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GST - Detention and seizure of goods in transit - Imposition of penalty - Mandatory compliance with statutory timelines under Section 129(3) of CGST Act 2017 - Appellant challenged contending that penalty order passed 47 days after Notice MOV-07, violating the mandatory 7-day period prescribed under Section 129(3) - Whether the 7-day period prescribed in Section 129(3) for passing penalty order is mandatory or merely directory - HELD - Section 129(3) of CGST Act 2017 prescribes that proper officer shall issue notice within seven days of detention or seizure and thereafter pass order within period of seven days from date of... [Read more]

GST - Detention and seizure of goods in transit - Imposition of penalty - Mandatory compliance with statutory timelines under Section 129(3) of CGST Act 2017 - Appellant challenged contending that penalty order passed 47 days after Notice MOV-07, violating the mandatory 7-day period prescribed under Section 129(3) - Whether the 7-day period prescribed in Section 129(3) for passing penalty order is mandatory or merely directory - HELD - Section 129(3) of CGST Act 2017 prescribes that proper officer shall issue notice within seven days of detention or seizure and thereafter pass order within period of seven days from date of service of such notice for payment of penalty. Use of word ‘shall’ indicates legislative intent that adherence to timeline is mandatory. Since GST Act is fiscal statute it must be construed strictly. Absence of express consequences of non-compliance does not render provision directory - Timeline has been introduced to prevent arbitrary detention, prolonged seizure and harassment to trader. Multiple High Courts have consistently held provisions of Section 129(3) to be mandatory and held that failure to adhere to timelines prescribed therein would vitiate order of detention – Further, the facts show appellant had generated tax invoices as e-invoices from portal, filed GST returns and paid appropriate GST, indicating no mens rea to evade tax only because e-way bill was not prepared. First Appellate Authority failed to examine basic fact of dates which was apparent on record - Order MOV-09 issued beyond mandatory time limit of 7 days is illegal and without jurisdiction. First Appellate Authority erred in failing to examine this issue. Order-in-appeal is set aside – The appeal is allowed [Read less]

Central Excise - Eligibility to claim credit on structural materials used for manufacturing capital goods - Welding electrodes and oxygen used for repair and maintenance - Time-bar of demand - Appellant manufacturer of steel products claimed CENVAT Credit on MS Channels, MS Angles, Plates, welding electrodes and oxygen used during August 2008 to April 2009 for manufacturing capital goods used within factory premises - Appellant submitted Chartered Engineer's Certificate showing materials used in manufacturing capital goods within factory premises and cited case laws holding assessees eligible for credit - Whether structura... [Read more]

Central Excise - Eligibility to claim credit on structural materials used for manufacturing capital goods - Welding electrodes and oxygen used for repair and maintenance - Time-bar of demand - Appellant manufacturer of steel products claimed CENVAT Credit on MS Channels, MS Angles, Plates, welding electrodes and oxygen used during August 2008 to April 2009 for manufacturing capital goods used within factory premises - Appellant submitted Chartered Engineer's Certificate showing materials used in manufacturing capital goods within factory premises and cited case laws holding assessees eligible for credit - Whether structural materials like MS Channels and Angles used in fabrication of structures for capital goods fall within definition of inputs eligible for CENVAT credit despite being structures for support of capital goods - Whether welding electrodes and oxygen used for repair and maintenance of machinery constituting capital goods are eligible for credit - HELD - Vandana Global Ltd decision (Larger Bench) on which Department relied has been reversed by Chhattisgarh High Court. The High Court held that goods used in fabrication of structures embedded to earth should be treated as inputs for capital goods and CENVAT credit cannot be denied – The term ‘inputs’ under Rule 2(k) has wide coverage and includes all goods used in manufacture of final products including capital goods used in factory. Explanation 2 to Rule 2(k) amended by Notification No.16/2009 specifically excludes only angles, channels, TMT bars used for construction of factory shed, laying foundation or making structures for support of capital goods - In present case, materials in question were not used for foundation, construction of factory or support structure but for manufacturing capital goods like machines used within factory premises. Following Chhattisgarh High Court decision, materials are inputs for capital goods and eligible for credit. Welding electrodes and oxygen used in manufacturing capital goods are also eligible for credit. On merits, demand is not sustainable. On time-bar aspect, Show Cause Notice issued on 14.08.2012 for credit taken during August 2008 to April 2009 is barred by limitation - During relevant period different interpretations existed on CENVAT credit eligibility. No suppression and no justification for invocation of extended period of limitation – The demand is set aside and the appeal is allowed [Read less]

Central Excise – SVLDRS – Manual issue of Discharge Certificate – Appellant filed declaration under SVLDRS and remitted differential duty remitted on the basis of Form SVLDRS-3 with substantiation by Bank statement. Revenue did not issue Form SVLDRS-4 despite such remittance – Whether discharge certificate should be issued when differential duty has been remitted under SVLDRS and payment is substantiated by bank documents – HELD - The differential duty stands remitted as the same is not disputed by Revenue. Appellant has complied with the substantive requirements of SVLDRS Scheme by filing requisite declaration i... [Read more]

Central Excise – SVLDRS – Manual issue of Discharge Certificate – Appellant filed declaration under SVLDRS and remitted differential duty remitted on the basis of Form SVLDRS-3 with substantiation by Bank statement. Revenue did not issue Form SVLDRS-4 despite such remittance – Whether discharge certificate should be issued when differential duty has been remitted under SVLDRS and payment is substantiated by bank documents – HELD - The differential duty stands remitted as the same is not disputed by Revenue. Appellant has complied with the substantive requirements of SVLDRS Scheme by filing requisite declaration in Form SVLDRS-1 and Form SVLDRS-3 and making the payment through authorized bank channel. The matter is only procedural in nature. Following the direction issued by Chennai Tribunal in case of Aurofood Pvt. Ltd. regarding manual processing of SVLDRS requests as per CBIC's Instruction on the subject, the Commissioner is directed to have the matter examined manually and process the request of appellant for issuing discharge certificate – The appeal is disposed of [Read less]

Customs - Revocation of Customs Broker license - Violation of Customs Brokers Licensing Regulations 2018 - Unauthorized use of credentials of another Customs Broker - Whether conscious use of another Customs Broker's credentials by appellant despite holding its own license and undertaking all clearance activities constitutes violation of CBLR warranting revocation - HELD – The fact that appellant undertook clearance activities with knowledge and consent of another Customs Broker does not authorize appellant to undertake Customs Broker functions using license of another Customs Broker. Statutory scheme does not contemplat... [Read more]

Customs - Revocation of Customs Broker license - Violation of Customs Brokers Licensing Regulations 2018 - Unauthorized use of credentials of another Customs Broker - Whether conscious use of another Customs Broker's credentials by appellant despite holding its own license and undertaking all clearance activities constitutes violation of CBLR warranting revocation - HELD – The fact that appellant undertook clearance activities with knowledge and consent of another Customs Broker does not authorize appellant to undertake Customs Broker functions using license of another Customs Broker. Statutory scheme does not contemplate one Customs Broker undertaking functions of another Customs Broker by using latter's credentials. Appellant despite holding its own license consciously chose to undertake transaction under license of another Customs Broker. This was not mere inadvertent or technical omission but conscious act - Violation of Regulation 10(a) follows from fact that appellant without authorization from importer in its own name undertook transaction and filed Bill using credentials of another broker. Violations of Regulations 10(d) and 10(e) sustained as appellant failed to discharge obligations to advise client regarding statutory requirements and bring matter to notice of authorities. Finding under Regulation 10(f) sustainable as record does not disclose that appellant had adequately informed importer of restrictions. Finding under Regulation 10(k) supported as original documents collected by appellant from importer were not produced to authorities - Absence of prior misconduct is mitigating circumstance but does not render present violations inconsequential. Use of another Customs Broker's credentials had effect of concealing identity of Customs Broker actually undertaking transaction and undermining regulatory framework. Proportionality principle cannot be applied where violations are substantive and relate to manner of undertaking Customs Broker activities and use was conscious not careless or inadvertent. Revocation of license not disproportionate to gravity of violations established. Forfeiture of security deposit and penalty of Rs.50,000/- also arise from established violations. Appellant failed to establish error of law warranting interference – The appeal is dismissed [Read less]

Customs - Confiscation of smuggled gold and imposition of penalties - Reasonable belief and burden of proof under Section 123 of Customs Act, 1962 - Admissibility of statements recorded during investigation - Appellant revenue seized gold bars and Indian currency from respondents during town interception at railway station alleging smuggled origin and proposed confiscation under Sections 111 and 113 of Customs Act, 1962, and penalties under Sections 112 and 114AA - Whether the evidence submitted by the Respondents regarding domestic purchase of the gold is sufficient to conclude that the gold in question are not smuggled i... [Read more]

Customs - Confiscation of smuggled gold and imposition of penalties - Reasonable belief and burden of proof under Section 123 of Customs Act, 1962 - Admissibility of statements recorded during investigation - Appellant revenue seized gold bars and Indian currency from respondents during town interception at railway station alleging smuggled origin and proposed confiscation under Sections 111 and 113 of Customs Act, 1962, and penalties under Sections 112 and 114AA - Whether the evidence submitted by the Respondents regarding domestic purchase of the gold is sufficient to conclude that the gold in question are not smuggled in nature – HELD - Reasonable belief required to invoke Section 123 statutory presumption must be founded on objective circumstances existing at time of seizure, not conjectures or assumptions. Absence of foreign markings on seized gold, fact that seizure was effected in town area and not at notified customs zone or international border, and absence of scientific or technical material connecting seized gold with foreign source collectively create substantial doubt whether foundational requirement of reasonable belief was satisfied. Mere purity of gold without corroborative scientific evidence connecting it with foreign source cannot furnish reasonable belief contemplated under Section 123. Burden of proof does not shift to claimants where initial seizure was effected without reasonable belief. Once respondents produced contemporaneous commercial records showing GST-compliant purchases and complete accounting, burden necessarily shifted back to revenue to affirmatively establish documents were fabricated or forged through independent and legally admissible evidence - Revenue's case predominantly resting on untested statements not supported by independent documentary or scientific evidence cannot sustain allegations of smuggling. Regarding Indian currency seized, no cogent material establishing nexus between seized currency and alleged act of smuggling; department failed to place evidence of any investigation establishing source of currency – Further, the currency seized during investigation cannot be retained indefinitely in absence of legally admissible evidence establishing connection with alleged offence. Confiscation of gold under Sections 111 and 113 set aside; all penalties under Sections 112 and 114AA set aside as foundational basis for penalties ceases to exist once confiscation order fails; Indian currency to be released with applicable interest – The Revenue appeals are dismissed - Revenue’s reliance on the statements recorded during the course of investigation – HELD - Revenue relied only on uncorroborated statements instead of leading independent evidence and has not produced forensic examination or expert opinion questioning genuineness of documents. Statements recorded under Section 108 were not handwritten and admittedly typed by investigating officers with signatures appended thereafter; respondents who are illiterate persons contended they were unable to comprehend proceedings and were in state of fear and apprehension. Mandatory statutory safeguards prescribed under Section 138B of Customs Act, 1962 require adjudicating authority to examine maker of statement as witness, record satisfaction regarding admissibility, and afford affected noticee opportunity to test evidence through cross-examination. Statements relied upon without adherence to these mandatory safeguards cannot be admitted as substantive evidence against noticee. Once voluntariness of statements stood seriously disputed, prudence demanded Department substantiate same by leading independent corroborative evidence before placing exclusive reliance thereon. No such corroboration forthcoming. [Read less]

Service Tax - Exemption for manpower supply services provided to Governmental Authority - Definition of ‘Governmental Authority’ - Original authority confirmed demand on grounds that Noida Authority does not qualify as Government or local authority being constituted under UP Industrial Area Development Act 1976, and therefore exemption under Notification No.25/2012 was not available. Appellant claimed that services of providing sweepers for sanitation conservancy were covered under entry 25 of Notification No.25/2012 which grants exemption for services provided to Governmental Authority, and that Noida Authority qualif... [Read more]

Service Tax - Exemption for manpower supply services provided to Governmental Authority - Definition of ‘Governmental Authority’ - Original authority confirmed demand on grounds that Noida Authority does not qualify as Government or local authority being constituted under UP Industrial Area Development Act 1976, and therefore exemption under Notification No.25/2012 was not available. Appellant claimed that services of providing sweepers for sanitation conservancy were covered under entry 25 of Notification No.25/2012 which grants exemption for services provided to Governmental Authority, and that Noida Authority qualifies as Governmental Authority - Whether services provided by appellant constitute sanitation conservancy services eligible for exemption under entry 25 of Notification No.25/2012 - HELD - Work order issued by Noida Authority reveals appellant had been providing sweepers for cleaning purposes which unquestionably falls within term sanitation conservancy. Entry 25 of Notification No.25/2012 grants exemption for sanitation conservancy services provided to Government, local authority or Governmental Authority. Noida Authority though constituted under UP Industrial Area Development Act 1976 qualifies as Governmental Authority within definition in Notification which provides that Governmental Authority means an authority or board or any other body set up by Act of Parliament or State Legislature or established by Government with 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 273W of Constitution - Original authority failed to examine whether Noida Authority qualified as Governmental Authority. Appellant was eligible for exemption under entry 25 of Notification No.25/2012. On remaining amount the appellant was eligible for small service provider exemption under Notification No.33/2012 - Extended period of limitation is not validly invoked. Appellant bona fide believed it was eligible for exemption and had regularly been filing ST-3 returns – The entire demand barred by limitation. Penalties under Section 78 and Section 77(1)(d) also set aside consequentially – The appeal is allowed [Read less]

Service Tax - Interest on refund of amount paid by mistake of fact - Rate of interest payable - Appellant paid Service Tax on GTA services and claimed refund on ground that exemption was available under Notification No.25/2012-ST for food stuff - Appellant appealed contending that since amount was paid by mistake of fact it constitutes a deposit and should be refunded with interest @ 12% - Whether amount paid by mistake of fact is refundable with interest @ 12% or without interest - HELD - When amount is paid by mistake of fact, it is not treated as tax but as a deposit and therefore should be refunded along with interest.... [Read more]

Service Tax - Interest on refund of amount paid by mistake of fact - Rate of interest payable - Appellant paid Service Tax on GTA services and claimed refund on ground that exemption was available under Notification No.25/2012-ST for food stuff - Appellant appealed contending that since amount was paid by mistake of fact it constitutes a deposit and should be refunded with interest @ 12% - Whether amount paid by mistake of fact is refundable with interest @ 12% or without interest - HELD - When amount is paid by mistake of fact, it is not treated as tax but as a deposit and therefore should be refunded along with interest. The CESTAT, Delhi Bench in cases of Gajendra Singh Sankhla, Meenu Builders and others held that interest @ 12% is payable on refund of amount paid by mistake of fact or mistake of law. Calcutta High Court in Rajendra Kumar Jain versus Commissioner of Customs (Port) Kolkata held that there is no statutory provision fixing rate of interest for refund of amount deposited during investigation and therefore interest @ 12% is payable till such statutory provision is notified - Fact that refund was sanctioned and paid within three months from date of application is not relevant consideration when amount in question is paid by mistake of fact as it is treated as deposit requiring interest. Since Commissioner (Appeals) accepted that amount was paid by mistake of fact, appellant entitled to interest @ 12% from date of deposit till date of refund payment. The impugned order rejecting interest claim not sustainable and set aside – The appeal is allowed with interest @ 12% granted [Read less]

GST on Corporate Guarantees – Scope of Supply under Section 7 of CGST Act, 2017 – Petitioners had furnished corporate guarantees without any consideration to their subsidiaries to enable the subsidiaries to avail credit facilities from banks. Petitioners contended that corporate guarantee is not a supply as no consideration is paid, it is a contingent contract under Section 31 of Indian Contract Act and does not satisfy the four conditions of supply being activity, service, to related party and in course or furtherance of business - Revenue contended that corporate guarantee constitutes supply under Section 7 read with... [Read more]

GST on Corporate Guarantees – Scope of Supply under Section 7 of CGST Act, 2017 – Petitioners had furnished corporate guarantees without any consideration to their subsidiaries to enable the subsidiaries to avail credit facilities from banks. Petitioners contended that corporate guarantee is not a supply as no consideration is paid, it is a contingent contract under Section 31 of Indian Contract Act and does not satisfy the four conditions of supply being activity, service, to related party and in course or furtherance of business - Revenue contended that corporate guarantee constitutes supply under Section 7 read with Schedule I Article 2 and Entry 5(e) of Schedule II of CGST Act – Whether corporate guarantee furnished without consideration between holding company and subsidiary is a taxable supply under GST regime – HELD - A corporate guarantee constitutes a supply under Section 7 of the CGST Act read with Schedule I Article 2 and Entry 5(e) of Schedule II of the CGST Act. The furnishing of a corporate guarantee by a Holding Company for its Subsidiary without any consideration falls within the purview of supply contemplated under Schedule I Article 2 which deems supply of goods or services or both between related persons to be taxable supply even when made without consideration provided the supply is made in the course or furtherance of business - The execution of a corporate guarantee constitutes a transaction of agreeing to the obligation within Entry 5(e) of Schedule II. Although corporate guarantee is contingent in nature and involves no immediate cost, once it is executed it constitutes a legal obligation and hence an identifiable supply of service - The merger of the statutory provisions of CGST Act with the provisions of the Indian Contract Act through the prism of Schedule I and Schedule II demonstrates that corporate guarantee is embraced within the taxable supply framework – Corporate guarantees furnished by holding companies to subsidiaries constitute taxable supply under Section 7 read with Schedule I Article 2 and Entry 5(e) of Schedule II of CGST Act - GST - Valuation of Corporate Guarantees - Constitutional Validity of Rule 28(2) CGST Rules - flat 1% Valuation – Petitioners challenged the validity of Rule 28(2) of CGST Rules which prescribes deemed valuation of corporate guarantees at 1% of guarantee amount or actual consideration, whichever is higher. Petitioners contended that the flat 1% valuation is arbitrary, violative of Article 14 and 19(1)(g) of Constitution and deprives them of the right to declare actual value under Rules 30 and 31 - Revenue defended the rule on ground that it adopts Safe Harbor rule from Income Tax and represents minimum acceptable commission considering market rates of 0.5% to 3%. Petitioners further contended that actual charges on corporate guarantees are much lower at 0.25% to 0.3% – Whether flat 1% deemed valuation of corporate guarantees is constitutionally valid and whether expression whichever is higher operates arbitrary – HELD - The provision of Rule 28(2) of CGST Rules fixing deemed valuation at 1% of guarantee amount is Constitutionally valid as the concept of deeming fiction is well-recognized in taxation statutes where actual value cannot be ascertained. The Supreme Court in Wipro Limited has held that deeming fiction can be applied only when actual cost is not ascertainable - In case of corporate guarantees where parties may not specify any consideration, a uniform deeming fiction of 1% serves the purpose of ensuring certainty and avoiding litigation. However the expression “whichever is higher” is arbitrary and violative of Article 14 and 19(1)(g) of the Constitution. This expression compels the assessee to pay tax on 1% even when actual consideration charged or payable is lower than 1% thereby depriving the assessee of the flexibility available under Rules 30 and 31 to determine reasonable valuation. The expression operates without any nexus to actual cost and becomes confiscatory in nature. The expression whichever is higher shall accordingly be read down – Rule 28(2) of CGST Rules is constitutionally valid except the expression “whichever is higher” which is struck down as arbitrary and violative of Article 14 and 19(1)(g) of Constitution - GST - Retroactive Application of Rule 28(2) - Corporate Guarantees Executed Before Rule Introduction – Petitioners had executed corporate guarantees before 26 October 2023 when Rule 28(2) came into force. Revenue issued demands for the period since GST regime inception in July 2017 applying the 1% valuation retrospectively to all guarantees – Whether imposition of GST levy based on Rule 28(2) on corporate guarantees executed prior to 26 October 2023 is constitutionally valid and whether such retroactive application violates Articles 14 and 19(1)(g) – HELD - The introduction of Rule 28(2) w.e.f. 26 October 2023 is retroactive in nature as it applies to corporate guarantees executed prior to its introduction. While the legislature has competence to make laws retrospective or retroactive such power remains subordinate to fundamental rights enshrined in the Constitution. The retroactive application of Rule 28(2) to guarantees executed before 26 October 2023 imposes an unexpected financial burden on taxpayers who had arranged their affairs based on the prevailing law - The levy during pre-26 October 2023 period when no levy existed violates the principle of legal certainty and fairness as taxpayers could not have anticipated the future tax liability. The retroactive levy for extended periods is harsh and unfair particularly when corporate guarantees may span several years resulting in annual tax liabilities. The imposition of such levy also invokes the doctrine of unjust enrichment as Revenue had no legal basis to levy GST on corporate guarantees prior to introduction of Rule 28(2) – The levy of GST on corporate guarantees executed prior to 26 October 2023 is struck down as violative of Article 14 and 19(1)(g) of the Constitution on ground of excessive retroactive application. Levy is permissible from 26 October 2023 onwards only for the period during which guarantees continue to remain in force - GST - Invocation of Section 74 - Fraud and Suppression - Matter of Interpretation of Statutory Provisions – Revenue issued show cause notices under Section 74 of CGST Act alleging fraud and wilful suppression on ground that petitioners had not declared GST liability on corporate guarantees in their monthly returns – Whether invocation of Section 74 provisions for matters involving bonafide interpretation of complex statutory provisions of GST law is justified - HELD - The Section 74 requires strict showing of malafide intent such as fraud, willful misstatement or suppression with deliberate intention to evade tax. The Supreme Court in Uniworth Textiles has held that suppression of facts must mean correct information not deliberately disclosed to evade payment of duty. When facts are known to both parties omission by one to do what he might have done does not render it suppression - Mere failure to declare does not amount to willful suppression and there must be some positive act from side of assessee to find willful suppression. In the instant case both the petitioners and Revenue had contested the working of statutory provisions relating to taxability of corporate guarantees. This involved disputed interpretation of complex provisions of CGST Act read with Indian Contract Act and Transfer of Property Act. A bonafide legal position cannot automatically constitute fraud or suppression. While taxpayers cannot claim immunity by taking shelter under legal complexities they also cannot be held guilty of suppression when they take a position on complex statutory provisions which is later disputed by Revenue – The invocation of Section 74 of CGST Act against petitioners for not declaring GST on corporate guarantees is quashed as the matter involved disputed interpreta [Read less]

GST - Stock Transfer without e-way Bill - Penalty under Section 129 absent Supply - Registered person dealing in steel goods transported steel goods under Delivery Challan from its own registered premises to its own registered godown as stock transfer. The vehicle was intercepted and detained by Mobile Squad on the ground that no e-way bill accompanied the movement. Penalty was imposed under Section 129(3) of the CGST Act 2017 - Whether penalty under Section 129 is leviable on goods transported as stock transfer where no tax is payable – HELD - The phrase tax payable in Section 129(1) would contemplate that the transacti... [Read more]

GST - Stock Transfer without e-way Bill - Penalty under Section 129 absent Supply - Registered person dealing in steel goods transported steel goods under Delivery Challan from its own registered premises to its own registered godown as stock transfer. The vehicle was intercepted and detained by Mobile Squad on the ground that no e-way bill accompanied the movement. Penalty was imposed under Section 129(3) of the CGST Act 2017 - Whether penalty under Section 129 is leviable on goods transported as stock transfer where no tax is payable – HELD - The phrase tax payable in Section 129(1) would contemplate that the transaction is liable for tax and on which the tax becomes payable. A stock transfer between locations of the same registered person does not constitute a supply as defined under Section 7 of the CGST Act because it lacks two distinct entities and consideration. Section 7 requires the transaction to be between more than one person or entity, illustrative expressions such as sale, transfer, barter, exchange fortifying the requirement of existence of more than one person, and the supply must be for consideration as defined in the Act. Where a transaction does not fall within the definition of supply under Section 7, the charging Section 9 does not get attracted and hence no tax is payable - Penalty under Section 129 which is quantified with reference to tax payable on such goods cannot be imposed where no tax is payable. The contention that the phrase tax payable is only a measure for quantifying penalty without requiring proof of actual supply was rejected. The finding that the transaction was not genuine merely on the ground that e-way bill was not available lacked evidentiary basis and in the absence of any allegation or evidence regarding non-genuineness of the transaction, such finding was unsustainable - Penalty under section 129 of CGST Act is not leviable on the registered person, for transport of goods without e-way bill, when such transport was undertaken on account of stock transfer - The impugned Order-in-Appeal is set aside and the appeals are allowed [Read less]

Central Excise - Extended period of limitation under Section 11A of the Central Excise Act, 1944 - Proviso to Section 11A - Invocation of extended period on ground of suppression when facts are known to both parties - Appellants engaged in body building of motor vehicles on job work basis, receiving chassis from manufacturers on which excise duty was paid at valuation of 110% of cost of manufacture. Appellant clearance of finished motor vehicle computed on sum total of cost of manufacture, directly received raw materials, job work charges and profit of appellant without including 10 percent profit of manufacturer incorpora... [Read more]

Central Excise - Extended period of limitation under Section 11A of the Central Excise Act, 1944 - Proviso to Section 11A - Invocation of extended period on ground of suppression when facts are known to both parties - Appellants engaged in body building of motor vehicles on job work basis, receiving chassis from manufacturers on which excise duty was paid at valuation of 110% of cost of manufacture. Appellant clearance of finished motor vehicle computed on sum total of cost of manufacture, directly received raw materials, job work charges and profit of appellant without including 10 percent profit of manufacturer incorporated in chassis valuation under Rule 8 of Central Excise Valuation Rules, 2000 - SCN issued invoking extended period of limitation under proviso to Section 11A alleging wilful misrepresentation and wilful suppression of valuation - Whether extended period of limitation available when facts regarding 110 percent valuation of chassis were known to both Department and assessee - HELD - Extended period of limitation under proviso to Section 11A cannot be invoked on allegation of suppression or misrepresentation merely. The words suppression and misrepresentation are qualified by wilful, which means with intent to evade duty. When facts are known to both parties, omission by one party to do what it might have done would not render it suppression - The Department was fully aware that manufacturers cleared chassis at 110 percent of cost of manufacture and if Department found non-inclusion of 10 percent in duty computation by job worker, it ought to have taken immediate action under Section 11A(1). The proviso cannot be invoked to extend period of limitation when Department failed to act promptly – The SCN dated 30.04.2008 for period 01.11.2004 to 31.03.2007 was beyond one-year period provided under Section 11A(1) and hence demand is barred by limitation – The appeal is allowed [Read less]

Customs - Limitation in appeals under Section 128 - Application of Section 14 of Limitation Act 1963 - Effect of ITC Limited decision changing legal position regarding necessity of modification before refund - Appellant imported pressure relief valves and filed refund applications under Section 27 of Customs Act within one-year period relying on binding jurisdictional law under Aman Medical and Micromax cases that treated refund claim as independent remedy not requiring prior modification of assessment. Supreme Court judgment in ITC Limited dated 18.09.2019 altered legal position by holding that refund claim could not be e... [Read more]

Customs - Limitation in appeals under Section 128 - Application of Section 14 of Limitation Act 1963 - Effect of ITC Limited decision changing legal position regarding necessity of modification before refund - Appellant imported pressure relief valves and filed refund applications under Section 27 of Customs Act within one-year period relying on binding jurisdictional law under Aman Medical and Micromax cases that treated refund claim as independent remedy not requiring prior modification of assessment. Supreme Court judgment in ITC Limited dated 18.09.2019 altered legal position by holding that refund claim could not be entertained unless assessment was first modified in appeal - Appellant within six days of ITC decision filed application under Section 149 seeking amendment of bills and requested abeyance of refund proceedings pending modification - Refund Authority rejected refund claims on ground that modification of assessments was prerequisite. Appellant thereafter filed appeals under Section 128. Commissioner (Appeals) rejected appeals as barred by limitation - Whether period spent in pursuing refund remedy which became abortive due to ITC Limited decision can be excluded under principles of Section 14 of Limitation Act - HELD - Section 14 of Limitation Act does not apply proprio vigore to appeals before Commissioner but principles underlying Section 14 apply to appeals under Section 128 of Customs Act. Where abortive proceeding undertaken in good faith and with due diligence proves abortive due to defect of jurisdiction or other cause of like nature, period spent in pursuing it may be excluded - Where refund proceeding was original proceeding instituted on 26.08.2019, period preceding that date cannot be excluded. However, distinct ground exists that binding jurisdictional law prevailing at time treated refund claim under Section 27 as independent sufficient remedy and necessity of modification was authoritatively declared only subsequently in ITC Limited - Period spent in pursuing abortive refund remedy and subsequent application under Section 149 liable to be excluded under principles of Section 14 up to 02.06.2020 when legal impediment crystallized. After exclusion, Appeals filed on 31.08.2020 fell within extended period under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 – Since the Commissioner (Appeals) did not examine appeals on merits, those Appeals are restored to the file of the Commissioner of Customs (Appeals). The Commissioner (Appeals) shall decide them on merits, without reopening the question of limitation - The impugned orders are set aside and the appeals are allowed [Read less]

GST - Reverse Charge Mechanism vs Forward Charge Mechanism - Services Rendered by Advocate as Insolvency Professional – Petitioner was appointed as Interim Resolution Professional by NCLT Delhi Bench for corporate debtor. Petitioner raised invoices for professional fees as Interim Resolution Professional. Resolution Professional called upon petitioner to issue GST compliant invoices claiming that GST is payable by Interim Resolution Professional. Petitioner contended that he is exempted from GST registration under Section 9(3) and (4) of CGST Act and Notifications 12/2017 and 13/2017 as Advocates are governed by reverse ... [Read more]

GST - Reverse Charge Mechanism vs Forward Charge Mechanism - Services Rendered by Advocate as Insolvency Professional – Petitioner was appointed as Interim Resolution Professional by NCLT Delhi Bench for corporate debtor. Petitioner raised invoices for professional fees as Interim Resolution Professional. Resolution Professional called upon petitioner to issue GST compliant invoices claiming that GST is payable by Interim Resolution Professional. Petitioner contended that he is exempted from GST registration under Section 9(3) and (4) of CGST Act and Notifications 12/2017 and 13/2017 as Advocates are governed by reverse charge mechanism for legal services and GST if payable is on reverse charge basis - Whether Advocates acting as Insolvency Professionals are governed by reverse charge mechanism applicable to legal services or forward charge mechanism applicable to Insolvency Professional services – HELD - Notification No. 12/2017 and No. 13/2017 dated 28.06.2017 provide that services rendered by Advocates are governed by RCM. However this applies to legal services rendered by Advocates in capacity as Advocates. Services rendered by person in capacity of Insolvency Professional are governed by separate statutory framework under Insolvency and Bankruptcy Code and IBBI Regulations. IBBI Regulations prescribe independent eligibility criteria and registration requirements for Insolvency Professionals - The Scheme of Classification of Services specifically classifies Insolvency and Receivership services under separate entry 998241 distinct from legal services entry 99821. Principle of specific description prevailing over general description applies. When Advocate renders services as Insolvency Professional the role is that of Insolvency Professional not Advocate - Taxability is determined by nature of services rendered not by professional qualification of person rendering service. As per Scheme of Classification, Insolvency and Receivership services are specifically covered under head 99824 and are not covered by Notification No. 13/2017 applicable to RCM. Thus Advocates acting as Insolvency Professionals are governed by forward charge mechanism applicable to all Insolvency Professionals as class and cannot claim benefit of reverse charge mechanism - Advocates enrolled with Bar Council who act as Insolvency Professionals shall be governed by forward charge mechanism. They shall be liable to obtain GST registration and comply with all consequential requirements under CGST Act and rules and notifications thereunder in same manner as applicable to Insolvency Professionals as class. Petitioner directed to furnish GST compliant invoices in respect of professional fee charged for services rendered as Interim Resolution Professional – Ordered accordingly [Read less]

Service Tax - Sale of Immovable Property - Liability on Advance Received for Sale of Plots – Service tax demand on amount returned to customers - Whether amount received as advance against sale of plots constitute sale of immovable property exempt from Service Tax under Section 65B(44)(a)(i) of Finance Act, 1994 – HELD - The appellant returned back amount regarding sale of flats due to non-viability of construction of residential towers. The said amount was not received in connection with rendering of any taxable service. Hence no Service Tax is payable on the amount returned back to customers - Even otherwise the amou... [Read more]

Service Tax - Sale of Immovable Property - Liability on Advance Received for Sale of Plots – Service tax demand on amount returned to customers - Whether amount received as advance against sale of plots constitute sale of immovable property exempt from Service Tax under Section 65B(44)(a)(i) of Finance Act, 1994 – HELD - The appellant returned back amount regarding sale of flats due to non-viability of construction of residential towers. The said amount was not received in connection with rendering of any taxable service. Hence no Service Tax is payable on the amount returned back to customers - Even otherwise the amount was received as advance against sale of plots for villas. As amounts have been received in connection with sale of immovable property, the said amount is not liable to Service Tax as per Section 65B(44)(a)(i) of Finance Act, 1994 - Service Tax is not payable on amount received in connection with sale of plots. Demand confirmed in impugned order on this amount is set aside - Service Tax - Construction of Residential Complex Service - Liability Where Service Tax Already Paid Before Show Cause Notice – Whether Service Tax can be demanded again when it has been already paid before issuance of Show Cause Notice – HELD - The Appellant paid Service Tax payable in respect of rendering of service namely Construction of Residential Complex Service before issuance of Show Cause Notice. Section 73 of Finance Act, 1994 provides that if Service Tax payable has been paid along with interest before issuance of Show Cause Notice, then there is no need to issue Notice to demand Service Tax. As Appellant has already paid Service Tax payable in this case along with interest, no demand should be made. The principle that once Service Tax is paid before issuance of Show Cause Notice with all applicable interest, no demand can be subsequently made, is settled law – No additional Service Tax demand can be made as full Service Tax has been paid before issuance of Show Cause Notice. The demand confirmed in impugned order on this amount is not sustainable - Penalty cannot be imposed where underlying demand itself is not valid or where no taxability exists. The case relates to bonafide legal interpretation and there was no intent to evade tax or commission of fraud or suppression of facts on part of Appellant – The penalty imposed in impugned order is set aside and the appeal is allowed [Read less]

GST - Service of Show Cause Notice on Common Portal - Sufficiency of Service – Whether mere uploading of Show Cause Notice on GST common portal without acknowledgement of receipt or filing of reply by assessee constitutes sufficient service of notice – HELD - Service of Show Cause Notice upon assessee cannot be deemed sufficient merely on account of its uploading on common portal unless its receipt is acknowledged or reply is filed - The Punjab and Haryana High Court in Luxmi Traders case examined the issue of service of notices through the common portal and held that mere uploading of an SCN, without acknowledgement o... [Read more]

GST - Service of Show Cause Notice on Common Portal - Sufficiency of Service – Whether mere uploading of Show Cause Notice on GST common portal without acknowledgement of receipt or filing of reply by assessee constitutes sufficient service of notice – HELD - Service of Show Cause Notice upon assessee cannot be deemed sufficient merely on account of its uploading on common portal unless its receipt is acknowledged or reply is filed - The Punjab and Haryana High Court in Luxmi Traders case examined the issue of service of notices through the common portal and held that mere uploading of an SCN, without acknowledgement of receipt or filing of a reply, cannot by itself be treated as sufficient service - the Petitioner is granted an opportunity to file a fresh application for revocation of cancellation of its GST registration - The Writ Petition is disposed of [Read less]

Service Tax - Classification of construction services - Construction of Complex Service versus Works Contract Service - Composite nature of construction contract involving supply of materials and services - Appellant engaged in construction of residential complex and internal development works for GNIDA - Whether service tax demand can be confirmed under Construction of Complex Service when show cause notice proposed such demand but adjudicating authority was directed to reconsider in light of Larsen and Toubro principle that composite services involving supply of materials and services should be classified as Works Contra... [Read more]

Service Tax - Classification of construction services - Construction of Complex Service versus Works Contract Service - Composite nature of construction contract involving supply of materials and services - Appellant engaged in construction of residential complex and internal development works for GNIDA - Whether service tax demand can be confirmed under Construction of Complex Service when show cause notice proposed such demand but adjudicating authority was directed to reconsider in light of Larsen and Toubro principle that composite services involving supply of materials and services should be classified as Works Contract Service - HELD – In Larsen and Toubro decision the Hon’ble Supreme Court has finally settled the issue as to whether a composite contract involving provision of service as well as transfer of property in goods could be covered under CICS and CCS from the date of introduction of service tax levy on such services. The Apex Court has observed that in as much as Section 67, dealing with valuation of taxable services, refers to the gross amount charged for service, the services of CICS and CCS would cover only pure service activities, as any contrary view would imply that the Government can levy service tax on the gross amount, including the value of transfer of property in goods also, which is constitutionally impermissible – Further, once SCN proposes demand under particular category of taxable service, adjudicating and appellate authorities cannot travel beyond scope of allegations and confirm demand under different category as assessee was not put on notice of such alternative category - The adjudicating authority's action to confirm demand under Construction of Complex Service without reclassifying under Works Contract Service constitutes violation of judicial protocol and failure to properly follow Tribunal's remand directions - The orders under challenge are set aside and the appeals are allowed [Read less]

Customs – Import of consignments of stainless steel products - Supplementary Show Cause Notice - Scope and Limitation of Fresh Proposals – Appellant received initial Show Cause Notice proposing recovery of differential Customs duty with quantum of duty demand at one amount. Subsequently a Supplementary Show Cause Notice was issued which introduced fresh proposals regarding rejection of declared value on ground of mis-declaration and denial of benefit of Notification No.46/2011-Cus dated 01.06.2011 and duty demand was substantially enhanced. Corrigenda to the SCNs were issued after considerable time lapse and were not r... [Read more]

Customs – Import of consignments of stainless steel products - Supplementary Show Cause Notice - Scope and Limitation of Fresh Proposals – Appellant received initial Show Cause Notice proposing recovery of differential Customs duty with quantum of duty demand at one amount. Subsequently a Supplementary Show Cause Notice was issued which introduced fresh proposals regarding rejection of declared value on ground of mis-declaration and denial of benefit of Notification No.46/2011-Cus dated 01.06.2011 and duty demand was substantially enhanced. Corrigenda to the SCNs were issued after considerable time lapse and were not received by Appellant even after filing replies and additional submissions. Adjudication order was passed immediately after issuance of corrigenda – Whether Supplementary Show Cause Notice introducing fresh and substantive grounds of denial of preferential exemption was issued within permissible scope of original notice and within limitation period – HELD - The Supplementary Show Cause Notice has introduced fresh and substantive ground by proposing denial of preferential exemption under Notification No.46/2011-Cus and by enhancing duty demand. Such course is beyond limited scope of supplementary notice and amounts to issuance of fresh Show Cause Notice in guise of supplementary notice. The original Show Cause Notice did not contain any proposal for denial of benefit of Notification or necessary factual foundation for such denial. Moreover Supplementary SCN was issued after one year of original Show Cause Notice. Corrigenda were issued after about two years of original SCN and approximately one year after Supplementary SCN. Appellant contended that corrigenda were not received even after filing replies and additional submissions. Impugned order has been passed in clear violation of principles of natural justice - The demands confirmed on basis of fresh proposals in Supplementary Show Cause Notice and Corrigenda are liable to be set aside on ground of limitation and not following principles of natural justice – The demands confirmed on basis of fresh proposals introduced through Supplementary Show Cause Notice are set aside - Customs - Country of Origin Certificates - Genuineness and Authentication - Retro-assessment based on Subsequent Verification – Appellant imported consignments of stainless steel products from suppliers in Malaysia and submitted Country of Origin Certificates - Goods were examined by proper officer of Customs and consignments were released after assessment and verification of COO Certificates. Subsequent to clearance by more than two years, investigation officers conducted verification and alleged COOs are fake – Whether the validity of COO Certificates can be questioned by Customs authorities at later stage – HELD - As per Rules of Origin if certificates were valid at time of import their validity cannot be questioned by Customs authorities at later stage. COOs submitted by Appellant were issued by suppliers and were authenticated by Authorized Officials of Malaysian Government whose signatures were verified by Customs officials before allowing clearance. Requirements under Notification have been met on date of import and cannot be negated by subsequent communication received from Malaysia after more than two years without details of contravention and action being taken against the issuing authority - Once COOs were found to be genuine, appellant would be eligible for benefit of Notification No.46/2011-Cus – All COO Certificates furnished by Appellant are authentic and acceptable. Appellant is eligible for benefit of exemption under Notification No.46/2011-Cus for all consignments - The findings of the Respondent with regard to levy of CVD under Notification No. 1/2017-Cus holding the goods actually of Chinese origin is not sustainable and is liable to be dropped - Customs - Classification of Imported Goods - Tariff Heading – Appellant classified goods imported namely Decorative and Design Sheet Article of Wall Panel and Decorative Design Stainless Steel Profiles under Customs Tariff Heading 7326. Department alleged that correct classification of goods should be under Customs Tariff Heading 7219 – Whether goods imported by Appellant are classifiable under CTH 7326 as claimed by Appellant and whether Department has discharged burden of producing proper evidence to support re-classification under CTH 7219 – HELD - The Proper officer has examined goods and accepted classification as declared in Bills of Entry and no objection was raised at time of clearance. If Department wants to re-classify goods imported and cleared, there must be specific reasons supported by evidence. In absence of any test report or expert opinion, finding that goods were classifiable under CTH 7219 is based merely on assumptions and presumptions and is not supported by opinion of any technical experts – The goods in question were coated with PVD (Physical Vapour Deposition) to impart desired colour. Thus, it is clear that the goods are further worked than cold rolled sheets and hence they become out of the purview of CTH 7218, 7219 or 7220 - When Department seeks different classification, it must produce proper evidence; mere assertion is not sufficient – The goods imported by appellant are appropriately classifiable under CTH 7326. Re-classification of goods under CTH 7219 is not sustainable - Customs - Valuation of Goods - Rejection of Transaction Value - Adjudicating Authority rejected declared transaction value and enhanced value on basis of contemporaneous imports – Whether declared transaction value can be rejected and re-determined without following procedure set out in Customs Valuation Rules and without evidence of undeclared payments – HELD - Valuation of goods declared by Appellant cannot be rejected and re-determined without following procedure set out in Valuation Rules. Adjudicating Authority has not followed provisions of Rule 9 of Customs Valuation Rules, 2007 for enhancement of value. There is no evidence available on record that Appellant has paid any amount over and above declared invoice prices. There is no documentary evidence available to show that Appellant has paid any amount over and above declared value. In circumstances rejection of transaction value declared by Appellant is legally not sustainable – The value declared by Appellant in Bills of Entry is acceptable and enhanced value re-determined by Revenue is set aside - Customs - Imposition of Penalties - HELD - Penalties have been imposed on allegation of mis-declaration and undervaluation of impugned goods by Appellant. Suppression of facts with intention to evade tax has not been established in this case. It has been held that allegations of mis-declaration and undervaluation of impugned goods are not sustained in view of findings regarding authenticity of COOs, proper classification of goods under CTH 7326, and acceptable declared value of goods. Therefore no penalty is imposable on Appellant for said allegations. [Read less]

Service Tax - SVLDRS Discharge Certificate - Prohibition of Reopening of matter –Appellant opted for settlement under Sabka Vishwas (Legacy Dispute Resolution) Scheme and discharge certificate was issued under Section 126 and 127 of Finance Act 2019. Revenue filed appeal challenging the Order-in-Original despite issuance of statutory discharge certificate – Whether Revenue appeal survives after issuance of discharge certificate under SVLDRS and whether Section 129 prohibits reopening of matters covered by declaration – HELD – The Section 129 of Finance Act 2019 unequivocally declares that every discharge certificat... [Read more]

Service Tax - SVLDRS Discharge Certificate - Prohibition of Reopening of matter –Appellant opted for settlement under Sabka Vishwas (Legacy Dispute Resolution) Scheme and discharge certificate was issued under Section 126 and 127 of Finance Act 2019. Revenue filed appeal challenging the Order-in-Original despite issuance of statutory discharge certificate – Whether Revenue appeal survives after issuance of discharge certificate under SVLDRS and whether Section 129 prohibits reopening of matters covered by declaration – HELD – The Section 129 of Finance Act 2019 unequivocally declares that every discharge certificate issued under Section 126 shall be conclusive regarding the matter and period covered by the declaration and the declarant shall not be liable to pay any further duty, interest or penalty and that no proceedings relating to the same matter and period shall thereafter be reopened - The SVLDRS scheme has been enacted for bringing quietus to legacy disputes. Once the statutory authorities accept the declaration and issue discharge certificate, the dispute reaches finality. The issuance of discharge certificate is not merely acknowledgment of payment but constitutes full and final statement of the tax dispute. Continuation of proceedings after issuance thereof would defeat the very object of the scheme. The legal position now stands authoritatively settled by the Bombay High Court in Astute Valuers and Consultants Pvt Ltd. – The Departmental appeal filed by the Revenue is not maintainable and is dismissed [Read less]

Service Tax - Works Contract Service - Classification and Reconciliation of Tax Payments – Commissioner (Appeals) remanded matter for de novo adjudication directing reconsideration of classification under Works Contract Service with effect from 01.06.2007 and verification of Appellant's claim regarding payment of Service Tax on GTA services. De novo authority confirmed demand with partly re-quantification - Appellant challenged that de novo authority failed to comply with remand directions and had not properly verified reconciliation statements and tax payments – Whether de novo adjudicating authority correctly complie... [Read more]

Service Tax - Works Contract Service - Classification and Reconciliation of Tax Payments – Commissioner (Appeals) remanded matter for de novo adjudication directing reconsideration of classification under Works Contract Service with effect from 01.06.2007 and verification of Appellant's claim regarding payment of Service Tax on GTA services. De novo authority confirmed demand with partly re-quantification - Appellant challenged that de novo authority failed to comply with remand directions and had not properly verified reconciliation statements and tax payments – Whether de novo adjudicating authority correctly complied with remand directions requiring proper verification of tax payments and reconciliation of records and whether demand under GTA Service was correctly determined – HELD - After introduction of Works Contract Service with effect from 01.06.2007, composite indivisible works contracts are liable to be assessed only under Works Contract Service. The de novo proceedings recognised change in classification but do not disclose any proper reconciliation of Appellant's tax payments or basis on which surviving demand was quantified - Mere recording that documents were verified without indicating payments accepted or rejected and reasons therefor does not satisfy remand directions or requirement of reasoned adjudication. The earlier remand order specifically required verification of Appellant's claim regarding payment of Service Tax under GTA Service which necessarily required reconciliation of departmental computation. De novo order merely records that documents were verified without indicating payments accepted, payments rejected or reasons therefor. Reliance on balance sheet and ST-3 returns without reconciliation with books of account, GAR-7 challans and other contemporaneous records is insufficient to sustain demand - The extended period is held to be unavailable as proceedings originated from scrutiny of statutory records and mere discrepancies noticed during audit are insufficient to invoke extended period – The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Outdoor Caterer Service - Interpretation of Substantial and Satisfying Meal within the meaning of Notification No.20/2004-ST – Appellant registered as Outdoor Caterer supplied snacks and refreshments to corporate establishments and availed benefit of Notification No.20/2004-ST as amended by Notification No.1/2006-ST by discharging Service Tax on fifty percent of gross value. Department viewed that supplies comprised only beverages and snacks and did not constitute a ‘substantial and satisfying meal’ within meaning of notification and proposed recovery of differential Service Tax by invoking extended per... [Read more]

Service Tax - Outdoor Caterer Service - Interpretation of Substantial and Satisfying Meal within the meaning of Notification No.20/2004-ST – Appellant registered as Outdoor Caterer supplied snacks and refreshments to corporate establishments and availed benefit of Notification No.20/2004-ST as amended by Notification No.1/2006-ST by discharging Service Tax on fifty percent of gross value. Department viewed that supplies comprised only beverages and snacks and did not constitute a ‘substantial and satisfying meal’ within meaning of notification and proposed recovery of differential Service Tax by invoking extended period - Whether appellant is entitled to benefit of Notification No.20/2004-ST as amended and whether expression substantial and satisfying meal must be restricted to lunch or dinner or whether beverages and light refreshments qualify as substantial and satisfying meal – HELD – The Notification No.20/2004-ST as amended neither restricts the expression substantial and satisfying meal to lunch or dinner nor prescribes any quantitative or qualitative standard for determining what would constitute such a meal. The expression must receive its ordinary commercial meaning having regard to the catering arrangement as a whole and not by dissecting individual menu items. The Department has effectively read into the notification limitations which do not exist and has denied the benefit by dissecting individual menu items instead of examining the catering service in its entirety – In the present case, although it is not disputed that VAT was paid on the value of the goods supplied, no attempt was made to identify the service component or examine whether the demand included the value of goods already subjected to VAT - The appellant's claim for the benefit of Notification No.20/2004-ST as amended cannot be denied merely because beverages formed part of the catering menu. The expression "substantial and satisfying meal" must be construed in the context of the catering arrangement as a whole and not by isolating individual items supplied thereunder – The impugned order is set aside and the appeal is allowed - Extended Period of Limitation - The dispute arises entirely from the Department's interpretation of the expression "substantial and satisfying meal" occurring in Notification No.20/2004-ST as amended. The appellant, on the other hand, entertained the view that the organised pantry and catering services rendered by it satisfied the conditions of the notification. Thus, the dispute is essentially one of interpretation of an exemption notification. It is well settled that where all primary facts are within the knowledge of the Department and the dispute concerns only the interpretation of law, the extended period cannot be invoked merely because the Department subsequently forms a different legal opinion. Mere rejection of an assessee's interpretation does not constitute suppression or wilful misstatement with intent to evade payment of tax - The Show Cause Notice covering period April 2007 to August 2009 is barred by limitation as the extended period under Section 73(1) of Finance Act 1994 is not invocable. [Read less]

GST - Input Tax Credit Mismatch - Procedure under Circular 183/15/2022-GST –Show Cause Notice for alleged mismatch of Input Tax Credit between FORM GSTR-3B and FORM GSTR-2A - Petitioner contended that Circular No. 183/15/2022-GST dated 27.12.2022 mandates specific procedure before raising demand on account of ITC mismatch – Whether proper officer must follow procedure prescribed in Circular 183/15/2022-GST requiring verification of conditions of Section 16 before confirming demand on ITC mismatch – HELD - The proper officer is mandated by paragraph 4 of Circular No. 183/15/2022-GST to first seek details from register... [Read more]

GST - Input Tax Credit Mismatch - Procedure under Circular 183/15/2022-GST –Show Cause Notice for alleged mismatch of Input Tax Credit between FORM GSTR-3B and FORM GSTR-2A - Petitioner contended that Circular No. 183/15/2022-GST dated 27.12.2022 mandates specific procedure before raising demand on account of ITC mismatch – Whether proper officer must follow procedure prescribed in Circular 183/15/2022-GST requiring verification of conditions of Section 16 before confirming demand on ITC mismatch – HELD - The proper officer is mandated by paragraph 4 of Circular No. 183/15/2022-GST to first seek details from registered person regarding invoices on which ITC has been availed in FORM GSTR 3B but which are not reflecting in FORM GSTR 2A and then ascertain fulfillment of conditions of Section 16 of CGST Act - The impugned orders have been passed without adhering to procedure prescribed in paragraph 4 of the Circular – Impugned assessment and appellate orders passed without following procedure prescribed in Circular No. 183/15/2022-GST are unsustainable. Petitioner is directed to file comprehensive representation along with supporting documents before adjudicating authority who shall consider and dispose representation in light of circular by passing reasoned order after affording reasonable opportunity of hearing - writ petition is disposed of [Read less]

GST - Jurisdiction for Assessment under Section 63, writ jurisdiction - Application to Registered Person – Authorities passed order under Section 63 of CGST Act, 2017 assessing petitioner for period 2017-2018 which is pre-registration period. Petitioner contended that Section 63 applies only for assessment of unregistered persons and not for unregistered periods and cannot be applied to registered person – Whether Section 63 which provides for assessment of unregistered person can be applied to assess registered person for pre-registration period – HELD – If a person is aggrieved by an order passed under Section 63... [Read more]

GST - Jurisdiction for Assessment under Section 63, writ jurisdiction - Application to Registered Person – Authorities passed order under Section 63 of CGST Act, 2017 assessing petitioner for period 2017-2018 which is pre-registration period. Petitioner contended that Section 63 applies only for assessment of unregistered persons and not for unregistered periods and cannot be applied to registered person – Whether Section 63 which provides for assessment of unregistered person can be applied to assess registered person for pre-registration period – HELD – If a person is aggrieved by an order passed under Section 63 of the 2017 Act, the statute provides for first appeal under Section 107 of CGST Act, which is otherwise and efficacious, alternative statutory remedy - To come to a conclusion whether the pre-registration transaction would be covered under the provisions of Section 63 for an existing registered person, some fact finding enquiries are required to be conducted. The impugned order does not demonstrate to be ex facie without jurisdiction unless a proper adjudication is made for which the first appellate authority is the appropriate and jurisdictional forum – The petition is disposed of [Read less]

Customs Broker Licensing Regulations, 2018 – Suspension of License – Mandatory Procedure under Regulation 16(2) – Whether the respondent authority can legally continue the suspension under Regulation 16(2) when the mandatory post-decisional hearing, which was to be held within fifteen days from the date of suspension, was conducted beyond the prescribed statutory period entirely at the instance of the respondent authority itself – HELD – The expression "shall, within fifteen days" contained in Regulation 16(2) unmistakably indicates that the timeline is mandatory and not merely directory, constituting an importan... [Read more]

Customs Broker Licensing Regulations, 2018 – Suspension of License – Mandatory Procedure under Regulation 16(2) – Whether the respondent authority can legally continue the suspension under Regulation 16(2) when the mandatory post-decisional hearing, which was to be held within fifteen days from the date of suspension, was conducted beyond the prescribed statutory period entirely at the instance of the respondent authority itself – HELD – The expression "shall, within fifteen days" contained in Regulation 16(2) unmistakably indicates that the timeline is mandatory and not merely directory, constituting an important procedural safeguard against arbitrary or prolonged suspension. The legislature has mandated that the Customs Broker shall be afforded a post-decisional hearing within fifteen days from the date of suspension, recognising that the initial suspension is ordered without granting a prior hearing on account of the urgency of the situation. The statutory safeguard cannot be diluted by administrative convenience or procedural delays attributable to the licensing authority - A timeline prescribed by law cannot be modified by administrative action. The respondent could not enlarge or extend a statutory period fixed by the delegated legislation. Acceptance of such a proposition would render the safeguard contained in Regulation 16(2) wholly illusory and would defeat the legislative intent underlying the provision. The conduct of the respondent itself, by postponing the hearing beyond the prescribed period, belies the existence of compelling urgency as would be required to invoke Regulation 16(1). The rule of law demands equal fidelity to both substantive powers and procedural safeguards – The impugned order is set aside. The continuation of suspension of the appellant's Customs Broker Licence stands revoked – The appeal is allowed [Read less]

Customs - Provisional release of imported goods - Discretionary power of competent authority under Section 110A of Customs Act, 1962 - Rejection of application for provisional release on ground that goods appeared to be misdeclared and investigation was pending - the petitioner’s request for provisional release was considered with reference to CBIC Circular No.35/2017-Customs dated 16.08.2017 - Whether provisional release can be denied merely on ground of pendency of investigation and alleged misdeclaration when Section 110A provides for provisional release - HELD - Executive instructions may supplement statute but canno... [Read more]

Customs - Provisional release of imported goods - Discretionary power of competent authority under Section 110A of Customs Act, 1962 - Rejection of application for provisional release on ground that goods appeared to be misdeclared and investigation was pending - the petitioner’s request for provisional release was considered with reference to CBIC Circular No.35/2017-Customs dated 16.08.2017 - Whether provisional release can be denied merely on ground of pendency of investigation and alleged misdeclaration when Section 110A provides for provisional release - HELD - Executive instructions may supplement statute but cannot override or replace statutory provision. CBIC Circular cannot take away right of provisional release provided under Section 110A. Provisional release has to be considered under Section 110A while ensuring interest of revenue is protected. Pendency of investigation, by itself, cannot be ground to deny provisional release when statute specifically provides for such release. Questions of classification of goods, misdeclaration, violation of import policy, and differential customs duty can be decided in adjudication proceedings; such pendency does not justify continued detention. Interest of revenue can be adequately protected by imposing appropriate conditions for provisional release such as payment of differential duty and personal bond. Impugned order rejecting provisional release is set aside. Competent authority directed to release subject goods provisionally on listed conditions - The writ petition is allowed [Read less]

Gujarat Value Added Tax Act, 2003 - Composition Permission - Reassessment based on Change of Opinion on rate of tax – Assessee engaged in restaurant business and resale of liquor obtained composition permission for restaurant business under Section 14D of VAT Act and paid normal tax rate on liquor resale purchased from outside the State as it could not be produced in the State. Audit assessment accepted this position. Subsequently reassessment notice was issued to withdraw composition benefit – Whether reassessment order initiated on change of opinion about tax rate without proper evidence is valid and whether composit... [Read more]

Gujarat Value Added Tax Act, 2003 - Composition Permission - Reassessment based on Change of Opinion on rate of tax – Assessee engaged in restaurant business and resale of liquor obtained composition permission for restaurant business under Section 14D of VAT Act and paid normal tax rate on liquor resale purchased from outside the State as it could not be produced in the State. Audit assessment accepted this position. Subsequently reassessment notice was issued to withdraw composition benefit – Whether reassessment order initiated on change of opinion about tax rate without proper evidence is valid and whether composition permission can be withdrawn when goods cannot be produced in the State due to legal constraints – HELD - After the retrospective amendment to Rule 28C(6) of the VAT Rules purchase of goods from outside the State is permissible by a dealer enjoying composition permission where such goods could not be produced in the State due to legal constraints and tax is paid at normal rate on resale - The assessee had determined the turnover of liquor separately and paid tax at normal Schedule Rate which was accepted in the Audit assessment order. The provision of Section 14D read with amended proviso to Rule 28C(6) stipulates that a dealer is entitled to the benefit of composition permission if goods are not capable of being produced in the State of Gujarat for any reason and tax is paid at normal rate on such goods. The amendment is retrospective in nature - The reassessment order ignoring the composition permission and raising demand on the entire turnover at normal rate was wrongly confirmed by the First Appellate Authority without considering merit of the case. The reassessment was carried on based on merely change of opinion about the rate of tax - The Tax Appeal by Revenue stands dismissed [Read less]

Customs - Adjudication Limitation - Scope of Expression "Where it is Possible to Do So" –Show Cause Notice issued under Section 28(4) of Customs Act, 1962 which mandated adjudication within one year from date of notice "where it is possible to do so". Petitioner contended that the expression does not confer power on adjudicating authority to keep assessment pending for unreasonable period and adjudication must be completed within one year or demonstrate that completion was impracticable – Whether the expression "where it is possible to do so" as it existed at time of issuance of Show Cause Notice permits adjudicating a... [Read more]

Customs - Adjudication Limitation - Scope of Expression "Where it is Possible to Do So" –Show Cause Notice issued under Section 28(4) of Customs Act, 1962 which mandated adjudication within one year from date of notice "where it is possible to do so". Petitioner contended that the expression does not confer power on adjudicating authority to keep assessment pending for unreasonable period and adjudication must be completed within one year or demonstrate that completion was impracticable – Whether the expression "where it is possible to do so" as it existed at time of issuance of Show Cause Notice permits adjudicating authority to keep proceedings indefinitely pending or whether it carries obligation to complete adjudication within stipulated period – HELD - The expression "where it is possible to do so" indicates that it is incumbent on officer concerned to demonstrate that it was not practicable to complete adjudication within stipulated period of one year from date of issuance of notice. The phrase "where it is possible to do so" means that adjudication is possible or practicable within one year. The expression cannot be understood as enabling or conferring power on adjudicating authority to keep assessment pending for an unreasonable period - Any attempt to construe the expression in such manner would defeat very purpose and object of prescribing limitation which is to extinguish stale demands and may render provision vulnerable to challenge on ground of being arbitrary thereby falling foul of Article 14 of Constitution. Even where no limitation is prescribed for taking any action including adjudication, it must be made within a reasonable time. Failure to complete adjudication within reasonable period would suffer from vice of arbitrariness thereby falling foul of Article 14 of Constitution – The expression "where it is possible to do so" mandates adjudication within one year from date of notice unless impracticability is demonstrated - The impugned order is set aside as barred by limitation – The petition stands disposed of - Customs - Adjudication Limitation - Applicability of Amendment to Section 28(9) via Finance Act 2018 to Proceedings Initiated Before Amendment – Petitioner contended that amendment should not apply to proceedings initiated before amendment and even if amendment applies, adjudication must be completed within two years from date of amendment – Whether amendment to Section 28(9) vide Finance Act 2018 applies to proceedings initiated prior to amendment and whether adjudication order passed beyond extended period of two years from date of amendment is sustainable – HELD - Limitation is part of procedural law and thus normally retrospective in nature with one condition superadded namely that an extended period of limitation would not revive dead claim. A claim which was time-barred before an amending Act with a larger period of limitation comes into force cannot be revived. When Show Cause Notice was issued on 05.08.2009, adjudication ought to be completed within one year i.e. by 05.08.2010 under expression "where it is possible to do so". The amendment to Section 28(9) was made after 9 years from date of notice which by itself is unreasonable to keep adjudication pending. By that time the claim had already become dead as it was barred under the law existing at time of notice. The amendment only enables adjudication to be made within period of two years from date of notice which if applied from date of amendment i.e. 29.03.2018 would expire by 29.03.2020. However impugned order is passed on 19.02.2024, almost four years thereafter. In any view the amended provision cannot rescue adjudication which had become barred by limitation under original provision – The amendment to Section 28(9) vide Finance Act 2018 does not apply to proceedings initiated prior to amendment as the claim had become dead before amendment came into force. Adjudication order passed on 19.02.2024 is barred by limitation - In any view, the delay of 14 years in adjudicating show cause notice is unreasonable, thereby suffers from the vice of arbitrariness and falls foul of Article 14 of the Constitution of India, thus unsustainable. [Read less]

GST – Levy of GST on Plan Sanctioning – Authority demanded GST on fees for obtaining plan sanction – Whether GST is chargeable on sanctioning of building plan – HELD - There is no supply of goods or provision of service in sanctioning the building plan and hence no element of quid pro quo exists. Authority is not entitled to collect GST on plan sanctioning as there is no supply of goods or provision of services involved in the process – Demand for GST is set aside – Ordered accordingly

GST - Maintainability of writ petition challenging order rejecting delayed appeal - Statutory limitation period for filing appeal under Section 107 of CGST/BGST Act 2017 - Jurisdiction of High Court under Article 226 of Constitution - Whether High Court can entertain writ petition filed beyond statutory period of limitation for filing appeal and whether Court can condone delay beyond period specified in Section 107(4) of BGST Act 2017 - HELD - When statutory forum is created by law for redressal of grievance, writ petition should not be entertained ignoring said statutory dispensation. Section 107 of BGST Act 2017 mandates... [Read more]

GST - Maintainability of writ petition challenging order rejecting delayed appeal - Statutory limitation period for filing appeal under Section 107 of CGST/BGST Act 2017 - Jurisdiction of High Court under Article 226 of Constitution - Whether High Court can entertain writ petition filed beyond statutory period of limitation for filing appeal and whether Court can condone delay beyond period specified in Section 107(4) of BGST Act 2017 - HELD - When statutory forum is created by law for redressal of grievance, writ petition should not be entertained ignoring said statutory dispensation. Section 107 of BGST Act 2017 mandates appeal to be filed within 3 months from date of communication of order and Appellate Authority has power to condone delay only upto one month further. Legislature in its wisdom has prescribed time-bound compliance of provisions and condonation of delay beyond statutory period will frustrate legislative intent and render legislative scheme otiose - Powers of High Court under Article 226 of Constitution are wide but not wider than principles of statutory interpretation and legislative intent. High Court cannot entertain writ petition filed beyond statutory period of appeal in ordinary circumstances, such entertainment being limited to exceptional circumstances involving breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction or challenge to vires of statute or delegated legislation. Writ petition filed after gross delay of almost three years from impugned order is not entertainable – The writ petition is dismissed [Read less]