wrong availment of transitional credit without foundational facts of fraud, wilful misstatement or suppression - The SCN invoked Section 74(1), and the FAA perceived an element of wilfulness merely because the Appellant availed the credit despite knowing that one return was not filed - Whether the Department was legally correct in invoking Section 74(1) - HELD - Section 74 requires fraud, wilful misstatement or suppression of facts to evade tax, and the SCN did not set out any foundational facts for the same. Mechanical use of these words without discussion indicates non-application of mind. Suppression cannot be alleged when the facts are within the knowledge of the Department - Section 74(1) can be invoked only where there is material evidence of fraud, wilful misstatement or suppression made part of the SCN. Wilfulness to take ineligible credit cannot be equated with failure to file a single return due to circumstances beyond control, and no mens rea can be attributed to the Appellant - The elements of Section 74 are not established and the order of the FAA is set aside. [Read less]

Central Excise - Clandestine removal of TMT rods/bars alleged on the basis of private records - Demand of duty and penalties on the Appellant company and its Managing Director - Appellant manufactured sponge iron, MS ingots and TMT rods, and the demand was confirmed on the basis of an Executive Diary, a made-up file and a duplicate book seized from the factory, along with statements of employees and the Managing Director, alleging that short accounted MS ingots were used to manufacture TMT rods that were cleared without payment of duty - Whether clandestine removal is established, and the demand and penalties sustainable, ... [Read more]

Central Excise - Clandestine removal of TMT rods/bars alleged on the basis of private records - Demand of duty and penalties on the Appellant company and its Managing Director - Appellant manufactured sponge iron, MS ingots and TMT rods, and the demand was confirmed on the basis of an Executive Diary, a made-up file and a duplicate book seized from the factory, along with statements of employees and the Managing Director, alleging that short accounted MS ingots were used to manufacture TMT rods that were cleared without payment of duty - Whether clandestine removal is established, and the demand and penalties sustainable, on the basis of private records and statements without corroborative evidence - HELD - The Executive Diary showed entries without customer name, date or invoice number, which the Revenue treated as clandestine removal, but there was no evidence on record regarding electricity consumption, transport details, dispatch details or the customers to whom the goods were sold. The short accountal related to MS ingots, which are not final products and were admittedly consumed captively, and the allegation that these were used to manufacture TMT rods was imaginary without corroborative evidence. Neither the Executive Diary nor the made-up file nor the statements of the employees and the Managing Director were corroborated with other evidence to prove clandestine removal. The burden to prove clandestine manufacture and removal lies heavily on the Revenue, and conjectures and surmises cannot be the basis of proof as positive evidence is required - The Revenue has not discharged the burden, and the impugned order is set aside along with the penalties imposed on the Appellant company and the Managing Director, and the appeals are allowed [Read less]

GST - Reversal of ITC under Section 17(2) of the CGST Act, 2017 read with Rules 42 and 43 of the CGST Rules, 2017 where exempt supplies pertain to trading of goods procured at nil rate on which no ITC was availed - The Appellant, a cooperative society, traded in cattle feed which is exempt - Demand for reversal of ITC on common inputs based on the exempt turnover declared in GSTR-9 without reversal - Appellant contended that no input tax was paid or availed on the purchases and that no common credit existed for reversal - Whether reversal of ITC is required under Section 17(2) - HELD - ITC is required to be reversed under ... [Read more]

GST - Reversal of ITC under Section 17(2) of the CGST Act, 2017 read with Rules 42 and 43 of the CGST Rules, 2017 where exempt supplies pertain to trading of goods procured at nil rate on which no ITC was availed - The Appellant, a cooperative society, traded in cattle feed which is exempt - Demand for reversal of ITC on common inputs based on the exempt turnover declared in GSTR-9 without reversal - Appellant contended that no input tax was paid or availed on the purchases and that no common credit existed for reversal - Whether reversal of ITC is required under Section 17(2) - HELD - ITC is required to be reversed under Section 17(2) only if the goods or services on which credit is taken are used partly for taxable supplies and partly for exempt supplies. If no ITC is taken on the purchase of wholly exempt traded goods, reversal is not required unless some credit, such as on common input services, is taken and used partly for exempt supplies and partly for taxable supplies, and the reversal is required only to that extent. The matter requires verification of the documents relating to ITC by the original authority - The impugned order is quashed and the matter is remanded for fresh adjudication to verify the ITC availed and to calculate the amount to be reversed, if any, after taking additional evidence and affording a personal hearing – The appeal is disposed of - Demand of differential tax on the basis of reconciliation between GSTR-1 and GSTR-9 for the same financial year - Right to correct figures in the annual return under Section 44 of the CGST Act, 2017 - The Adjudicating Authority demanded the differential tax as the tax liability declared in GSTR-1 was higher than that in GSTR-9. The Appellant stated that the difference was due to clerical errors and that the tax paid in the annual return far exceeded the difference - Whether the demand on the basis of the difference between GSTR-1 and GSTR-9 is sustainable - HELD - GSTR-9 is an annual return under Section 44, and the taxpayer has the right to correct in it the figures declared in the monthly or quarterly returns. As the Appellant claimed that the difference is due to clerical errors and the matter is being remanded on the other issue, the Appellant is to be allowed the opportunity to explain the reasons for the difference to the original authority, which will consider the explanation and decide whether any tax is payable - The matter is remanded to the Adjudicating Authority for fresh adjudication. [Read less]

GST - Proceedings against a deceased proprietor, Requirement of notice to the legal heir under Section 93(1)(b) of the CGST Act, 2017 where the business is discontinued - Show cause proceedings on alleged excess ITC based on a mismatch between GSTR-3B and GSTR-2A – The proprietor had died, the business was discontinued and the registration was cancelled. The appeal was filed before the Tribunal by the legal heir - Whether the Respondent followed the procedure under Section 93(1)(b) by issuing notice to the legal heir for the estate of the deceased - HELD - On the death of the proprietor, the proprietorship comes to an en... [Read more]

GST - Proceedings against a deceased proprietor, Requirement of notice to the legal heir under Section 93(1)(b) of the CGST Act, 2017 where the business is discontinued - Show cause proceedings on alleged excess ITC based on a mismatch between GSTR-3B and GSTR-2A – The proprietor had died, the business was discontinued and the registration was cancelled. The appeal was filed before the Tribunal by the legal heir - Whether the Respondent followed the procedure under Section 93(1)(b) by issuing notice to the legal heir for the estate of the deceased - HELD - On the death of the proprietor, the proprietorship comes to an end. Section 93(1)(b) makes the legal representative liable only out of the estate of the deceased, to the extent the estate is capable of meeting the charge, where the business is discontinued. It authorises post-death proceedings only against the legal representative after notice and hearing, and does not authorise determination of liability against a dead person - No effort was made to find whether any estate existed, and no notice was issued to the legal heir even after more than three years from the date of death. Various High Courts have held that proceedings against a deceased person are non est and void, and the earlier decision of the Tribunal taking the same view applies - The entire proceedings against the deceased taxpayer are illegal, without jurisdiction and null and void - The order of the FAA is quashed and the entire proceedings are set aside - On merits of the case, the deceased appellant was eligible for ITC having filed all the certificates issued by the suppliers, who have certified that they have paid the GST on the invoices and only due to mistake in filing GST Return GSTR1 they have shown such invoices in B2C instead of B2B. It is not at all disputed that the suppliers have paid the tax and the appellant was always eligible for ITC, even during his lifetime - The impugned order is quashed and set aside. The appeal is allowed [Read less]

GST - Transitional credit under Section 140 of the CGST Act, 2017 - Credit claimed in TRAN-1 as balance carried forward from the last return under the existing law - Appellant claimed credit in TRAN-1 as a balance of VAT credit carried forward, while the return filed under the existing law for the last month showed the balance of tax at credit as nil - Whether credit claimed in TRAN-1 as a carried forward balance is admissible when the last return under the existing law showed no balance - HELD - The return for the last month under the existing law showed the balance of tax at credit as nil, so the Appellant had no credit ... [Read more]

GST - Transitional credit under Section 140 of the CGST Act, 2017 - Credit claimed in TRAN-1 as balance carried forward from the last return under the existing law - Appellant claimed credit in TRAN-1 as a balance of VAT credit carried forward, while the return filed under the existing law for the last month showed the balance of tax at credit as nil - Whether credit claimed in TRAN-1 as a carried forward balance is admissible when the last return under the existing law showed no balance - HELD - The return for the last month under the existing law showed the balance of tax at credit as nil, so the Appellant had no credit at hand as on the appointed date to claim in TRAN-1. The contention of the Respondent was therefore correct - The claim is rightly rejected and the appeal is dismissed to that extent - Transitional credit on VAT paid on capital goods purchased before the appointed date - Non-filing of the application for credit within thirty days under the existing law - Appellant purchased a truck chassis with engine before the appointed date for body building, and declared the purchase as eligible for credit in the return for the last month under the existing law. The credit claimed in TRAN-1 was rejected because it was not reflected in the relevant part of the return and the application in the prescribed form was not filed within thirty days - Whether the Appellant is eligible for transitional credit under Section 140 on the VAT paid on the truck purchased before the appointed date and put to use after it, though the credit was not reflected in the returns - HELD - The Appellant had declared the purchase in the return as a local purchase eligible for credit. The truck, being a goods vehicle, could be put to use only after the body building was completed, by which time the GST regime had been introduced and the only method prescribed for availing the credit was TRAN-1. No other condition is attached to TRAN-1 under Section 140 - The High Court in PK Joseph Vs Commercial Tax Officer has held that the thirty days run from the date on which the capital goods are put to commercial use and not from the date of purchase, so failure to obtain sanction before the appointed date cannot be equated with absence of substantive entitlement – Further, during the initial period of GST implementation there were many hurdles, and procedural infractions are to be viewed with a judicial eye. The Appellant was made a victim of procedure although it was eligible for credit under both regimes - The order of the FAA is quashed and set aside, and the appeal is allowed [Read less]

GST - Applicability of Section 76 of the CGST Act, 2017 to a registered person who collected tax under valid invoices but did not remit it to the Government – Respondent-assessee supplied taxable services to the Railways, collected GST under valid invoices, short-declared turnover in GSTR-3B and failed to file returns thereafter, thereby withholding the tax collected - Adjudicating Authority confirmed the tax, interest and penalty under Section 76. The FAA upheld the tax and interest but set aside the penalty on the premise that Section 76 applies only to collections made without authority of law - Whether Section 76 app... [Read more]

GST - Applicability of Section 76 of the CGST Act, 2017 to a registered person who collected tax under valid invoices but did not remit it to the Government – Respondent-assessee supplied taxable services to the Railways, collected GST under valid invoices, short-declared turnover in GSTR-3B and failed to file returns thereafter, thereby withholding the tax collected - Adjudicating Authority confirmed the tax, interest and penalty under Section 76. The FAA upheld the tax and interest but set aside the penalty on the premise that Section 76 applies only to collections made without authority of law - Whether Section 76 applies to a registered person who collected tax under valid invoices and withheld it - HELD - Section 76(1) mandates that every person who has collected any amount as representing the tax and has not paid it to the Government shall forthwith pay it, irrespective of whether the supplies in respect of which the amount was collected are taxable or not. The expression ‘any amount’ and ‘every person’ is of the widest amplitude and draws no distinction between registered and unregistered persons. The provision does not condition its operation on the collection being unauthorised, and a contrary view would create an anomalous immunity for registered defaulters - The foundational contention of the Respondent that Section 76 applies only to unauthorized collections by unregistered persons or amounts collected without legal authority, is fundamentally flawed - A person collecting tax holds it in a fiduciary capacity for the Government, and retaining it while filing suppressed or nil returns is a breach of that trust - The finding of the FAA that Section 76 excludes registered suppliers is unsustainable and the penalty under Section 76 is restored - The appeal by the Department is allowed [Read less]

GST - Initiation of proceedings under Section 130 of the CGST Act, 2017 for confiscation of goods found unaccounted on survey of business premises, as against proceedings under Sections 73 or 74 - Proper officer seized raw material and tobacco products found unaccounted in the books at the business premises of the Respondents and imposed penalty and fine in lieu of confiscation under Section 130(2). The FAA set aside the orders on the view that proceedings under Sections 73 or 74 should have been initiated - Department contended that the tax officer is empowered to inspect the records and to initiate proceedings under Sect... [Read more]

GST - Initiation of proceedings under Section 130 of the CGST Act, 2017 for confiscation of goods found unaccounted on survey of business premises, as against proceedings under Sections 73 or 74 - Proper officer seized raw material and tobacco products found unaccounted in the books at the business premises of the Respondents and imposed penalty and fine in lieu of confiscation under Section 130(2). The FAA set aside the orders on the view that proceedings under Sections 73 or 74 should have been initiated - Department contended that the tax officer is empowered to inspect the records and to initiate proceedings under Section 130 - Whether the FAA rightly set aside the penalty and fine imposed under Section 130(2) for goods found unaccounted - HELD - Section 35(1) requires registered persons to maintain true and correct accounts of goods, and Section 35(6) empowers the proper officer, where a person fails to keep account of goods, to determine the tax payable on such goods as if they had been supplied by that person under Section 73 or 74, which apply mutatis mutandis. The High Court has consistently held that where excess stock is found during survey, proceedings must be initiated under Section 73 or 74 and not under Section 130 read with Rule 120, and that proceedings under Section 130 are liable to be quashed. Where unaccounted goods are found at the time of survey, the proper officer is empowered only to initiate proceedings under Section 73 or 74 and is not authorised to initiate proceedings under Section 130 and levy penalty in lieu of confiscation - The FAA rightly set aside the orders - The appeals of the Department are dismissed [Read less]

GST - Excess ITC alleged on a mismatch between GSTR-3B and GSTR-2A for the year 2017-18 - Remand in terms of the CBIC Circular on the difference in ITC - On scrutiny of returns, an SCN was issued alleging that credit availed in GSTR-3B exceeded that reflected in GSTR-2A - The Appellant stated that it could not produce documentary evidence earlier but could now produce the supplier's returns and the portal comparison establishing payment of tax - HELD - The dispute pertaining to the year 2017-18 is squarely covered by the Circular No. 183/15/2022-GST, issued as an advisory to resolve the difference in ITC availed in GSTR-3B... [Read more]

GST - Excess ITC alleged on a mismatch between GSTR-3B and GSTR-2A for the year 2017-18 - Remand in terms of the CBIC Circular on the difference in ITC - On scrutiny of returns, an SCN was issued alleging that credit availed in GSTR-3B exceeded that reflected in GSTR-2A - The Appellant stated that it could not produce documentary evidence earlier but could now produce the supplier's returns and the portal comparison establishing payment of tax - HELD - The dispute pertaining to the year 2017-18 is squarely covered by the Circular No. 183/15/2022-GST, issued as an advisory to resolve the difference in ITC availed in GSTR-3B as compared to GSTR-2A for the years 2017-18 and 2018-19. The Circular applies to ongoing proceedings and also to cases where adjudication or appeal proceedings are still pending - The order of the FAA is set aside and the appeal is allowed by way of remand, with a direction to consider the matter afresh [Read less]

Central Excise - Clubbing of clearances of separately constituted units for SSI exemption under Notification No. 8/2003-CE - Appellant, a proprietorship manufacturing HDPE pipes and hoses, claimed SSI exemption, and the Department alleged that three other concerns of family members were dummy units and demanded duty on the combined clearances - Whether the clearances of the other concerns are liable to be clubbed with those of the Appellant - HELD - The concerns had different legal forms and ownership compositions, and family relationship or common ownership by themselves do not justify clubbing. Common layout and access, ... [Read more]

Central Excise - Clubbing of clearances of separately constituted units for SSI exemption under Notification No. 8/2003-CE - Appellant, a proprietorship manufacturing HDPE pipes and hoses, claimed SSI exemption, and the Department alleged that three other concerns of family members were dummy units and demanded duty on the combined clearances - Whether the clearances of the other concerns are liable to be clubbed with those of the Appellant - HELD - The concerns had different legal forms and ownership compositions, and family relationship or common ownership by themselves do not justify clubbing. Common layout and access, sharing of computers, accounting facilities and office staff, common marketing through dealers, reciprocal use of available vehicle capacity and the common hoarding do not by themselves establish that the units lacked independent existence. The invoices showed distinct brand names and logos, and no connection in the course of trade was established with the Appellant's brand. Trial balance entries do not disclose the nature of the transactions, and the Department did not establish by payment records that one concern discharged the electricity liability of another. Though financial flow-back is not an indispensable condition, the evidence as a whole is insufficient to establish that the concerns were dummy units - Clubbing is not sustainable and the demand attributable to it is set aside - Clandestine manufacture and removal on the basis of data in pen drives - Demand was confirmed on the basis of sales ledgers, purchase ledgers and financial records recovered from pen drives seized from the accounts officer of the concerns, with printouts signed by the proprietor - Whether clandestine manufacture and removal is established - HELD - The record does not establish that the devices were sealed at the time of seizure or explain their custody in the intervening period. The proprietor's signature shows only that the printouts were taken in his presence and does not establish that the data remained unchanged. The Department did not identify the source computer, the manner of extraction or produce the certificate under Section 36B(4) of the Central Excise Act, 1944, and electronic printouts cannot be relied upon without compliance with Section 36B. The statements were relied upon without addressing the safeguards under Section 9D, and the demand cannot be sustained solely on disputed statements where the electronic record is not independently corroborated. Parallel accounts without corroboration by evidence such as unaccounted raw-material procurement, production capacity, identified purchasers and receipt of sale proceeds are insufficient - The demand for clandestine removal and the consequential appropriation are set aside - Interest and penalties on the manufacturer under Section 11AC read with Rule 25 and on the proprietor and another person under Rule 26 of Central Excise Rules, 2002 - Penalties were imposed on the proprietorship concern, its proprietor and the then proprietrix of a related concern, who was alleged to have actively assisted the proprietor - Whether interest and penalties can be sustained - HELD - Penalty on the manufacturer and interest are founded on the demands confirmed, and as those demands are unsustainable they cannot survive. The notice and the impugned order do not identify the specific conduct satisfying the ingredients of Rule 26, and the finding that she actively assisted the proprietor does not specify the acts attributable to her. Relationship or association with the concerns without proof of the requisite conduct is insufficient - The interest and penalties on all the Appellants are set aside and all the three appeals are allowed. [Read less]

Central Excise - Disregard of remand directions by adjudicating authority on proportionate CENVAT Credit reversal under Rule 6(3) of CENVAT Credit Rules, 2004 - Tribunal in the earlier round remanded the demand on common inputs and input services with a direction to verify the reversal of proportionate credit and extend the benefit - Adjudicating authority in de novo proceedings did not verify the quantum of credit reversed and re-confirmed the demand as the procedure under Rule 6 was not followed - Whether an order passed in de novo proceedings contrary to the directions of the Tribunal can be upheld - HELD - Rule 6 only ... [Read more]

Central Excise - Disregard of remand directions by adjudicating authority on proportionate CENVAT Credit reversal under Rule 6(3) of CENVAT Credit Rules, 2004 - Tribunal in the earlier round remanded the demand on common inputs and input services with a direction to verify the reversal of proportionate credit and extend the benefit - Adjudicating authority in de novo proceedings did not verify the quantum of credit reversed and re-confirmed the demand as the procedure under Rule 6 was not followed - Whether an order passed in de novo proceedings contrary to the directions of the Tribunal can be upheld - HELD - Rule 6 only gives an option to the Appellant and does not confer any right on the Department to recover duty, and reversal of CENVAT Credit tantamount to non-availment of CENVAT Credit. The Appellant had reversed proportionate credit and the adjudicating authority did not dispute the reversal. Instead of verifying the quantum reversed, the adjudicating authority again invoked Rule 6 and decided the issue in terms of the SCN disregarding the directions of the Bench. Such an approach is not acceptable following the principles of judicial discipline, and an order contrary to the directions of the Bench cannot be upheld - The order is set aside to that extent and the appeal is allowed - Extended period of limitation and cum-duty benefit on demand of duty on printed goods cleared at concessional rate and on goods allegedly misclassified - Demand was raised on diaries, letter pads and printed carry bags cleared under a different tariff heading, and on printed calendars, cards, envelopes and notebooks cleared at concessional rate while availing CENVAT Credit, by invoking the extended period - Whether the extended period can be invoked and whether cum-duty benefit is available on the duty confirmed - HELD - The Appellant had been regularly giving declarations, filing returns and was audited from time to time. The Bench in the earlier round had held that classification was a bona fide issue, so the extended period cannot be invoked. The same logic applies to the demand on printed calendars, cards, envelopes and notebooks, which must be confined to the normal period. The Appellant is also entitled to cum-duty benefit on the duty confirmed - All the demands are restricted to the normal period and cum-duty benefit is to be extended - Imposition of penalty on the manufacturer and on its Director in de novo proceedings - Penalties were imposed on the Appellant company and its Director on the demands of duty and under Rule 6(3) of CENVAT Credit Rules, 2004 - Whether penalties are imposable in the absence of suppression or mens rea - HELD - The Tribunal in the earlier round had set aside the penalty on the Appellant as there was no mala fide. There is no allegation or evidence of mens rea in respect of the remaining demands. For the same reasons, penalty cannot be imposed on the Director - All the penalties are set aside, the appeal of the company is partly allowed and the appeal of the Director is allowed. [Read less]

Customs - Penalty under Section 114 of Customs Act, 1962 on Customs House Agent and its partner for aiding and abetting attempted export of mis-declared old and used leather goods for undue duty drawback - Containers of leather garments and footwear were intercepted and found to contain old and used goods, the freight forwarder without a CHA licence used the licence of the Appellant No. 1 for customs clearance, and the Appellant No. 2, its partner, had not verified the credentials of the exporters, the signatures and the authorisation letters - Penalties were imposed on both Appellants, and separate proceedings under the C... [Read more]

Customs - Penalty under Section 114 of Customs Act, 1962 on Customs House Agent and its partner for aiding and abetting attempted export of mis-declared old and used leather goods for undue duty drawback - Containers of leather garments and footwear were intercepted and found to contain old and used goods, the freight forwarder without a CHA licence used the licence of the Appellant No. 1 for customs clearance, and the Appellant No. 2, its partner, had not verified the credentials of the exporters, the signatures and the authorisation letters - Penalties were imposed on both Appellants, and separate proceedings under the Customs House Agents Licensing Regulations, 2004 on the same goods had resulted in revocation of the licence and forfeiture of the security deposit - Whether penalties under Section 114 can be sustained on the Appellants - HELD - The competent authority had already inflicted the highest administrative penalty on the Appellant No. 1 under the Regulations for the very same goods and investigation, and penalties under the Customs Act for the same allegations are not sustainable. The failure to verify the credentials of the exporters, signatures and authorisation letters may be a breach of obligations under the Regulations but cannot without more invite penalty under Section 114. There was no cogent evidence that the Appellants knew that the goods were old and used, participated in the preparation of false documents, knew of the fraudulent drawback, arranged the goods, received any part of the drawback or conspired with others. Liability under Section 114 cannot be founded merely on association with the consignments as a CHA or on use of the CHA licence - The procedural lapses are not connected to the attempted fraudulent export, the penalties on both Appellants are set aside and the appeals are allowed [Read less]

Customs - Confiscation of legitimate goods under Section 119 of Customs Act, 1962 on allegation that the goods were used as camouflage for concealing contraband elephant tusks - Appellant No. 1, a tea manufacturer and exporter, entrusted its tea consignment to Appellant No. 2, a transporter, and elephant tusks were recovered from the driver's cabin of the intercepted vehicle while the tea was in the rear carrier - Adjudicating authority ordered confiscation of the tea with an option to redeem on payment of redemption fine, which was upheld by the First Appellate Authority - Whether the tea can be confiscated under Section ... [Read more]

Customs - Confiscation of legitimate goods under Section 119 of Customs Act, 1962 on allegation that the goods were used as camouflage for concealing contraband elephant tusks - Appellant No. 1, a tea manufacturer and exporter, entrusted its tea consignment to Appellant No. 2, a transporter, and elephant tusks were recovered from the driver's cabin of the intercepted vehicle while the tea was in the rear carrier - Adjudicating authority ordered confiscation of the tea with an option to redeem on payment of redemption fine, which was upheld by the First Appellate Authority - Whether the tea can be confiscated under Section 119 and redemption fine imposed - HELD - The driver, in his statement recorded immediately after the seizure, disclosed the despatcher and the intended recipient without implicating either Appellant. The call records showed communication only between the despatcher, the driver and the intended recipient, with none linking the Appellants to the driver. The Appellants immediately sought provisional release of the tea and furnished the Bank Guarantee, which shows their bona fides. Defects in the E-way Bills and error in the address of the receiver do not form cogent evidence against the Appellants. The Revenue has not brought cogent evidence linking the Appellants with the identified perpetrators, and no case is made out that the tea was dispatched as a guise for movement of the contraband - The confiscation and the redemption fine are set aside, the redemption fine already recovered is to be refunded with interest and the appeals are allowed - Penalty under Section 114 of Customs Act, 1962 on the consignor and the transporter of legitimate goods found in a vehicle carrying contraband elephant tusks - Penalty was imposed on Appellant No. 1, the consignor of tea, and Appellant No. 2, the transporter who arranged the vehicle through a broker, on the allegation that they were involved in the transportation of the tusks recovered from the driver's cabin - Whether penalty under Section 114 can be imposed in the absence of evidence linking the Appellants with the contraband - HELD - The driver was engaged by the owner of the vehicle and not by the Appellants, and no link was established between the Appellants and the driver, the despatcher or the intended recipient of the tusks. No person implicated in the proceedings gave any statement against the Appellants, and the call records did not show any communication of the Appellants with the driver. The Revenue failed to provide cogent evidence linking the Appellants with the alleged perpetrators. Mere discrepancies in the E-way Bills do not constitute evidence of participation in the illicit transportation - The penalties imposed on the Appellants are set aside and the impugned order is set aside in respect of both the Appellants. [Read less]

Customs - Rejection of drawback claim on shipping bills for failure to seek conversion from Advance Authorisation Scheme to Drawback Scheme within three months under Circular No. 36/2010-Cus. - Appellant sought conversion of shipping bills including three air export shipping bills, which was approved after verification, the brand rate of drawback was fixed, and the drawback claim on the three shipping bills was rejected as the request was not filed with the proper officer within three months of the Let Export Order - Whether drawback can be rejected on the ground of the time limit prescribed in the Circular - HELD - The re... [Read more]

Customs - Rejection of drawback claim on shipping bills for failure to seek conversion from Advance Authorisation Scheme to Drawback Scheme within three months under Circular No. 36/2010-Cus. - Appellant sought conversion of shipping bills including three air export shipping bills, which was approved after verification, the brand rate of drawback was fixed, and the drawback claim on the three shipping bills was rejected as the request was not filed with the proper officer within three months of the Let Export Order - Whether drawback can be rejected on the ground of the time limit prescribed in the Circular - HELD - The request for conversion covering the disputed shipping bills was filed later with supporting documents, whereas the earlier request related to other shipping bills, and the impugned order wrongly treated the earlier request as the relevant application. Section 149 of the Customs Act, 1962, as applicable at the relevant time, allowed amendment after export on documentary evidence existing at the time of export and did not prescribe the three-month limitation. A circular issued by the Board cannot by itself introduce a statutory bar not contained in the governing provision, and circulars and guidelines are administrative directions that cannot be regarded as law - The rejection on the ground of time limit is unsustainable - Rejection of drawback claim on the ground that conversion of shipping bills was allowed by a non-jurisdictional Commissioner - Conversion of air export shipping bills from Advance Authorisation to Drawback Scheme was approved by the Commissioner of Customs (Sea) although the exports fell within the jurisdiction of the Air Commissionerate, and the drawback claim was rejected on this ground - Whether the unchallenged conversion order can be reopened at the stage of sanction of drawback - HELD - Conversion of the shipping bills was approved after verification, and neither that approval nor the subsequent brand-rate fixation has been shown to have been set aside or withdrawn. The conversion order remains unchallenged and the drawback claim cannot be rejected by reopening that order at the sanction stage without first dealing with it in accordance with law. The subsequent brand-rate fixation supports the claim - The impugned order is set aside, the jurisdictional authority is directed to process the drawback claim in accordance with law and the appellant is entitled to consequential relief. [Read less]

GST - Demand of tax and interest on ITC availed on invoices of suppliers who had not filed GSTR-3B, where the Revenue conceded the claim after verification of documents - Adjudicating Authority confirmed a demand of ineligible ITC with interest and penalty under Section 73(9), and the FAA granted partial relief and confirmed the balance demand - Appellant contended that the disputed IGST pertained to invoices reflected in GSTR-2A for FY 2017-18 but the goods were received and the credit availed in FY 2018-19 - On verification, the jurisdictional authorities confirmed that the invoices and the Chartered Accountant certifica... [Read more]

GST - Demand of tax and interest on ITC availed on invoices of suppliers who had not filed GSTR-3B, where the Revenue conceded the claim after verification of documents - Adjudicating Authority confirmed a demand of ineligible ITC with interest and penalty under Section 73(9), and the FAA granted partial relief and confirmed the balance demand - Appellant contended that the disputed IGST pertained to invoices reflected in GSTR-2A for FY 2017-18 but the goods were received and the credit availed in FY 2018-19 - On verification, the jurisdictional authorities confirmed that the invoices and the Chartered Accountant certificate supported the disputed ITC and that the amount paid exceeded the amount appropriated - Whether the demand of tax and interest confirmed by the FAA is sustainable - HELD - The Revenue itself conceded, on verification of documents, that the demand of IGST is not sustainable. The balance demand of CGST and SGST arose purely from incomplete appropriation of the amounts already paid, and the remaining amount is appropriated from the sum already paid. As no tax is due from the Appellant, the demand of interest is also not sustainable - The demand of tax and interest confirmed by the FAA is set aside and the appeal is allowed - Penalty under Section 73(9) of the CGST Act, 2017 where tax and interest were paid within thirty days of the notice under Section 73(8) - The Appellant contended that the tax and interest attributable to the demand were paid within thirty days of the notice, and the Revenue accepted that the penalties under CGST and SGST are not sustainable, while remaining silent on the penalty under IGST - Whether the penalty is sustainable - HELD - Under Section 73(8), no penalty is leviable where tax with interest is paid within the prescribed period. Accordingly, the penalties under CGST and SGST are not sustainable. On the same logic the penalty under IGST is also not sustainable - The penalties imposed are set aside. [Read less]

GST - Determination of suppressed outward supplies on the basis of entries in diaries seized during inspection by the Special Investigation Branch - Adjudicating Authority treated transactions recorded in seized diaries as unaccounted outward supplies and imposed tax with equal penalty - FAA reduced the suppressed turnover and sustained a smaller tax and penalty after accepting the explanation in respect of 85 B2B invoices produced at the appellate stage and part of the hand pumps - Revenue contended that the invoices were an afterthought and that the explanation of the Respondent-taxpayer was accepted without verification... [Read more]

GST - Determination of suppressed outward supplies on the basis of entries in diaries seized during inspection by the Special Investigation Branch - Adjudicating Authority treated transactions recorded in seized diaries as unaccounted outward supplies and imposed tax with equal penalty - FAA reduced the suppressed turnover and sustained a smaller tax and penalty after accepting the explanation in respect of 85 B2B invoices produced at the appellate stage and part of the hand pumps - Revenue contended that the invoices were an afterthought and that the explanation of the Respondent-taxpayer was accepted without verification - Whether the entries in the seized diaries establish suppressed outward supplies and whether the orders contain adequate findings and reasoned analysis - HELD - A finding of suppressed turnover must be founded on clear identification and examination of the relevant transactions and supporting material. An inference of suppression cannot be sustained merely on an aggregate figure without a demonstrable factual basis for its computation - The Adjudicating Authority did not identify the entries relied upon, the basis on which the alleged sale of hand pumps was quantified or the reasons for rejecting the explanation, and the absence of regular books at the premises does not dispense with the requirement of establishing the suppressed turnover. The mere non-production of invoices during investigation does not conclusively establish suppression, nor can the subsequent production of invoices and the assertion of disclosure in GSTR-1 be accepted without verification - The FAA also did not identify the entries found unverifiable or provide a computation of the reduced turnover. A quasi-judicial order must disclose the material considered, the reasoning adopted and the basis of the conclusions - The orders of the Adjudicating Authority and the FAA are set aside, the appeal of the Revenue is partly allowed and the matter is remanded for fresh adjudication with entry-wise examination, reconciliation with the books and returns, verification of the invoices - The Revenue appeal is partly allowed [Read less]

GST - Violation of principles of natural justice by passing an adjudication order without personal hearing under Section 75(4) of the CGST Act, 2017 - The Adjudicating Authority confirmed a demand of excess ITC availed in GSTR-3B as compared to GSTR-9 for FY 2018-19, with interest and penalty, without a personal hearing - Whether the order passed without a personal hearing is in breach of Section 75(4) - HELD - Section 75(4) makes it mandatory to grant an opportunity of hearing where any adverse decision is contemplated, and an order confirming the demand in the SCN is an adverse order. The hearing is a separate right, and... [Read more]

GST - Violation of principles of natural justice by passing an adjudication order without personal hearing under Section 75(4) of the CGST Act, 2017 - The Adjudicating Authority confirmed a demand of excess ITC availed in GSTR-3B as compared to GSTR-9 for FY 2018-19, with interest and penalty, without a personal hearing - Whether the order passed without a personal hearing is in breach of Section 75(4) - HELD - Section 75(4) makes it mandatory to grant an opportunity of hearing where any adverse decision is contemplated, and an order confirming the demand in the SCN is an adverse order. The hearing is a separate right, and a written reply does not take its place – Further, the defect was not cured in the first appeal, as the FAA did not examine the GSTR-9C, the books or the reconciliation of the Appellant but adopted the figures of the Department - The adjudication order and the order of the FAA cannot be sustained on this ground - Excess availment of ITC on the basis of mismatch between GSTR-3B and GSTR-9 for FY 2018-19 - Burden of proof under Section 155 of the CGST Act, 2017 - Department computed the excess ITC by comparing GSTR-3B, after deducting reverse charge credit said to be reported in Table 4(A)(5), with GSTR-9 - Appellant denied the excess claim, contended that the figures in GSTR-9 were a bona fide mistake and offered its books of account to prove the credit - Whether the finding that the Appellant availed excess ITC is sustainable on the material on record - HELD - The adjudication order suffers from three infirmities, namely that it assumed the reverse charge credit was included in Table 4(A)(5) without verifying the returns, that it recorded an admission of excess credit which the record does not show, and that it rejected the plea of mistake in GSTR-9 without examining the books - A mismatch between two returns is a reason to examine the records and is not by itself proof that credit was availed in excess. Neither Section 44 nor Rule 80 provides for rectification of GSTR-9 once filed, and a genuine and inadvertent error in a return must be recognised as such - The burden of proving the claim to credit lies on the Appellant under Section 155, and it must discharge the burden with its books and invoices, for which the authority should give an opportunity - The orders are set aside and the matter is remanded to the Adjudicating Authority for fresh adjudication confined to the SCN, with the Appellant to produce its books and returns - the demand of tax, interest and penalty stands set aside - The matter is remanded to the Adjudicating Authority for fresh adjudication. [Read less]

GST - Applicable rate of tax on general construction services provided to Indian Railways, Eligibility to the concessional rate for composite supply of works contract under Sr. No. 3(v)(a) of Notification No. 11/2017-Central Tax (Rate) - The Respondent-taxpayer, a joint venture, provided construction services to Indian Railways and paid GST at the concessional rate. The SCN under Section 74 alleged short payment as the services were general construction services taxable at the standard rate - The FAA set aside the demand on the view that the services were works contract services to Railways - Whether the general constructi... [Read more]

GST - Applicable rate of tax on general construction services provided to Indian Railways, Eligibility to the concessional rate for composite supply of works contract under Sr. No. 3(v)(a) of Notification No. 11/2017-Central Tax (Rate) - The Respondent-taxpayer, a joint venture, provided construction services to Indian Railways and paid GST at the concessional rate. The SCN under Section 74 alleged short payment as the services were general construction services taxable at the standard rate - The FAA set aside the demand on the view that the services were works contract services to Railways - Whether the general construction services provided to Indian Railways are covered as composite supply of works contract to Railways attracting the concessional rate - HELD - The concessional rate under Sr. No. 3(v)(a) is available only for a composite supply of works contract provided to Railways, and any other composite supply of works contract attracts the standard rate. The invoices raised by the taxpayer described the services as general construction services - The taxpayer did not demonstrate, with structural proofs and billing breakups, that the services were construction services in relation to immovable property forming a composite supply of works contract. The finding of the FAA that all railway construction services fall under works contract services at the concessional rate is legally untenable - The order of the FAA is set aside, the Order-in-Original is restored and the appeal of the Department is allowed [Read less]

GST - Imposition of penalty under Section 122(1) of the CGST Act, 2017 for issuing and availing invoices without actual supply of goods, where the declared place of business was found vacant and stockless - Respondent-taxpayer was found on inspection to have closed premises with a notice of vacancy and no stock - Proper Officer passed the order ex parte, held that the Respondent had merely obtained and issued invoices without actual purchases and sales and imposed penalty - The FAA set aside the penalty - Whether the Respondent carried on genuine trading activities or the transactions were mere paper entries - HELD - The c... [Read more]

GST - Imposition of penalty under Section 122(1) of the CGST Act, 2017 for issuing and availing invoices without actual supply of goods, where the declared place of business was found vacant and stockless - Respondent-taxpayer was found on inspection to have closed premises with a notice of vacancy and no stock - Proper Officer passed the order ex parte, held that the Respondent had merely obtained and issued invoices without actual purchases and sales and imposed penalty - The FAA set aside the penalty - Whether the Respondent carried on genuine trading activities or the transactions were mere paper entries - HELD - The closed premises, the notice of vacancy and the absence of stock on the date of inspection cannot by themselves conclusively establish that no genuine business was carried on earlier. The mere assertion that business was conducted and stock disposed of is also insufficient. The genuineness of the transactions requires examination of contemporaneous records collectively, such as invoices, registers, transport documents, weighment slips, freight payments, records of machinery and operational expenses, bank statements and e-way bills, and the absence of one document is not conclusive proof of fictitious transactions - The subsequent cancellation of a supplier's registration does not by itself establish that earlier supplies were fictitious, and the alleged discrepancies in e-way bills must be examined on the material - The FAA did not verify these records, and the Proper Officer passed the original order ex parte without an effective opportunity of hearing - The orders of the Proper Officer and the FAA are set aside, the appeal of the Department is partly allowed and the matter is remanded for fresh adjudication after affording a personal hearing - The departmental appeal stands disposed of [Read less]

GST - Dismissal of appeal by the FAA on the ground of multiplicity of litigation - Adjudicating Authority confirmed a demand of tax, interest and penalty on account of non-reversal of ITC on exempt supplies and difference between GSTR-1 and GSTR-9, rejected the rectification application of the Appellant under Section 161. The Appellant filed an appeal against the demand and another against the rejection of rectification, and the FAA took up both together but dismissed the appeal against the rectification order only on the ground that it was multiplicity of litigation on the same issue - Whether the FAA was justified in dis... [Read more]

GST - Dismissal of appeal by the FAA on the ground of multiplicity of litigation - Adjudicating Authority confirmed a demand of tax, interest and penalty on account of non-reversal of ITC on exempt supplies and difference between GSTR-1 and GSTR-9, rejected the rectification application of the Appellant under Section 161. The Appellant filed an appeal against the demand and another against the rejection of rectification, and the FAA took up both together but dismissed the appeal against the rectification order only on the ground that it was multiplicity of litigation on the same issue - Whether the FAA was justified in dismissing the appeal on that ground without deciding the appeals on merits - HELD - An appeal under Section 107 has to be disposed of by an order under Section 107(11) confirming, modifying or annulling the order appealed against. Having decided to take up both appeals together, the FAA should have disposed of both by suitable orders - The impugned order contains no finding on the appeal against the demand of tax, interest and penalty, and the FAA did not deal with the principal grounds against the rejection of the rectification application. In the absence of such findings, the Tribunal cannot decide the merits of the demand in the present appeal - The impugned order is quashed and the matter is referred back to the FAA to pass fresh orders on both appeals, dealing with the principal grounds and affording a reasonable opportunity including personal hearing – The appeal is disposed of [Read less]

GST - Remand for fresh consideration of the dispute on Input Tax Credit claimed in excess of the amount available in GSTR-2A for FY 2017-18 in light of Circular No. 183/15/2022-GST - Appellant contended that the supplier had wrongly mentioned another taxpayer's GSTIN while filing GSTR-1, which resulted in the absence of the invoices from GSTR-2A - HELD - The dispute pertaining to FY 2017-18 is squarely covered by the Circular, which applies to cases for FY 2017-18 and 2018-19 where adjudication or appeal proceedings are still pending. However, the Circular was issued after the conclusion of the adjudication and first appea... [Read more]

GST - Remand for fresh consideration of the dispute on Input Tax Credit claimed in excess of the amount available in GSTR-2A for FY 2017-18 in light of Circular No. 183/15/2022-GST - Appellant contended that the supplier had wrongly mentioned another taxpayer's GSTIN while filing GSTR-1, which resulted in the absence of the invoices from GSTR-2A - HELD - The dispute pertaining to FY 2017-18 is squarely covered by the Circular, which applies to cases for FY 2017-18 and 2018-19 where adjudication or appeal proceedings are still pending. However, the Circular was issued after the conclusion of the adjudication and first appeal proceedings, so its benefit could not be extended in those proceedings. As both parties consented to the matter being examined de novo, it is fit to remand the matter to the FAA with a limited remit - The order of the FAA is set aside and the appeal is allowed by way of remand with a direction to consider the matter afresh in terms of the Circular and the documentary evidence and pass suitable orders after following the principles of natural justice - the appeal is allowed by way of remand [Read less]

Customs - Rejection of appeal by First Appellate Authority as time-barred - Limitation computed from the date of Order-in-Original instead of the date of service - Appellant's appeal against rejection of refund claim was dismissed by FAA as filed belatedly with a delay of 05 days - Whether FAA was justified in rejecting the appeal as time-barred when limitation was reckoned from the date of the Order-in-Original and not from the date of service - HELD - FAA decided without sufficient reasons that the appeal was filed with a delay of 05 days, yet held it to be time-barred. Limitation was calculated from the date of Order-in... [Read more]

Customs - Rejection of appeal by First Appellate Authority as time-barred - Limitation computed from the date of Order-in-Original instead of the date of service - Appellant's appeal against rejection of refund claim was dismissed by FAA as filed belatedly with a delay of 05 days - Whether FAA was justified in rejecting the appeal as time-barred when limitation was reckoned from the date of the Order-in-Original and not from the date of service - HELD - FAA decided without sufficient reasons that the appeal was filed with a delay of 05 days, yet held it to be time-barred. Limitation was calculated from the date of Order-in-Original and not from the date of service. Even otherwise, the delay was within the condonable period of 60 + 30 days. If there was any delay, FAA ought to have called for an explanation as to the date of service, which was not done. The track consignment issued by the postal authorities demonstrated the actual date of receipt, and reckoned from the date of service, the appeal was filed within the prescribed period - The rejection of the appeal as time-barred is unsustainable. The impugned order is set aside. The matter is remitted to the file of Commissioner (Appeals) who shall pass a de-novo order on merits without going into the limitation – The appeal is disposed of [Read less]

Customs - Penalty under Section 112(b) of the Customs Act, 1962 on local purchaser of imported machinery - Alleged misdeclaration and wrongful availment of exemption by the importer - Appellant, a local purchaser of computerized embroidery machine imported by another person claiming exemption, was issued SCN proposing penalty on the ground that the machine appeared liable to confiscation under Section 111(m) - Whether penalty under Section 112(b) can be imposed on a domestic purchaser merely on the basis of the purchase when there is no evidence of knowledge, reason to believe or participation in the importer's misdeclarat... [Read more]

Customs - Penalty under Section 112(b) of the Customs Act, 1962 on local purchaser of imported machinery - Alleged misdeclaration and wrongful availment of exemption by the importer - Appellant, a local purchaser of computerized embroidery machine imported by another person claiming exemption, was issued SCN proposing penalty on the ground that the machine appeared liable to confiscation under Section 111(m) - Whether penalty under Section 112(b) can be imposed on a domestic purchaser merely on the basis of the purchase when there is no evidence of knowledge, reason to believe or participation in the importer's misdeclaration - HELD - The Appellant purchased the machinery under domestic invoices, which described the goods merely as computerized embroidery machines without representing any customs exemption, and paid the invoiced price including applicable taxes without claiming the exemption. The misdeclaration related to the import transaction, and no material was shown to establish the Appellant's participation or knowledge. The Appellant is not responsible for independently proving every aspect of the upstream seller's tax compliance, when there is no allegation of collusion with the importer. Section 112(b) requires knowledge or reason to believe that the goods are liable to confiscation, and knowledge that goods are imported cannot by itself be equated with such knowledge. The principle of caveat emptor does not dispense with the Department's burden to establish the statutory ingredients of the contravention - Revenue has not discharged its burden, and the penalty imposed on the Appellant is set aside - The appeal is disposed of [Read less]

Customs - Penalty on exporter company and its Director for attempted export of prohibited red sanders concealed in export container - Substitution of declared goods during transit - Appellant exported steel wire in a container loaded and sealed in the presence of Central Excise Officers, which was intercepted by DRI and found to contain red sanders wood logs in place of a part of the declared goods - Whether penalty under Section 114(i) of the Customs Act, 1962 can be imposed on the Appellant company and its Director when their connivance or involvement in the attempted export of red sanders is not established - HELD - The... [Read more]

Customs - Penalty on exporter company and its Director for attempted export of prohibited red sanders concealed in export container - Substitution of declared goods during transit - Appellant exported steel wire in a container loaded and sealed in the presence of Central Excise Officers, which was intercepted by DRI and found to contain red sanders wood logs in place of a part of the declared goods - Whether penalty under Section 114(i) of the Customs Act, 1962 can be imposed on the Appellant company and its Director when their connivance or involvement in the attempted export of red sanders is not established - HELD - The goods were loaded and the container was sealed in the presence of the officers, and the substitution of steel wire by red sanders wooden logs happened during transport from the factory to the port, with the connivance of the driver, after the seal was broken in between. No evidence was brought on record to show that the Appellant company or its Director was involved in the offence in any manner, and the investigation did not establish their connivance. The findings of the Adjudicating Authority themselves recorded that the container was sealed by officers, that the perpetrators replaced the goods at some point, that the export order was procured by false assurance from the middleman, and that the Appellants filed a complaint against the fraudsters. These findings established the bona fides of the Appellant company, which as a bonafide exporter believed the person who cheated it - The penalty imposed on the Appellant company and its Director is not legally sustainable and set aside - Confiscation of export goods and redemption fine - Goods exported under supervision of Central Excise Officers - Declared steel wire was recovered along with red sanders wood logs from the sealed export container and was confiscated, with redemption fine imposed in lieu of confiscation - Whether the declared export goods are liable to confiscation and redemption fine is sustainable when the Appellant company is not held responsible for the attempted export of red sanders - HELD - The steel wire manufactured by the Appellant company was exported under proper supervision in the presence of the Central Excise Officer, and the Appellant company was not responsible for the attempted export of red sanders - The goods are not liable for confiscation and the redemption fine imposed in lieu of confiscation is not sustainable and is set aside - Penalty under Section 114(i) of the Customs Act, 1962 on Customs Broker's Manager and Business Developer who acted as middlemen in export consignment - Alleged facilitation of attempted smuggling of red sanders - Adjudicating Authority held the Appellants to have acted as middlemen in collusion with the main perpetrator and imposed penalty, whereas the Appellants contended that their role was limited to clearance work and introducing the concerned persons to each other - Whether penalty under Section 114(i) can be imposed on the Appellants when there is no evidence to show that they were knowingly involved in the attempted smuggling - HELD - The role played by the Appellants as recorded in the impugned order reveals only that they were middlemen who acted in connection with the export of steel wire. There is no evidence on record to show that they were knowingly involved in the attempted smuggling of red sanders, were part of the smuggling syndicate or facilitated the attempted smuggling - The penalties imposed on the Appellants under Section 114(i) are not sustainable and are set aside. [Read less]

GST - Jurisdiction of Principal Bench of the GSTAT under proviso to Section 109(5) of the CGST Act, 2017 where the dispute is whether services are intermediary services or export of services - Appellant, a subsidiary of an overseas group, rendered services to its overseas group entities, treated them as export of services, and filed refund claims of unutilised Input Tax Credit – Rejection of refund on the ground that the services were intermediary services - Revenue objected that the dispute was whether the Appellant is an intermediary or whether the conditions of export are satisfied, and not one relating to place of su... [Read more]

GST - Jurisdiction of Principal Bench of the GSTAT under proviso to Section 109(5) of the CGST Act, 2017 where the dispute is whether services are intermediary services or export of services - Appellant, a subsidiary of an overseas group, rendered services to its overseas group entities, treated them as export of services, and filed refund claims of unutilised Input Tax Credit – Rejection of refund on the ground that the services were intermediary services - Revenue objected that the dispute was whether the Appellant is an intermediary or whether the conditions of export are satisfied, and not one relating to place of supply, so that the Principal Bench lacked jurisdiction - Appellant contended that the essential question is the place of supply since it determines the incidence of GST - Whether the case involves an issue relating to place of supply so as to fall within the exclusive jurisdiction of the Principal Bench - HELD - Section 109(5) provides that cases in which any one of the issues involved relates to the place of supply shall be heard only by the Principal Bench. Place of supply is defined by reference to Chapter V of the IGST Act, and under Section 13(8)(b), as it stood before its omission, the place of supply of intermediary services was the location of the supplier of services, which here is India. If the Appellant is an intermediary, the place of supply is in India, whereas if it is not an intermediary, the services are exported and the place of supply is outside India, so that no GST is leviable. The refund can therefore be decided only after determining whether the supply is made in India or outside India. Though the main issue is whether the services are intermediary services or export, it necessarily involves the question of place of supply - The contention of Revenue that the case does not fall within the jurisdiction of the Principal Bench is not accepted and the objection is rejected - Classification of support services and software development services rendered to overseas group entities as export of services or intermediary services under Sections 2(6) and 2(13) of the IGST Act, 2017 - Appellant provided contract software development services and support services to its overseas parent and group companies on a cost plus mark-up basis, under agreements - Appellant treated the services as export of services without payment of tax and claimed refund of unutilised Input Tax Credit, which was rejected by the adjudicating authority and the FAA treating it as intermediary service - Whether the services qualify as export of services or fall within the definition of intermediary services - HELD - An intermediary under Section 2(13) is a broker, an agent or any other person who arranges or facilitates the supply of goods or services or securities between two or more persons, but does not include a person who supplies such goods or services on his own account. The Board Circular clarifies that the concept requires a minimum of three parties and two distinct supplies, namely the main supply between the principals and the ancillary supply of facilitation, that a person involved in the main supply on a principal-to-principal basis is not an intermediary, and that sub-contracting for a service is not an intermediary service - The expression ‘any other person’ has to be read in the light of the doctrine of ejusdem generis and cannot include a person who is unable to bind the foreign principal with an obligation or duty or to act on its behalf. The Appellant and its parent entered into agreements on a principal-to-principal basis, there is no agency or brokerage, and no provision of the agreements creates any obligation on the foreign company to be undertaken by the Appellant. The contract is strictly between the Appellant and the foreign company, there is no privity of contract between the Appellant and the customers of the foreign company, and the Appellant supplies the services on its own account - The conditions of Section 2(6) are satisfied, since the supplier is located in India, the recipient is located outside India, the place of supply is outside India, and payment is received in convertible foreign exchange - The services are not intermediary services but export of services. The impugned orders are set aside, and the Respondent is directed to refund the unutilised Input Tax Credit along with interest as per Section 56 of the CGST Act - The appeals are allowed - Rejection of refund claim on grounds beyond the SCN and violation of natural justice - Refund of unutilised Input Tax Credit on export of services - The SCN and the adjudication order in one of the appeals additionally rejected the claim on the grounds of mismatch between the BRC and export invoices, invoices not appearing in GSTR-2A and lack of nexus of certain inputs with the business - Whether the refund claim could be rejected on such additional grounds when the SCN did not specify them and the FAA recorded no findings thereon - HELD - The SCN did not specify the alleged deficiencies. The FAA ignored the issue and recorded no clear finding supported by reasoning, and there is hardly any discussion of these grounds in the orders below. The SCN was not a proper as the grounds for rejecting the refund application were not elaborated and their particulars were not communicated to the Appellant - The orders travel beyond the scope of the SCN and violate the principles of natural justice, and are therefore not sustainable. [Read less]

GST - Eligibility of Input Tax Credit under Section 16(2) of the CGST Act, 2017 for the period July 2017 to March 2018, Denial of credit on account of the mismatch - Burden of proof under Section 155 and effect of mismatch between Form GSTR-3B and Form GSTR-2A - Department alleged a mismatch between the ITC availed in Form GSTR-3B and the figures in Form GSTR-9 - Respondent contended that the requirement of Section 16(2)(c) is absolute and that, upon a mismatch, the burden under Section 155 lies on the Appellant to prove payment of tax by its suppliers - Whether the conditions of Section 16(2) stood satisfied and whether t... [Read more]

GST - Eligibility of Input Tax Credit under Section 16(2) of the CGST Act, 2017 for the period July 2017 to March 2018, Denial of credit on account of the mismatch - Burden of proof under Section 155 and effect of mismatch between Form GSTR-3B and Form GSTR-2A - Department alleged a mismatch between the ITC availed in Form GSTR-3B and the figures in Form GSTR-9 - Respondent contended that the requirement of Section 16(2)(c) is absolute and that, upon a mismatch, the burden under Section 155 lies on the Appellant to prove payment of tax by its suppliers - Whether the conditions of Section 16(2) stood satisfied and whether the burden under Section 155 was discharged - HELD - The condition (c) being the only point of contest, the burden lay on the Appellant under Section 155. The Appellant pointed to the reflection of the IGST on the invoices in Form GSTR-2A, the payment of the full consideration inclusive of tax as evidenced by bank statements, and its reconciliation, whereas the Respondent placed no material to show that the supplier had not paid the tax. The burden cast by Section 155 was therefore discharged on the record. Form GSTR-2A is only a facilitator for self-assessment and a difference between Form GSTR-3B and Form GSTR-2A may justify verification but cannot, without more, be treated as proof that Section 16(2)(c) has not been satisfied - The Appellant having discharged the burden, the mismatch by itself could not sustain the denial of credit – The appeal is allowed - Requirement of certificates under the Board Circular dated 27.12.2022 on difference between ITC availed in Form GSTR-3B and available in Form GSTR-2A for the Financial Years 2017-18 and 2018-19 - Demand was confirmed and the appeal was dismissed by the FAA solely on the ground that the Appellant did not produce the Chartered Accountant's certificate or the supplier's certificate contemplated by the Circular - Whether credit can be denied solely for non-production of the certificates contemplated by the Circular - HELD - The Circular requires the proper officer first to seek from the registered person the details of all invoices on which ITC was availed but not reflected in Form GSTR-2A, and then to ascertain the fulfilment of the conditions of Section 16 before seeking the certificates as a means of verifying Section 16(2)(c). The record did not disclose that the proper officer took this first step - The certificate is a means of verification and not a further condition of eligibility, and the Circular nowhere provides that the unmatched credit must be disallowed in its absence. Non-furnishing of the certificates may be relevant to the verification process but does not dispense with determination of the actual ITC liability by reference to the substantive statutory provisions applicable to the relevant period - The difference in the present case arose not from any failure of the suppliers to report the supplies but from the head under which the credit was availed - Denial of credit by the FAA solely for want of the certificates contemplated by the Circular cannot be sustained and set aside - Availment of credit of IGST charged on inter-State supply by an SEZ unit as CGST and SGST - Appellant availed credit equally under CGST and SGST on two invoices raised by an SEZ unit, though IGST was discharged on the supply and stood reflected in Form GSTR-2A - Respondent contended that CGST, SGST and IGST are distinct levies, that supplies by an SEZ unit are deemed inter-State supplies under Section 7(5)(b) of the IGST Act so that availment of CGST and SGST is a substantive contravention - Whether the credit equally availed under CGST and SGST on the inter-State supply is input tax credit wrongly availed so as to sustain the demand - HELD - By virtue of Section 7(5)(b) the supply was an inter-State supply and the tax chargeable was integrated tax, and the objection of the Respondent is directed to the head under which credit was availed and not to the absence of a supply or an invoice. The Hon'ble High Court of Kerala, on materially similar facts where IGST was reflected in Form GSTR-2A but the credit was availed under CGST and SGST, held that there was no wrong availment of credit and that the mistake was inadvertent and technical. The status of the supplier as an SEZ unit does not distinguish the case, as Section 7(5)(b) only fixes the inter-State character of the supply and leaves unaffected the fact that the tax charged was IGST. The decision binds the Tribunal, the High Court being a higher judicial forum - The contention that the High Court overlooked loss of revenue is unfounded since the concern was before it and was addressed by a direction to the GST Council - The credit equally availed under CGST and SGST is not ITC wrongly availed within the meaning of Section 73, the inadvertent error in the head of credit being an error of reporting and not an availment of credit to which the Appellant was not entitled - The denial of credit by the FAA is not sustainable and set aside - As that demand of tax does not survive, the interest and penalty confirmed on it cannot survive independently – The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Compounded Levy Scheme - Survival of duty demand after omission of Section 3A of the Central Excise Act, 1944 without saving clause - Appellant, an independent processor of man-made fabrics, was issued SCNs demanding duty under the Compounded Levy Scheme on the basis of the number of hot air stenter chambers, and the Commissioner confirmed the demand in remand proceedings - Whether proceedings for recovery of duty can continue after omission of Section 3A by the Finance Act, 2001 without any saving clause - HELD - The Supreme Court held that omission is nothing but a particular form of words evincing an in... [Read more]

Central Excise - Compounded Levy Scheme - Survival of duty demand after omission of Section 3A of the Central Excise Act, 1944 without saving clause - Appellant, an independent processor of man-made fabrics, was issued SCNs demanding duty under the Compounded Levy Scheme on the basis of the number of hot air stenter chambers, and the Commissioner confirmed the demand in remand proceedings - Whether proceedings for recovery of duty can continue after omission of Section 3A by the Finance Act, 2001 without any saving clause - HELD - The Supreme Court held that omission is nothing but a particular form of words evincing an intention to abrogate an enactment or portion thereof, that omission and deletion are used interchangeably, and that omission is a form of repeal to which Section 6 of the General Clauses Act, 1897 applies, since repeal under Section 6 refers also to any provision contained in any Act. The earlier view that omission does not amount to repeal was clarified by the Supreme Court as not the correct legal position. The Bombay High Court and the Rajasthan High Court, following this decision, upheld the duty demand while quashing interest. The contrary view of the Gujarat High Court was rendered without the benefit of this principle - Following the Supreme Court, the duty demand confirmed by the Commissioner after omission of Section 3A survives, and the order is upheld to the extent of confirmation of central excise duty - Interest and penalty under Rule 96ZQ(5) of the Central Excise Rules, 1944 - Compounded Levy Scheme - Commissioner confirmed duty demand with interest and imposed penalty under Rule 96ZQ(5) - Whether interest and penalty under Rule 96ZQ can be sustained - HELD - The Supreme Court declared that the interest and penalty provisions under Rules 96ZO, 96ZP and 96ZQ are invalid, as Section 3A, which provides a separate scheme for the compounded levy, does not itself provide for levy of interest, and the Rules cannot do so - The demand of interest and penalty is set aside, and the appeal is partly allowed. [Read less]

Central Excise - Exemption to waste and scrap arising in manufacture of railway coaches cleared at concessional rate - Meaning of exempted goods in Sl.No.17 of Notification No.62/95-CE - Appellant, a factory belonging to the Central Government under the Ministry of Railways, cleared coaches at 1% under Notification No.1/2011-CE and cleared waste and scrap without payment of duty, treating it as covered by Notification No.27/2011-CE, and on audit objection paid duty on the scrap and claimed refund - Whether waste and scrap arising in the manufacture of coaches cleared at 1% under Notification No.1/2011-CE is exempt under Sl... [Read more]

Central Excise - Exemption to waste and scrap arising in manufacture of railway coaches cleared at concessional rate - Meaning of exempted goods in Sl.No.17 of Notification No.62/95-CE - Appellant, a factory belonging to the Central Government under the Ministry of Railways, cleared coaches at 1% under Notification No.1/2011-CE and cleared waste and scrap without payment of duty, treating it as covered by Notification No.27/2011-CE, and on audit objection paid duty on the scrap and claimed refund - Whether waste and scrap arising in the manufacture of coaches cleared at 1% under Notification No.1/2011-CE is exempt under Sl.No.17 of Notification No.62/95-CE - HELD - Sl.No.17 exempts waste and scrap arising in the course of manufacture of exempted goods in a factory belonging to the Indian Railways. Section 5A(1) empowers the Central Government to exempt goods from the whole or any part of the duty, and Notification No.1/2011-CE itself exempts the coaches from so much of the duty as is in excess of 1%, so that they are exempted goods though not exempted from the whole of the duty. Sl.No.17 does not qualify the expression, whereas an earlier notification expressly defined exempted goods as goods chargeable to nil rate or exempted from the whole of the duty, and the restriction cannot be supplied by interpretation. Strict construction means fidelity to the words used and does not permit addition of words. The amendment to Rule 2(d) of the CENVAT Credit Rules, 2004 shows that the Central Government itself treated goods under Notification No.1/2011-CE as exempted goods. Citation of an inapplicable notification at the time of clearance cannot extinguish an exemption conferred by law - Waste and scrap was exempt under Sl.No.17, the rejection of refund cannot stand, and the demand fails on merits - Extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 - Show cause notice issued after the Department had itself unearthed and collected the duty on audit - Appellant paid the duty on audit objection and claimed refund, which was adjudicated by the Assistant Commissioner, whereafter SCN was issued alleging suppression of facts - Whether the extended period under Section 11A(4) could be invoked against the Appellant - HELD - Section 11A(4) is attracted only where duty is not paid by reason of fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade payment of duty, and mere failure to declare is not wilful suppression. The facts alleged to be suppressed were ascertained by the Department's own audit, collected, and made the subject of the refund claim adjudicated earlier, and facts known to the authorities cannot be treated as suppressed in a later notice. The SCN merely echoed the statutory words without particulars of any positive act. The Appellant, a factory of the Union of India, whose liability was ascertained and paid at the instance of the Department in a dispute of pure construction, cannot be attributed with intent to evade - The extended period was not invokable, and the demand is barred by limitation in its entirety - Interest under Section 11AA and penalty under Section 11AC of the Central Excise Act, 1944 - Consequential to demand of duty on waste and scrap - Whether interest and penalty are tenable when the demand fails on merits and on limitation - HELD - Interest under Section 11AA is consequential and cannot survive when the demand fails. Penalty under Section 11AC presupposes fraud, suppression or intent to evade, which were found to be absent - Interest and penalty are set aside, both appeals are allowed, the refund of the duty paid on waste and scrap is held admissible with interest as admissible in law, the amount appropriated shall be refunded only once, and the original authority shall process the refund after verification within ninety days from the date of receipt of the order. [Read less]

Service Tax - Invocability of extended period of limitation and imposition of penalty where short-payment was pointed out during audit under the proviso to Section 73(1) of the Finance Act, 1994 - Works Contract Service - During audit, the Department alleged short-payment of service tax on the ground that tax was payable upon credit or debit of consideration in the books of account of an associated enterprise under the Explanation to the third proviso to Rule 6(1) of the Service Tax Rules, 1994. The SCN invoked the extended period of limitation - The Respondent contended that the extended period was invocable due to non-di... [Read more]

Service Tax - Invocability of extended period of limitation and imposition of penalty where short-payment was pointed out during audit under the proviso to Section 73(1) of the Finance Act, 1994 - Works Contract Service - During audit, the Department alleged short-payment of service tax on the ground that tax was payable upon credit or debit of consideration in the books of account of an associated enterprise under the Explanation to the third proviso to Rule 6(1) of the Service Tax Rules, 1994. The SCN invoked the extended period of limitation - The Respondent contended that the extended period was invocable due to non-disclosure of relevant facts and failure to file ST-3 returns until detection by audit - Whether the extended period of limitation was invocable and the penalties sustainable - HELD - Mere non-payment of duty or failure to obtain registration, in the absence of fraud, suppression or wilful misstatement, is insufficient to attract the extended period of limitation, and invocation of the extended period requires a positive act indicative of wilful default - Apart from the fact that the short-payment was pointed out during audit, there was nothing to establish a deliberate attempt to evade payment of service tax. The extended period of limitation is therefore not invocable. The penalties imposed on the basis of the alleged suppression or wilful default cannot be sustained - The penalties are set aside. The amounts of service tax already paid shall be appropriated towards the corresponding liability, and no further recovery of the tax so paid shall be made. Any remaining demand that is barred by limitation is set aside. The penalties imposed are also set aside - The appeal is disposed of - Confirmation of demand for want of proof of payment despite audit annexure recording payment under Rule 6(1) of the Service Tax Rules, 1994 - The Adjudicating Authority accepted that the Explanation to the third proviso to Rule 6(1) was inapplicable where consideration was actually received. It nevertheless confirmed the demand on the ground that the Appellant had not produced evidence of receipt of consideration and payment of tax - Whether the demand could be confirmed when the record showed that the tax had been paid after the short-payment was pointed out by audit - HELD - Once the Adjudicating Authority held that the Explanation to Rule 6(1) did not apply where consideration was actually received, the decisive question was whether the Appellant had received the consideration and discharged the tax. The annexure to the audit report, enclosed with the appeal memorandum, recorded the service tax as paid before issuance of the SCN, and the Order-in-Original also recorded a further payment appropriated towards the demand. The record therefore supported the claim of the Appellant that the amounts had been paid before issuance of the SCN - The amounts are required to be treated as accepted and paid to the extent established by the records. With no evidence of fraud, no SCN should have been issued and the payments should have been accepted as settling the matter - The service tax and interest already paid are appropriated towards the corresponding liability and no further recovery of the amounts so paid shall be made - Effect of limitation on enforcement of remaining tax demand and voluntary payment of time-barred liability - The entire demand pertained to the extended period, which was held not invocable. The Appellant had paid amounts towards the liability after audit objections - Whether a demand falling beyond the normal period of limitation can be sustained - HELD - Limitation ordinarily bars the remedy for enforcing a liability but does not necessarily extinguish the underlying tax liability - A debt does not cease to exist merely because the remedy for its enforcement is barred by limitation. An assessee may voluntarily pay an amount towards an outstanding liability even where the remedy for compulsory recovery is barred. Such payment may discharge the liability to the extent paid but does not by itself revive a time-barred remedy for recovery of the unpaid balance, unless provided for in law. The sustainability of any remaining demand, including the normal period, must be independently examined, and since the extended period is not invocable, any demand falling beyond the normal period is unsustainable - The impugned order is modified, the remaining demand barred by limitation is set aside. [Read less]

Service Tax - Classification of tool management services under Business Support Service for April and May 2009 - Under a Tool Management Agreement the Appellant undertook procurement, stocking, regrinding, coating, handling and management of production tools along with provision of manpower for the client. From April 2009 the Appellant split its invoices into tool hire charges, on which VAT was paid, and tool service charges, on which service tax was paid. The SCN proposed service tax on the tool hire charges under Business Support Service - Whether the services rendered during April and May 2009 are classifiable under Bus... [Read more]

Service Tax - Classification of tool management services under Business Support Service for April and May 2009 - Under a Tool Management Agreement the Appellant undertook procurement, stocking, regrinding, coating, handling and management of production tools along with provision of manpower for the client. From April 2009 the Appellant split its invoices into tool hire charges, on which VAT was paid, and tool service charges, on which service tax was paid. The SCN proposed service tax on the tool hire charges under Business Support Service - Whether the services rendered during April and May 2009 are classifiable under Business Support Service - HELD - Classification of a taxable service must be determined with reference to the terms of the contract, the actual activities undertaken and the statutory definition applicable during the relevant period. The manner in which invoices are raised cannot by itself determine classification, and the existence of a composite contractual arrangement does not justify classification of the entire consideration under BAS without establishing that the activities satisfy the statutory definition. The expression "operational or administrative assistance in any manner" was substituted only with effect from 01.05.2011, and an amendment enlarging the scope of a taxable entry cannot be applied retrospectively in the absence of express statutory authority - An activity does not become Business Support Service merely because it supports the business operations of the recipient. The activities under the agreement relate to tool management and manufacturing operations and have no apparent nexus with marketing. The Revenue cannot rely on the composite nature of the agreement or on a subsequent enlargement of the definition - The classification of the entire consideration under Business Support Service cannot be sustained and the demand is set aside – The appeal is allowed - Remand for fresh classification under an alternative taxable service where the SCN proposed classification only under BAS - The SCN proposed classification of the services under Business Support Service and did not propose any alternative classification. The Appellant contended that a remand for fresh classification would enlarge the scope of the SCN and prejudice the Appellant - HELD - Adjudication must remain within the allegations and grounds set out in the SCN. In the absence of an alternative classification proposed in the SCN, the proceedings cannot be used to introduce a new classification at the appellate stage to sustain the demand - No remand for fresh classification under an alternative taxable service is warranted - CENVAT Credit - Reversal of credit on capital goods removed as such, including capital goods exported under bond/LUT, under Rule 3(5) of the CENVAT Credit Rules, 2004 - During audit it was noticed that the Appellant had removed CENVAT credit availed capital goods, in one month and also for export in two other months, without reversing the credit availed thereon - Whether CENVAT credit availed on capital goods removed as such, including those exported under bond/LUT, is liable to be reversed under Rule 3(5) - HELD - The issue is not whether export under bond is permitted but whether it triggers reversal of credit taken under Rule 3(5). Credit is a statutory benefit subject to the conditions and restrictions prescribed by the Act and Rules, and is not an absolute right - The Apex Court held that the proviso to Rule 3(5) providing for reduction of credit on removal of used capital goods is clarificatory and retrospective, which entitles the assessee to make the adjustment as per the proviso and later claim rebate. The judgment supporting reversal also recognises the eligibility of the goods for rebate, and since export under bond without payment of duty is also permissible, the matter is revenue neutral. Although statutory procedures must ordinarily be followed, considering the small tax amount involved, the export incentives intended to ensure that taxes are not exported and the long lapse of time, remand would serve no useful purpose - The demand relating to capital goods removed as such is set aside on revenue neutrality and considering the facts of the case - Invocation of extended period of limitation - Whether the extended period of limitation and the penalty under Section 78 are sustainable - HELD - Invocation of the extended period requires satisfaction of the statutory conditions applicable to the relevant provision. A dispute involving interpretation of law does not by itself establish suppression, just as the discovery of a discrepancy during audit does not by itself exclude suppression. The penalty under Section 78 must be considered in accordance with its statutory requirements and cannot be imposed mechanically merely because a demand has been confirmed. The burden of proving suppression has not been discharged by the Revenue - The impugned order is set aside. [Read less]

GST - Waiver of interest and penalty under Section 128A of the CGST Act, 2017 - Effect of adjustment through Form GST DRC-03A of a payment made earlier through Form GST DRC-03 - Petitioner paid an amount through Form GST DRC-03 towards reversal of ITC for the relevant year, but inadvertently mentioned the following financial year in the form. The Order-in-Original under Section 73 declined to give credit for it - After Rule 142(2B) was inserted, the Petitioner filed applications in Form GST DRC-03A, which were accepted on the portal and reduced the outstanding principal tax liability to nil, and then applied in Form GST SP... [Read more]

GST - Waiver of interest and penalty under Section 128A of the CGST Act, 2017 - Effect of adjustment through Form GST DRC-03A of a payment made earlier through Form GST DRC-03 - Petitioner paid an amount through Form GST DRC-03 towards reversal of ITC for the relevant year, but inadvertently mentioned the following financial year in the form. The Order-in-Original under Section 73 declined to give credit for it - After Rule 142(2B) was inserted, the Petitioner filed applications in Form GST DRC-03A, which were accepted on the portal and reduced the outstanding principal tax liability to nil, and then applied in Form GST SPL-02 under Section 128A. The competent authority rejected the application on the ground that the payment could not be treated as payment towards the tax liability of the relevant year - Whether the competent authority, while considering the application under Section 128A, could disregard the adjustment effected through Form GST DRC-03A that was accepted on the portal and reduced the principal tax liability to nil - HELD - The material precondition for the waiver of interest and penalty under Section 128A is payment of the entire principal amount of tax covered by the demand. Under Rule 142(2B), an amount paid through Form GST DRC-03 is credited in the Electronic Liability Register against the demand as if it was paid on the date of the original intimation - The second proviso to Rule 164 and the Circular on Section 128A contemplate that such payment is adjusted through Form GST DRC-03A before filing the application in Form GST SPL-02. Under Section 49(7) and Rule 85, the Electronic Liability Register records the liabilities and is credited on payment towards a demand - The Respondents did not dispute that the payment was made and received. The Petitioner had consistently explained the mention of the wrong financial year as an inadvertent error and had furnished annual returns showing no outstanding liability for that year. The authority rejected the application without verifying these facts and without considering the legal effect of the adjustment reflected as nil in the Electronic Liability Register – The impugned order was passed without proper application of mind and set aside. The Respondent is directed to accept and process the application in Form GST SPL-02 and pass the consequential order in accordance with law – The petition is allowed [Read less]

GST - Refund of accumulated ITC on export of goods without payment of tax under Rule 89(4) of the CGST Rules, 2017 where invoices were issued in the relevant period but goods were exported after the relevant period - Department appeal against sanction of refund in respect of three shipping bills dated after the end of the period 01.04.2022 to 31.10.2022, contending that the goods were not exported during the relevant period and that their value should not be included in the turnover of zero-rated supply - Whether the value of invoices issued during the relevant period for goods exported subsequently can be included in the ... [Read more]

GST - Refund of accumulated ITC on export of goods without payment of tax under Rule 89(4) of the CGST Rules, 2017 where invoices were issued in the relevant period but goods were exported after the relevant period - Department appeal against sanction of refund in respect of three shipping bills dated after the end of the period 01.04.2022 to 31.10.2022, contending that the goods were not exported during the relevant period and that their value should not be included in the turnover of zero-rated supply - Whether the value of invoices issued during the relevant period for goods exported subsequently can be included in the turnover of zero-rated supply - HELD - The issue involved in the present case has been decided by this bench in an earlier case. The three amounts for computing the refund, namely Net ITC, turnover of zero-rated supply of goods and Adjusted Total Turnover, must relate to the same relevant period - Under Sections 12 and 31 of the CGST Act, tax invoice has to be issued before or at the time of removal of goods, and supply of export goods takes place at the time of removal and preparation of the invoice, even though the goods are treated as exported only when they leave India. If the invoices for goods cleared for export under bond or LUT are issued during the relevant period, they are included in the turnover of zero-rated supply regardless of whether the goods were actually exported during that period, though refund can be given only after the exporter establishes actual export. There was no dispute that the invoices were issued during the relevant period and that the goods were exported - There is no reason to deny refund - The order of the FAA is upheld and the appeal by the Department is rejected [Read less]

Customs - Penalty on person found with seized foreign origin cigarettes in rented godown on the basis of retracted statement - Cigarettes and other goods were seized from a godown taken on rent by the Appellant, who in his statement claimed only some cartons as his own and stated that the remaining goods belonged to two other persons, whose details he furnished, and he retracted the statement within a short time - Whether penalty can be sustained on the Appellant - HELD - The Appellant gave the details and mobile numbers of the two persons and of the landlord, but the Department took no follow up action to verify the state... [Read more]

Customs - Penalty on person found with seized foreign origin cigarettes in rented godown on the basis of retracted statement - Cigarettes and other goods were seized from a godown taken on rent by the Appellant, who in his statement claimed only some cartons as his own and stated that the remaining goods belonged to two other persons, whose details he furnished, and he retracted the statement within a short time - Whether penalty can be sustained on the Appellant - HELD - The Appellant gave the details and mobile numbers of the two persons and of the landlord, but the Department took no follow up action to verify the statements of these persons. A statement once retracted, where the Department did not reject the retraction with cogent reasons or record a counter statement, cannot be accepted as evidence. The Appellant produced an invoice showing that only the cartons claimed by him were purchased by him, and the other foreign origin cigarettes belonged to other persons. The condition that the Appellant was knowingly dealing with goods liable to confiscation under Section 111 of the Customs Act, 1962 is not fulfilled, as penalty requires dealing with goods liable to confiscation and knowledge or belief about such goods being liable to confiscation - The penalty is set aside - Confiscation of foreign origin electric rice cookers and ceramic stoves and redemption fine - Goods were confiscated with an option to redeem on payment of redemption fine, and neither side made out a proper case for confiscation or for release of the goods - Whether the redemption fine is to be reduced - HELD - Considering that the value of the goods was determined only on assumption, the goods should be released on payment of a lower redemption fine - The goods are to be released on payment of the reduced redemption fine and the appeal is disposed of. [Read less]

GST - Detention of goods in transit - Validity of documents produced after interception under Section 68 of the CGST Act, 2017 read with Rule 138 of the CGST Rules, 2017 - The conveyance of the Appellant transporter was intercepted - Driver produced transport documents relating to different suppliers and different commodities, none of which was physically found in the vehicle. The vehicle was found loaded with a large quantity of textile materials and readymade apparel for which no tax invoice, delivery challan or e-way bill was available. The Appellant contended that the booking clerk had handed over a wrong bundle of doc... [Read more]

GST - Detention of goods in transit - Validity of documents produced after interception under Section 68 of the CGST Act, 2017 read with Rule 138 of the CGST Rules, 2017 - The conveyance of the Appellant transporter was intercepted - Driver produced transport documents relating to different suppliers and different commodities, none of which was physically found in the vehicle. The vehicle was found loaded with a large quantity of textile materials and readymade apparel for which no tax invoice, delivery challan or e-way bill was available. The Appellant contended that the booking clerk had handed over a wrong bundle of documents and subsequently produced tax invoices of registered suppliers matching the goods - Whether transport of goods accompanied by mismatched tax documents, followed by submission of invoices after detention without e-way bills, satisfies the requirements of Section 68 read with Rule 138 - HELD - Section 68 mandates that the person in charge of a conveyance must carry the prescribed documents, and the presence of valid documentation during actual transit is a strict requirement. The explanation of an accidental exchange of documents was an unsubstantiated oral statement, as the Appellant, a professional logistics firm, produced no transport manifest, dispatch logs, tracking data or registration details of the alleged second vehicle - The invoices submitted by email after the seizure cannot cure the illegal nature of the transit, since the law does not permit retrospective validation. The invoices were issued only to unregistered buyers with Aadhaar numbers and no e-way bill was generated for any of them. The documents were therefore artificially structured after detention - The requirements of Section 68 and Rule 138 were not satisfied - The penalty under Section 129(3) is upheld and the appeal is dismissed - Proceedings against transporter as a ‘person other than the owner’ under Section 129(1)(b) of the CGST Act, 2017 where the suppliers claimed ownership after detention - Whether the proper officer was justified in treating the Appellant as a person other than the owner and imposing penalty under Section 129(3) - HELD - The rejection of ownership by the Revenue was based on verifiable facts, namely that the cargo was completely unmanifested, the documents carried related to goods not found in the vehicle, and the invoices produced later had no e-way bills - At the time of interception no owner was identifiable for the recovered cargo. ‘Coming forward’ under Section 129(1)(b) means stepping forward with valid, pre-existing and compliant documents at the threshold of interception, and the contrary view would render Section 68 and Rule 138 a dead letter - The valuation adopted on objective parameters such as quality and prevalent wholesale market averages was a fair and sound mechanism - The proper officer committed no error in treating the Appellant under Section 129(1)(b). [Read less]

Service Tax - Show cause notice proposing rejection of rebate under Notification No. 41/2012-ST without disclosing the arithmetical working - Show cause notices proposed rejection of rebate claims on the ground of clause (c) of the proviso to the notification, and the Appellant contended that the notices and orders are vitiated as they disclose no basis or working for the amounts proposed to be rejected - Whether the proceedings are vitiated for want of disclosure of the arithmetical basis - HELD - A show cause notice must state the grounds which necessitate action and the action proposed, but it is not void because it doe... [Read more]

Service Tax - Show cause notice proposing rejection of rebate under Notification No. 41/2012-ST without disclosing the arithmetical working - Show cause notices proposed rejection of rebate claims on the ground of clause (c) of the proviso to the notification, and the Appellant contended that the notices and orders are vitiated as they disclose no basis or working for the amounts proposed to be rejected - Whether the proceedings are vitiated for want of disclosure of the arithmetical basis - HELD - A show cause notice must state the grounds which necessitate action and the action proposed, but it is not void because it does not set out arithmetic that follows mechanically from the claimant's own figures. The ground was clause (c) of the proviso, and the orders record the method of comparing the documented rebate on each shipping bill with the prescribed threshold, using figures furnished by the Appellant. The Appellant contested the rejection on merits at every stage, did not identify any shipping bill on which the comparison went wrong and did not show prejudice. A grievance unaccompanied by demonstrable prejudice does not vitiate the proceedings - The contention fails - Rejection of rebate claims on documents under paragraph 3 of Notification No. 41/2012-ST in view of clause (c) of the proviso - Appellant, a manufacturer exporter, claimed rebate of service tax paid on specified services on the basis of documents, did not seek rebate under paragraph 2 on any shipping bill, and the claims were rejected to the extent the documented rebate on a shipping bill did not exceed the rebate admissible under the Schedule of rates by at least twenty per cent - Whether the claims under paragraph 3 were rightly rejected - HELD - Clause (b) of the proviso employs the correlative either-or, so the two procedures are distinct routes and not stages of one claim, and the election is made for each shipping bill when it is presented. Clause (c) is a condition of eligibility for the paragraph 3 route, couched in prohibitory terms, which opens the document based route only where the actual incidence materially exceeds the average. The comparison is necessarily shipping bill wise, as the Schedule rebate is computed on the FOB value of each shipping bill, and the Appellant did not dispute the arithmetic. Clause (c) does not deny rebate to anyone but channels the exporter to the Schedule route, and the later amendment left the proviso untouched - The claims were rightly rejected to the extent the documented rebate fell below the prescribed threshold of the FOB value - Alternative claim for rebate at Schedule rates under paragraph 2 of Notification No. 41/2012-ST after failure of claim under paragraph 3 - Appellant contended that it is entitled to rebate under paragraph 2 on the shipping bills on which its documentary claim failed, but the shipping bills were presented and self assessed without the declaration required for the paragraph 2 route - Whether the Appellant can fall back on paragraph 2 and whether such a claim can be entertained in these proceedings - HELD - The declarations in paragraph 2 are the means by which that route is taken, in the shipping bill at the time of presentation, whereas the paragraph 3 claim is filed after export, so the choice of route for each shipping bill is a single election made at the time of export and final once made. If the Schedule rate could be granted in substitution after a documentary claim fails, clause (c) would cease to have any operation. Section 149 of the Customs Act, 1962 permits amendment after export only on documentary evidence existing at the time of export, and cannot be used to make retrospectively an election not made. Ignorance of the notification does not enlarge the rights under it, and the order of the Revisionary Authority turned on the impossibility of election owing to non-functional EDI facility. A paragraph 2 rebate is founded on the electronic shipping bill, and refund cannot be entertained unless the self assessment is modified in accordance with law - The alternative prayer for rebate under paragraph 2 cannot be granted - Beneficial construction of rebate notification and strict construction of conditions - Appellant urged that the notification, being a beneficial measure promoting exports, must be construed liberally - Whether the principle of beneficial construction alters the answer on the claims under paragraphs 2 and 3 - HELD - A beneficial exemption granted to further an identified public purpose is construed liberally in accordance with its object, and the notification is taken to belong to this class as it promotes exports. Liberal construction is a tool for discerning the reach of the words in the light of their object and is not a licence to disregard a condition expressly imposed, as a party not fulfilling the conditions is not entitled to the benefit. Ambiguity is resolved in favour of the claimant, but there is no ambiguity in clauses (b) and (c). The object of the notification is to refund the tax through a scheme in which the Schedule route is the rule and the documentary route the exception, and allowing an exporter to try the exception and then claim the rule overrides the means chosen. Clause (c) is a substantive condition of eligibility built in with a specific policy objective - Beneficial construction does not alter the result, the appeals are dismissed and the impugned orders are upheld. [Read less]

Service Tax - Exemption under Notification No. 25/2012-ST for receipts from Government authorities on supply of equipment on rent - Appellant, not registered with the Department, received consideration for construction and repair of roads and drains, which the First Appellate Authority held exempt, but confirmed the demand on receipts for supply of hot mix plant, paver machine and accessories on rent, allowing cum-tax benefit under Section 67(2) - Whether the receipts for supply of equipment on rent are exempt as services for construction or maintenance of roads - HELD - The agreements are in respect of supply of tangible ... [Read more]

Service Tax - Exemption under Notification No. 25/2012-ST for receipts from Government authorities on supply of equipment on rent - Appellant, not registered with the Department, received consideration for construction and repair of roads and drains, which the First Appellate Authority held exempt, but confirmed the demand on receipts for supply of hot mix plant, paver machine and accessories on rent, allowing cum-tax benefit under Section 67(2) - Whether the receipts for supply of equipment on rent are exempt as services for construction or maintenance of roads - HELD - The agreements are in respect of supply of tangible goods against a mutually agreed consideration, and the contention that these receipts also related to provision of services for construction or maintenance of roads is contrary to the agreements. These services do not fall under any clause of the exemption notification - The finding of the First Appellate Authority cannot be faulted and the demand is upheld - Threshold exemption under Notification No. 33/2012-ST on supply of tangible goods service - Appellant claimed the benefit of the threshold exemption for the year in which the demand survived - Whether the benefit of threshold exemption is available - HELD - The Appellant's own submissions showed that the aggregate value of taxable services in the preceding financial year was much more than the prescribed limit, and the benefit of the exemption cannot be extended for the following financial year - The contention is rejected - Extended period of limitation where the service provider was neither registered nor filing returns - Demand was confirmed by invoking the proviso to Section 73(1) of Finance Act, 1994 on receipts identified from Income Tax Department data, and the Appellant contended that it had not suppressed any information and relied on decisions of the Tribunal - Whether the extended period can be invoked - HELD - The Appellant was not registered with the Department and was not filing any returns, and no plausible explanation was given for not registering and complying with the provisions when it provided taxable services of value much exceeding the threshold exemption limit. Intention to evade payment is obvious, as non-registration and non-disclosure resulted in non-payment of Service Tax. The decisions relied on concerned persons who were duly registered with the Department or who showed a bona fide belief that they were not required to pay tax, whereas the Appellant did not plead or conclusively show any bona fide belief. The finding of fact that the Appellant suppressed the relevant facts with intent to evade payment of tax is not disturbed - The extended period was rightly invoked and the demand is sustained - Penalty under Section 78 of Finance Act, 1994 where extended period is invoked - Penalty equal to the Service Tax confirmed was imposed on the Appellant along with the demand - Whether the penalty under Section 78 is sustainable - HELD - As the demand made by invoking the extended period of limitation under the proviso to Section 73(1) cannot be faulted, the penalty under Section 78 follows naturally, as held by the Supreme Court - The penalty is sustained and the appeal is dismissed. [Read less]

Service Tax - Rejection of declaration under Voluntary Compliance Encouragement Scheme, 2013 as substantially false under Section 111 of Finance Act, 2013 - Appellant, a civil contractor and subcontractor, filed a declaration for the period up to 31.12.2012 and paid the declared dues, the investigation commenced after 01.03.2013, and the Department computed a higher liability from the books, Form 26AS, work orders and invoices on the view that the declaration was substantially false - Whether the rejection of the declaration is sustainable and whether the amount paid is refundable - HELD - No investigation was pending agai... [Read more]

Service Tax - Rejection of declaration under Voluntary Compliance Encouragement Scheme, 2013 as substantially false under Section 111 of Finance Act, 2013 - Appellant, a civil contractor and subcontractor, filed a declaration for the period up to 31.12.2012 and paid the declared dues, the investigation commenced after 01.03.2013, and the Department computed a higher liability from the books, Form 26AS, work orders and invoices on the view that the declaration was substantially false - Whether the rejection of the declaration is sustainable and whether the amount paid is refundable - HELD - No investigation was pending against the Appellant as on 01.03.2013, the relevant date for eligibility, and the subsequent investigation could not retrospectively make the Appellant ineligible. Section 111 requires reason to believe that the declaration was substantially false, which cannot be established merely by comparing the amount declared with a higher amount worked out by the Department. The difference arose from particular transactions ascertainable from contemporaneous records, the Appellant did not deny the contracts or receipts, and it explained the treatment adopted with reference to the tax paid by the principal contractors, Form 26AS entries, classification, the composition scheme and free supplies. Payment of Service Tax by a principal contractor does not automatically discharge the independent liability of a sub-contractor, but a difference of opinion on taxability, classification or valuation does not by itself establish substantial falsity - The rejection of the declaration is unsustainable, but in view of Section 109 the amount paid under the Scheme is not refundable merely because the demand is set aside - Limitation and extended period under Section 73(1) of Finance Act, 1994 where SCN was issued under Section 111 of Finance Act, 2013 after a VCES declaration - SCN was issued in December 2014 for the period from April 2008 to December 2012, and the Department contended that the true liability was not disclosed in the declaration and was detected during investigation - Whether the demand is barred by limitation, whether the VCES declaration restarts limitation and whether the extended period, interest and penalty are sustainable - HELD - Limitation must be determined return-period-wise with reference to the relevant date under Section 73(6), and for the last return period the normal period of eighteen months expired before the SCN. Section 111(3) merely attracts the machinery of Section 73 and does not substitute the date of the VCES declaration for the relevant date, so the declaration cannot be a fresh starting point of limitation. Mere non-payment cannot amount to suppression, and the burden of establishing suppression rests on the Revenue. The demand was reconstructed from the Appellant's books of account, ST-3 returns, Form 26AS, work orders and invoices, and the disputes arose from differing legal characterisation of the receipts, which do not establish deliberate withholding of information with intent to evade tax - The extended period is not invocable, the entire demand is barred by limitation, the demand, interest and penalty are set aside without examination of the merits and the appeal is allowed. [Read less]

Tamil Nadu VAT Act, 2006 - Limitation for reassessment of deemed assessment - Section 27 of the TNVAT Act - Petitioner, a works contractor and registered dealer, filed monthly returns for the assessment years 2011-12 to 2014-15, and the assessments stood deemed to have been completed under Section 22(2) of the TNVAT Act - Respondent issued notices alleging discrepancies after the Petitioner wrote a letter seeking copies of the assessment orders, and passed assessment orders under Section 27 of the TNVAT Act in 2022. Petitioner challenged the orders on the ground that the proceedings were initiated beyond the period of six ... [Read more]

Tamil Nadu VAT Act, 2006 - Limitation for reassessment of deemed assessment - Section 27 of the TNVAT Act - Petitioner, a works contractor and registered dealer, filed monthly returns for the assessment years 2011-12 to 2014-15, and the assessments stood deemed to have been completed under Section 22(2) of the TNVAT Act - Respondent issued notices alleging discrepancies after the Petitioner wrote a letter seeking copies of the assessment orders, and passed assessment orders under Section 27 of the TNVAT Act in 2022. Petitioner challenged the orders on the ground that the proceedings were initiated beyond the period of six years prescribed under Section 27(1). Respondent contended that the proceedings were initiated on examining the records after the Petitioner's letter - Whether the proceedings initiated by the Respondent under Section 27 of the TNVAT Act were barred by limitation - HELD - The Petitioner had filed the returns in the prescribed manner along with the requisite documents and proof of payment of tax, and the assessments therefore stood deemed to have been completed in terms of Section 22(2). The power to reopen such assessments under Section 27 is subject to the period of limitation prescribed therein. The impugned orders were passed beyond the period of six years and were barred by limitation. The Petitioner's letter was only a communication seeking the assessment records and could not extend or revive the statutory period of limitation. The jurisdiction under Section 27 must be exercised within the prescribed period and cannot be enlarged by consent, correspondence or conduct of the dealer. The Respondent therefore lacked jurisdiction to pass the impugned orders - The impugned orders are set aside and the writ petitions are allowed [Read less]

Central Excise - Availment of proportionate CENVAT credit on common inputs used in the manufacture of dutiable final products and exempted by-products - Liability to pay an amount under Rule 6(3)(b) of the CENVAT Credit Rules, 2004 - The Respondent-assessee manufactured dutiable and non-dutiable products and used common inputs in the manufacture, but availed CENVAT credit only in proportion to the dutiable products on the basis of a chartered accountant certificate - The Adjudicating Authority held that the methodology was not compatible with Rule 6 and confirmed the demand of ten per cent of the price of the exempted by-p... [Read more]

Central Excise - Availment of proportionate CENVAT credit on common inputs used in the manufacture of dutiable final products and exempted by-products - Liability to pay an amount under Rule 6(3)(b) of the CENVAT Credit Rules, 2004 - The Respondent-assessee manufactured dutiable and non-dutiable products and used common inputs in the manufacture, but availed CENVAT credit only in proportion to the dutiable products on the basis of a chartered accountant certificate - The Adjudicating Authority held that the methodology was not compatible with Rule 6 and confirmed the demand of ten per cent of the price of the exempted by-products under Rule 6(3)(b) read with Rule 14 - The CESTAT allowed the appeal, holding that taking credit proportionate to the dutiable products amounts to not taking credit - Whether an Respondent-assessee is entitled to follow a system different from the system provided under the Rules - HELD - The issue is squarely covered in favour of the assessee by the decision of the Apex Court, which held that the requirement of separate records does not apply where the by-product emerges as a technological necessity and no part of the input can be traced in the by-product - Under Rule 6(1), CENVAT credit is admissible on inputs used in the manufacture of dutiable goods and inadmissible on the quantity used in the manufacture of exempted goods. Where the entire quantity of input is used in the manufacture of the final product, the mere fact that a by-product emerges does not bring the by-product within Rule 6 so as to call for separate accounts or payment of an amount on the exempted goods - Where the assessee has taken credit only on the quantity of input intended for use in the manufacture of dutiable goods, the question of invoking Rule 6 does not arise. It is immaterial whether the Rules of 2002 and 2004 contain provisions akin to the earlier rules. Although the CESTAT has not given elaborate reasons, it has arrived at a conclusion as per the settled legal position - The questions are answered in favour of the assessee and the Revenue appeal is dismissed [Read less]

GST - Jurisdiction of the State Bench of the Tribunal to examine the validity of an Advance Ruling under Section 95 of the CGST Act, 2017 which was never challenged before Appellate Authority for Advance Ruling - The Respondent obtained an advance ruling holding that the licensing service for the right to use minerals attracted tax at the same rate as on supply of like goods for the period 01.07.2017 to 31.12.2018, and the ruling was not challenged by the Revenue under Section 100 - Whether the Tribunal, that too a State Bench, can go into the jurisdiction of the Authority when the ruling has not been challenged at any sta... [Read more]

GST - Jurisdiction of the State Bench of the Tribunal to examine the validity of an Advance Ruling under Section 95 of the CGST Act, 2017 which was never challenged before Appellate Authority for Advance Ruling - The Respondent obtained an advance ruling holding that the licensing service for the right to use minerals attracted tax at the same rate as on supply of like goods for the period 01.07.2017 to 31.12.2018, and the ruling was not challenged by the Revenue under Section 100 - Whether the Tribunal, that too a State Bench, can go into the jurisdiction of the Authority when the ruling has not been challenged at any stage - HELD – The Revenue has challenged the maintainability of the advance ruling itself on the ground that the said ruling was without jurisdiction for the reason it could only be given on matters having prospective application and not on completed past transactions - The scheme of Chapter XVII governing the landscape of Advance Ruling, provides a hierarchy of appeal against the ruling before the Appellate Authority and the National Appellate Authority, and the Ruling was neither rectified under Section 102 nor alleged to be void under Section 104. In view of Section 109(4), the State Bench does not have jurisdiction to decide the validity of the order of the Authority - The Tribunal cannot decide the jurisdiction of the Authority in rendering the ruling - The appeals filed by the revenue against the impugned orders-in-appeal lack merit and dismissed - Binding nature of an Advance Ruling under Section 103 of the CGST Act, 2017 - Whether a Board circular constitutes a change in law, facts or circumstances under Section 103(2) - The Revenue contended that the Advance Ruling ceased to bind it on issuance of a Board circular nearly two years later, which clarified that the service attracted the higher rate from 01.07.2017 - Whether the advance ruling is binding on the Department vis-a-vis the Respondent or the Department can resile from it under Section 103(2) - HELD - Under Section 103(1), the Ruling is binding on the applicant and on the concerned or jurisdictional officer in respect of that applicant, and as it was not appealed against, it attained finality. A Circular is an executive instruction under Section 168 and is binding on the Departmental officers but not on the assessee or the courts, whereas the Ruling is a quasi-judicial order. The expression change in law under Section 103(2) means a change in the Act, Rules or rate notification and not a Circular. A Circular adverse to the assessee cannot be applied retrospectively to nullify a quasi-judicial order in his favour. As there was no change in facts, circumstances or law, the Revenue cannot resile from the ruling - The Revenue was bound by the Ruling and the refund sanctioned in accordance with it was in accordance with law - Determination of the rate of tax on licensing service for the right to use minerals for the period 01.07.2017 to 31.12.2018 on the basis of a Board circular - Whether the rate of tax can be determined on the basis of Circular No.164/20/2021-GST - HELD - Under Section 9(1), the rate of tax is to be notified by the Government on the recommendation of the Council through a notification, and a circular issued under Section 168 can only clarify the law and can never create a levy. In terms of Article 265 of the Constitution, no tax can be levied or collected except by authority of law, which means the Act, notifications and Rules and not a Circular - The Revenue could not point out any notification or entry prescribing the higher rate for the period, and the demand resting solely on the Circular is without the authority of law - The Revenue is not justified in relying on the Circular to hold that the rate during the period was the higher rate - Recovery of erroneous refund under Section 73 of the CGST Act, 2017 where the refund of excess tax paid was sanctioned in accordance with an advance ruling, and grounds raised beyond the SCN - The refund of the difference between the tax paid and the tax payable under the ruling was sanctioned under Section 54 with a Chartered Accountant certificate and reversal of the corresponding credit in the electronic credit ledger - Revenue contended in the second appeal that the refund could be claimed only by the service provider and that the Respondent was unjustly enriched - Whether the refund can be said to be erroneous and whether the new grounds can be agitated - HELD - The Ruling held the field when the refund was sanctioned and was neither challenged, rectified nor alleged to be obtained by fraud. A subsequent Circular holding a contrary view cannot make the refund erroneous. The proceedings under Section 73 on the basis of the Circular are void ab initio - The grounds of refund being available only to the service provider and of unjust enrichment were not taken in the SCN or the Order-in-Original, and under Section 75(7) they cannot be raised at the stage of the second appeal - In any case, the recipient who has borne the incidence of tax is entitled to claim refund, and the Respondent discharged the onus under Section 54(8)(e) and Rule 89(2)(m) by the CA certificate and the reversal of credit, which the Revenue did not dispute. The question whether Section 73 can be invoked independently without challenging the refund order in appeal or revision need not be decided - The orders of the FAA setting aside the demand, penalty and interest are confirmed. [Read less]

Service Tax - Refund of Swachh Bharat Cess and Krishi Kalyan Cess paid on input services used for export of goods under Notification No. 41/2012-ST - Whether the Appellants are entitled to refund of SBC and KKC paid on input services used for export of goods - HELD - Notification No. 41/2012-ST grants refund of service tax paid on services used for export of goods, and Section 119(2) of the Finance Act, 2015 and Section 161(2) of the Finance Act, 2016 stipulate SBC and KKC as service tax. Sub-section (5) of Section 119 of the Finance Act, 2015 and sub-section (5) of Section 161 of the Finance Act, 2016 provide that all pro... [Read more]

Service Tax - Refund of Swachh Bharat Cess and Krishi Kalyan Cess paid on input services used for export of goods under Notification No. 41/2012-ST - Whether the Appellants are entitled to refund of SBC and KKC paid on input services used for export of goods - HELD - Notification No. 41/2012-ST grants refund of service tax paid on services used for export of goods, and Section 119(2) of the Finance Act, 2015 and Section 161(2) of the Finance Act, 2016 stipulate SBC and KKC as service tax. Sub-section (5) of Section 119 of the Finance Act, 2015 and sub-section (5) of Section 161 of the Finance Act, 2016 provide that all provisions relating to refund of service tax under the Finance Act, 1994 shall apply to refund of SBC and KKC. SBC and KKC, though called cess, have been given the status of service tax, and the rebate of SBC and KKC is therefore allowable under Notification No. 41/2012-ST - Following the ratio of the earlier decision of the Bench, which stands conceded by the Revenue, the issue is squarely covered in favour of the Appellants - The impugned orders are set aside and the appeals are allowed [Read less]

Customs - Confiscation of export goods and imposition of penalties on alleged diversion of rice declared for export to one country to a different country - Respondent exported rice under shipping bills declared for Iran, and the Department alleged on investigation that the consignments had been delivered to the UAE in violation of Paras 2.40 and 2.53 of the Foreign Trade Policy - Adjudicating Authority held the goods liable to confiscation under Sections 113(i) and 113(d) and imposed penalties under Sections 114 and 114AA - CESTAT set aside the orders after noting that the documents were in the name of the buyers in Iran, ... [Read more]

Customs - Confiscation of export goods and imposition of penalties on alleged diversion of rice declared for export to one country to a different country - Respondent exported rice under shipping bills declared for Iran, and the Department alleged on investigation that the consignments had been delivered to the UAE in violation of Paras 2.40 and 2.53 of the Foreign Trade Policy - Adjudicating Authority held the goods liable to confiscation under Sections 113(i) and 113(d) and imposed penalties under Sections 114 and 114AA - CESTAT set aside the orders after noting that the documents were in the name of the buyers in Iran, that re-export documents, phytosanitary certificates and bank remittances were produced, and that no evidence showed that the documents were amended or fabricated - Whether the CESTAT was justified in setting aside the confiscation and penalties - HELD - At first blush the diversion of goods intended for export to Iran appeared to be a grave offence. The CESTAT, however, recorded a categorical finding of fact that the goods were intended for export to Iran, as the phytosanitary certificates placed on record contained the registration number, the name of the exporter, the name of the consignee in Iran, the number of bags and the quantities, and the Adjudicating Authority and the FAA neither pointed out any discrepancy nor made any allegation supported by evidence that the certificates were amended to facilitate clearance in another country - Once the goods are permitted to be exported by the issuance of a Let Export Order, ownership is transferred to the buyer as soon as the ship carrying the goods crosses the territorial waters of India, as per the CBEC Circular and the decision of the Apex Court. None of the buyers in Iran claimed short shipment or non-receipt, the remittance receipts were not objected to by the banks or alleged to be non-genuine, and under the RBI regulations payment can be received only from the consignee named in the export documents, so the contention of third-party payment had no basis. The conclusion that the goods were exported to the UAE was based merely on assumptions and presumptions - in the absence of evidence the CESTAT was justified in setting aside the confiscation and penalties - The Revenue appeal is dismissed - Jurisdiction of Customs authorities to confiscate goods and impose penalties for alleged violation of the Foreign Trade Policy relating to receipt of export proceeds in freely convertible foreign exchange - The entire basis of the decision of the Adjudicating Authority was the alleged violation of Para 2.53 of the Foreign Trade Policy, on the ground that goods actually exported to the UAE required payment in freely convertible foreign exchange, and the SCN invoked Sections 113(d) and 113(i) of the Customs Act. - Whether the Customs authorities could confiscate the goods and impose penalties on the allegation of violation relating to receipt of foreign exchange for the exported goods - HELD - No proceedings had been initiated against the Respondents for any violation relating to the receipt of foreign exchange for the exported goods, and no allegation was made or SCN issued under the Foreign Exchange Management Act or the Customs Act in this regard. The CESTAT rightly arrived at the finding that there was no violation of the Customs Act in any manner, as there was no dispute regarding the description, quantity or value of the goods, and the export of rice was neither prohibited nor restricted at the relevant time - The appeals of the Revenue are dismissed [Read less]

Central Excise - Eligibility to CENVAT Credit on input services of maintenance and repair of wind farm situated away from the factory under Rule 2(l) of the CENVAT Credit Rules, 2004 - Appellant established a wind farm about 225 kilometres from its factory for captive generation, and the electricity generated was supplied to the electricity board, which supplied electricity to the factory after adjustment and deduction of wheeling charges - Appellant availed CENVAT credit of service tax paid on maintenance and repair services received at the wind farm - Whether the Tribunal was justified in holding that the Appellant is no... [Read more]

Central Excise - Eligibility to CENVAT Credit on input services of maintenance and repair of wind farm situated away from the factory under Rule 2(l) of the CENVAT Credit Rules, 2004 - Appellant established a wind farm about 225 kilometres from its factory for captive generation, and the electricity generated was supplied to the electricity board, which supplied electricity to the factory after adjustment and deduction of wheeling charges - Appellant availed CENVAT credit of service tax paid on maintenance and repair services received at the wind farm - Whether the Tribunal was justified in holding that the Appellant is not entitled to avail and utilize CENVAT credit on service tax paid on manufacture and repair of the wind farm/mills - HELD - The definition of input service in Rule 2(l) covers any service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products, and has to be widely construed. The words "within the factory of production" are absent in Rule 2(l), and the only stipulation is that the input service should be received by the manufacturer of the final product. There is no provision in the Rules which requires that input services received by the manufacturer must be received at the factory premises - The Appellant utilised the electricity supplied by the electricity board against the electricity generated by the wind mills, and the maintenance and repair services of the wind mills were therefore used in relation to the manufacturing activity and fall within input service. The Tribunal was not justified in denying the credit - The question of law is answered in favour of the Appellant and against the Respondent and the appeal is allowed [Read less]

GST - Chhattisgarh AAR - Taxability of amounts received by an incubator agency from a State society for technical support services - Availability of exemption under Sr. Nos. 3, 3A and 72 of Notification No. 12/2017-Central Tax (Rate) - The Applicant was appointed under a service contract by an apex society of the Department of Rural Development of the State Government, funded by the Central Government under a livelihoods mission, as a Technical Support Services Agency to establish and execute an incubator programme across the State - Whether the amounts received are liable to GST and whether the services are exempt under S... [Read more]

GST - Chhattisgarh AAR - Taxability of amounts received by an incubator agency from a State society for technical support services - Availability of exemption under Sr. Nos. 3, 3A and 72 of Notification No. 12/2017-Central Tax (Rate) - The Applicant was appointed under a service contract by an apex society of the Department of Rural Development of the State Government, funded by the Central Government under a livelihoods mission, as a Technical Support Services Agency to establish and execute an incubator programme across the State - Whether the amounts received are liable to GST and whether the services are exempt under Sr. Nos. 3, 3A and 72 - HELD - The Applicant was engaged as a consultant to render consultancy services and was not rendering services mandated under Article 243G of the Constitution, and the view that its service targeted at rural poverty alleviation should be wholly exempt is misplaced - The exemptions under Sr. Nos. 3, 3A and 72 require the services to be provided to the Central Government, State Government or Union territory administration or local authority themselves, whereas the recipient is a society which is a government entity and not the Government, so the entries are inapplicable. The consideration for the composite supply is taxable at the rate applicable to the principal supply of incubation and enterprise development services - The amounts received for the consultancy services attract GST at the standard rate and the exemption under Sr. No. 72 is not available for the training and capacity-building services or for the incubation support, mentoring and related services – Ordered accordingly - Taxability of amounts received towards dedicated project human resources, salary and personnel costs as part of the consideration for a composite supply of consultancy services - The Applicant sought a ruling on whether amounts received towards dedicated project personnel under the incubator cost component are liable to GST, without furnishing specific details - Whether such amounts are liable to GST - HELD - In the absence of specific details furnished by the Applicant, a conclusive decision is difficult. Amounts received strictly towards salary and direct personnel costs for dedicated project human resources generally do not attract GST, since services by an employee to the employer in relation to employment are outside the scope of supply under Schedule III. However, the salaries of the project staff of the Applicant form part of the supplier's own cost and are not separately excludable from the consideration for a composite supply. The pure agent exclusion under Rule 33 is unavailable where the supplier is the employer, so reimbursement of employee costs is taxable consideration - No conclusive ruling is possible for want of details - Inclusion of challenge fund grants, soft loans and other enterprise-support funds passed on under a project in the taxable value of services, and exclusion as pure agent expenditure under Rule 33 of the CGST Rules, 2017 - Applicant administered a challenge fund of grants and soft loans, and equity investments, which were transferred to selected rural enterprises, and contended that it acted as a pure agent and that the sums were pass-through grants not forming part of the value under Section 15 - Whether the challenge fund and other enterprise-support funds form part of the taxable value of the services supplied - HELD - On the basis of the contract, the Applicant functions as a technical consultant, and the services are a composite supply of goods and services. The grants, soft loans and other enterprise-support funds administered, facilitated or passed on under the project form part of the taxable value of the services supplied by the Applicant - The exclusion of challenge fund disbursements under Rule 33 is possible only if the Applicant acts strictly as a pure agent of the recipient, with written authorisation, recovery at actual cost, separate invoicing and no ownership or benefit, and without proper documentation the entire receipt may be treated as consideration - The funds form part of the taxable value of the services - Exemption under Sr. No. 48 of Notification No. 12/2017-Central Tax (Rate) for taxable services by a Technology Business Incubator recognised by the National Science and Technology Entrepreneurship Development Board - Whether, upon its recognition as a Technology Business Incubator by the Board, the taxable services under the project would be exempt from the date of recognition - HELD - Sr. No. 48 provides nil rate for taxable services under Heading 9983 or any other Heading of Chapter 99 only if provided by a Technology Business Incubator or a Science and Technology Entrepreneurship Park recognised by the Board, or a bio-incubator recognised by the Biotechnology Industry Research Assistance Council. There is nothing on record to hold that the Applicant is a recognised incubator as on date. Upon such recognition the taxable services rendered under the project would qualify for nil rate from the date of recognition, subject to adherence to the conditions. The exemption operates only prospectively from the effective date of recognition and supplies before recognition remain unaffected - The taxable services rendered after recognition qualify for nil rate under Sr. No. 48, subject to the conditions [Read less]