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Central Excise - Cenvat Credit on Capital Goods - Machinery, equipment and components used in erection of Air Separation Plant – Disallowance of credit on grounds that the parts lost their identity in the integrated plant, goods were procured by supplier, the plant became attached to earth and ceased to be goods - Whether duty-paid goods received in appellant's factory and used for erection of an Air Separation Plant qualify as capital goods under Rule 2(a) of the CENVAT Credit Rules, 2004 - HELD - The CENVAT Credit Rules, 2004 define capital goods to include all goods falling under Chapters 82, 84, 85, 90 and components... [Read more]

Central Excise - Cenvat Credit on Capital Goods - Machinery, equipment and components used in erection of Air Separation Plant – Disallowance of credit on grounds that the parts lost their identity in the integrated plant, goods were procured by supplier, the plant became attached to earth and ceased to be goods - Whether duty-paid goods received in appellant's factory and used for erection of an Air Separation Plant qualify as capital goods under Rule 2(a) of the CENVAT Credit Rules, 2004 - HELD - The CENVAT Credit Rules, 2004 define capital goods to include all goods falling under Chapters 82, 84, 85, 90 and components, spares and accessories thereof. The undisputed position is that the machinery and equipment fall under Chapter 84 and related chapters, were duty-paid, and were received in appellant's factory under valid invoices - Merely because various machinery, equipment, appliances and parts are assembled at the site to set up an integrated plant does not disentitle the appellant from claiming credit. The manufacturing plant facility in a factory comprises a number of capital goods which must be assembled together to function in unison to perform the required processes. In no manufacturing plant can all machineries be used independently; they have to function in conjunction with each other and for this purpose are assembled into a plant. Merely because all individual equipment, machinery or components are assembled together, it is preposterous to suggest that capital goods credit cannot be allowed on individual machinery, equipment or appliances - So long as individual machinery, equipment or appliance or parts and components thereof fall within the definition of capital goods under Rule 2(a) of the CENVAT Credit Rules and so long as they are used within the factory of production for manufacture of excisable goods which are chargeable to duty, the benefit of capital goods credit cannot be denied - The appellant is rightfully entitled to capital goods credit on various machinery, equipment, appliances and parts and components thereof used in setting up the manufacturing plant within the factory premises - The order denying capital goods credit is unsustainable in law and is set aside. The appeal is allowed - Ownership of Goods - Not a Criterion for CENVAT Credit - Revenue authority denied capital goods credit on the ground that the machinery and components were procured and owned by the supplier and not by the appellant, and that invoices were issued in the supplier's name - Whether ownership of goods remaining with the supplier disentitles the appellant from availing CENVAT Credit on capital goods received and used in its factory – HELD – The ownership of goods is not a criterion for availment of CENVAT Credit on capital goods. The CENVAT Credit Rules emphasize receipt and use of goods in the factory and nowhere prescribe ownership as a pre-condition for claiming credit. Even though the goods were initially procured and owned by the supplier, they were received in the appellant's factory under valid invoices naming the appellant as consignee and were used for setting up a manufacturing plant within the factory for production of excisable goods. The benefit of capital goods credit cannot be denied solely because ownership remained with the supplier – The denial of credit solely on the basis of ownership is legally not sustainable - The finding that ownership of goods remaining with the supplier disentitles the appellant from availing credit is set aside - Rule 4(3) of CENVAT Credit Rules - Leasing Arrangements with non-financing entities - Appellant had availed capital goods credit on machinery supplied under a leasing arrangement with a supplier which is not a financing company. Revenue authority contended that Rule 4(3) restricts credit only when goods are leased from a financing company, and since the supplier is not a financing company, credit is not admissible - Whether Rule 4(3) of the CENVAT Credit Rules restricts credit only to goods leased from financing companies or whether it extends credit even in leasing arrangements with non-financing entities - HELD - Rule 4(3) of the CENVAT Credit Rules provides that credit shall be allowed even if capital goods are acquired on lease, hire purchase or loan agreement from a Financing Company. The language "even if" is enlarging in nature and does not imply that the lessor must necessarily be a Financing Company. The Rule is enabling and enlarging in scope, not restrictive. It extends the benefit of credit and does not restrict it to financing companies alone. The Rule clarifies that credit shall be allowed even if capital goods are procured through various financial arrangements including leasing from any entity, not exclusively from financing companies. Therefore, the finding that credit is not admissible because the lessor is not a financing company is contrary to settled law. The structure of Rule 4(3) demonstrates that it was intended to expand the scope of eligibility to include various financial arrangements, ensuring that the benefit of CENVAT Credit remains available to the actual user of machinery regardless of the nature of the supplier - The finding that credit is inadmissible because the supplier is not a financing company is set aside - Immovability of Integrated Plant - The Air Separation Plant, after assembly of various machinery and components, became attached to earth through nuts and bolts and thus became immovable property. Revenue authority denied credit on the ground that the plant became attached to earth, ceased to be goods, and therefore credit on component goods was inadmissible - Whether the fact that individual machinery and components become assembled into a larger plant that becomes attached to earth affects the admissibility of capital goods credit on the individual duty-paid items - HELD - The law is well settled that even if individual machinery and components are assembled into a larger plant that becomes attached to earth, credit on the duty-paid capital goods remains admissible. Immovability of the integrated plant does not affect entitlement to credit on individual capital goods. The purpose of fastening machinery to earth by nuts and bolts is only to ensure operational stability, functionality, and vibration-free operation. Such fastening is universally recognized as temporary and functional attachment, insufficient to classify the plant as immovable property for the purpose of denying capital goods credit. The attachment does not destroy the identity of the constituent machines or components. Hence, the conclusion that the Air Separation Plant is immovable and therefore, credit is inadmissible is wholly mis-conceived - Extended Period Invocation - Whether the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act is invocable – HELD - The extended period under the proviso to Section 11A(1) is invocable only when there is suppression, misstatement or intent to evade duty. In the present case, all relevant facts were within the knowledge of the department, the credit was availed under valid invoices and disclosed in statutory returns, and the dispute is purely interpretational in nature involving substantial judicial debate on a pure question of law. There is no suppression, misstatement or intention to evade duty on the part of the appellant. The department was put to notice about the components of cenvat credit being availed and the lease arrangement was disclosed to the department well before the notice was issued. On this ground alone, the demands are not sustainable and the extended period cannot be invoked. [Read less]

Service Tax – SEZ Unit, Refund, Procedural Deficiencies - Refund claim under Notification No. 12/2013-ST dated 01.07.2013 – Rejection of substantial portion of the claim on grounds including mismatch of invoices, non-submission of original invoices, incomplete address in invoices, rubber stamp corrections and non-inclusion of certain services in the approved list - Whether refund of service tax paid on services admittedly used for authorized operations of a SEZ unit can be denied on account of procedural deficiencies in documentation – HELD - The object of the SEZ Act is to grant fiscal benefits and tax exemptions to... [Read more]

Service Tax – SEZ Unit, Refund, Procedural Deficiencies - Refund claim under Notification No. 12/2013-ST dated 01.07.2013 – Rejection of substantial portion of the claim on grounds including mismatch of invoices, non-submission of original invoices, incomplete address in invoices, rubber stamp corrections and non-inclusion of certain services in the approved list - Whether refund of service tax paid on services admittedly used for authorized operations of a SEZ unit can be denied on account of procedural deficiencies in documentation – HELD - The object of the SEZ Act is to grant fiscal benefits and tax exemptions to units carrying out authorized operations. Section 26 of the SEZ Act grants exemption from taxes and duties in respect of services used for authorized operations and Section 51 gives overriding effect to the Act's provisions over any inconsistent provisions in other laws - Where receipt of services, payment of service tax and nexus with authorized operations stand established, denial of refund merely on account of invoice presentation, clerical discrepancies, rubber stamp corrections or non-availability of some original invoices cannot be sustained - The Revenue has not disputed that the Hormone Block formed part of the appellant’s SEZ unit. Once such factual position is accepted, denial of refund merely because the exact description appearing in the invoice does not identically match the wording used in the approved list would amount to elevating form over substance. The procedural infractions which do not affect substantive eligibility cannot form the basis for denial of exemption or refund - Further, construction and infrastructure creation activities undertaken during establishment of the SEZ unit are intrinsically connected with authorized operations and the expression "used for authorized operations" requires liberal and purposive interpretation to give effect to the beneficial scheme - The appellant is entitled to refund of the service tax paid on all the disputed services. The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Admissibility of CENVAT Credit on Service Tax paid on Leadership Fee in Consortium Project – Under the consortium arrangement, the leader company is designated as the principal contractor and consortium members agree to pay leadership fee for overall management, coordination and integration of the entire project. The leadership fee is classified as consulting engineer service and service tax is paid under Reverse Charge Mechanism, which is subsequently distributed through ISD mechanism and availed as CENVAT credit - Department disallows the credit on the ground that the contract substantially relates to man... [Read more]

Service Tax - Admissibility of CENVAT Credit on Service Tax paid on Leadership Fee in Consortium Project – Under the consortium arrangement, the leader company is designated as the principal contractor and consortium members agree to pay leadership fee for overall management, coordination and integration of the entire project. The leadership fee is classified as consulting engineer service and service tax is paid under Reverse Charge Mechanism, which is subsequently distributed through ISD mechanism and availed as CENVAT credit - Department disallows the credit on the ground that the contract substantially relates to manufacture and supply of goods which is an exempted activity, and therefore the service tax paid is not eligible for credit – Whether the CENVAT credit on service tax paid on leadership fee – HELD - Once service tax is validly paid and accepted by the Department and credit is properly distributed through ISD mechanism without any dispute regarding genuineness of invoices or receipt of services, denial of credit at the recipient's end merely on account of procedural irregularity is legally unsustainable - The consortium arrangement constitutes an integrated turnkey project and the leadership fee forms part of the overall project management structure, therefore the Department's attempt to isolate one component contract and deny credit amounts to impermissible vivisection of a composite contractual arrangement - Additionally, consulting engineer service falls within the specified services covered under Rule 6(5) of CCR, 2004, which grants full credit unless such services are used exclusively in exempted goods or exempted services. The Department failed to establish that the impugned service was used exclusively for exempted activity, particularly when the project comprises both supply of goods and taxable service elements. Since the entire exercise is revenue neutral with service tax accepted as correctly paid and corresponding credit being legitimate, allegations of intention to evade become untenable, and imposition of penalty without any material establishing fraud, collusion, willful misstatement or suppression of facts is wholly unwarranted – The impugned order disallowing CENVAT credit and the demand, interest and equal penalty imposed are set aside and the appeal is allowed [Read less]

Central Excise - Refund of excess excise duty on incorrect valuation – Appellant paid Oil Industry Development Cess at ad valorem rate on ex-duty price instead of cum-duty price during a specified period, resulting in excess payment, and subsequently claimed refund under Section 11B of the Central Excise Act, 1944 - Whether excess cess paid due to adoption of incorrect assessable value is refundable in principle in terms of valuation under Section 4 of the Central Excise Act, 1944 read with Section 15 of the Oil Industry (Development) Act, 1974 and the Notification dated 28.03.2016 - HELD - Where an ad valorem levy of ce... [Read more]

Central Excise - Refund of excess excise duty on incorrect valuation – Appellant paid Oil Industry Development Cess at ad valorem rate on ex-duty price instead of cum-duty price during a specified period, resulting in excess payment, and subsequently claimed refund under Section 11B of the Central Excise Act, 1944 - Whether excess cess paid due to adoption of incorrect assessable value is refundable in principle in terms of valuation under Section 4 of the Central Excise Act, 1944 read with Section 15 of the Oil Industry (Development) Act, 1974 and the Notification dated 28.03.2016 - HELD - Where an ad valorem levy of cess is charged, the principles of valuation under Section 4 of the CEA, 1944 necessarily apply, requiring that transaction value be determined exclusive of duties and taxes. Where the sale price is charged inclusive of duty and governed by a pricing mechanism that does not separately recover duty, such price must be treated as cum-duty price, from which the duty element must be backed out to arrive at the correct assessable value - The excess payment arising from applying the duty rate on an inflated value that already includes the duty component constitutes payment of duty on duty, which is a direct mathematical consequence of incorrect valuation methodology. The Department cannot retain amounts collected without lawful authority as mandated by Article 265 of the Constitution. Since the Department has not disputed the computation or the corrected methodology adopted subsequently, rejection on merits is not sustainable. Excess duty paid due to incorrect valuation is refundable in principle, subject only to the doctrine of unjust enrichment - The appellant has successfully established that excess cess was paid due to incorrect valuation methodology. The appellant is entitled to refund of excess OID Cess paid, as the same has been paid on an incorrect assessable value and the incidence of such cess has not been passed on to the buyer - The impugned order is set aside and the appeal is allowedrnrn^Refund claim – Bar of unjust enrichment - Duty burden not passed on to buyer - Whether the refund claim is barred by the doctrine of unjust enrichment under Section 11B read with Section 12B of the Central Excise Act, 1944 – HELD - While Section 12B creates a statutory presumption that duty has been passed on, such presumption is rebuttable and the assessee can discharge the burden through cogent evidence. The crude oil sale agreement forms the primary evidence and establishes an exhaustive pricing mechanism wherein Oil Industry Development Cess is conspicuously absent despite specific mention of other levies like Sales Tax and VAT. The deliberate exclusion of cess from the pricing formula, when read in the context of detailed contractual provisions for other levies, demonstrates conscious allocation that cess is to be borne by the seller, not the buyer. The invoices, which constitute primary evidence of price charged in commercial transactions, do not reflect any cess component, indicating non-recovery from the buyer. The Chartered Accountant's certificate, based on examination of books of account and contractual terms, establishes that the duty burden was borne by the assessee - The Department has produced no contrary evidence to discredit these documents or establish actual recovery from the buyer. The principle that where contract price does not permit separate recovery of duty, unjust enrichment does not apply, is consistent across judicial precedents. Cum-duty valuation is a principle of assessment and cannot be extended to infer unjust enrichment beyond its statutory purpose - The appellant has successfully rebutted the presumption under Section 12B and the refund is not hit by unjust enrichment. [Read less]

Service Tax - Demand based solely on Income Tax Returns data - Validity of extended period assessment - Whether a service tax demand can be raised and confirmed in the extended period of limitation based solely on reliance on income tax data from Form 26AS without corroborative evidence from service tax records demonstrating actual rendition of taxable services – HELD - The mere reliance on Form 26AS or income tax returns for issuing a show cause notice in the extended period is not legally sustainable. The Form 26AS is maintained on a cash or receipt basis by the Income Tax Department for income tax purposes, whereas se... [Read more]

Service Tax - Demand based solely on Income Tax Returns data - Validity of extended period assessment - Whether a service tax demand can be raised and confirmed in the extended period of limitation based solely on reliance on income tax data from Form 26AS without corroborative evidence from service tax records demonstrating actual rendition of taxable services – HELD - The mere reliance on Form 26AS or income tax returns for issuing a show cause notice in the extended period is not legally sustainable. The Form 26AS is maintained on a cash or receipt basis by the Income Tax Department for income tax purposes, whereas service tax is chargeable on a mercantile or accrual basis. Mere entries in income tax returns cannot establish liability under the service tax statute unless corroborated by independent evidence demonstrating the rendition of taxable services. The mechanical reliance on income tax data without verification of the nature of receipts or proof of taxable services is impermissible in law - The impugned order is set aside on account of time bar and the appeal is allowed [Read less]

GST - Anti-profiteering – Not passing on of benefit of rate reduction on cinema ticket – Respondents increased the base price of admission tickets despite a reduction in GST rate with effect from 01.01.2019 - The investigation by the DGAP established that the Respondents increased base prices across various ticket categories during the post-rate-reduction period – HELD - The statutory mandate under Section 171 requires that any reduction in the rate of tax on supply of goods or services must be passed on to the recipient through commensurate reduction in prices. The intention behind the anti-profiteering provision is... [Read more]

GST - Anti-profiteering – Not passing on of benefit of rate reduction on cinema ticket – Respondents increased the base price of admission tickets despite a reduction in GST rate with effect from 01.01.2019 - The investigation by the DGAP established that the Respondents increased base prices across various ticket categories during the post-rate-reduction period – HELD - The statutory mandate under Section 171 requires that any reduction in the rate of tax on supply of goods or services must be passed on to the recipient through commensurate reduction in prices. The intention behind the anti-profiteering provision is that the moment the GST rate is reduced, the benefit should immediately be passed on to the end-user by way of price reduction proportionate to the tax reduction. When prices are inclusive of GST, maintaining the same selling price while increasing the base price effectively denies the benefit of Government's decision to lower the tax rate. The Respondents’ contention regarding State licensing authority permissions lacks documentary substantiation. The Respondents failed to produce any government order or court order from the relevant period permitting the price increase. The subsequently filed Government orders pertaining to the year 2025 cannot be treated as evidence for matters occurring in 2019. Further, these orders do not prohibit theatre owners from reducing ticket prices when the central government reduces GST rate - The Section 171 places the onus on the service supplier to reduce prices to pass on the tax benefit, irrespective of regulatory permissions for price increases - The Respondent is directed to deposit the profiteered amount along with interest at 18 percent from 28.06.2019 onwards, with 50 percent of the amount plus interest deposited in the Central Consumer Welfare Fund and the remaining 50 percent plus interest deposited in the State Consumer Welfare Fund. No penalty is levied upon the operator as the penalty provision came into force on 01.01.2020 and cannot be applied retrospectively for the period from 01.01.2019 to 30.06.2019. The operator's objections to the anti-profiteering reports are rejected – Ordered accordingly [Read less]

Service Tax on Ash Evacuation Service - Removal of ash from ash pond – Demand under the category of ‘site formation and clearance, excavation and earth moving and demolition service’ - The appellant undertook work of evacuation of settled ash from ash pond as a sub-contractor - Whether the activity of removal of ash from ash pond is subject to service tax levy – HELD - The activity of removal of ash from ash pond is not leviable to service tax as it constitutes an essential part of the production process and does not qualify as a service activity - The activities forming part of the production process cannot be sub... [Read more]

Service Tax on Ash Evacuation Service - Removal of ash from ash pond – Demand under the category of ‘site formation and clearance, excavation and earth moving and demolition service’ - The appellant undertook work of evacuation of settled ash from ash pond as a sub-contractor - Whether the activity of removal of ash from ash pond is subject to service tax levy – HELD - The activity of removal of ash from ash pond is not leviable to service tax as it constitutes an essential part of the production process and does not qualify as a service activity - The activities forming part of the production process cannot be subjected to service tax levy - The demand of service tax under the category of site formation and clearance, excavation and earth moving and demolition service is set aside.rnrnWorks Contract Service - Adjustment of Payments - The assessee had deposited service tax amounting to a specific sum during the relevant financial years under the works contract service category - Whether the service tax payments already made by the assessee can be adjusted against the tax demand confirmed by the revenue authority – HELD – From challan-wise details of service tax payments furnished by the assessee it is found that substantial payments were made during the relevant financial years for which no material discrepancy was brought on record by the revenue. When payments are substantiated by documentary evidence in the form of authenticated challans and the revenue authority fails to dispute either the factum of payment or the authenticity thereof, such amounts merit consideration for adjustment against actual liabilities - Differential amounts between confirmed demand and proven payments can be adjusted, and when deposits made during investigation are available, they can be appropriated against such differential amounts - The payments made by the assessee are appropriated against the confirmed demands and no further demand of service tax can be sustained under the works contract service category.rnrnManpower Supply Service - Partial Reverse Charge Eligibility - Whether the assessee is entitled to avail the benefit of partial reverse charge mechanism restricting its service tax liability to 25 percent of the service value – HELD - In terms of Notification No. 30/2012-ST dated 20.06.2012 issued under Section 68(2) of the Finance Act, 1994, the partial reverse charge mechanism in respect of manpower supply service was applicable only where such service was provided by an individual, Hindu Undivided Family, proprietary concern, partnership firm or association of persons, located in the taxable territory, to a business entity registered as a body corporate located in the taxable territory. No material was placed on record to establish the fulfillment of these essential statutory conditions. In the absence of evidence demonstrating eligibility for partial reverse charge, the assessee cannot restrict its service tax liability to 25 percent and must pay full service tax on the entire value. When the assessee had actually deposited service tax at the full rate, such payments can be adjusted against confirmed demands - The claim for partial reverse charge is rejected and the service tax payments made by the assessee at the full rate are appropriated against the confirmed demands.rnrnRevenue neutrality and extended period of limitation - Since the service tax liability would be available as CENVAT credit to the appellant upon payment, a revenue neutral situation arises, and in such circumstances, no demand of service tax can be sustained in view of settled judicial pronouncements. Furthermore, the Revenue failed to adduce evidence of suppression of facts or wilful mis-statement by the appellant to justify invocation of extended period of limitation. The demand raised under extended period of limitation is set aside on the grounds of revenue neutrality and absence of justification for extended period invocation. [Read less]

Customs - Rejection of Declared Transaction Value under Rule 12 of Customs Valuation Rules - Appellants imported lighting fixtures from China and declared transaction values which were rejected by the Department based on alleged electronic data from pen drives and statements recorded during investigation - Whether the rejection of declared transaction value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is legally sustainable – HELD - The statutory framework under Section 14 of the Customs Act, 1962 establishes a presumption in favour of the correctness of the declared trans... [Read more]

Customs - Rejection of Declared Transaction Value under Rule 12 of Customs Valuation Rules - Appellants imported lighting fixtures from China and declared transaction values which were rejected by the Department based on alleged electronic data from pen drives and statements recorded during investigation - Whether the rejection of declared transaction value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is legally sustainable – HELD - The statutory framework under Section 14 of the Customs Act, 1962 establishes a presumption in favour of the correctness of the declared transaction value, and any departure therefrom must be strictly justified with objective material giving rise to reasonable doubt. The expression "reason to doubt" under Rule 12 requires the existence of objective material and cannot be equated with mere suspicion or conjecture. The burden of establishing such doubt lies squarely on the Department - The Hon'ble Supreme Court in Eicher Tractors Ltd. v. Commissioner of Customs and South India Television Pvt. Ltd. v. Commissioner of Customs has authoritatively held that the price actually paid or payable must be accepted unless conditions specified in the rules are not satisfied, and the burden of proving undervaluation lies entirely on the Department through cogent and reliable evidence - In the present case, the Revenue relied upon unverified electronic data and uncorroborated statements without establishing any objective basis for doubting the declared value, no evidence of additional consideration, no corroborated documentary evidence, and no reliable comparison with contemporaneous imports. The entire case rested on suspicion rather than evidence and did not satisfy the statutory requirements of Rule 12 - Accordingly, the rejection of transaction value is set aside.rnrnRe-determination of Value in Accordance with Sequential Application of Valuation Rules - Whether the re-determination of value undertaken by the adjudicating authority was in accordance with the Customs Valuation Rules, 2007 – HELD - The Rule 3(2) of the Valuation Rules unequivocally provides that where value cannot be determined under Rule 3(1), it shall be determined by proceeding sequentially through Rules 4 to 9, with the word "shall" imposing a mandatory obligation leaving no scope for selective or discretionary application - The adjudicating authority bypassed the entire statutory framework and adopted a hybrid and impermissible method based on selective data and assumptions without establishing comparability or providing cogent reasoning. The adoption of standardized rates of rupees 110 per kilogram and rupees 225 per kilogram applied uniformly across multiple consignments was not derived from contemporaneous import data or any recognized valuation source but was extrapolated from unverified electronic records. The conversion of assumed values from RMB into USD and thereafter into INR did not follow any notified exchange rate or consistent methodology. The inclusion of buying agent commission was unsustainable as there was no evidence that such agents acted on behalf of suppliers or that the commission formed part of price actually paid or payable. The re-determination failed to follow the mandatory sequential application of Rules 4 to 9, adopted arbitrary standardized rates without evidentiary basis, relied on unverified electronic records and uncorroborated statements, and ignored commercial realities. Accordingly, the re-determination of value is set aside.rnrnAdmissibility of Electronic Evidence and Statements under Section 138C of Customs Act - Whether the reliance placed on electronic records allegedly retrieved from pen drives and hard disks and statements recorded under Section 108 of the Customs Act was legally admissible and sufficient to sustain the allegations – HELD - The electronic evidence and statements are neither legally admissible nor sufficient to sustain the allegation of undervaluation. Section 138C of the Customs Act, 1962, which governs admissibility of electronic records, is analogous to Section 65B of the Indian Evidence Act, 1872, and incorporates stringent safeguards to ensure authenticity, reliability and integrity of electronic evidence by mandating certification regarding the manner of production, particulars of the device and authenticity of contents - The evidentiary foundation of the electronic records was deeply flawed as they were neither authenticated nor certified, lacked statutory compliance, and had not been correlated with specific consignments. Further, statements recorded under Section 108, while admissible, must be voluntary, tested and corroborated by independent evidence, with denial of cross-examination of witnesses whose statements are relied upon constituting a serious violation of principles of natural justice. Despite specific requests, cross-examination was not granted and no valid reason for such denial was recorded - The absence of any evidence of extra remittance or flow of funds from appellants to suppliers was fatal, as proof of additional consideration is a sine qua non in cases of alleged undervaluation. Defective evidence cannot corroborate another defective piece of evidence. Accordingly, the electronic evidence and statements are held to be inadmissible and unreliable.rnrnInvocation of Extended Period of Limitation under Section 28 of Customs Act - HELD - The entire basis for invoking the extended period was the allegation of undervaluation founded upon electronic records and statements recorded during investigation, but as such evidence was found to be legally inadmissible and lacking statutory compliance under Section 138C and devoid of corroboration, when the very foundation of the allegation fails, the consequential invocation of extended limitation cannot survive. Extended period cannot be invoked on the basis of assumptions, suspicion or inferential reasoning and requires clear evidence of deliberate intent to evade duty. All imports were effected through proper Bills of Entry with goods examined and assessed by Customs authorities at the time of clearance, with values being enhanced wherever considered necessary. This factual position demonstrates that the Department was fully aware of the transactions and had applied its mind to the issue of valuation contemporaneously - The extended period is an exception to the normal rule and must be invoked strictly in accordance with statutory conditions. Once the Department is in possession of all relevant facts, the limitation clock begins to run. Accordingly, the invocation of extended period is set aside and the demand is barred by limitation.rnrnConfiscation and Penalties without Proof of Deliberate Misdeclaration - Whether the confiscation of goods under Section 111(m) of the Customs Act, 1962, the imposition of redemption fine, and the penalties imposed under Sections 112, 114A and 114AA were sustainable in law – HELD - Held that the confiscation, redemption fine and penalties are unsustainable. Confiscation under Section 111(m) can be invoked only where there is misdeclaration of value, quantity or other material particulars, and such misdeclaration must be deliberate, conscious and supported by cogent evidence - A mere difference in valuation or subsequent re-determination of value does not automatically amount to misdeclaration. Once the foundation for confiscation fails, the confiscation itself cannot be sustained as confiscation is not an automatic consequence of every valuation dispute. Redemption fine is purely consequential to confiscation, and it is a settled principle that where confiscation is set aside, redemption fine cannot survive independently. The imposition of penalty under Section 114A is not sustainable as the said provision is attracted only where duty has not been levied or has been short-levied by reason of collusion, wilful misstatement or suppression of [Read less]

Customs - Confiscation of Goods and Imposition of Redemption Fine - Importer's Bona Fides – Import of crude degummed soya bean oil. Upon discharge, an excess quantity of oil is found in the storage tank which was cleared on payment of duty - Adjudicating authority confiscates the excess goods under Section 111(j), 111(i), and 111(m) of the Customs Act, 1962, with an option to redeem on payment of fine under Section 125, and imposes penalty under Section 114A - Whether goods that remain in the possession of the custodian and are subsequently cleared on payment of duty are liable for confiscation – HELD - The appellant-i... [Read more]

Customs - Confiscation of Goods and Imposition of Redemption Fine - Importer's Bona Fides – Import of crude degummed soya bean oil. Upon discharge, an excess quantity of oil is found in the storage tank which was cleared on payment of duty - Adjudicating authority confiscates the excess goods under Section 111(j), 111(i), and 111(m) of the Customs Act, 1962, with an option to redeem on payment of fine under Section 125, and imposes penalty under Section 114A - Whether goods that remain in the possession of the custodian and are subsequently cleared on payment of duty are liable for confiscation – HELD - The appellant-importer made no attempt to clear the excess goods without payment of duty. The email communication on record establishes that the importer categorically instructed the custodian not to release the tankers until Customs duty was paid for the excess quantity. This demonstrates the bona fides of the importer. The fact that the goods were finally cleared on payment of duty further supports the position that there was no intention to remove goods without payment of duty - The adjudicating authority's finding that the importer and custodian were acting together to remove the goods without payment is factually incorrect and unsustainable in law. The order of confiscation and the consequent imposition of redemption fine are set aside - The appeals are allowedrnrnImposition of Penalty under Section 114A - Absence of Mens Rea - Penalty is imposed on both the importer and custodian under Section 114A of the Customs Act, 1962, on the premise that they had prior knowledge of the excess quantity and acted together to remove it without payment of customs duty - Whether penalty under Section 114A of the Customs Act, 1962, can be imposed where there is no evidence of mens rea or intent to remove goods without payment of duty and the goods are subsequently cleared on payment of duty – HELD - Section 114A is not applicable to the facts and circumstances of the case. The observation of the adjudicating authority regarding collusion between the importer and custodian is factually incorrect. No corroborative evidence exists on record to prove collusion, wilful misstatement, or suppression of facts. The custodian notified the importer of the excess quantity, and the importer immediately instructed the custodian not to release the tankers pending payment of duty. The evidence on record indicates that there is no mens rea on the part of either appellant to clear goods without payment of duty. The adjudicating authority has not made out any case to justify the imposition of penalty under Section 114A. Accordingly, the penalty imposed on the importer under Section 114A is set aside. [Read less]

Central Excise - Excise duty valuation where finished goods manufacturer supplies raw materials to sister concern and recipient availing Cenvat credit – Revenue Neutrality – Demand of differential excise duty on the ground that the assessable value adopted by the appellant based on CAS-4 certificate was lower than actual costing, resulting in short payment of excise duty for the period extending over several years - Whether demand for short payment of excise duty can be sustained when the goods supplied to a sister unit are used as raw material and the recipient fully avails Cenvat credit for the excise duty paid, irre... [Read more]

Central Excise - Excise duty valuation where finished goods manufacturer supplies raw materials to sister concern and recipient availing Cenvat credit – Revenue Neutrality – Demand of differential excise duty on the ground that the assessable value adopted by the appellant based on CAS-4 certificate was lower than actual costing, resulting in short payment of excise duty for the period extending over several years - Whether demand for short payment of excise duty can be sustained when the goods supplied to a sister unit are used as raw material and the recipient fully avails Cenvat credit for the excise duty paid, irrespective of the assessable value adopted by the supplier, thereby creating a revenue neutral situation – HELD - Since the goods cleared by the manufacturer are used by the receiving unit as raw material, the receiving unit takes Cenvat credit for the invoices raised by the manufacturer. Irrespective of the assessable value adopted by the manufacturer, the excise duty paid thereon is fully available and availed as Cenvat credit by the receiving unit. This constitutes a clear case of revenue neutrality where no prejudice to revenue occurs. The Revenue has failed to make out any case for imposing the demand on the manufacturer. Additionally, all factual details were reflected in the excise returns filed monthly while clearing goods to the sister unit, thereby negating any allegation of suppression by the manufacturer - The impugned order is set aside on merits and also on grounds of time bar. The appeal is allowed [Read less]

Customs - Confiscation of vehicle for removal of goods without Out of Charge clearance - Transporter acting on directions of importer and CHA - whether confiscation of a vehicle and imposition of redemption fine is justified when a transporter removes goods from customs area without obtaining out of charge clearance, though the customs duty has been fully paid by the importer and the transporter merely followed the directions of the importer – HELD - A transporter who removes goods from customs area without obtaining Out of Charge clearance, but does so on the directions of the importer and clearing and forwarding agent,... [Read more]

Customs - Confiscation of vehicle for removal of goods without Out of Charge clearance - Transporter acting on directions of importer and CHA - whether confiscation of a vehicle and imposition of redemption fine is justified when a transporter removes goods from customs area without obtaining out of charge clearance, though the customs duty has been fully paid by the importer and the transporter merely followed the directions of the importer – HELD - A transporter who removes goods from customs area without obtaining Out of Charge clearance, but does so on the directions of the importer and clearing and forwarding agent, and where the customs duty has been fully paid by the importer, the confiscation of the transporter's vehicle is not justified - While the removal of goods without proper authorization constitutes a contravention of the Customs Act, such contravention does not warrant confiscation of the vehicle when there is no allegation of contraband or restricted or prohibited goods being transported. The transporter, acting merely as a carrier following the explicit instructions of the importer and the authorized agent, cannot be held culpable to the extent of losing his vehicle and livelihood. However, a penalty is imposable as a measure to ensure greater vigilance and care in future transactions, and the same is modified to a reasonable amount rather than being set aside entirely. The confiscation and redemption fine are set aside, while the penalty is reduced proportionately – The appeal is partly allowed [Read less]

Customs – Deemed Export, Discharge of Export Obligation, Duty Demand – Respondent obtained authorization for duty-free imports of polymer raw materials under Advance Authorization and Duty-Free Import Authorization schemes obtained Export Obligation Discharge Certificates after completion of deemed exports to a 100% EoU – Demand of duty on the ground of non-fulfillment of export obligation - Whether the Customs authorities can demand duty on the ground of non-fulfillment of export obligation when EODC have been issued by the licensing authority after due verification and have not been revoked - HELD - When an assesse... [Read more]

Customs – Deemed Export, Discharge of Export Obligation, Duty Demand – Respondent obtained authorization for duty-free imports of polymer raw materials under Advance Authorization and Duty-Free Import Authorization schemes obtained Export Obligation Discharge Certificates after completion of deemed exports to a 100% EoU – Demand of duty on the ground of non-fulfillment of export obligation - Whether the Customs authorities can demand duty on the ground of non-fulfillment of export obligation when EODC have been issued by the licensing authority after due verification and have not been revoked - HELD - When an assessee has obtained Export Obligation Discharge Certificate from the licensing authority and all bonds executed at the time of import have been duly discharged by the Customs authority after satisfying itself that the assessee has fulfilled all the conditions, confirming the demand of customs duty alleging violation of the conditions of the notification is bad in law - The Tribunal in similar facts has held that the issuance of Export Obligation Discharge Certificate by the licensing authority is determinative of completion of export obligations and discharge of bonds by Customs authorities represents administrative closure of authorizations. The demand cannot be sustained merely on suspicion or on the basis of intelligence developed by the DRI without prior consultation with the licensing authority or revocation of the certificates. When export obligations have been completed and bonds have been released, there is no question of wilful misstatement or suppression of facts with intent to evade payment of duty - The appeal filed by the Revenue is rejected [Read less]

Service Tax liability on turnkey/engineering, procurement and construction (EPC) projects for irrigation work – Appellants were awarded work contracts by the Irrigation and CAD Department for execution of turnkey/EPC projects involving construction of irrigation infrastructure - Department sought to levy service tax on these activities as works contract services - Whether the appellants are liable to service tax under the category of works contract service during the relevant period – HELD - The involves interpretation of the Larger bench decision in Lanco Infratech case which has examined the classification of turnkey... [Read more]

Service Tax liability on turnkey/engineering, procurement and construction (EPC) projects for irrigation work – Appellants were awarded work contracts by the Irrigation and CAD Department for execution of turnkey/EPC projects involving construction of irrigation infrastructure - Department sought to levy service tax on these activities as works contract services - Whether the appellants are liable to service tax under the category of works contract service during the relevant period – HELD - The involves interpretation of the Larger bench decision in Lanco Infratech case which has examined the classification of turnkey/EPC contracts. The larger bench had concluded that turnkey/EPC contracts must be classified based on the essential character of service provided, and where such contracts relate to construction of canals, pipelines or conduits for irrigation, water supply or sewerage disposal when provided to government or government undertakings, they would be for non-commercial, non-industrial purposes and would fall under the exclusionary clause of works contract service definition, thereby not being exigible to service tax. However, since the revenue had filed an appeal against the Larger bench decision before the Supreme court and the outcome of that appeal was not readily ascertainable at the time of hearing, the matter requires consideration of the Supreme court's decision before final adjudication - The appeals are allowed by way of remand, and the matter is remanded back to the original adjudicating authority with a direction to first ascertain the status of the Supreme court's decision and thereafter decide the issue keeping in view both the Larger bench order and the Supreme court decision - the appeal is allowed [Read less]

GST – Uttarakhand AAR - Governmental Authority, Special Purpose Vehicle for Smart Cities Mission – Applicant is Special Purpose Vehicle (SPV) for implementation of smart cities project is established by the State Government through two public authorities holding equal equity shares, with its Bd comprising serving Government officials in ex-officio capacities, and exercises functions relating to urban development and infrastructure under the smart cities mission framework - Whether the SPV qualifies as a governmental authority within the meaning of the explanation to Notification No. 12/2017-Central Tax (Rate) dated 28.... [Read more]

GST – Uttarakhand AAR - Governmental Authority, Special Purpose Vehicle for Smart Cities Mission – Applicant is Special Purpose Vehicle (SPV) for implementation of smart cities project is established by the State Government through two public authorities holding equal equity shares, with its Bd comprising serving Government officials in ex-officio capacities, and exercises functions relating to urban development and infrastructure under the smart cities mission framework - Whether the SPV qualifies as a governmental authority within the meaning of the explanation to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 32/2017-Central Tax (Rate) dated 13.10.2017 – HELD - The Applicant qualifies as a Governmental authority as it is established by the Government of the State, has one hundred percent equity participation held by nominees of two public authorities in their official capacity functioning under State Government control, and is constituted to carry out functions entrusted to urban local bodies under the smart cities mission framework. Although not set up by legislation, the entity satisfies the second limb of the definition by meeting the requirements of Government establishment and participation both by way of equity and control. The complete Government ownership, along with the Board composition of serving government officers exercising management and strategic direction, demonstrates unqualified State Government control over the entity's functions, funding and execution, thereby fulfilling all conditions prescribed under the explanation to the Notification – The Applicant qualifies as a Governmental authority - Ordered accordingly - Exemption for Services by Governmental Authority relating to Municipal Functions under GST - Whether the services provided by the Applicant in relation to execution of smart city and energy savings company model projects to the water supply utility, pertaining to functions entrusted to a municipality qualify for exemption under serial number four of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 14/2018-Central Tax (Rate) dated 26.07.2018 – HELD - The services relate to water supply for domestic and industrial purposes, which is enumerated as Entry 5 of the Twelfth Schedule of the Constitution as a function entrusted to Municipalities. The project also advances Municipal functions relating to environmental protection and ecological aspects under Entry 8 of the Twelfth Schedule. The expression "in relation to" used in the exemption provision has wide amplitude covering both direct and indirect nexus with municipal functions. The services rendered by the applicant are integrally connected with the functioning, efficiency and sustainability of municipal water supply functions under Article 243W of the Constitution and therefore qualify for exemption under Serial No. 4 of Notification No. 12/2017-CT (Rate), as amended by Notification No. 14/2018-Central Tax (Rate) dated 26.07.2018 - Pure Agent Status - Integrated Project Implementation and Supervisory Role - Whether the applicant, in respect of amounts received from the water supply utility for remittance to the private contractor without any markup, deduction or value addition, acts as a pure agent of the recipient of supply under Rule 33 of the CGST Rules, 2017 – HELD - The applicant does not qualify as a pure agent within the meaning of Rule 33 of the CGST Rules. Although the amounts are transmitted without markup or deduction, the essential conditions for pure agency status are not satisfied because the applicant is not merely as a channel for payment but as an active and integral participant in the overall execution, supervision, financial management and implementation of the project - The services of the contractor are procured as an integral part of the applicant own contractual obligations under the overall project arrangement rather than as independent supplies obtained merely on behalf of the water supply utility. The amounts received and disbursed are intrinsically linked to the execution of the overall supply undertaken by the applicant, and therefore cannot be treated as reimbursements eligible for exclusion from the value of taxable supply. Such amounts are liable to be considered as part of the consideration for the supply made by the governmental authority. [Read less]

Service Tax - Liability of proprietary concern for dues of erstwhile partnership firm - Whether a proprietary concern can be held liable for service tax demands pertaining to the period when an erstwhile partnership firm was in operation, where both entities have separate service tax registrations, different PAN numbers, and the partnership firm's registration was surrendered prior to issuance of show cause notice – HELD - The show cause notice is ab initio void and the demand is liable to be set aside on the ground that the Department failed to establish transferee liability of the proprietary concern for the tax arrear... [Read more]

Service Tax - Liability of proprietary concern for dues of erstwhile partnership firm - Whether a proprietary concern can be held liable for service tax demands pertaining to the period when an erstwhile partnership firm was in operation, where both entities have separate service tax registrations, different PAN numbers, and the partnership firm's registration was surrendered prior to issuance of show cause notice – HELD - The show cause notice is ab initio void and the demand is liable to be set aside on the ground that the Department failed to establish transferee liability of the proprietary concern for the tax arrears of the erstwhile partnership firm. While the liability of the erstwhile firm does not automatically vanish, the Department was obligated to bring on record whether the present proprietary firm had acquired the partnership's ongoing business in a manner that the proprietor could be held personally liable for the erstwhile firm's tax arrears and to duly reflect the proprietor as the successor and not the non-existent partnership firm. In the absence of any evidence of formal transfer or amalgamation of the business entity, when the proprietorship carries a fresh registration, transferee liability remains unestablished – Further, the show cause notice itself was not even addressed to the partner who is the proprietor but to the proprietary concern with fresh registration - The impugned order is set aside and the appeal is allowedrnrnService Tax levy on composite works contracts prior to Finance Act, 2007 - Whether service tax can be levied on indivisible composite works contracts involving transfer of property in goods prior to the introduction of the Finance Act, 2007 which expressly made such contracts liable to service tax – HELD - Service tax cannot be levied on composite works contracts prior to 1st June 2007 as the charging Section 65(105) of the Finance Act, 1994 refers only to service contracts simpliciter and not to composite works contracts - In the present case, the services rendered involve deemed sale of material used in execution of the works contract on which VAT has been duly discharged and therefore the very demand of service tax for the period before 1st June 2007 on services involving composite works contracts is non-existent. Once the very basis of demand has been demolished, the impugned order cannot be sustained and set aside. [Read less]

Service Tax - Exemption for renting of residential dwelling as Hostel – Appellant rents a multi-storey building to an educational foundation for use as a hostel for students and staff – Appellant initially pays service tax but later files a refund claim contending the rental income is exempt under Section 66D(m) of the Finance Act, 1994 - Whether the service of renting a residential building used as a hostel by an educational institution for student and staff accommodation qualifies as a service by way of renting of residential dwelling for use as residence and is thus exempt from service tax – HELD - The phrase 'res... [Read more]

Service Tax - Exemption for renting of residential dwelling as Hostel – Appellant rents a multi-storey building to an educational foundation for use as a hostel for students and staff – Appellant initially pays service tax but later files a refund claim contending the rental income is exempt under Section 66D(m) of the Finance Act, 1994 - Whether the service of renting a residential building used as a hostel by an educational institution for student and staff accommodation qualifies as a service by way of renting of residential dwelling for use as residence and is thus exempt from service tax – HELD - The phrase 'residential dwelling for use as residence' in the section is activity-specific and not person-specific and does not require that the lessee itself must use the property as residence. The legislative intent behind the exemption is that a rented property used as residence should not attract tax, irrespective of the intermediary or the specific person using it. The ultimate use of the property in the present case remained unchanged as it was used for residence by students and staff of the educational institution - Granting a narrow interpretation by restricting the exemption only when the property is used by the lessee themselves would defeat the legislative intent, particularly as the tax burden would ultimately be passed on to the students. The TRU clarification that 'residential dwelling' means any residential accommodation, excluding temporary stay establishments such as hotels, motels, inns and guest houses, supports this interpretation. A hostel provides long-term residential accommodation and thus falls within the definition of residential dwelling - The appellant is not liable to pay service tax on the rental income received by renting the premises to the educational institution which was in turn used as hostels for the students – The appeal is allowed [Read less]

GST – Return of Job worked goods - Invocation of extended period of limitation - Maintenance of proper records – Petitioner had sent goods to its sister concern for job work without maintaining proper records as required under Section 143 of the CGST Act read with Rule 45 of the CGST Rules. The goods were not returned within the stipulated period, and the taxpayer could not furnish Form ITC-04 due to alleged technical glitches - Tax demand along with interest and penalty invoking extended period - Whether the authorities can invoke extended period of limitation under Section 74 of the CGST Act when the taxpayer fails t... [Read more]

GST – Return of Job worked goods - Invocation of extended period of limitation - Maintenance of proper records – Petitioner had sent goods to its sister concern for job work without maintaining proper records as required under Section 143 of the CGST Act read with Rule 45 of the CGST Rules. The goods were not returned within the stipulated period, and the taxpayer could not furnish Form ITC-04 due to alleged technical glitches - Tax demand along with interest and penalty invoking extended period - Whether the authorities can invoke extended period of limitation under Section 74 of the CGST Act when the taxpayer fails to maintain records showing that goods sent for job work were returned within the prescribed time – HELD - The extended period of limitation under Section 74 has a much lower threshold compared to earlier indirect tax legislations. The GST scheme is based on self-assessment where the Department relies on records maintained by the assessee. If goods are dispatched on job work basis, proper accounts must be maintained and goods must be accounted for before supply from registered premises. When the taxpayer fails to maintain necessary records showing return of goods within the prescribed period, it is deemed that a supply has taken place and tax liability arises - The SCN sufficiently invokes Section 74 by referring to the relevant Sections and Rule provisions and calculating the demand with reference to Section 143(3), 144(4) and Rule 45(3) and 45(4). Technical objections regarding invocation of extended limitation cannot be countenanced in light of the scheme of GST enactment. The threshold for invoking extended period is lower compared to earlier legislation, and absence of detailed specification of all ingredients does not vitiate the proceedings when the statutory provisions are adequately referred to in the show cause notice - The writ petitions are disposed with liberty to the petitioner to establish that the issue is revenue neutral by demonstrating that inputs sent for job work suffered tax either in the hands of the principal or the job worker. The respondent shall thereafter pass final orders on merits after hearing the petitioner – The petition is disposed of [Read less]

GST - Demand on Reverse Charge Mechanism basis on professional and consultancy services availed by SEZ unit for failure to produce the Letter of Undertaking and SEZ Certificate - Department contended that the unit is not outside the GST framework merely by virtue of being an SEZ unit - Whether an SEZ unit is liable to pay tax under the RCM on services that qualify as zero-rated supplies under Section 16 of the IGST Act, 2017 – HELD - The assessment orders were passed primarily because the petitioner failed to produce the Letter of Undertaking and SEZ Certificate before the adjudicating authority for verification. The Sec... [Read more]

GST - Demand on Reverse Charge Mechanism basis on professional and consultancy services availed by SEZ unit for failure to produce the Letter of Undertaking and SEZ Certificate - Department contended that the unit is not outside the GST framework merely by virtue of being an SEZ unit - Whether an SEZ unit is liable to pay tax under the RCM on services that qualify as zero-rated supplies under Section 16 of the IGST Act, 2017 – HELD - The assessment orders were passed primarily because the petitioner failed to produce the Letter of Undertaking and SEZ Certificate before the adjudicating authority for verification. The Section 16 of the IGST Act treats supplies to an SEZ unit for authorized operations as zero-rated supplies, and where the supplier is not liable to pay tax, the recipient SEZ unit has to pay tax under the Reverse Charge or effect supplies without payment of tax under a valid Letter of Undertaking. Merely being an SEZ unit does not place the entity entirely outside the GST framework, but the assessee must establish its entitlement to benefits by producing necessary documents - The controversy can be effectively resolved by affording the petitioner a further opportunity to place the relevant documents before the adjudicating authority, as the requisite SEZ Certificate was subsequently produced before the court itself during hearing - The impugned assessment orders stand set aside. The petitioner is directed to file an additional reply, if any, and produce the Letter of Undertaking and SEZ Certificate before the adjudicating authority. The adjudicating authority shall thereafter consider the petitioner's claim in light of Section 16 of the IGST Act and pass fresh orders on merits and in accordance with law after affording due opportunity to the petitioner – The petition is disposed of [Read less]

GST - Breach of principles of natural justice – Petitioner discontinued business and obtained cancellation of its registration in June 2019. In 2025, an order-in-original is passed imposing tax demand petitioner generated two e-way bills in respect of each invoice – Order passed without affording reasonable opportunity to respond to the show cause notice – HELD - Although a person whose registration stands cancelled retains technical access to the tax portal, it is unreasonable to expect such person to access the portal six years after discontinuing business and after registration cancellation. The order passed witho... [Read more]

GST - Breach of principles of natural justice – Petitioner discontinued business and obtained cancellation of its registration in June 2019. In 2025, an order-in-original is passed imposing tax demand petitioner generated two e-way bills in respect of each invoice – Order passed without affording reasonable opportunity to respond to the show cause notice – HELD - Although a person whose registration stands cancelled retains technical access to the tax portal, it is unreasonable to expect such person to access the portal six years after discontinuing business and after registration cancellation. The order passed without hearing the assessee constitutes a breach of principles of natural justice and is liable to be set aside. The court reasons that the tax authority should have afforded a reasonable opportunity to the assessee to respond to the show cause notice before passing the assessment order. The principles of natural justice require that any person against whom an adverse order is to be passed must be given an adequate opportunity to present their case - The impugned order is set aside and the matter is remanded for reconsideration, subject to the assessee paying ten percent of the disputed tax demand – The petition is disposed of [Read less]

GST - Input Tax Credit - Wrongful Availment - Burden of Proof and Substantiation of Supply – Disallowance of input tax credit on the ground that lorry receipts and weighment slips had not been filed - Whether the availment of input tax credit can be disallowed merely on the ground that lorry receipts and weighment slips have not been filed, notwithstanding that the supplier was registered at the time of supply, invoices contained transport details, and the supplier had filed returns and paid taxes – HELD - The record shows that the supplier was a registered person during the relevant period, and the registration was ca... [Read more]

GST - Input Tax Credit - Wrongful Availment - Burden of Proof and Substantiation of Supply – Disallowance of input tax credit on the ground that lorry receipts and weighment slips had not been filed - Whether the availment of input tax credit can be disallowed merely on the ground that lorry receipts and weighment slips have not been filed, notwithstanding that the supplier was registered at the time of supply, invoices contained transport details, and the supplier had filed returns and paid taxes – HELD - The record shows that the supplier was a registered person during the relevant period, and the registration was cancelled subsequently. Each invoice contains the vehicle number under which the goods were transported. The impugned order records the petitioner’s contention that the supplier arranged the conveyance for the delivery of the goods to the petitioner - Where a supplier is a registered person at the time of supply, has issued tax invoices containing material details including vehicle numbers, and has filed requisite returns and paid taxes in respect of the supplies, a further examination into the genuineness of the supply becomes warranted before confirming a tax proposal. The burden of proof regarding availment of ITC is statutorily imposed on the person availing the credit, however, this burden must be discharged in the context of all available evidence and circumstances. Merely because certain ancillary documents are absent, and without undertaking a holistic examination of the transaction, the tax authority cannot reject the input tax credit – The impugned order is set aside and the matter is remanded to the respondent for reconsideration. The petitioner is permitted to place additional documents relating to the supply - The Writ Petition is disposed of [Read less]

Customs - Duty exemption on refined vegetable oils – Eligibility based on 'edible grade' classification irrespective of end-use - Respondents imported refined vegetable oils (peanut oil, sunflower oil, walnut oil, almond oil, and macadamia nut oil) classified under Customs Tariff Items 1508, 1512, and declared them as edible grade, seeking duty exemption under Serial Nos. 64 and 71 of Notification No. 50/2017-Customs dated 30.06.2017. The goods were tested by a Government-approved laboratory (FSSAI/NABL accredited) and confirmed to meet edible grade standards as per FSSAI regulations. However, the importer declared the i... [Read more]

Customs - Duty exemption on refined vegetable oils – Eligibility based on 'edible grade' classification irrespective of end-use - Respondents imported refined vegetable oils (peanut oil, sunflower oil, walnut oil, almond oil, and macadamia nut oil) classified under Customs Tariff Items 1508, 1512, and declared them as edible grade, seeking duty exemption under Serial Nos. 64 and 71 of Notification No. 50/2017-Customs dated 30.06.2017. The goods were tested by a Government-approved laboratory (FSSAI/NABL accredited) and confirmed to meet edible grade standards as per FSSAI regulations. However, the importer declared the intended end-use as cosmetics, pharmaceuticals, and personal care products rather than direct human consumption - Whether goods can qualify for customs duty exemption under Notification No. 50/2017-Customs if they are of 'edible grade' as per prescribed standards but are intended for non-food industrial use such as cosmetics and pharmaceuticals – HELD – The goods meeting the two essential conditions prescribed in the exemption notification i.e. classification under specified chapter headings and certification as 'refined and edible grade', are eligible for Customs duty exemption regardless of their declared end-use - The exemption notification contains no explicit condition regarding end-use. The supplementary note to Chapter 15 of the Customs Tariff Act defines 'edible grade' with reference to standards prescribed by FSSAI and the Prevention of Food Adulteration Rules based on quality parameters alone. Laboratory test reports confirming that imported goods conform to edible grade standards as per FSSAI regulations constitute sufficient evidence of meeting the statutory definition of 'edible grade' – The Circulars issued by the Board cannot impose additional conditions beyond what is expressly stated in the exemption notification, as circular instructions cannot restrict or modify the scope of a statutory exemption - The taxable event occurs at the point of import when goods are classified, and subsequent end-use is immaterial to determining duty eligibility. The Department's reliance on CBEC Circular No. 40/2001 imposing an end-use condition is legally unsustainable as it contradicts the notification and cannot override statutory provisions - The order passed by the Commissioner of Customs (Appeals), which extended customs duty exemption to the imported goods under Serial Nos. 64 and 71 of Notification No. 50/2017-Customs, is upheld as proper and legal - The appeal filed by the Revenue is dismissed [Read less]

GST - Anti-profiteering - Failure to pass on the benefit of reduction in GST rate on cinema admission tickets from 18% to 12% w.e.f. 01.01.2019 - Whether a registered person engaged in providing cinema admission services, who increases base prices following a GST rate reduction while maintaining the same cumulative tax-inclusive price, violates Section 171(1) of the CGST Act, 2017 and constitutes profiteering notwithstanding any permission granted by the High Court to collect proposed fares subject to regulatory compliance – HELD – The Respondent has violated Section 171(1) of the CGST Act, 2017, which mandates that a... [Read more]

GST - Anti-profiteering - Failure to pass on the benefit of reduction in GST rate on cinema admission tickets from 18% to 12% w.e.f. 01.01.2019 - Whether a registered person engaged in providing cinema admission services, who increases base prices following a GST rate reduction while maintaining the same cumulative tax-inclusive price, violates Section 171(1) of the CGST Act, 2017 and constitutes profiteering notwithstanding any permission granted by the High Court to collect proposed fares subject to regulatory compliance – HELD – The Respondent has violated Section 171(1) of the CGST Act, 2017, which mandates that any reduction in the rate of tax on supply of goods or services must be passed on to the recipient by way of commensurate reduction in prices. The statutory obligation under Section 171 is absolute and cannot be overridden by conditional permissions granted by the High Court, as such permissions were not unconditional and were subject to compliance with the regulatory framework governing ticket pricing - The intention of the Government is that the benefit of tax rate reduction should immediately be passed on to the end-user by way of reduction in prices commensurate with the reduction in tax rate. By increasing base prices while maintaining the same cum-tax selling price, the Respondent has defeated the statutory mandate and prevented consumers from benefiting from the government's decision to lower the tax rate - Since recipients are not identifiable, the Respondent shall deposit 50% in the Central Consumer Welfare Fund and 50% in the State Consumer Welfare Fund. The Respondent shall pay interest at 18% per annum on the total profiteered amount from 28.06.2019 – Ordered accordingly [Read less]

Customs - Mandatory return of seized cash on expiry of statutory period under Customs Act – Seizure of Cash during search proceedings – Non-issue of show cause notice within Six months from the date of seizure - The Customs authorities neither issued SCN within the prescribed period nor communicated any extension order before the expiry of the six-month period. Subsequently, Customs authorities transferred the seized cash to income tax authorities - Whether seized cash must be mandatorily returned to the person from whom it was seized when no show cause notice is issued within six months of seizure and no valid extensi... [Read more]

Customs - Mandatory return of seized cash on expiry of statutory period under Customs Act – Seizure of Cash during search proceedings – Non-issue of show cause notice within Six months from the date of seizure - The Customs authorities neither issued SCN within the prescribed period nor communicated any extension order before the expiry of the six-month period. Subsequently, Customs authorities transferred the seized cash to income tax authorities - Whether seized cash must be mandatorily returned to the person from whom it was seized when no show cause notice is issued within six months of seizure and no valid extension order communicating the extension to the person concerned is passed before expiry of the statutory period – HELD - The seized cash must be mandatorily returned on expiry of six months in accordance with Section 110(2) of the Customs Act, 1962. The order sheet dated 18.02.2026 purporting to grant extension does not satisfy the requirements of a valid approval order because it merely bears a signature without any recorded reasons or evidence of application of mind by the competent authority, rendering it a mere rubber stamp - Furthermore, the order was never communicated to the petitioners before the expiry of the six-month period, which is a mandatory requirement under the proviso to Section 110(2) - The approval orders for extension must reflect that the higher authority applied its mind and examine the fitness of the case. Consequently, both conditions prescribed under Section 110(2) were not fulfilled and the petitioners earned a legal right to return of the cash on 19.02.2026. The retention of cash beyond this date and subsequent transfer to income tax authorities without informing the Court during pendency of writ petition constitutes illegal action beyond the jurisdiction of the Customs authorities - Though the petitioners may now pursue return of money from income tax authorities in accordance with law, costs of Rs.1,00,000 is imposed on respondents for illegal actions, deliberate obstruction of justice, and overreaching the proceedings – The petition is disposed of [Read less]

GST - Principle of res judicata, Maintainability of fresh investigation in Anti-profiteering proceedings - Whether a fresh investigation is required to be initiated based on a new complaint regarding alleged profiteering by the respondent for the same project and period when the subject matter of profiteering has already been finally adjudicated upon and affirmed by a superior court and the complaint has been withdrawn by the complainant – HELD - The principles of res judicata are well established and provide that once a matter has been fully and finally adjudicated upon by a competent authority and affirmed by a superio... [Read more]

GST - Principle of res judicata, Maintainability of fresh investigation in Anti-profiteering proceedings - Whether a fresh investigation is required to be initiated based on a new complaint regarding alleged profiteering by the respondent for the same project and period when the subject matter of profiteering has already been finally adjudicated upon and affirmed by a superior court and the complaint has been withdrawn by the complainant – HELD - The principles of res judicata are well established and provide that once a matter has been fully and finally adjudicated upon by a competent authority and affirmed by a superior court, the same cannot be reopened based on a fresh complaint raising the same cause of action against the same respondent for the same project and period. Permitting such a course would be contrary to settled canons of jurisprudence and would lead to multiple parallel proceedings on the same subject matter, resulting in legal uncertainty and abuse of process. The complainant has himself unconditionally withdrawn the complaint and has already obtained possession of the allotted unit with all financial transactions settled. The matter of profiteering has attained finality both in terms of facts and law through the previous investigation, the National Anti-Profiteering Authority's order, and the High Court's judgment - No fresh investigation is required to be taken up based on the complaint. The present proceedings are dropped as not maintainable [Read less]

GST - Anti-Profiteering - Jurisdiction of erstwhile NAA to direct further investigation beyond scope of original complaint in Anti-Profiteering Proceedings - Whether the erstwhile National Anti-Profiteering Authority possesses jurisdiction to direct investigation into goods and services beyond those covered in the original complaint or reference – HELD - The authority possesses wide jurisdiction to direct further investigation beyond the scope of the original complaint. Rule 133(4) of the CGST Rules, 2017 confers jurisdiction on the authority to direct further investigation without imposing any restrictions or limitation... [Read more]

GST - Anti-Profiteering - Jurisdiction of erstwhile NAA to direct further investigation beyond scope of original complaint in Anti-Profiteering Proceedings - Whether the erstwhile National Anti-Profiteering Authority possesses jurisdiction to direct investigation into goods and services beyond those covered in the original complaint or reference – HELD - The authority possesses wide jurisdiction to direct further investigation beyond the scope of the original complaint. Rule 133(4) of the CGST Rules, 2017 confers jurisdiction on the authority to direct further investigation without imposing any restrictions or limitations. The provision is non-obstante in nature and the authority need not confine itself only to goods or services covered in the original report. The authority itself had recognized this position by directing further investigation based on the respondent's own submission acknowledging that benefits may not have been passed to certain customers. Sub-rule (5) of Rule 133 is merely clarificatory in nature and does not confer additional jurisdiction but reiterates existing powers - Further, the scope of investigation by the investigating authority under Rule 129(2) is very wide and is not limited to goods or services in relation to which a complaint is received. Since the respondent itself invited the direction for further investigation through its own submissions, it cannot later challenge the jurisdiction of the authority to conduct such investigation. Therefore, the first contention of the respondent stands rejected and the authority's order directing further investigation is upheld - The jurisdiction of the erstwhile Anti-Profiteering Authority to direct further investigation into other products is confirmed.rnrn^Validity of Proceedings following omission of Rules constituting Anti-Profiteering Authority without Savings Clause - Rules 122, 124, 125, 134 and 137 of the CGST Rules, 2017 which provided for the constitution, appointment and functioning of the National Anti-Profiteering Authority were omitted vide Notification dated 23.11.2022 without any savings clause. The respondent challenged the validity of proceedings initiated under the earlier authority structure - Whether proceedings initiated by the National Anti-Profiteering Authority become void and non-existent following the omission of the rules constituting the authority without any savings clause – HELD - The omission of the Rules does not render the proceedings non-existent or cause them to disappear from record. While it is true that repeal or deletion of statutory provisions normally obliterates them from the statute book and the operation largely depends on savings clauses, the facts of this case present a different scenario. The Government decision to address illegal profiteering continued even after the Rules were omitted. The Competition Commission of India was subsequently vested with anti-profiteering powers, and later the Principal Bench of the GST Appellate Tribunal was given jurisdiction to examine anti-profiteering matters. This reflects a change in the designated authority rather than abandonment of the anti-profiteering objective. Furthermore, the amended Rule 127 substituted the term "duties" with "functions" and added an explanation defining "authority" as the authority notified under sub-section 2 of Section 171 of the Act. The principles of succession apply to such situations, ensuring that orders passed by the erstwhile authority before omission of rules do not vanish from record. The omission of Rules creating the NAA does not result in nullification of its orders or proceedings - The proceedings initiated and orders passed by the erstwhile NAA are valid and do not become void due to subsequent omission of the rules constituting the authority.rnrn^Applicability of Limitation Period to Anti-Profiteering Proceedings - Respondent contended that proceedings were barred by limitation as the investigating authority did not furnish its report within the time period specified in Rule 133(1) of the CGST Rules, 2017, which mandates that the authority shall decide matters within six months of receipt of the report from the investigating authority - Whether anti-profiteering proceedings are barred by limitation due to non-compliance with the time limit specified in Rule 133(1) for deciding matters – HELD - The Rule 133(1) prescribes a time limit for the authority to decide matters but does not provide any consequences for non-compliance with such time limit. The Delhi High Court in Reckitt Benckiser case has held that since the Rules do not specify consequences for lapse of time limits, the time limits are directory in nature and not mandatory in character. The anti-profiteering provisions in the Act and Rules constitute beneficial legislation designed to promote consumer welfare which must receive liberal construction that favors the consumer and promotes the intent and objective of the Act. If strict adherence to procedural time limits could vitiate the entire proceedings, it would defeat the protective purpose of the legislation - The anti-profiteering proceedings are not barred by limitation, and the time limits specified in the Rules are directory rather than mandatory in nature.rnrn^Applicability of Interest and Penalty - The profiteering period was from 15.11.2017 to 31.01.2018. The provision for imposition of penalty under Section 171(3A) was introduced with effect from 01.01.2020, and the provision for interest under Rule 133(3)(c) was inserted on 28.06.2019 - Whether interest and penalty can be imposed on profiteered amounts when the profiteering occurred in a period prior to the introduction of these provisions – HELD - The respondent is not liable to pay any interest or penalty on the profiteered amount. The provisions for interest and penalty were introduced after the period of alleged profiteering and these provisions apply only prospectively from their date of introduction. Since the profiteering occurred prior to the introduction of both the penalty provision (01.01.2020) and the interest provision (28.06.2019), these provisions cannot be applied retrospectively to the respondent's conduct during the pre-amendment period - The respondent is not liable to pay any interest or penalty on the profiteered amount as the profiteering period predates the introduction of these provisions.rnrn^Whether the anti-profiteering authority must consider commercial, costing and market-related factors while determining whether the benefit of GST rate reduction has been passed on to consumers, or whether it is limited to examining whether the benefit has been commensurate reduction in prices – HELD - The anti-profiteering authority is not concerned with the price determined by the supplier for supply of particular goods or services, exclusive of the GST or input-tax credit component. The supplier is at liberty to set base prices and vary them according to commercial and economic factors. However, the fundamental duty under Section 171 of the CGST Act, 2017 requires that every supplier must pass on the benefit of reduced tax rate and input-tax credit by way of commensurate reduction in prices - The authority is mandated only to ensure that benefits of reduced rates and input-tax credit are passed on; it cannot force suppliers to sell at reduced prices. However, if a supplier fails to pass the benefit to any customer, it cannot claim compliance by passing greater benefits to other customers. Each customer is entitled to receive the benefit of rate reduction - The methodology of comparing average prices of the pre-GST period with actual prices of the post-GST period is permissible and does not constitute an error. The authority correctly adopted this approach to determine the profiteered amount, and the respondent's challenge to the methodology is rejected. The respondent's admission through its own submissions that benefits were not passed on [Read less]

GST - Bail application in case involving GST evasion through fictitious firms - Applicant was arrested on allegation of orchestrating and operating multiple fictitious firms that availed and passed on fraudulent ITC through at least eleven bogus entities, causing massive loss to the public exchequer - Applicant claimed to have been working merely in an accounting or consulting capacity without proprietary or beneficial interest in any of the firms, and contended that his arrest was illegal as grounds of arrest were not provided in writing as required under the relevant statutory provision – HELD - While the allegations a... [Read more]

GST - Bail application in case involving GST evasion through fictitious firms - Applicant was arrested on allegation of orchestrating and operating multiple fictitious firms that availed and passed on fraudulent ITC through at least eleven bogus entities, causing massive loss to the public exchequer - Applicant claimed to have been working merely in an accounting or consulting capacity without proprietary or beneficial interest in any of the firms, and contended that his arrest was illegal as grounds of arrest were not provided in writing as required under the relevant statutory provision – HELD - While the allegations and counter-allegations constitute matters to be determined at trial, the veracity of charges can be assessed only after conclusion of the trial and appreciation of evidence by the trial Court. The trial of the case would take sufficiently long time, and the applicant has undergone incarceration of six months as on the relevant date. The judgments relied upon by the prosecution, though acknowledged as correct statements of law, are distinguishable on the facts of the present case - The applicant is ordered to be released on bail on furnishing bail or surety bonds to the satisfaction of the concerned trial Court or Duty Magistrate, with a direction to the trial Court to conclude the trial expeditiously - The petition is allowed [Read less]

Customs - Retrospective application of Notification, Requirement of Publication in Official Gazette – Petitioner imported platinum jewellery studded with freshwater pearls from Thailand under the ASEAN-India Free Trade Area agreement. The goods arrived at the port of importation on 02.04.2026 at 00:15 hours. On the same day, the company requested clearance without import license, claiming entitlement to transitional arrangements. However, the Customs authorities refused clearance relying on Notification No. 02/2026-27 issued on 01.04.2026 and published in the official gazette on 02.04.2026 at 22:46:52 hours, which restri... [Read more]

Customs - Retrospective application of Notification, Requirement of Publication in Official Gazette – Petitioner imported platinum jewellery studded with freshwater pearls from Thailand under the ASEAN-India Free Trade Area agreement. The goods arrived at the port of importation on 02.04.2026 at 00:15 hours. On the same day, the company requested clearance without import license, claiming entitlement to transitional arrangements. However, the Customs authorities refused clearance relying on Notification No. 02/2026-27 issued on 01.04.2026 and published in the official gazette on 02.04.2026 at 22:46:52 hours, which restricted the import of the specified goods and denied transitional benefits - Whether a Notification restricting imports and denying transitional arrangements, published in the official Gazette more than 22 hours after the arrival of goods at the port, can operate retrospectively and apply to goods already in transit prior to its publication – HELD - The notification cannot operate retrospectively against the imported goods. The Court relies on the principle established in Viraj Impex that delegated legislation acquires the force of law only upon publication in the official gazette in the manner prescribed by the parent statute, and such publication is a condition precedent for enforceability - The Court further adopts the principle from G.S. Chatha Rice Mills that in the era of electronic publication of gazette notifications, the precise time of uploading the notification to the e-gazette is significant for determining when it becomes effective and enforceable - Since the notification was digitally signed and published at 22:46:52 hours on 02.04.2026, nearly 22 hours after the goods arrived, the notification could not have any retrospective effect on goods that had already landed before its publication - Once the legislature prescribes a specific mode of promulgation, the executive cannot introduce an alternative mode and attribute legal consequences to it. Therefore, the respondent authorities erred in applying the notification to the petitioner's consignment that had already arrived before the notification was published in the official Gazette - The authorities are directed to immediately assess, clear, and grant out-of-charge to the petitioner's consignment without insisting upon any import authorization or license under the impugned notification - The writ petition partly allowed [Read less]

GST - Anti-profiteering - Interest liability on refundable amount – Respondent-Developer derived an additional input tax credit compared to the pre-GST period, which resulted in a profiteered amount that was not reduced in the base or cum-tax prices charged to the buyers - The Developer subsequently agreed to comply with the anti-profiteering report but contested the imposition of interest, contending that interest should either not be levied or should apply only from the date of Completion certificate - Whether a developer is liable to refund the profiteered amount along with interest and from which date the interest be... [Read more]

GST - Anti-profiteering - Interest liability on refundable amount – Respondent-Developer derived an additional input tax credit compared to the pre-GST period, which resulted in a profiteered amount that was not reduced in the base or cum-tax prices charged to the buyers - The Developer subsequently agreed to comply with the anti-profiteering report but contested the imposition of interest, contending that interest should either not be levied or should apply only from the date of Completion certificate - Whether a developer is liable to refund the profiteered amount along with interest and from which date the interest becomes payable – HELD - The Respondent is liable to refund the profiteered amount along with interest at 18% per annum from the respective dates of collection of the excess amount. Section 171 of the CGST Act, 2017 creates a statutory obligation to pass on the benefit of tax reduction or additional input tax credit at the time of supply itself. Rule 133(3)(b) of the CGST Rules, 2017 expressly empowers the authority to order return of the amount not passed on by way of commensurate reduction in prices, along with interest from the date of collection of the higher amount till the date of its return. The provision is mandatory in nature - The developer's contention that interest should apply only from the date of Completion certificate is rejected because Section 171 mandates passing on of benefits at the time of supply itself, and retention of such benefit constitutes collection of excess amounts attracting interest from the date of such collection - Where a supplier retains the benefit instead of passing it on to the recipient, the amount retained assumes the character of excess consideration collected from the buyers, and interest in such cases is compensatory in nature ensuring restitution of the time value of money that rightfully belongs to the recipients. The reliance on Rule 133(3)(c), which applies only where recipients are not identifiable or do not claim the amount, is misplaced as all homebuyers are identifiable in the present case – Ordered accordingly [Read less]

GST - Anti-profiteering provision – Passing of input tax credit benefit to consumers – The matter of passing on the benefit of input tax credit to home-buyers in a real estate project the case was referred to the DGAP for investigation - DGAP computed the profiteered amount after adjusting for ITC benefits that were verified as passed on to 55 home-buyers - Whether the respondent-construction service provider has complied with Section 171 of the CGST Act, 2017, by passing on the benefit of input tax credit to home-buyers – HELD - The respondent passed on the ITC benefit to eligible home-buyers to the tune of Rs. 2,02... [Read more]

GST - Anti-profiteering provision – Passing of input tax credit benefit to consumers – The matter of passing on the benefit of input tax credit to home-buyers in a real estate project the case was referred to the DGAP for investigation - DGAP computed the profiteered amount after adjusting for ITC benefits that were verified as passed on to 55 home-buyers - Whether the respondent-construction service provider has complied with Section 171 of the CGST Act, 2017, by passing on the benefit of input tax credit to home-buyers – HELD - The respondent passed on the ITC benefit to eligible home-buyers to the tune of Rs. 2,02,53,991/-, which exceeds the computed profiteered amount of Rs. 1,70,87,844/-. The Tribunal accepted the report of the DGAP after verifying the documents submitted by the respondent showing that the benefit was indeed passed on to home-buyers, including acknowledgment from the complainant. Since the respondent has already paid the profiteered amount to eligible home-buyers, the respondent is not liable to pay any penalty under Section 171 of the CGST Act, 2017. However, the respondent is directed to calculate and pay interest within two months as applicable under Rule 133(3)(b) of the CGST Rules, 2017 - The appeal is disposed of [Read less]