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GST - Proceeding under Section 74 of the CGST Act, 2017 alleging purchases from bogus and non-existent suppliers – Restoration of registration of supplier – Respondents issued order imposing tax and penalty – HELD – The proceedings have been initiated on the basis of the information being received that the supplier firm is not existing as its registration has been cancelled. However, the record further shows that the registration of the selling dealer was restored - Once the registration of the selling dealer has been restored no action can be taken against the petitioner by holding that the purchases have been mad... [Read more]

GST - Proceeding under Section 74 of the CGST Act, 2017 alleging purchases from bogus and non-existent suppliers – Restoration of registration of supplier – Respondents issued order imposing tax and penalty – HELD – The proceedings have been initiated on the basis of the information being received that the supplier firm is not existing as its registration has been cancelled. However, the record further shows that the registration of the selling dealer was restored - Once the registration of the selling dealer has been restored no action can be taken against the petitioner by holding that the purchases have been made from unregistered dealer - the petitioner has brought on record the documentary evidence about the actual physical movement of the goods and payments made through banking channel, moreover, accounts book, ledger book having entries of the same were produced in which no discrepancy was pointed out by any of the authorities – The proceedings under section 74 can only be invoked when there is a fraud, wilfull mis-statement or suppression of fact to evade tax on the part of the taxpayer. Once the authorities have failed to record any finding of fact that there is a fraud or mis-statement or suppression of fact with a view to evade payment of tax, the proceedings under section 74 of the Act cannot be justified – Once the registration of the selling dealer has been restored no adverse view could have been drawn against the petitioner – The impugned order is set aside and the petition is allowed [Read less]

Service Tax - Taxability of Interest Income, Balances Written Back, Profit on Sale of Fixed Assets and Service Tax on Expenses – HELD - The income by way of interest on fixed deposits with banks and inter-corporate deposits is covered under the Negative List of Services under Section 66D(n)(i) of the Finance Act, 1994. The Adjudicating Authority erred in ignoring the Chartered Accountant's Certificate based on the audited accounts, and the demand on this count was set aside - The amounts written back as bad debts recovered cannot be construed as consideration received for services rendered and are not taxable. Accordingl... [Read more]

Service Tax - Taxability of Interest Income, Balances Written Back, Profit on Sale of Fixed Assets and Service Tax on Expenses – HELD - The income by way of interest on fixed deposits with banks and inter-corporate deposits is covered under the Negative List of Services under Section 66D(n)(i) of the Finance Act, 1994. The Adjudicating Authority erred in ignoring the Chartered Accountant's Certificate based on the audited accounts, and the demand on this count was set aside - The amounts written back as bad debts recovered cannot be construed as consideration received for services rendered and are not taxable. Accordingly, the demand on this count is set aside - the demand on the issues of interest income and balances written back is set aside, and remanding the remaining issues to the Adjudicating Authority for fresh consideration after taking into account the documents provided by the Appellant as non-consideration of the documents relied on by the appellant amounts to violation of principle of natural justice resulting in denial of effective hearing to the appellant – The appeal is allowed by remand [Read less]

Central Excise - ISD credit distribution, technical deficiencies in supplier invoices, extended period of limitation – Appellant availed CENVAT credit on the basis of invoices issued by their Input Service Distributor (ISD) - Department disallowed the credit on the grounds that the supplier invoices were addressed not to the ISD; invoices lacked details of the original service providers and relied upon internal ledger entries - Whether the distribution of ISD credit to the Ambattur unit is valid even though the supplier invoices were addressed to the another unit - HELD - The mere technical defects in supplier invoices, ... [Read more]

Central Excise - ISD credit distribution, technical deficiencies in supplier invoices, extended period of limitation – Appellant availed CENVAT credit on the basis of invoices issued by their Input Service Distributor (ISD) - Department disallowed the credit on the grounds that the supplier invoices were addressed not to the ISD; invoices lacked details of the original service providers and relied upon internal ledger entries - Whether the distribution of ISD credit to the Ambattur unit is valid even though the supplier invoices were addressed to the another unit - HELD - The mere technical defects in supplier invoices, such as the invoice being addressed to another unit instead of the ISD, are not sufficient to disallow the ISD distributed credit, as long as the substantive documentary trail establishes genuine receipt of service and lawful distribution by the ISD. Since the payments were accounted and paid from the head office, which is registered as the ISD, the distribution of credit to the Ambattur unit is valid – Further, the absence of non-essential particulars in the ISD invoices, such as the details of the original service providers, is not sufficient to disallow the ISD distributed credit, as long as the genuineness of the invoices and the payments can be established through other documentary evidence like bank payments, contractual letters, delivery/performance certificates, etc. The appellant had provided such corroborating evidence and hence, the distribution of credit cannot be denied on this ground – Moreover, the Department failed to establish the ingredients for invoking the extended period of limitation, such as fraud, collusion, or deliberate misstatements. Mere non-payment of duties is not equivalent to collusion or willful misstatement or suppression of facts. The burden of proving any form of mala fide lies on the Department, which it failed to discharge in this case. Accordingly, the demand is time-barred and the penalties imposed on both the Appellants are not justified - the demand of ineligible CENVAT credit, interest, and all the consequent penalties are set aside – The appeal is allowed [Read less]

GST - Challenge to vires of Clause 8 of the Assam Industries [Tax Reimbursement for Eligible Units] Scheme, 2017, Interim Order - Reimbursement of State GST and claim of Input Tax Credit – Dept issued notice alleging availment of ITC inspite of being not eligible for the same as per the provisions of the Assam Industries [Tax Reimbursement for Eligible Units] Scheme, 2017 – HELD – In view of the provisions of Article 246A & Article 279A of the Constitution of India; and Section 16 & Section 164 of the CGST Act read with Section 2[87] vis-à-vis Clause 8 of the Reimbursement Scheme, this Court prima facie finds force ... [Read more]

GST - Challenge to vires of Clause 8 of the Assam Industries [Tax Reimbursement for Eligible Units] Scheme, 2017, Interim Order - Reimbursement of State GST and claim of Input Tax Credit – Dept issued notice alleging availment of ITC inspite of being not eligible for the same as per the provisions of the Assam Industries [Tax Reimbursement for Eligible Units] Scheme, 2017 – HELD – In view of the provisions of Article 246A & Article 279A of the Constitution of India; and Section 16 & Section 164 of the CGST Act read with Section 2[87] vis-à-vis Clause 8 of the Reimbursement Scheme, this Court prima facie finds force in the submissions made on behalf of the petitioner that framing of such a provision like Clause 8 in the Reimbursement Scheme, 2017 runs against the Constitutional and Statutory provisions - It is, ordered, in the interim, that the operation of the impugned Show Cause Notices shall remained suspended till the returnable date – Ordered accordingly [Read less]

GST – Non-generation of E-way bill due to technical glitch, Intention to evade tax - The goods in question were transported with tax invoice but the e-way bill could not be generated due to a technical glitch but generated later on the same day - The vehicle was intercepted and penalty was levied on the ground that the e-way bill was not available at the time of inspection - Whether the penalty imposed on the petitioner for the non-availability of the e-way bill at the time of interception is justified, considering that the e-way bill was generated prior to the interception - HELD - Once the petitioner had produced the e... [Read more]

GST – Non-generation of E-way bill due to technical glitch, Intention to evade tax - The goods in question were transported with tax invoice but the e-way bill could not be generated due to a technical glitch but generated later on the same day - The vehicle was intercepted and penalty was levied on the ground that the e-way bill was not available at the time of inspection - Whether the penalty imposed on the petitioner for the non-availability of the e-way bill at the time of interception is justified, considering that the e-way bill was generated prior to the interception - HELD - Once the petitioner had produced the e-way bill, which was generated prior to the detention and physical verification, no adverse view could be drawn against the petitioner. If the requisite documents, which were not accompanying the goods at the time of interception, were produced before the seizure order was passed, and if there was no intention to avoid the legitimate tax, the levy of penalty is not justified. In the present case, the e-way bill was generated much prior to the detention order, and therefore, there was no intention to evade payment of tax - The penalty imposed on the petitioner is set aside and the petition is allowed [Read less]

Odisha Value Added Tax Act, 2004 - Audit Assessment; Limitation Period – Challenge to validity of Joint Commissioner of Sales Tax initiating Audit Assessment proceedings under Section 42 of the OVAT Act, 2004 based on an Audit Visit Report submitted under Section 41 beyond the stipulated time period - The Assessing Authority had earlier proceeded under Section 43 for assessing escaped turnover based on the same Audit Visit Report, which was set aside by the Appellate Authority - Whether the Assessing Authority could have initiated Audit Assessment proceedings under Section 42 based on the AVR which was time-barred under ... [Read more]

Odisha Value Added Tax Act, 2004 - Audit Assessment; Limitation Period – Challenge to validity of Joint Commissioner of Sales Tax initiating Audit Assessment proceedings under Section 42 of the OVAT Act, 2004 based on an Audit Visit Report submitted under Section 41 beyond the stipulated time period - The Assessing Authority had earlier proceeded under Section 43 for assessing escaped turnover based on the same Audit Visit Report, which was set aside by the Appellate Authority - Whether the Assessing Authority could have initiated Audit Assessment proceedings under Section 42 based on the AVR which was time-barred under Section 41(4), by invoking the provisions of Section 49(2) of the Act - HELD - The provisions of Section 49(2) cannot be invoked to correct the jurisdictional error within the same statute, i.e., from Section 43 to Section 42. Section 49(2) empowers the Assessing Authority to reassess tax under the OVAT Act or Central Sales Tax Act when a Court or Tribunal determines that the transaction was assessed under the wrong law. However, it does not apply when the Assessing Authority chooses to proceed under a wrong provision within the same statute, i.e., Section 43 instead of Section 42 – Further, the "Appellate Authority" defined under the Act cannot be equated with a "Court" for the purposes of Section 49(2). The express language of Section 49(2) refers to an order passed by "any Court or Tribunal" in appeal or revision, which does not include the order of the Appellate Authority under Section 77 - Since the AVR was time-barred under Section 41(4), the Assessing Authority could not have initiated Audit Assessment proceedings under Section 42 relying on the same. The notice dated 01.05.2024 in Form VAT-306 and the consequent Audit Assessment order are accordingly quashed - The writ petition is allowed [Read less]

Central Excise – Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – Collection of transportation cost – Duty liability – Appellant is engaged in manufacture of Plastic Storage Water Tanks, which are cleared on payment of duty – Revenue issued show cause notice alleging that cost of transportation collected by Appellant from buyers was required to be included in assessable value of goods in terms of Rule 5 of the Rules – Adjudicating Authority dropped demand as proposed in show cause notice – Commissioner (Appeals) set aside order passed by Adjudicating Authority – W... [Read more]

Central Excise – Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – Collection of transportation cost – Duty liability – Appellant is engaged in manufacture of Plastic Storage Water Tanks, which are cleared on payment of duty – Revenue issued show cause notice alleging that cost of transportation collected by Appellant from buyers was required to be included in assessable value of goods in terms of Rule 5 of the Rules – Adjudicating Authority dropped demand as proposed in show cause notice – Commissioner (Appeals) set aside order passed by Adjudicating Authority – Whether impugned orders are sustainable in law – HELD – In case of Baroda Electric Motor Vs CCE, Supreme Court observed that equalized freight charged from everyone is not includible into assessable value, since duty of excise is on manufacture and not on profit made on transportation. Applying the above ratio, Adjudicating Authority held that average cost of transportation collected at depots for delivery of goods at customer’s place would not form part of assessable value. Appellate Commissioner had not properly applied his mind before passing impugned orders. Impugned orders passed by Commissioner (Appeals) are set aside – Appeals allowed [Read less]

Central Excise – Manufacture of menthol flakes – Entitlement of exemption – Appellants were engaged in manufacture of Menthol Flakes and were availing area based exemption under Notification No.56/2002-CE – Investigation revealed that Appellants were not procuring raw material and were not manufacturing finished goods and had wrongly claimed exemption – After following due process, Commissioner confirmed demand of duty – Whether Appellants had manufactured and cleared finished goods under Notification No.56/2002-CE and had correctly claimed exemption/refund thereto – HELD – Case of department is that Appell... [Read more]

Central Excise – Manufacture of menthol flakes – Entitlement of exemption – Appellants were engaged in manufacture of Menthol Flakes and were availing area based exemption under Notification No.56/2002-CE – Investigation revealed that Appellants were not procuring raw material and were not manufacturing finished goods and had wrongly claimed exemption – After following due process, Commissioner confirmed demand of duty – Whether Appellants had manufactured and cleared finished goods under Notification No.56/2002-CE and had correctly claimed exemption/refund thereto – HELD – Case of department is that Appellants had fraudulently shown procurement of raw material and its use in production and clearance of finished products with an intent to avail illegal monetary benefit under Notification No.56/2002-CE. Entire case of department is built on basis of investigation conducted by Commissioner in respect of supplier of Appellants. Appellants have submitted sale invoices and barrier toll receipts to substantiate fact that they have received material through proper invoices and have used same for manufacturing and subsequently have cleared the goods. Appellants had correctly claimed exemption under Notification No.56/2002-CE. Allegation leveled against Appellants do not sustain. Impugned order is liable to be set aside – Appeals allowed [Read less]

Customs – Import of microphones – Denial of exemption – Demand of duty – Appellant imported microphones and receivers and claimed exemption from duty of customs under Notification No.57/2017-Customs – Principal Commissioner denied benefit of exemption claimed by Appellant and ordered for recovery of short paid duty – Whether Appellant is entitled to benefit of exemption from duty of customs under Notification No.57/2017-Customs – HELD – Serial No.6 of Notification No.57/2017-Customs provided that parts imported for use in manufacture of Printed Circuit Board Assembly (PCBA) would be exempted. Case of Appell... [Read more]

Customs – Import of microphones – Denial of exemption – Demand of duty – Appellant imported microphones and receivers and claimed exemption from duty of customs under Notification No.57/2017-Customs – Principal Commissioner denied benefit of exemption claimed by Appellant and ordered for recovery of short paid duty – Whether Appellant is entitled to benefit of exemption from duty of customs under Notification No.57/2017-Customs – HELD – Serial No.6 of Notification No.57/2017-Customs provided that parts imported for use in manufacture of Printed Circuit Board Assembly (PCBA) would be exempted. Case of Appellant is that imported parts like microphones and receivers were used in manufacture of PCBA. Appellant claimed exemption from duty of customs under Serial No.6 of Exemption Notification No.57/2017. Impugned order had placed reliance upon Explanation (b) which was added by amended Notification No.22/2018-Customs. Amended Notification does not alter Serial No.6 of Exemption Notification. On basis of some information, Principal Commissioner hold that microphones and receivers are not used in PCBA. In absence of opinion of any expert having been obtained, reliance placed on information downloaded from website cannot be considered as authentic. In reply filed by Appellant to show cause notice, reference was made to a certificate issued by Chartered Engineer mentioning that microphones and receivers are mounted on PCBA. Appellant is entitled to benefit of exemption from duty of customs under Notification No.57/2017. Impugned order passed by Principal Commissioner is set aside – Appeal allowed [Read less]

Service Tax – Construction of residential complex – Demand of tax – Appellant is engaged in business of development of residential complex – Department issued show cause notice alleging that Appellant had short paid service tax in respect of Construction of Complex Service – Original Authority confirmed demand as proposed in show cause notice – Appellate Authority upheld order passed by Original Authority – Whether demand of Service Tax confirmed against Appellant as upheld by Appellate Authority is tenable – HELD – Impugned order in original had confirmed demand under category of Construction of Complex ... [Read more]

Service Tax – Construction of residential complex – Demand of tax – Appellant is engaged in business of development of residential complex – Department issued show cause notice alleging that Appellant had short paid service tax in respect of Construction of Complex Service – Original Authority confirmed demand as proposed in show cause notice – Appellate Authority upheld order passed by Original Authority – Whether demand of Service Tax confirmed against Appellant as upheld by Appellate Authority is tenable – HELD – Impugned order in original had confirmed demand under category of Construction of Complex Service. It is an undisputed fact that Appellant is engaged in a composite contract involving provision of service as well as transfer of property in goods. Services provided by Appellant being in nature of composite works contract cannot be brought within fold of Construction of Complex Service – Further, the issue being subject matter of litigation during the relevant period, evidences that the issue involved interpretational disputes, as such, no malafide can be attributed to the appellants warranting invoking of the extended period of limitation – The impugned Order-in-Appeal to extent it upholds impugned Order-in-Original confirming demand along with applicable interest and imposing penalty cannot be sustained and is set aside – The appeal is allowed [Read less]

Central Excise – Retrospective application of curative amendment - Manufacture of sabudana – Entitlement of exemption – Appellants are engaged in manufacture of Sabudana subject to Nil rate of duty – Dept issued notice to appellants by proposing demand of duty – Whether exemption granted vide Notification No.12/2013-CE was required to be considered retrospectively – HELD – Sabudana is being manufactured as a food item, meant for consumption by devotees during fasting season. Sabudana has been historically never subject to Duty of Excise under provisions of the Act. Vide Notification No.1/2011-CE, duty of exci... [Read more]

Central Excise – Retrospective application of curative amendment - Manufacture of sabudana – Entitlement of exemption – Appellants are engaged in manufacture of Sabudana subject to Nil rate of duty – Dept issued notice to appellants by proposing demand of duty – Whether exemption granted vide Notification No.12/2013-CE was required to be considered retrospectively – HELD – Sabudana is being manufactured as a food item, meant for consumption by devotees during fasting season. Sabudana has been historically never subject to Duty of Excise under provisions of the Act. Vide Notification No.1/2011-CE, duty of excise of 1% was imposed and by Notification 16/2012-CE, rate of duty was increased from 1% to 2%. However, the Nil rate restored vide Notification No.12/2013-CE, which must be read as a clarification or curative one, which means that NIL rate of duty would become applicable even in interregnum as well, which means that same would operate retrospectively – the orders under challenge are set aside and the appeals are allowed [Read less]

GST - Section 17(5) of the CGST Act, 2017 - Blocked credit, Eligibility for Input Tax Credit on the premium paid towards an insurance policy covering the stock-in-trade and the business premises of the petitioner - Disallowance of ITC against the premium paid for stock and premises insurance policy by classifying as motor vehicle insurance – Petitioner case that the insurance policy was taken for securing stock in trade and business premises and not the motor vehicle and therefore, the respondent could not have invoked the provisions of section 17(5)(b) of the CGST Act – HELD – The Section 17(5) of the CGST Act is ap... [Read more]

GST - Section 17(5) of the CGST Act, 2017 - Blocked credit, Eligibility for Input Tax Credit on the premium paid towards an insurance policy covering the stock-in-trade and the business premises of the petitioner - Disallowance of ITC against the premium paid for stock and premises insurance policy by classifying as motor vehicle insurance – Petitioner case that the insurance policy was taken for securing stock in trade and business premises and not the motor vehicle and therefore, the respondent could not have invoked the provisions of section 17(5)(b) of the CGST Act – HELD – The Section 17(5) of the CGST Act is applicable only in cases where input tax credit has been sought in respect of motor vehicle. The insurance policies are for stock and premises of the petitioner for STFI cover and earthquake and not for motor vehicle. The respondent has not considered the insurance policy which is for stock and the property, and not for motor vehicle - The respondent could not have passed the impugned order by making addition on incorrect facts and could not have assumed jurisdiction to disallow ITC on insurance premium which is not for motor vehicle. The impugned order and impugned notice are quashed and set aside - The petition is allowed [Read less]

GST – 100% EOU – Refund on Zero-rated supply - Exported of goods manufactured out of raw materials received on payment of tax, Deemed export or Zero-rated supply - Petitioner claimed refund under Section 54(3) of the CGST Act, 2017 on the basis that the export had been made without payment of tax - Petitioners also filed an undertaking that it had not purchased the goods without payment of tax under the deemed export Notification No.48/2017 dated 18.10.2017 and Circular No.14/2017 dated 06.11.2017 and the suppliers had not claimed the refund of such tax. The provisional refund was granted pursuant to the refund applica... [Read more]

GST – 100% EOU – Refund on Zero-rated supply - Exported of goods manufactured out of raw materials received on payment of tax, Deemed export or Zero-rated supply - Petitioner claimed refund under Section 54(3) of the CGST Act, 2017 on the basis that the export had been made without payment of tax - Petitioners also filed an undertaking that it had not purchased the goods without payment of tax under the deemed export Notification No.48/2017 dated 18.10.2017 and Circular No.14/2017 dated 06.11.2017 and the suppliers had not claimed the refund of such tax. The provisional refund was granted pursuant to the refund application but later on, Respondent issued the notice seeking to withdraw the refund already granted alleging that the tax paid on deemed exports would not be considered as input tax credit - Whether the refund claim filed by the petitioner was rightly disallowed by the respondents on the ground that the petitioners did not file the refund claim under Rule 89(4A) of the CGST Rules, 2017 – HELD – The petitioners-EOU filed refund claim in view of Notification No.48/2017 under section 54 r/w Rule 89(4). The supplier of the goods to the petitioners did not avail the input tax credit and refund was sanctioned by the authorised officer, which was later sought to be recovered - the petitioners are not the deemed exporters but are the exporter of the goods resulting into zero-rated supply as per section 16(1) of the IGST Act and all the inward supplies to the petitioners are made with payment of GST charged by the suppliers who have not taken benefit of any notification as deemed exporter. The suppliers have not shown such supplies as deemed export but the supplies have been shown as regular B2B supplies i.e. in regular form only. The suppliers of the goods to the petitioners have never followed the procedure as per Circular No.14/14/2017 dated 6.11.2017 nor any invoices are endorsed as an EOU unit by the petitioners as per the procedure prescribed in the said circular - Therefore, the zero-rated supplies made by the petitioners is not coming in the purview of the deemed exports because the petitioners have exported the goods and therefore, entitled to refund of the unutilised ITC as per the provisions of section 54(3) of the GST Act read with Rule 89(4) of the GST Rules - As the petitioners are exporters of the goods and has never claimed the input tax credit under Notification No.48/2017 as deemed exporter, para no.2.2 of clarificatory Circular No.172/04/2022-GST dated 06.07.2022 would not be applicable – The respondents were not justified in disallowing the refund claim of the petitioners on the ground that the petitioners did not file such claim under Rule 89(4A) of the CGST Rules. The respondents shall pay the refund as per the claims made by the petitioners – The petition is allowed [Read less]

GST - Corporate Insolvency Resolution Process (CIRP), Corporate Debtor Sold as Going Concern, Extinguishment of Past Dues – During the liquidation process, the petitioner company was sold as a going concern. The NCLT confirmed the sale and observed that the sale of the corporate debtor as a going concern is akin to a de-facto CIRP. Subsequent to the sale, the CGST authorities issued a demand notice to the petitioner company for tax dues - Whether the petitioner company, having been sold as a going concern in liquidation, can be held liable for the past tax dues (prior to the date of sale) or whether such past dues stand ... [Read more]

GST - Corporate Insolvency Resolution Process (CIRP), Corporate Debtor Sold as Going Concern, Extinguishment of Past Dues – During the liquidation process, the petitioner company was sold as a going concern. The NCLT confirmed the sale and observed that the sale of the corporate debtor as a going concern is akin to a de-facto CIRP. Subsequent to the sale, the CGST authorities issued a demand notice to the petitioner company for tax dues - Whether the petitioner company, having been sold as a going concern in liquidation, can be held liable for the past tax dues (prior to the date of sale) or whether such past dues stand extinguished - HELD - Upon successful completion of a CIRP or upon a corporate debtor being sold in liquidation as a going concern on a "clean state" basis, all the past dues of the corporate debtor shall stand frozen and extinguished - The order of priority for distribution of assets in liquidation under Section 53 of the Insolvency and Bankruptcy Code, 2016 cannot be overridden, and the operational creditors, such as the CGST authorities in the present case, cannot jump the queue in contravention of the priorities enumerated in Section 53 - The promotion of corporate revival is the avowed object of the Insolvency and Bankruptcy Code, 2016, and a buyer of a corporate debtor as a going concern should not be saddled with past dues. Accordingly, the order passed by the CGST authorities demanding tax dues from the petitioner company is quashed - The writ petition is allowed [Read less]

Service Tax - Works Contract Service, Non-filing of service tax return – Demand invoking extended period - Department alleged that the appellant had not paid/short paid service tax on work contract services provided to M/s Rajasthan Vidyut Prasaran Nigam Limited - Whether the department was correct in invoking the extended period of limitation to demand the service tax from the appellant – HELD - The confusion regarding the taxability of works contract services/composite contracts was settled by the Supreme Court in the case of Commissioner of C.Ex. & Cus., Kerala Vs. Larsen & Toubro Ltd. in 2015. The period in dispute... [Read more]

Service Tax - Works Contract Service, Non-filing of service tax return – Demand invoking extended period - Department alleged that the appellant had not paid/short paid service tax on work contract services provided to M/s Rajasthan Vidyut Prasaran Nigam Limited - Whether the department was correct in invoking the extended period of limitation to demand the service tax from the appellant – HELD - The confusion regarding the taxability of works contract services/composite contracts was settled by the Supreme Court in the case of Commissioner of C.Ex. & Cus., Kerala Vs. Larsen & Toubro Ltd. in 2015. The period in dispute was subsequent to this Supreme Court decision, and hence the appellant could not claim the benefit of any prevailing confusion. The ignorance of law is not a valid defense, and the appellant's claim of bona fide belief is not acceptable - The demand of service tax liability of along with the invocation of the extended period of limitation is upheld – The appeal is dismissed [Read less]

Service Tax – Sections 65(105)(zzzz) and 73 of Finance Act, 1994 – Renting of immovable property – Invoking of extended period of limitation – Demand of tax – Appellants were receiving rental income from Hospital by renting their immovable property – Department issued show cause notice proposing demand of service tax to Appellants by invoking extended period of limitation – Commissioner confirmed demand under Section 73 of the Act – Whether invocation of extended period of limitation is justified in facts and circumstances of case – HELD – Renting of Immovable Property was brought in the Act with effect... [Read more]

Service Tax – Sections 65(105)(zzzz) and 73 of Finance Act, 1994 – Renting of immovable property – Invoking of extended period of limitation – Demand of tax – Appellants were receiving rental income from Hospital by renting their immovable property – Department issued show cause notice proposing demand of service tax to Appellants by invoking extended period of limitation – Commissioner confirmed demand under Section 73 of the Act – Whether invocation of extended period of limitation is justified in facts and circumstances of case – HELD – Renting of Immovable Property was brought in the Act with effect from 1-6-2007 by introducing Section 65(105)(zzzz). Validity of said levy had been challenged before Delhi High Court. Delhi High Court held that mere renting of property by itself cannot be called as service and cannot attract service tax. Vide retrospective amendment introduced with effect from 1-6-2007 by 2010 Act, Renting of Immovable Property by itself became a taxable service, which was also further challenged before Delhi High Court and Delhi High Court granted stay. Keeping in view the circumstances and nature of levy as well as various decisions of Supreme Court, High Court and Tribunal on identical issue, invocation of extended period of limitation is not justified in present case. Impugned order is set aside only on limitation – Appeals allowed [Read less]

Service Tax – Section 66A of Finance Act, 1994 – Performing of work outside India – Tax liability – Western Geco, British Virgin Islands/headquarters of Appellant had entered into contracts with Oil and Natural Gas Commission (ONGC) and Reliance Industries Ltd (RIL) to conduct seismic survey of sea beyond 12 nautical miles from Indian land mass, analyse data and submit reports which help them in finding and drilling for oil and gas – Appellant/Western Geco Gurugram had paid service tax on 4% of total value of contracts received for data analysis done in Mumbai office – Department issued show cause notice to App... [Read more]

Service Tax – Section 66A of Finance Act, 1994 – Performing of work outside India – Tax liability – Western Geco, British Virgin Islands/headquarters of Appellant had entered into contracts with Oil and Natural Gas Commission (ONGC) and Reliance Industries Ltd (RIL) to conduct seismic survey of sea beyond 12 nautical miles from Indian land mass, analyse data and submit reports which help them in finding and drilling for oil and gas – Appellant/Western Geco Gurugram had paid service tax on 4% of total value of contracts received for data analysis done in Mumbai office – Department issued show cause notice to Appellant by proposing demand of Service Tax on remaining 96% of basic cost – Commissioner confirmed demand as proposed in show cause notice – Whether Appellant is liable to pay Service Tax on entire value of contract when 96% of work was performed outside India – HELD – Section 66A of the Act states that if service was rendered by a person outside India, service recipient had to pay tax as if he had rendered the service. Contracts for service were entered into by Western Geco, BV Islands with ONGC and RIL and consideration was paid in US dollars. Nothing is brought on record to show that any contracts were entered into by Gurugram or Mumbai project offices of Western Geco. There was no lis between ONGC and Western Geco Mumbai or Western Geco Gurugram. Project offices of Western Geco in Mumbai and Gurugram and its headquarters in BV Islands were separate persons as per Section 66A of the Act and the service provider was Western Geco BV Islands which was not located in India. Services performed outside territorial waters of India are clearly not exigible to service tax, because Finance Act does not extend to places outside India. Liability to pay service tax could not have been fastened on Appellant which neither provided any service nor received any consideration. Charge of service tax was only on ONGC and RIL as per Section 66A of the Act. Demand confirmed against Appellant cannot be sustained and needs to be set aside – Appeal allowed [Read less]

Customs - Redetermination of export value at the time of final assessment, export of iron ore – Provisional assessment of shipping bills based on declared FOB and quantity. On finalization, the Original Authority observed that the Appellants had realized export proceeds as per their initial declaration and in terms of the contract, and there was no evidence of mis-declaration of value. However, the Original Authority held that the CRCL report's moisture content, in terms of the bond executed by the Appellants at the time of export, would be applicable for working out the duty. On appeal, the Commissioner (Appeals) modifi... [Read more]

Customs - Redetermination of export value at the time of final assessment, export of iron ore – Provisional assessment of shipping bills based on declared FOB and quantity. On finalization, the Original Authority observed that the Appellants had realized export proceeds as per their initial declaration and in terms of the contract, and there was no evidence of mis-declaration of value. However, the Original Authority held that the CRCL report's moisture content, in terms of the bond executed by the Appellants at the time of export, would be applicable for working out the duty. On appeal, the Commissioner (Appeals) modified the order to the extent of adopting the declared Fe content by the Appellants and not as determined by either CRCL lab or CIQ test report - Whether the redetermination of FOB value for the purpose of working out the refund by adopting a different yardstick is sustainable – HELD - The bond at the time of provisional assessment is essentially to bind the Appellants to pay the differential duty at the time of final assessment and not to accept the findings of the CRCL, especially in relation to the moisture content, when there is a specific provision for determining the Fe content as well as the moisture content on the basis of the CIQ report at the discharge port. The amount of Customs duty finally payable has to be computed by the Refund Sanctioning Authority based on the value/price received by the Appellants in terms of the final commercial invoice and BRC, and the excess payments, if any, made by the Appellants at the time of provisional assessment is required to be refunded with applicable interest – The matter is remanded back to the Original Refund Sanctioning Authority to redetermine the quantum of refund and interest admissible in accordance with the law – The appeals are allowed by way of remand [Read less]

Customs – Sections 72(1)(d) and 114AA of Customs Act, 1962 – Non-accountal of goods – Demand of duty – Appellant/SEZ unit is engaged in import and processing of bulk raw sugar – Based on certain investigations, department felt that there are certain unaccounted goods at godown, which resulted in issuance of show cause notice proposing demand of duty – Adjudicating authority confirmed demand of duty and imposed penalties – Whether demand of duty confirmed against Appellant is sustainable – HELD – Entire goods which were stored in warehouse were initially imported duty free by Appellant, therefore, its acco... [Read more]

Customs – Sections 72(1)(d) and 114AA of Customs Act, 1962 – Non-accountal of goods – Demand of duty – Appellant/SEZ unit is engaged in import and processing of bulk raw sugar – Based on certain investigations, department felt that there are certain unaccounted goods at godown, which resulted in issuance of show cause notice proposing demand of duty – Adjudicating authority confirmed demand of duty and imposed penalties – Whether demand of duty confirmed against Appellant is sustainable – HELD – Entire goods which were stored in warehouse were initially imported duty free by Appellant, therefore, its accountal is necessary and any non-accountal would entail demand of duty. Demand had been made in terms of certain non-accountal of goods, which were brought inside private bonded warehouse, by Appellant to satisfaction of proper officer of Customs. Appellant had given detailed breakup to account for same, which includes loss due to cyclone, rejected goods, clearance to SEZ unit under Ex-Bond Bill of Entry duly acknowledged by SEZ authorities, etc. Reconciliation had not been done properly and this needs to be recalculated keeping in view the amount, which had actually been lost due to cyclone, or exported or ex-bonded and transported to SEZ unit, duly acknowledged, etc. To extent of explained loss due to natural cause, Appellant would be entitled for remission of duty. Entire demand is set aside. Matter is remanded back to Adjudicating Authority to re-determine amount of duty recoverable, if any – Appeal partly allowed - Imposition of penalties – Whether penalties imposed on Appellant under Sections 72(1)(d) and 114AA of the Act are sustainable – HELD – Penalty under Section 72(1)(d) of the Act would depend on having not able to properly account for goods which were initially warehoused. If Appellant is able to explain Into-Bond quantity and Ex-Bond quantity, penalty is not imposable. Unexplained quantity shall be leviable to customs duty in terms of the Act. Penalty under Section 72(1)(d) of the Act will require to be determined after proper reconciliation is done and if any unexplained quantity still remains. Penalty imposed under Section 72(1)(d) of the Act is set aside and remanded for redetermination subject to determination of duty, if any. Since goods have been exported and Appellant being SEZ unit have not claimed any export benefit on said export, penalty imposed under Section 114AA of the Act is not tenable. [Read less]

The period of limitation prescribed u/r 89(1A) r/w Sec. 54 for filing refund claim is directory in nature. The CGST authorities are not entitled to retain IGST paid wrongly instead of CGST+SGST, by holding that the refund is barred by limitation.

GST - Recovery of GST on cancelled invoice - Recovery proceeding under Section 79 of the CGST Act for the recovery of IGST. The petitioner claimed that the recipient had failed to honor the contract and therefore the petitioner was not liable to pay tax as no service was provided - The petitioner had recorded the transaction in Form GSTR-1 but did not reflect it in Form GSTR-3B, claiming there was no concluded contract - Petitioner contended that the invoices were cancelled and payment was not received from the vendor but respondent initiated the recovery proceedings – HELD - The petitioner's reply to the Form GST DRC-01... [Read more]

GST - Recovery of GST on cancelled invoice - Recovery proceeding under Section 79 of the CGST Act for the recovery of IGST. The petitioner claimed that the recipient had failed to honor the contract and therefore the petitioner was not liable to pay tax as no service was provided - The petitioner had recorded the transaction in Form GSTR-1 but did not reflect it in Form GSTR-3B, claiming there was no concluded contract - Petitioner contended that the invoices were cancelled and payment was not received from the vendor but respondent initiated the recovery proceedings – HELD - The petitioner's reply to the Form GST DRC-01B was incomplete and therefore the impugned recovery proceeding was initiated. If the petitioner had indeed provided the service but not received payment, the petitioner would still be liable to pay tax under the GST law. The Petitioner ought to have given a proper reply by substantiating the same with the Annual Books of Account. If the amounts are shown in the Annual Books of Account are receivable, mere cancellation of the invoices unilaterally at a later point of time is of no avail - The matter is remanded back to the respondent to pass a fresh order within 30 days and the petitioner is directed to provide a proper reply with supporting evidence. If the petitioner fails to file such a reply within the given time, the writ petition will be deemed to have been dismissed - The writ petition is disposed of [Read less]