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GST - Denial of input tax credit on account of default of supplier in depositing tax under Section 16(2)(c) of CGST Act, 2017 – Challenge to the vires of the provision of Section 16(2)(c) of the CGST Act, which denies ITC to the purchasing dealer if the tax charged in respect of such supply has not been paid to the Government by the supplier - Whether Section 16(2)(c) of the CGST Act is arbitrary, ultra vires and violative of Articles 14, 19(1)(g), 265, and 300A of the Constitution of India - HELD – The provision of Section 16(2)(c) is clear, self-explanatory and unambiguous, and its underlying intent is to ensure that... [Read more]

GST - Denial of input tax credit on account of default of supplier in depositing tax under Section 16(2)(c) of CGST Act, 2017 – Challenge to the vires of the provision of Section 16(2)(c) of the CGST Act, which denies ITC to the purchasing dealer if the tax charged in respect of such supply has not been paid to the Government by the supplier - Whether Section 16(2)(c) of the CGST Act is arbitrary, ultra vires and violative of Articles 14, 19(1)(g), 265, and 300A of the Constitution of India - HELD – The provision of Section 16(2)(c) is clear, self-explanatory and unambiguous, and its underlying intent is to ensure that the Government is not deprived of revenue on account of illegal or defaulting conduct on the part of the supplier. The GST regime, unlike the previous VAT regime, has a destination-based tax structure, and any reading down of Section 16(2)(c) would have cascading fiscal consequences across state boundaries – The clause (c) of Section 16(2) of the CGST Act clearly states that ITC will be available to the purchasing dealer only if the supplier has paid the tax to the Government. It is for the purchasing dealer to prove that the tax collected has been remitted to the Government by the supplier - The GST framework provides adequate safeguards for the purchasing dealer through Sections 41 and 53 of the CGST Act and Rule 37A of the CGST Rules, 2017. The burden of proof lies on the purchasing dealer to establish eligibility for ITC under Section 155 of the CGST Act - It is settled legal principle of statutory interpretation that a provision in the statute is not to be read in isolation rather it has to read along with other related provisions itself. The provision of Section 16(2)(c) cannot be read in isolation, but has to read with attendant provisions - The Court acknowledge the genuine concerns of the petitioners regarding the hardship faced by bona fide purchasers due to the supplier's default. The Government is urged to undertake a comprehensive re-evaluation of the situation and implement a robust, technology-driven tracking mechanism to alleviate the disproportionate burdens on purchasers. The Government is directed to take prompt steps for the recovery of tax from the erring suppliers, instead of compelling the purchasers to avail themselves of alternate cumbersome remedies – The Court expects that the Govt will address the issue of genuine purchasers at the earliest through appropriate legislative amendments or clarifications within the GST framework – The Section 16(2)(c) of the CGST Act is not arbitrary, ultra vires or violative of the Constitution. The challenge to the vires of Section 16(2)(c) of the CGST Act is rejected - The petitions are disposed of - Burden of Proof under Section 155 of the CGST Act - The Section 155 of the CGST Act places the burden of proof on the person claiming input tax credit to establish their eligibility, which is intrinsically linked to the actual payment of tax by the supplier. The expression "eligible" in Section 155 cannot be construed as dependent upon a unilateral act of claim by the purchaser; rather, it has a direct nexus with the actual payment of tax by the supplier - Doctrine of reading down of a provision – The doctrine of reading down is a judicial tool used to salvage the constitutionality of a statute by giving a provision a narrowed or limited interpretation, thereby mitigating potential conflicts with constitutional or legal principles. We do not find that the provision of Section 16(2)(c) if read with the scheme of GST regime as discussed, conflicts with constitutional or legal principles. The provision of Section 16(2)(c) cannot be read in isolation, but has to read with attendant provisions as discussed hereinabove, which enables the government to secure its interest in revenue, by keeping a check on fraudulent transactions while maintaining the interest of genuine purchasers. It is settled legal principle of statutory interpretation that a provision in the statute is not to be read in isolation rather it has to read along with other related provisions itself, more particularly when the subject matter interconnects within different sections or parts of the same statute. [Para 82] [Read less]

GST – Demand of GST on settlement of Arbitral Award, Scope of Supply – Challenge to the show cause notice seeking to levy IGST on the settlement of an international commercial Arbitral award - Revenue sought to levy IGST on the damages paid by the Petitioner to Docomo, contending that Docomo's agreement to withdraw enforcement proceedings amounted to 'supply of service' under Section 7 read with Entry 5(e) of Schedule II of CGST Act, 2017 - Whether the settlement between Petitioner and Docomo in the enforcement proceedings filed by Docomo under Sections 47 and 48 of the Arbitration and Conciliation Act, 1996, under whi... [Read more]

GST – Demand of GST on settlement of Arbitral Award, Scope of Supply – Challenge to the show cause notice seeking to levy IGST on the settlement of an international commercial Arbitral award - Revenue sought to levy IGST on the damages paid by the Petitioner to Docomo, contending that Docomo's agreement to withdraw enforcement proceedings amounted to 'supply of service' under Section 7 read with Entry 5(e) of Schedule II of CGST Act, 2017 - Whether the settlement between Petitioner and Docomo in the enforcement proceedings filed by Docomo under Sections 47 and 48 of the Arbitration and Conciliation Act, 1996, under which the Arbitral Award for damages stood settled between the parties, would amount to "supply" within the definition of Section 7(1) of the CGST Act – HELD - The settlement between the parties in the enforcement proceedings, wherein petitioner discharged the arbitral award liability and Docomo agreed to withdraw the collateral enforcement proceedings, cannot be construed as an independent agreement amounting to 'supply of service' under the CGST Act. Mere satisfaction of a decree/award by the judgment debtor, and the decree-holder/award-creditor agreeing to withdraw the execution proceedings, which are incidental and integral to the decree/award, cannot be regarded as creating any independent agreement beyond the scope of the decree/award itself. The payment of damages under the arbitral award was a mere flow of money from the party who caused the breach to the party who suffered the loss, and did not constitute consideration for any "supply" under the GST law - The consent terms entered between the parties, recording the conditions for satisfaction of the arbitral award, does not bring about any independent obligation/agreement involving consideration, so as to attract the provisions of Section 7 read with Entry 5(e) of Schedule II of the CGST Act - The Circulars issued by the CBIC, which clarified that damages for breach of contract are not taxable, are binding on the revenue authorities and the demand for IGST was contrary to the law - The action on the part of the respondents in raising the impugned demand on the ground that Docomo agreed not to pursue the execution proceedings instituted before the Courts of different jurisdictions (UK and USA etc.) would amount to an independent agreement between Docomo and Tata, under which Docomo tolerated an act or a situation, is totally untenable - the settlement between Tata and Docomo in the enforcement proceedings of the arbitral award did not amount to "supply" under the GST law. Accordingly, the intimation under Form DRC-01A and the show cause notice issued by the DGGI are quashed – The writ petition is allowed - Whether the writ petition is maintainable despite the availability of an alternate remedy of appeal – HELD - The writ petition is maintainable despite the availability of an alternate remedy, as the designated officer had no jurisdiction to issue the show cause notice to levy GST on the settlement of the arbitral award. The Court rely on the principles laid down by the Supreme Court in Godrej Sara Lee Limited v. Excise and Taxation Officer, wherein it was held that the mere availability of an alternate remedy does not operate as an absolute bar to the maintainability of a writ petition, and the high courts have the discretion to entertain a writ petition based on the facts and circumstances of the case. [Read less]

GST – Taxability of supply of solar power generating systems, issue of separate invoices for the supply of goods and services - Petitioner had been paying GST at an effective rate of 8.9% by applying the 70:30 mechanism set out in the relevant GST Rate notifications – Dept issued an assessment order demanding tax at 18% on the entire value, rejecting the petitioner's claim for the 70:30 mechanism - Whether the petitioner is entitled to pay GST on the supply of solar power generating systems and related services by applying the 70:30 mechanism as per the relevant GST notifications, or whether the higher rate of 18% can ... [Read more]

GST – Taxability of supply of solar power generating systems, issue of separate invoices for the supply of goods and services - Petitioner had been paying GST at an effective rate of 8.9% by applying the 70:30 mechanism set out in the relevant GST Rate notifications – Dept issued an assessment order demanding tax at 18% on the entire value, rejecting the petitioner's claim for the 70:30 mechanism - Whether the petitioner is entitled to pay GST on the supply of solar power generating systems and related services by applying the 70:30 mechanism as per the relevant GST notifications, or whether the higher rate of 18% can be levied on the entire value – HELD - A conjoint reading of the Entry 234 of Notification No. 1/2017 C.T (R), dated 28.06.2017 and Entry No.38 in Service rate Notification No.11/2017-C.T (R), dated 28.06.2017 and the explanations thereto clearly indicate that the 70:30 mechanism is applicable even if the petitioner has issued separate invoices for the supply of goods and services, as long as the supplies were made under a single contract - The respondent's contention that the 70:30 mechanism would not apply due to the issuance of separate invoices is rejected, as this does not negate the existence of an overall contract for the supply of solar power generating systems. Any supply of a Solar Power Generating System, or it’s parts as one supply or as separate parts would not make any difference, to the rate of tax. The view of the respondent to the contrary is incorrect – Further, the respondent failed to conduct a proper exercise to ascertain the value of goods and services separately and apply the appropriate rates of tax. The impugned order appears to be an attempt by the third respondent to simply raise revenue for the state without applying his mind to the facts - The impugned assessment order is set aside to the extent of the levy of differential rate of tax on the supply of goods and services of solar power generating systems and solar power-based devices – The writ petition is allowed [Read less]

Central Excise – Excisability of Waste & By-product - Whether spent earth emerging during the process of bleaching of crude palm oil is chargeable to excise duty – HELD - The spent earth (waste mud) emerging during the process of bleaching of crude palm oil is not an excisable good and is not liable to excise duty. The spent earth has not emerged by any conscious effort but has emerged involuntarily during the course of bleaching. The Department had mainly relied on a circular dated 28.10.2009 which was later withdrawn - There is an omnibus Notification No. 89/1995-CE dated 18.05.1995 which exempts all waste, parings a... [Read more]

Central Excise – Excisability of Waste & By-product - Whether spent earth emerging during the process of bleaching of crude palm oil is chargeable to excise duty – HELD - The spent earth (waste mud) emerging during the process of bleaching of crude palm oil is not an excisable good and is not liable to excise duty. The spent earth has not emerged by any conscious effort but has emerged involuntarily during the course of bleaching. The Department had mainly relied on a circular dated 28.10.2009 which was later withdrawn - There is an omnibus Notification No. 89/1995-CE dated 18.05.1995 which exempts all waste, parings and scrap arising in the course of manufacture of exempted goods from the whole of the duty of excise. The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Refund of Education Cess (EC) and Secondary Higher Education Cess (SHEC) - The appellant claimed exemption from payment of EC and SHEC under Notification Nos. 28/2010 and 29/2010 when paying Central Excise duty on coal - Refund sanctioning authority later rejected a part of the refund on the ground that there was no evidence that the customers had not availed Cenvat credit on the said payments - The Commissioner (Appeals) issued a show cause notice proposing to recover the sanctioned refund as "erroneous refund" under Section 35A of the Central Excise Act, 1944 - Jurisdiction of the Commissioner (Appeals) ... [Read more]

Central Excise - Refund of Education Cess (EC) and Secondary Higher Education Cess (SHEC) - The appellant claimed exemption from payment of EC and SHEC under Notification Nos. 28/2010 and 29/2010 when paying Central Excise duty on coal - Refund sanctioning authority later rejected a part of the refund on the ground that there was no evidence that the customers had not availed Cenvat credit on the said payments - The Commissioner (Appeals) issued a show cause notice proposing to recover the sanctioned refund as "erroneous refund" under Section 35A of the Central Excise Act, 1944 - Jurisdiction of the Commissioner (Appeals) to issue the show cause notice and the timeliness of the Departmental appeal against the original order sanctioning the refund – HELD - The findings of the Commissioner (Appeals) that the appellant was not entitled to the exemption from EC and SHEC under Notification Nos. 28/2010 and 29/2010 when paying Central Excise duty on coal are upheld, as the said notifications only exempted EC and SHEC where Clean Energy Cess (CEC) was leviable - On merit, the appellants have no case as the appellants got the refund on the ground that said exemptions were available to them, which was later noted that it was not correct as per legal provisions regarding applicability of EC & SHEC while paying Central Excise duty. EC & SHEC cannot be exempted when they are paying Central Excise duty while clearing the coal - The Commissioner (Appeals) was within his statutory powers under Section 35A to issue the SCN proposing to recover the "erroneous refund", as the relevant time limit under Section 11A(1) read with Explanation (b)(v) to sub-section 14 of Section 11A had not expired - The Departmental appeal against the original refund order is also found to be filed within the prescribed time limit under Section 35E(3). The technical grounds raised by the appellant challenging the timeliness of the departmental appeal and the issuance of the SCN by the Commissioner (Appeals) are rejected. The order of the Commissioner (Appeals) is upheld and the appeal is dismissed [Read less]

Central Sales Tax Act, 1956 - Branch Transfer or Inter-State Sale – Vide the impugned order the Tribunal held that the movement of goods from Maharashtra to Uttarakhand was in pursuance of purchase orders placed by assessee's sole buyer in Uttarakhand, and not a mere branch transfer. The movement of goods was an inter-State sale and branch transfer. A direction was issued to the Assessing Authority to ascertain the amount required to be transferred to the State of Maharashtra in terms of section 22(1B) of the CST Act so that the State of Uttarakhand can refund it to the State of Maharashtra – Instant appeal filed by th... [Read more]

Central Sales Tax Act, 1956 - Branch Transfer or Inter-State Sale – Vide the impugned order the Tribunal held that the movement of goods from Maharashtra to Uttarakhand was in pursuance of purchase orders placed by assessee's sole buyer in Uttarakhand, and not a mere branch transfer. The movement of goods was an inter-State sale and branch transfer. A direction was issued to the Assessing Authority to ascertain the amount required to be transferred to the State of Maharashtra in terms of section 22(1B) of the CST Act so that the State of Uttarakhand can refund it to the State of Maharashtra – Instant appeal filed by the State of Uttarakhand – SC HELD – There is no good ground to interfere with the impugned order/judgment in exercise of our jurisdiction under Article 136 of the Constitution of India. Accordingly, the special leave petition stands dismissed [Read less]

Service Tax – Discharge of Statutory functions - Appellant was formed to perform statutory functions on behalf of the Government of Haryana, such as issuance of driving licenses, vehicle registration certificates, arms & ammunition licenses, income, caste, and domicile certificates, etc. through e-Disha/Common Services Centers where the services are provided at government-prescribed statutory charges - Whether the appellant can be considered as a 'Governmental authority' or 'local authority' under the Finance Act, 1994 and its services are exempt from service tax under Notification No. 25/2012-ST dated 20.06.2012 - HELD ... [Read more]

Service Tax – Discharge of Statutory functions - Appellant was formed to perform statutory functions on behalf of the Government of Haryana, such as issuance of driving licenses, vehicle registration certificates, arms & ammunition licenses, income, caste, and domicile certificates, etc. through e-Disha/Common Services Centers where the services are provided at government-prescribed statutory charges - Whether the appellant can be considered as a 'Governmental authority' or 'local authority' under the Finance Act, 1994 and its services are exempt from service tax under Notification No. 25/2012-ST dated 20.06.2012 - HELD - The appellant falls within the definition of 'Governmental authority' as defined under clause 2(s) of Notification No. 25/2012-ST dated 20.06.2012 – Appellant being an instrumentality of the State created to perform local functions electronically, is the implementing agency of the Government and not a commercial service provider. The functions performed by the appellant are Governmental and civic in nature, carried out not for commercial gain but as a part of the State's obligation to provide public services efficiently through e-governance platform. The statutory fee charged for issuing various licenses/certificates cannot be said to be commercial consideration decided between the parties - The exemption under Notification No. 25/2012-ST was consciously drafted to include Governmental authorities that may not be functioning directly as municipalities or panchayats but are executing or assisting in carrying out those functions on behalf of such constitutional bodies – The appellants, being an instrumentality of the State created to perform local functions electronically, are the implementing agency of the government, and are not a commercial service provider. Consequently, denial of exemption under Notification No. 25/2012-ST to the appellants, is not legally sustainable – The impugned order is set aside and the appeal is allowed - Invocation of extended period and imposition of penalties – HELD - The extended period cannot be invoked because the department has failed to prove any of the elements which are required for invoking the extended period provided under proviso to Section 73(1) of the Finance Act, 1994. Moreover, since the appellants are a ‘governmental authority’ fully controlled and funded by the Government of Haryana and its accounts/receipts are also subjected to audit by the Accountant General Haryana and there is no concealment or suppression of facts and every activity is already within the public domain and its operations are under the overall supervision of the Government of Haryana itself, therefore, the element “intent to evade the tax” is wholly absent. Moreover, the issue of taxability and availability of exemption under notification is purely an interpretational issue. Further, the appellants were under a bona fide belief that being a governmental authority performing municipal functions, their services were exempt and hence, no Service Tax registration was necessary - the appellants, being a non-profit government-controlled entity engaged in providing statutory citizen-centric services, leaves no room to infer any intent to evade the tax. Therefore, invocation of extended period and imposition of penalties under Sections 77 & 78 of the Finance Act, are not sustainable in law. [Read less]

The Uttarakhand Water Tax on Electricity Generation Act, 2012 - Competence of State Legislature to impose Tax on Electricity Generation – Challenge to the Constitutional validity and vires of "The Uttarakhand Water Tax on Electricity Generation Act, 2012" imposing a tax on the drawal of water for generation of electricity - Whether the State Legislature has the legislative competence to enact the Act which, in pith and substance, imposes a tax on the generation of electricity – HELD - The nature of the tax imposed by the Act is a tax on the generation of electricity, and not a tax on the drawal or use of water for elec... [Read more]

The Uttarakhand Water Tax on Electricity Generation Act, 2012 - Competence of State Legislature to impose Tax on Electricity Generation – Challenge to the Constitutional validity and vires of "The Uttarakhand Water Tax on Electricity Generation Act, 2012" imposing a tax on the drawal of water for generation of electricity - Whether the State Legislature has the legislative competence to enact the Act which, in pith and substance, imposes a tax on the generation of electricity – HELD - The nature of the tax imposed by the Act is a tax on the generation of electricity, and not a tax on the drawal or use of water for electricity generation. Taxation is a distinct matter and there is a clear distinction between general subjects of legislation and taxation. The power to tax cannot be deduced from a general legislative entry as an ancillary power. The State Legislature does not have the power to levy a tax on the generation of electricity as there is no entry in List II of the Seventh Schedule which empowers the State Legislature to do so. The delegation of power to the State Government to fix the rates of tax under the Act without any guidelines is excessive delegation and, therefore, the Act is ultra vires the Constitution – The Uttarakhand Water Tax on Electricity Generation Act, 2012 is ultra vires the Constitution and struck down - The reference is answered accordingly - Excessive Delegation - The appellants also challenged the Act on the ground that it involves excessive delegation of power to the State Government to fix the rates of the water tax. The Court agreed with the conclusion of brother Ravindra Maithani, J. that Section 17 of the Act, which empowers the State Government to fix the rates of the water tax, makes excessive delegation of power without any policy guidelines, and is therefore, bad in law - Doctrine of Promissory Estoppel - The appellants contended that the State is promissorily estopped from levying the water tax in the light of the respective agreements entered into with the State. The Court held that there can be no promissory estoppel against the legislature in the exercise of its legislative functions, and the competence and power of the State Legislature to enact legislation, including for the purpose of taxation, cannot be interdicted on the plea of promissory estoppel. [Read less]

Service Tax – Agreement for work contract/job contract or Supply of Manpower - Classification of the activities under "Manpower Recruitment or Supply Agency Services" - The appellant is engaged in execution of various work contracts for entities under different agreements. The Department classified the activities undertaken by the appellant under "Manpower Recruitment or Supply Agency Services" - Whether the activities undertaken by the appellant fall under Manpower Recruitment or Supply Agency Services or not - HELD – The agreements clearly demonstrate execution of work and not supply of manpower. The lump sum work co... [Read more]

Service Tax – Agreement for work contract/job contract or Supply of Manpower - Classification of the activities under "Manpower Recruitment or Supply Agency Services" - The appellant is engaged in execution of various work contracts for entities under different agreements. The Department classified the activities undertaken by the appellant under "Manpower Recruitment or Supply Agency Services" - Whether the activities undertaken by the appellant fall under Manpower Recruitment or Supply Agency Services or not - HELD – The agreements clearly demonstrate execution of work and not supply of manpower. The lump sum work contracts not specifying manpower cannot be classified as manpower service. The agreements are for undertaking work and the payment is based on the quantum of work done and not based on quantum of manpower or number of labourers or manpower supplied. In the absence of specific number of men supplied and in the absence of evidence to show that both the parties understood the services to be of a manpower supply, the activities of the appellant do not fall under "Manpower Recruitment or Supply Agency Services" – Further, the extended period has been invoked on the ground of non-registration and non-filing of returns, however, it is well settled that mere non-registration or non-filing of returns does not amount suppression of facts unless intent to evade tax is established, which is not the case here - The demand is not sustainable on merits and the extended period - The appeal is allowed [Read less]

Customs – Levy of interest under Section 28AA of the Customs Act, 1962 on demand of IGST – Imposition of redemption fine under Section 125 of the Customs Act and penalty under Section 112(a) of the Customs Act, in lieu of confiscation of goods – HELD - In view of the judgments of the Bombay High Court in A.R. Sulphonates Private Limited vs. Union of India, the levy of interest, redemption fine, and penalty on the demand of IGST is not legally sustainable - The Section 3(12) of the Customs Tariff Act, 1975, prior to its amendment on 16.08.2024, did not apply the provisions of the Customs Act relating to interest, offe... [Read more]

Customs – Levy of interest under Section 28AA of the Customs Act, 1962 on demand of IGST – Imposition of redemption fine under Section 125 of the Customs Act and penalty under Section 112(a) of the Customs Act, in lieu of confiscation of goods – HELD - In view of the judgments of the Bombay High Court in A.R. Sulphonates Private Limited vs. Union of India, the levy of interest, redemption fine, and penalty on the demand of IGST is not legally sustainable - The Section 3(12) of the Customs Tariff Act, 1975, prior to its amendment on 16.08.2024, did not apply the provisions of the Customs Act relating to interest, offences, and penalties to the integrated tax chargeable under section 3(7) of the Tariff Act - The amendment to section 3(12) of the Tariff Act from 16.08.2024 is prospective in nature. The impugned order is set aside to the extent it demanded interest, imposed penalty, and gave an option to redeem the goods on payment of redemption fine. The confirmation of the demand and recovery of IGST is upheld - The appeal is partly allowed [Read less]

Customs - Fulfilment of export obligation through third party exports under EPCG Scheme, demand of differential duty - The appellant importer had obtained EPCG licenses and discharged the export obligation through third party exports. The Department alleged that the exports were not genuinely made by the appellant using the imported capital goods and the EODC obtained by the appellant was fraudulent - Whether the demand of differential duty can be confirmed on the ground that appellant has violated conditions No. 2 & 4 of the notification No. 97/2004-Cus. dated 17.09.2004 when EODC was already issued by DGFT – HELD - The... [Read more]

Customs - Fulfilment of export obligation through third party exports under EPCG Scheme, demand of differential duty - The appellant importer had obtained EPCG licenses and discharged the export obligation through third party exports. The Department alleged that the exports were not genuinely made by the appellant using the imported capital goods and the EODC obtained by the appellant was fraudulent - Whether the demand of differential duty can be confirmed on the ground that appellant has violated conditions No. 2 & 4 of the notification No. 97/2004-Cus. dated 17.09.2004 when EODC was already issued by DGFT – HELD - The provisions relating to third party exports under the EPCG Scheme were ambiguous at the relevant time. The DGFT had clarified the issue of third party exports and restored the EODC obtained by the appellant. The subsequent policy changes regarding third party exports cannot be made applicable retrospectively – Further, once the DGFT authorities exercised their jurisdiction and satisfied themselves that the export obligation was fulfilled by the appellant within the stipulated time and redeemed the bank guarantee, the customs department does not have any jurisdiction to sit in judgment over the EODC issued by the DGFT. If there was any misrepresentation, it was for the licensing authority (DGFT) to take steps in that behalf – The appellant cannot be penalized for the alleged procedural violations due to the lacuna in the Foreign Trade Policy and the Customs Notification - The demand and penalties in respect of the imports made under the two EPCG licenses are set aside, while upholding the findings in relation to the other two licenses which were not challenged by the appellant – The appeal is allowed [Read less]

Customs - Determination of Fe content for customs duty assessment of exported iron ore fines - Demand-cum-show-cause notice alleging misdeclaration of iron ore fines (Fe content) and consequent evasion of Customs duty - Order-in-original assessing the Fe content of the exported iron ore fines on dry metric tonne (DMT) basis, instead of the wet metric tonne (WMT) basis - Whether the Commissioner of Customs (Preventive) was justified in assessing the Fe content of the exported iron ore fines on DMT basis, instead of the WMT basis as per the CBIC circular, for the transactions that occurred prior to the amendment of the Custo... [Read more]

Customs - Determination of Fe content for customs duty assessment of exported iron ore fines - Demand-cum-show-cause notice alleging misdeclaration of iron ore fines (Fe content) and consequent evasion of Customs duty - Order-in-original assessing the Fe content of the exported iron ore fines on dry metric tonne (DMT) basis, instead of the wet metric tonne (WMT) basis - Whether the Commissioner of Customs (Preventive) was justified in assessing the Fe content of the exported iron ore fines on DMT basis, instead of the WMT basis as per the CBIC circular, for the transactions that occurred prior to the amendment of the Customs Tariff Act, 1975 by the Finance Act, 2022 - HELD - The transactions of export in question were prior to the amendment of the Customs Tariff Act, 1975 by the Finance Act, 2022 which changed the method of computation from WMT to DMT. Since the transactions of export relate to the period prior to the enforcement of the amendment in the Customs Tariff Act, 1975 by the Finance Act, 2022, the method of calculation would be governed by the extant statutory provisions, rules, and circulars on the date of the taxable event. It is settled legal position that the Fe content of the exported iron ore fines is to be determined on the WMT basis as per the CBIC Circular No. 04/2012-Customs dated 17.02.2012 - The Commissioner of Customs has proceeded to adjudicate the Fe content to be more than 58% on the basis of DMT, which is erroneous approach and such finding rendered in the Order-in-Original is perverse and inconsistent and conflicts with the settled position of law in this regard - The order-in-original passed by the Commissioner of Customs (Preventive) is inconsistent with the settled legal position and thus set aside. The matter is remitted back to the Commissioner to adjudicate the liability or otherwise by classifying the iron ore fines on the basis of WMT, after affording a reasonable opportunity of hearing to the petitioner and confronting the material collected - The order-in-original is set aside and the writ petition is allowed [Read less]

Service Tax - Liability for Service Tax on Foreign Contract Works for Government Project - Appellant, a Government department, undertook a Government-funded project to construction of an artificial - The project was awarded to a foreign company and the appellant supervised and coordinated the implementation of the project on behalf of the Government - Whether the appellant is liable to pay service tax on the services received from the foreign company for the Government project – HELD – The project undertaken by the appellant was an EPC (Engineering, Procurement, and Construction) project, which falls under the category... [Read more]

Service Tax - Liability for Service Tax on Foreign Contract Works for Government Project - Appellant, a Government department, undertook a Government-funded project to construction of an artificial - The project was awarded to a foreign company and the appellant supervised and coordinated the implementation of the project on behalf of the Government - Whether the appellant is liable to pay service tax on the services received from the foreign company for the Government project – HELD – The project undertaken by the appellant was an EPC (Engineering, Procurement, and Construction) project, which falls under the category of Works Contract Services under Section 65(105)(zzzza) of the Finance Act, 1994. The appellant was aware of the tax liability, as it had mentioned the service tax, VAT, and other taxes in the price bid submitted to the foreign company. The appellant is liable to pay service tax on the services received from the foreign company for the Government project - The appellant had paid service tax at the compounding rate of 4.12% on the gross amount as per the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 read with Notification No. 32/2007-ST dated 22.05.2007, even though it was not opted for. This amount should be considered, and the penalty imposed by the adjudicating authority should be set aside - The matter is remanded to the adjudication authority for verification and re-determination of the duty liability after extending the benefit of Notification No. 32/2007-ST dated 22.05.2007 and considering the amount paid by the appellant – The appeal is partly allowed [Read less]

Service Tax - Classification of services as "Site Formation and Clearance, Excavation and Earthmoving and Demolition Services" or "Mining Services" - Providing of services to M/s. Rajasthan State Mines and Minerals Ltd., including overburden, excavation, and truck loading of lignite. The respondent-assessee argued that these activities were classifiable as "Mining Services", which were introduced with effect from 01.06.2007 and therefore, were not taxable prior to the said date - Whether the services provided by the respondent fall under "Site Formation and Clearance, Excavation and Earthmoving and Demolition Services" und... [Read more]

Service Tax - Classification of services as "Site Formation and Clearance, Excavation and Earthmoving and Demolition Services" or "Mining Services" - Providing of services to M/s. Rajasthan State Mines and Minerals Ltd., including overburden, excavation, and truck loading of lignite. The respondent-assessee argued that these activities were classifiable as "Mining Services", which were introduced with effect from 01.06.2007 and therefore, were not taxable prior to the said date - Whether the services provided by the respondent fall under "Site Formation and Clearance, Excavation and Earthmoving and Demolition Services" under Section 65(97a) of the Act, as claimed by the Revenue, or under "Mining Services" under Section 65(105)(zzzy) as classified by the respondent – HELD - The essential character of the work undertaken by the respondent was mining of minerals, and the activity would be classifiable under Mining Services w.e.f. 01.06.2007 - The activity of mining was not taxable prior to 1.06.2007 and the demand of service tax for the period prior to introduction of the mining services is unsustainable by incorporating it under the category of site formation – The CBEC Circular No.123/5/2010-TRU dated 24.05.2010 clarified that site formation, clearance excavation, earth, moving and demolition services are attracted only if the service providers provide the services independently and not as part of a complete work such as laying of cables under the road. A comprehensive contract cannot be vivisected for charging service tax relating to site formation service, as the activity of site formation was merely incidental to or in relation to the contract of mining of ore undertaken - The respondent has been paying service tax since 1.06.2007 under the category of “Mining Services” and the same has been accepted by the Department. In that view of the matter, it is not open to the Department to tax the same activity under a different category merely because the mining activity was not taxable at that time. The order passed by the Adjudicating Authority is confirmed and appeal filed by the Revenue is dismissed [Read less]

Customs - Limitation period for recovery of short-payment of duty - Benefit of duty-free imports under DFIA licenses - Revenue alleged that the DFIA licenses were issued on the basis of manipulated export documents/fraudulent export undertakings, and hence, the export incentives and benefits appeared to be inadmissible - Whether the demand confirmed in the impugned order is sustainable on the ground of limitation – HELD - The SCN was issued 2.5 years after the date of actual imports, and there was no allegation of suppression of facts in the SCN to invoke the extended period of limitation under Section 28 of the Customs ... [Read more]

Customs - Limitation period for recovery of short-payment of duty - Benefit of duty-free imports under DFIA licenses - Revenue alleged that the DFIA licenses were issued on the basis of manipulated export documents/fraudulent export undertakings, and hence, the export incentives and benefits appeared to be inadmissible - Whether the demand confirmed in the impugned order is sustainable on the ground of limitation – HELD - The SCN was issued 2.5 years after the date of actual imports, and there was no allegation of suppression of facts in the SCN to invoke the extended period of limitation under Section 28 of the Customs Act, 1962 - There was no discussion on the aspect of limitation in the impugned order. There was no basis for the Revenue to allege suppression of facts to invoke the extended period of limitation - The demand confirmed in the impugned order is not sustainable on the ground of limitation and set aside – The appeal is allowed [Read less]

GST - Validity of issue of Consolidated Show Cause Notice covering multiple financial years under Sections 73 and 74 of the CGST Act, 2017 – Revenue in appeal against Ld. Single Judge Order holding that issuance of consolidated notices is impermissible - Whether the issuance of consolidated show cause notices under Sections 73 and 74 of the CGST Act, 2017 covering multiple financial years is permissible – HELD - On a combined reading of the provisions of the CGST Act and particularly Sections 73 and 74 of the Act, the irresistible conclusion would be that the proceedings under Sections 73 and 74 of the Act were never i... [Read more]

GST - Validity of issue of Consolidated Show Cause Notice covering multiple financial years under Sections 73 and 74 of the CGST Act, 2017 – Revenue in appeal against Ld. Single Judge Order holding that issuance of consolidated notices is impermissible - Whether the issuance of consolidated show cause notices under Sections 73 and 74 of the CGST Act, 2017 covering multiple financial years is permissible – HELD - On a combined reading of the provisions of the CGST Act and particularly Sections 73 and 74 of the Act, the irresistible conclusion would be that the proceedings under Sections 73 and 74 of the Act were never intended to be confined to a financial year - The use of the expression "any period" in these provisions indicates that the proceedings are not confined to a specific tax period or financial year. The provisions governing filing of returns, assessment, audit, and determination of demand are structured independently for each tax period or financial year, but the consequential proceedings under Sections 73 and 74 are not restricted in the same manner - The prescription of limitation under sub-section (10) of Sections 73 and 74 operates within a limited sphere and does not control or restrict the scope of issuance of the notice. Mere reference to “financial year” in sub-section (10) neither indicates, nor can it be construed to mean, that Sections 73/74 are confined to a financial year. Such an interpretation is not borne out from a plain reading of the provisions - The reference to tax period or financial year in the Form-GST DRC-01 cannot be relied upon to say that SCN shall be confined to a financial year. It could at the best may be relevant for computation of limitation under Sub-Section (10) and it would not affect the exercise of power under Sections 73 and 74 of the Act – The SCNs issued under Sections 73/74 do not prohibit coverage of multiple financial years. Such notices are neither tax period–specific nor financial year–specific. There is no statutory bar to issuance of a common SCN covering multiple tax periods or financial years. Any interpretation to the contrary would amount to rewriting the language of Sections 73/74, which is impermissible – The Bench concur with the view taken by the High Courts of Delhi, Allahabad, and Jammu & Kashmir. For the reasons, not inclined to concur with the view taken by the High Courts of Bombay, Kerala, Madras, Andhra Pradesh, and Himachal Pradesh - The order of learned Single Judge is not sustainable and set aside. The writ appeal is allowed - Contention regarding pecuniary jurisdiction – HELD - The submission that, if show cause notices are confined to a financial year or tax period, the pecuniary jurisdiction would remain at a lower level, whereas aggregation would enhance the quantum and shift jurisdiction to a higher authority, is of no relevance. The assessee’s concern is only that the show cause notice be adjudicated by a proper officer vested with jurisdiction, whether territorial or pecuniary - It is settled position of law that an assessee has no right to chose the Adjudicating Authority. Merely because combining of more than one financial year, the pecuniary jurisdiction shifts to an officer of the higher rank, no prejudice would be caused to the assessee, since statutory safeguards, remedies and determination of tax would remain as it is. Therefore, the respondent/assessees contention with regard to pecuniary jurisdiction cannot be accepted. [para 40, 41] - Protection of limitation – HELD - If any portion of the period covered by the notice is demonstrated to be beyond the limitation stipulated under sub-section (10), the same would be liable to be excluded as being time-barred. However, issuance of a consolidated show cause notice would not dilute or take away the protection of limitation available under Sub-Section (10) of Sections 73 and 74 of the Act. Each period forming part of notice must satisfy scrutiny on the touchstone of limitation and any portion falling short of such test cannot be sustained. [para 42] [Read less]

Service Tax - Issue of consolidated demand notice for multiple assessment years, Determination of Monetary limit, Maintainability of appeal before High Court – Revenue issued a consolidated demand notice for Service Tax covering multiple assessment years aggregating to Rs. 2.60Cr. However, the Service Tax demand for each individual assessment year was less than Rs. 2 crores - Whether it is permissible to club together the Service Tax demand for multiple assessment years and file an appeal on the consolidated Service Tax or whether the Service Tax demand has to be considered only in respect of each individual assessment y... [Read more]

Service Tax - Issue of consolidated demand notice for multiple assessment years, Determination of Monetary limit, Maintainability of appeal before High Court – Revenue issued a consolidated demand notice for Service Tax covering multiple assessment years aggregating to Rs. 2.60Cr. However, the Service Tax demand for each individual assessment year was less than Rs. 2 crores - Whether it is permissible to club together the Service Tax demand for multiple assessment years and file an appeal on the consolidated Service Tax or whether the Service Tax demand has to be considered only in respect of each individual assessment year - HELD - As per the CBIC instruction No. CBIC/160390/20/2024-JC-CBEC dated 6-8-2024, the appeal has to be filed in respect of each assessment year where the disputed tax amount exceeds Rs. 2 crores. A consolidated notice demanding Service Tax, covering various financial years, to enable the Revenue to reach the threshold of 2 crores is not permissible – Further, a consolidated notice covering multiple financial years is not permissible, unless there are exceptional circumstances involving fraud spanning across different years. If the demand for Service Tax in respect of one of the assessment years is beyond the limitation period, the time barred demand cannot be made a part of the consolidated show cause notice. Thus, even if it is assumed that a consolidated demand for Service Tax comprising many assessment years can be made, the time-barred claim cannot be a part of the consolidated claims - The Revenue appeal stands dismissed [Read less]

Service Tax - Taxability of activities like segregation of coal from stones, crushing/sizing of coal – Vide the impugned order the Tribunal held that the activity undertaken by the appellant, including crushing/sizing of coal, amounts to "manufacture" of coal under Section 2(f) of the Central Excise Act, 1944 – Revenue in appeal – SC HELD - The Department has been levying Excise Duty on the same activity, besides States collecting VAT. Now, Service tax is sought to be imposed on the same value of goods, crushing and transportation charges. This will be a double levy of both Excise Duty and Service tax on the same tra... [Read more]

Service Tax - Taxability of activities like segregation of coal from stones, crushing/sizing of coal – Vide the impugned order the Tribunal held that the activity undertaken by the appellant, including crushing/sizing of coal, amounts to "manufacture" of coal under Section 2(f) of the Central Excise Act, 1944 – Revenue in appeal – SC HELD - The Department has been levying Excise Duty on the same activity, besides States collecting VAT. Now, Service tax is sought to be imposed on the same value of goods, crushing and transportation charges. This will be a double levy of both Excise Duty and Service tax on the same transaction. In view of the aforesaid, the Revenue’s appeal stands dismissed [Read less]

GST – Non-filing of Form GSTR-9C along with the annual return in Form GSTR-9 - Levy of Late fee for delayed filing of reconciliation statement in Form GSTR-9C - Whether a late fee can be levied under Section 47 of the CGST Act, 2017 for delayed filing of Form GSTR-9-C – HELD - Since the petitioner’s turnover exceeded Rs.5 crores, a reconciliation statement in Form GSTR-9C was required to be filed along with the Annual Return. Section 44 mandates the filing of an annual return, which may include a reconciliation statement. The late fee is applicable if there is a failure to furnish the returns as required under Sectio... [Read more]

GST – Non-filing of Form GSTR-9C along with the annual return in Form GSTR-9 - Levy of Late fee for delayed filing of reconciliation statement in Form GSTR-9C - Whether a late fee can be levied under Section 47 of the CGST Act, 2017 for delayed filing of Form GSTR-9-C – HELD - Since the petitioner’s turnover exceeded Rs.5 crores, a reconciliation statement in Form GSTR-9C was required to be filed along with the Annual Return. Section 44 mandates the filing of an annual return, which may include a reconciliation statement. The late fee is applicable if there is a failure to furnish the returns as required under Section 44 of the Act - The Rule 80(3) of the CGST Rules, 2017 also specifies that the reconciliation statement (Form GSTR-9C) has to be furnished "along with" the annual return (Form GSTR-9), making it a mandatory requirement. Therefore, the non-filing of Form GSTR-9C would constitute non-filing of the returns as required under Section 44, enabling the levy of a late fee under Section 47 of the Act – In the Form GSTR-9-C the assessee has to self-reconcile the Turnover, Tax Paid, Input Tax Credit and other details on the basis of the audited Annual Financial Statement, which only completes the annual return in Form GSTR-9. Thus, if a person files Form GSTR-9 without Form GSTR-9-C, it would amount to non-filing of returns as required under Section 44 of the Act, entitling the authorities to impose the late fee. Since these questions in detail were not dealt with by the Kerala High Court in Anishia Chandrakanth case, unable to agree with the decision rendered therein - The writ petition is dismissed [Read less]