More Judgements

1. Home
2. More Judgements

M.P. Entry Tax Act, 1976 – Levy of Entry Tax on beer and IMFL – Challenge to the levy of Entry Tax under M.P. Entry Tax Act on the entry of IMFL and beer into the local area - The appellants contended that the transactions are between the Government warehouses and the retailers, and the manufacturers do not cause the entry of goods into the local area - The State contended that the manufacturers are liable to pay the Entry Tax as they cause the entry of goods into the local area - Whether the appellants have "caused to be effected the entry of goods" into the local area under Section 3(1) of the M.P. Entry Tax Act, ren... [Read more]

M.P. Entry Tax Act, 1976 – Levy of Entry Tax on beer and IMFL – Challenge to the levy of Entry Tax under M.P. Entry Tax Act on the entry of IMFL and beer into the local area - The appellants contended that the transactions are between the Government warehouses and the retailers, and the manufacturers do not cause the entry of goods into the local area - The State contended that the manufacturers are liable to pay the Entry Tax as they cause the entry of goods into the local area - Whether the appellants have "caused to be effected the entry of goods" into the local area under Section 3(1) of the M.P. Entry Tax Act, rendering them liable for the payment of entry tax – HELD - In case a canalising agency or intermediary agency is involved, unless their role is merely that of a name lender, the sale will not be treated as an inseparable or an inseverable sale. If an independent canalising agency enters into back-to-back contracts and there is no direct linkage or causal connection between the export by foreign exporter and the receipt of the imported goods in India by local users, then the integrity of the entire transaction would be disrupted and would be substituted by two independent transactions – In the present case, there were two independent transactions, one between the appellant – manufacturers and the State Warehouse and the other between the State warehouse and the retailers. Hence, it not possible to accept the contention of the State that the role of the State is only supervisory and the warehouses didn’t purchase beer and IMFL from the manufacturer - the appellants by the sale to the warehouse caused to be effected the entry of goods and the entry was occasioned on the account of the sale into the local area for consumption, use or sale therein - The levy of entry tax on the appellants is justified as they had "caused to be effected the entry of goods" into the local area, which is the incidence of taxation under Section 3(1) of the M.P. Entry Tax Act – Further, the appellants' contention that a notification under Section 3B of the Act was necessary for the levy, is rejected as the Section 3B is an enabling provision and the levy can be made under the general machinery provided in Section 14 of the Act – There no grounds to interfere with the impugned order. The appeals are dismissed [Read less]

Service Tax – Scope of ‘Healthcare Services’, Eligibility of exemption to Stem Cell banking services, Limitation Period - Appellant is engaged in the collection, processing, testing, and storage of umbilical cord blood units and their therapeutic application – Demand of service tax on its services during the period from 01.07.2012 to 16.02.2014 - Whether the services rendered by the appellant, relating to enrolment, collection, processing, and storage of umbilical cord blood stem cells, fall within the ambit of "Healthcare Services" and are therefore, eligible for exemption from payment of service tax for the perio... [Read more]

Service Tax – Scope of ‘Healthcare Services’, Eligibility of exemption to Stem Cell banking services, Limitation Period - Appellant is engaged in the collection, processing, testing, and storage of umbilical cord blood units and their therapeutic application – Demand of service tax on its services during the period from 01.07.2012 to 16.02.2014 - Whether the services rendered by the appellant, relating to enrolment, collection, processing, and storage of umbilical cord blood stem cells, fall within the ambit of "Healthcare Services" and are therefore, eligible for exemption from payment of service tax for the period between 01.07.2012 to 17.02.2014 – HELD - The services provided by cord blood banks, including preservation of stem cells or any other services related to such preservation, are exempt from service tax, under Entry 2A of Notification No. 4/2014-ST dated 17.02.2014. The later insertion of Entry 2A by Notification No. 4/2014-ST, which specifically exempted services provided by cord blood banks, is clarificatory in nature and must be applied to the appellant's pending claims and existing disputes – Further, the appellant's services are preventive and curative in nature and encompass diagnosis, treatment, and care. The processing, testing, cryopreservation, and eventual release for transplantation constitute integral components of healthcare aimed at future diagnosis, treatment, and care – Though the Department contends that the appellant’s services were exempted only from 17.02.2014 under Entry 2A of Notification No. 4/2014-ST, however, the insertion of Entry 2A does not curtail the scope of Serial No.2 under Notification No. 25/2012-ST. The absence of express inclusion of cord blood services in earlier notifications does not alter their essential healthcare nature. Therefore, the appellant’s services are well within the ambit of “Healthcare Services” - Furthermore, the Ministry of Health and Family Welfare had clarified that stem cell banking is a part of "healthcare services" and qualifies for exemption. Accordingly, the appellant's services are held to be eligible for exemption from service tax during the disputed period - the impugned order is set aside and the appeals are allowed - Whether the show cause notice issued by the department was barred by limitation – HELD - the invocation of the extended period of limitation under Section 73 of the Finance Act, 1994 is unwarranted as there was no fraud, collusion, wilful misstatement, or suppression of facts with an intent to evade payment of service tax. Mere non-payment of service tax, by itself, does not justify the invocation of the extended limitation period. Accordingly, the show cause notice issued by the Department is time-barred - Whether the imposition of penalties and interest on the appellant was justified – HELD - The imposition of penalties was not warranted as the appellant neither suppressed nor concealed any material facts from the Department. The appellant acted under a bona fide belief that its activities were covered under the exemption notification and was in constant communication with the authorities, seeking clarifications. The penal provisions are meant to deter deliberate contravention of statutory provisions and are not intended to penalize bona fide taxpayers. Accordingly, the imposition of penalties and interest was held to be arbitrary, unjust, and unsustainable in law. [Read less]

GST - Section 74(9), Section 75(4) of the CGST Act, 2017 - Principles of Natural Justice; Audi Alteram Partem; Opportunity of Hearing – Issue of DRC-01 proposing additional tax liability - Petitioner submitted a detailed reply and made a specific written request for a personal hearing as provided for under the Act. However, the authority proceeded to pass a final assessment order under Section 74(9), confirming the demand and penalty without granting the requested personal hearing - Whether an assessment order passed under Section 74(9) of the CGST Act, 2017, is legally sustainable if it is passed without affording a man... [Read more]

GST - Section 74(9), Section 75(4) of the CGST Act, 2017 - Principles of Natural Justice; Audi Alteram Partem; Opportunity of Hearing – Issue of DRC-01 proposing additional tax liability - Petitioner submitted a detailed reply and made a specific written request for a personal hearing as provided for under the Act. However, the authority proceeded to pass a final assessment order under Section 74(9), confirming the demand and penalty without granting the requested personal hearing - Whether an assessment order passed under Section 74(9) of the CGST Act, 2017, is legally sustainable if it is passed without affording a mandatory personal hearing as stipulated under Section 75(4) of the said Act, especially when a specific written request for a hearing has been made and an adverse decision is contemplated – HELD - The impugned assessment order was passed in clear violation of the mandatory provisions of Section 75(4) of the Act and the principles of natural justice. A plain reading of Section 75(4) makes it unequivocally clear that an opportunity of hearing is mandatory where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person. The use of the word "or" signifies that these are two independent conditions, and the fulfillment of either one makes the grant of a hearing obligatory - In the instant case, both conditions were satisfied, as the petitioner had made a specific request in writing for a personal hearing, and an adverse order was manifestly contemplated and subsequently passed – Further, the term "opportunity of hearing" includes the right to a "personal hearing" and cannot be construed as being fulfilled by merely permitting the submission of a written reply. The failure of the adjudicating authority to grant a personal hearing despite a written request constitutes an apparent error of law and a breach of the legal maxim Audi Alteram Partem. This procedural lapse is not a mere technicality but a fatal flaw that vitiates the entire decision-making process and renders the resultant order unsustainable - The impugned order is quashed and set aside. The matter is remanded back to the adjudicating authority with a direction to pass a fresh order after affording a proper opportunity of personal hearing to the petitioner in accordance with the law - The writ petitions are allowed [Read less]

Central Excise - Voluntarily payment of duty, Limitation period, penalty - The appellant had crossed the SSI exemption threshold in 2008-09 and 2009-10 but took Central Excise Registration on 2010 – Appellant voluntarily paid the entire duty along with interest and intimated the Department - Show Cause Notice issued alleging non-payment of duty, non-filing of declaration/intimation on crossing of value of clearance, and imposed a penalty equivalent to the duty demand - Denial of benefit of CENVAT credit and imposition of penalty equivalent to duty – HELD - The appellant had voluntarily paid the entire duty along with i... [Read more]

Central Excise - Voluntarily payment of duty, Limitation period, penalty - The appellant had crossed the SSI exemption threshold in 2008-09 and 2009-10 but took Central Excise Registration on 2010 – Appellant voluntarily paid the entire duty along with interest and intimated the Department - Show Cause Notice issued alleging non-payment of duty, non-filing of declaration/intimation on crossing of value of clearance, and imposed a penalty equivalent to the duty demand - Denial of benefit of CENVAT credit and imposition of penalty equivalent to duty – HELD - The appellant had voluntarily paid the entire duty along with interest prior to the issuance of the SCN and had intimated the Department about the same. The Department had issued the show cause notice after a delay of 3.5 years from the date of the appellant's intimation, which is unjustified – Further, the denial of CENVAT credit taken by the appellant is untenable, as the requirement of registration is not a condition precedent for claiming CENVAT credit - the extended period of limitation cannot be invoked in the absence of any evidence of wilful misstatement or suppression of facts with intent to evade payment of duty - the issuance of the show cause notice and the consequent denial of the benefit under Section 11A(1)(b) of CEA, 1944 and imposition of penalty are not justified and set aside – The appeal is allowed [Read less]

Central Excise Act 1944 – Limitation, Refund of duty paid under mistake of Law - The assessee, a manufacturer of homoeopathic products, paid duty on its clearances, including those of alcoholic preparations, under the mistaken belief that its turnover had crossed the SSI exemption threshold - After excluding the value of alcoholic products, the assessee's clearance value was found to be within the SSI exemption limit for the relevant period, making the entire duty paid an amount deposited under a mistake of law. A refund claim was filed, which was rejected by the lower authorities as being barred by limitation under Sect... [Read more]

Central Excise Act 1944 – Limitation, Refund of duty paid under mistake of Law - The assessee, a manufacturer of homoeopathic products, paid duty on its clearances, including those of alcoholic preparations, under the mistaken belief that its turnover had crossed the SSI exemption threshold - After excluding the value of alcoholic products, the assessee's clearance value was found to be within the SSI exemption limit for the relevant period, making the entire duty paid an amount deposited under a mistake of law. A refund claim was filed, which was rejected by the lower authorities as being barred by limitation under Section 11B of the Central Excise Act, 1944 - Whether the statutory period of limitation prescribed under Section 11B of the Central Excise Act, 1944 applies to a claim for refund of an amount that was paid under a mistake of law and was never legally leviable as excise duty - HELD - The amount paid by the assessee under a mistake of law cannot be equated with Central Excise duty and is merely a deposit. As the alcoholic preparations were not within the Central Excise net, the department lacked the authority to levy and collect such an amount. Consequently, the amount paid did not partake the character of excise duty, and thus the trappings applicable to a 'tax', including the limitation period, do not apply - Once the Department could not have Constitutionally demanded the amount, it cannot retain it merely because it was paid by mistake. To do so would violate Article 265 of the Constitution of India. Since the amount was not a 'tax' to begin with, the provisions of Section 11B are not attracted to the refund claim - The refund claim is not barred by limitation and the assessee is entitled to the refund with interest – The appeal is allowed - Unjust Enrichment - Whether the assessee had successfully discharged the burden of proving that the principle of unjust enrichment is not applicable, by demonstrating that the incidence of the erroneously paid duty was not passed on to its buyers - HELD - The bar of unjust enrichment is not applicable as the assessee has successfully proven that the incidence of duty was not passed on. An examination of the assessee's ledger accounts revealed that after discharging the Central Excise duty, specific notings stating "on hold" were appended against the amounts. This indicates that the amounts were not expensed out in the books of accounts, as the assessee was awaiting the outcome of the litigation. This, coupled with the certificate from a Chartered Accountant, sufficiently establishes that the amount of Central Excise paid under mistake of law was borne by the assessee from its own pocket and was not collected from the buyers - The claim is not hit by the bar of unjust enrichment. [Read less]

Central Sales Tax Act, 1956 - Section 3(a) & Section 6A - Inter-State Sale or Stock Transfer - Burden of Proof - Occasioning Movement of Goods - Pre-existing Purchase Order – Appellant moved its goods from a mother warehouse in Maharashtra to various Carrying and Forwarding Agents (CFAs) located in other States to maintain pre-determined 'Normative Inventory Levels' at the CFA locations - Appellant furnished Form-F declarations to support its claim of stock transfers under Section 6A of the CST Act, 1956 – Revenue of the case that the integrated supply chain created an inextricable link between the movement of goods fr... [Read more]

Central Sales Tax Act, 1956 - Section 3(a) & Section 6A - Inter-State Sale or Stock Transfer - Burden of Proof - Occasioning Movement of Goods - Pre-existing Purchase Order – Appellant moved its goods from a mother warehouse in Maharashtra to various Carrying and Forwarding Agents (CFAs) located in other States to maintain pre-determined 'Normative Inventory Levels' at the CFA locations - Appellant furnished Form-F declarations to support its claim of stock transfers under Section 6A of the CST Act, 1956 – Revenue of the case that the integrated supply chain created an inextricable link between the movement of goods from Maharashtra and the eventual sale to distributors, thus constituting an inter-State sale under Section 3(a) of the CST Act - Whether the movement of goods from the company's mother warehouse in one State to its CFAs in other States is an inter-State sale that occasions the movement of goods due to a pre-existing contract of sale under Section 3(a) of the CST Act or if it is a transfer of goods to an agent otherwise than by way of sale, qualifying as a stock transfer under Section 6A of the Act – HELD - The movement of goods from the mother warehouse to the CFAs constitutes a stock transfer and not an inter-State sale. The goods are standard, off-the-shelf products and their movement to CFAs is not occasioned by any pre-existing purchase order from a distributor but is undertaken proactively to maintain inventory at normative levels based on sales forecasts. The appropriation of specific goods against a purchase order occurs only at the CFA's location when a 'Picking List' is prepared for delivery. Until that point, the goods remain unappropriated stock owned by the company, co-mingled with other stock, and can even be transferred from one CFA to another - The fact that delivery from a CFA to a distributor is significantly faster than the transit time from the mother warehouse to the CFA makes it physically impossible for the movement from the mother warehouse to be a direct consequence of a distributor's order. By furnishing Form-F, the company discharged its initial burden of proof under Section 6A, shifting the onus to the revenue to establish a pre-existing sale agreement, which it failed to do. The movement of goods is to place them in the stream of trade for future sales, not in the stream of a concluded sale - the transactions are in the nature of stock transfers falling within the scope of Section 6A of the CST Act and not inter-State sales under Section 3(a) of the Act - The appeals filed by the State are dismissed [Read less]

Service Tax - Cable operator services, Extended period – Demand of service tax on various receipts including lease pay holder receipts, infrastructure provider receipts, channel placement and carriage receipts, and installation and repair and maintenance charges - Whether service tax can be charged on lease pay holder receipts under cable operator services - HELD - As per the Cable Television Networks (Regulation) Act, 1995, cable service means the transmission by cables of programmes including re-transmission by cables of any broadcast television signals. The lease pay holder receipts are not for the transmission of sig... [Read more]

Service Tax - Cable operator services, Extended period – Demand of service tax on various receipts including lease pay holder receipts, infrastructure provider receipts, channel placement and carriage receipts, and installation and repair and maintenance charges - Whether service tax can be charged on lease pay holder receipts under cable operator services - HELD - As per the Cable Television Networks (Regulation) Act, 1995, cable service means the transmission by cables of programmes including re-transmission by cables of any broadcast television signals. The lease pay holder receipts are not for the transmission of signals but for not expanding the business in the area where small operators are operating. Therefore, the lease pay holder receipts are not taxable under cable operator services - Service tax cannot be charged on lease pay holder receipts under cable operator services - Department cannot invoke extended period in the subsequent show cause notices when it failed to take cognizance of some issues in the earlier audit - the invocation of the extended period of limitation is set aside and matter is remanded for demand pertaining to the normal period, the Original Authority to decide the taxability of the various receipts by the Appellants considering their submissions and the evolved jurisprudence – The appeal is partly allowed - Whether service tax can be charged on channel placement and carriage receipts under cable operator services or Business Auxiliary Services - HELD - The channel placement and carriage receipts are correctly classifiable under Business Auxiliary Services and not under cable operator services. The income from channel placement and carriage receipts is not for telecasting the channels but for providing maximum reach and viewership to the channels by placing them at the desired frequencies. This service of enhancing the channel's viewership is a Business Auxiliary Service - Whether service tax can be charged on infrastructure provider receipts under telecommunication services - HELD - Service tax cannot be charged on infrastructure provider receipts under telecommunication services. The appellant receives infrastructure provider receipts for leasing optical fibres to telecom and other companies. In this transaction, there is no transmission of signals, video, sound or any other data from the end of the Appellant. The companies are free to transmit their own data on the leased cables. Therefore, the demand of service tax on infrastructure receipt services cannot be made under telecommunication services - Whether the Appellant is entitled to CENVAT credit on the inputs and input services utilized for providing the output services - HELD - The issue of CENVAT credit requires to be decided by the Original Authority after duly verifying the invoices or other documentary proof that may be submitted by the Appellants. The Appellants claimed they are in possession of the requisite invoices and documents to prove their eligibility for CENVAT credit. [Read less]

Customs – Cancellation of expired MEIS Scrips - Petitioner exported commercial vehicles and obtained MEIS benefits - Dept found that the goods exported by the petitioners were misclassified under ITC(HS) code 87060042 instead of codes 87012090, 87042219 and 87054000. Consequently, the authorities initiated proceedings to cancel the excess MEIS scrips issued to the petitioners at the rate of 3% instead of 2% - Whether the MEIS scrips, which were already availed of and whose validity period of 24 months had expired, can be cancelled by exercising jurisdiction under Section 9(4) of the Foreign Trade (Development and Regulat... [Read more]

Customs – Cancellation of expired MEIS Scrips - Petitioner exported commercial vehicles and obtained MEIS benefits - Dept found that the goods exported by the petitioners were misclassified under ITC(HS) code 87060042 instead of codes 87012090, 87042219 and 87054000. Consequently, the authorities initiated proceedings to cancel the excess MEIS scrips issued to the petitioners at the rate of 3% instead of 2% - Whether the MEIS scrips, which were already availed of and whose validity period of 24 months had expired, can be cancelled by exercising jurisdiction under Section 9(4) of the Foreign Trade (Development and Regulation) Act, 1992 read with Rule 10 of the Foreign Trade (Regulation) Rules, 1993 – HELD - Even if the validity period of the MEIS scrips has expired, the authorities can still cancel the scrips as the cancellation is not merely of the document but of the effectiveness of the decision that resulted in the issuance of the scrip. The Court disagreed with the judgment of the Punjab and Haryana High Court in M/s. Supreme Castings Ltd. case, which held that something cannot be cancelled when it has already ceased to exist - The Section 9(4) of the FTDR Act must be given a wider meaning to enable the authorities to recall an order or a decision which resulted in the issuance of the scrip, when it is ultimately found that such order or decision requires reconsideration - the MEIS scrips which were issued during the relevant period (first scrip on 22.08.2016 and the last scrip on 02.06.2021) can be cancelled even if the scrips are availed off and the validity period of 24 months has expired - The authorities are of the view that what was exported was not merely chassis but it also included engine, driver cabin, wheel, fuel tank, etc, and therefore it has to fall within the descriptions under headings 8702-8704. Consequently, the petitioner is only entitled for 2% and not 3% as claimed by the petitioners - The alleged contravention against the petitioners does not pertain to the law relating to customs or foreign exchange or the rules and regulations made thereto - the impugned order passed by the Appellate Authority is quashed and the matter is remanded back to the file of the appellate authority to deal with the appeal on its own merits – The writ petitions are allowed - The dispute between the parties pertains to the description of the subject property, which was sought to be brought by the petitioners under ITC(HS) code 8706 and whereas the authorities have brought it under CTH 8704 - The authorities are of the view that what was exported was not merely chassis but it also included engine, driver cabin, wheel, fuel tank, etc, and therefore it has to fall within the descriptions under headings 8702-8704. Consequently, the petitioner is only entitled for 2% and not 3% as claimed by the petitioners – HELD - The alleged contravention against the petitioners does not pertain to the law relating to customs or foreign exchange or the rules and regulations made thereto. It is a clear case of contravention of a foreign trade policy. The question is whether it will come within the scope of Rule 10 (d) - Since the Appellate Authority has not applied its mind and stated the reasons as to how the order is sought to be justified in line with Section 9(4) of the FTDR Act r/w Rule 10 of the Foreign Trade (Regulation) Rules, 1993, this Court does not want to substitute its mind and assign reasons in the place of the Appellate Authority - the impugned order passed by the Appellate Authority is quashed and the matter is remanded back to the file of the appellate authority to deal with the appeal on its own merits and in accordance with law. [Read less]

Service Tax - Business Support Services or Sale of Developmental Rights, Sale vs. Service - The appellants, being group companies floated by a parent entity engaged in manufacturing Wind Turbine Generators and providing end-to-end turnkey solutions for setting up wind farms – Appellant undertook various preparatory activities such as site identification, feasibility studies, wind monitoring, and obtaining necessary governmental approvals and allotments for potential wind power projects. These collected "Approvals and Allotments" were transferred to the parent entity under agreements styled as a sale of "Developmental Rig... [Read more]

Service Tax - Business Support Services or Sale of Developmental Rights, Sale vs. Service - The appellants, being group companies floated by a parent entity engaged in manufacturing Wind Turbine Generators and providing end-to-end turnkey solutions for setting up wind farms – Appellant undertook various preparatory activities such as site identification, feasibility studies, wind monitoring, and obtaining necessary governmental approvals and allotments for potential wind power projects. These collected "Approvals and Allotments" were transferred to the parent entity under agreements styled as a sale of "Developmental Rights" for a "Purchase Consideration" - Whether the transfer of project "Approvals and Allotments" for setting up wind farms, which were the outcome of a series of preparatory activities, by group companies to their parent entity constitutes a sale of "Developmental Rights" as a benefit arising from immovable property or is it a taxable provision of 'Business Support Services' - HELD - The nomenclature of an agreement or a transaction is not the decisive factor; it is the it is the substance of the document that matters. While certain Developmental Rights can be considered a "benefit arising out of land" and thus immovable property, that principle applies to rights simpliciter, such as the right to develop land or Transferable Development Rights. In the present case, what was transferred was not merely the approvals and allotments, but the whole set of underlying activities including site identification, extensive studies, and project feasibility analysis – As per the turnkey contracts between the parent entity and its end customers, the parent entity itself was contractually obligated to perform these very activities. This demonstrates that the appellants were performing these activities on behalf of their parent entity, effectively acting as an outsourced service provider – Further, the Valuation Report explicitly stated that they were acting "on behalf of" the parent company to facilitate it by creating infrastructure and providing necessary support. Furthermore, evidence indicated that the underlying "Developer Permissions" were not transferable, which undermines the claim of a valid sale. The activities performed by the appellants were clearly in support of the main business of their parent company, fitting the definition of 'Business Support Services', and are not a transaction in immovable property excluded from the levy of service tax - The demand for service tax on the consideration received by the appellants under the taxable category of 'Business Support Services' is upheld and the appeal is dismissed - Extended Period of Limitation, Suppression of Facts - Whether the revenue department was justified in invoking the extended period of limitation on the grounds of wilful suppression of facts with an intent to evade tax - HELD - The act of structuring the transaction as a "sale of Developmental Rights" and consciously using nomenclature like "Purchase Consideration" in the agreements was an intentional act to hide the true colour and nature of the services being rendered. This was a deliberate stratagem to misguide government authorities, avoid scrutiny, and ultimately evade the service tax payable on what were taxable 'Support Services of Business & Commerce'. The entire arrangement was carried out in connivance with the recipient parent company to suppress the true nature of the services provided. Therefore, the essential ingredients for invoking the extended period, namely suppression of facts with a clear intent to evade the payment of tax, are conclusively established by the facts on record - The invocation of the extended period of limitation is upheld [Read less]

Customs - Classification of Water Treatment Chemicals, MEIS benefits, recovery of Customs duty - Appellant is engaged in the manufacture of water treatment chemicals, including 'Organophosphorus Compounds' (Acids and Salts) under the brand name 'Aquacid' - Appellant had been receiving export incentives in the form of a Focus Market Scheme (FMS) and later Merchandise Exports from India Scheme (MEIS) on the export of the said products - Show Cause Notice issued alleging that the appellant had misclassified the goods under Tariff Item No. 29319090 and the goods were more appropriately classifiable under the residuary Tariff I... [Read more]

Customs - Classification of Water Treatment Chemicals, MEIS benefits, recovery of Customs duty - Appellant is engaged in the manufacture of water treatment chemicals, including 'Organophosphorus Compounds' (Acids and Salts) under the brand name 'Aquacid' - Appellant had been receiving export incentives in the form of a Focus Market Scheme (FMS) and later Merchandise Exports from India Scheme (MEIS) on the export of the said products - Show Cause Notice issued alleging that the appellant had misclassified the goods under Tariff Item No. 29319090 and the goods were more appropriately classifiable under the residuary Tariff Item 29313900 appearing in sub-heading "Other Organo-phosphorus derivatives" - Whether the goods exported by the appellant are appropriately classifiable under Tariff Item No. 29319090 as claimed by the appellant or under Tariff Item No. 29313900 as contended by the department - HELD - The expert opinion obtained by the appellant categorically stated that the goods manufactured by the appellant are 'Organophosphorus Compounds' and not 'Organophosphorus Derivatives'. The Revenue authorities, not being qualified scientific experts, lack the technical competence to opine on the nature of the subject products - The opinion/certificate of an expert is binding upon the Revenue and the same cannot be brushed aside, particularly when the authorities are not expert themselves and there is no evidence/material available to the contrary – The CRCL is a Departmental laboratory and the report submitted by it cannot be ignored or disregarded without any valid reason. The onus to prove the classification of a particular product lies on the Department, which the Department failed to discharge in the present case. Accordingly, the impugned goods are appropriately classifiable under Tariff Entry No. 29319090, as claimed by the appellant, and the reclassification of the goods under the CTH 29313900, in the impugned order is rejected - the demands of Custom duty confirmed under Sections 28 and 28AAA of the Customs Act, 1962, the penalties imposed under Sections 114A, 114AA and 114AB of the Act, and the redemption fine imposed in lieu of confiscation of the goods under Section 111(o) of the Act are set aside – the appeal is allowed - Whether the Customs authorities have the jurisdiction to question the eligibility of the appellant under the MEIS scheme and deny the benefit thereunder until such licenses have been cancelled by DGFT - HELD - The Circular No.334/1/2012-TRU dated 01.06.2012 clarified that the recovery proceedings under Section 28AAA can be initiated by the Customs authorities only after the DGFT initiates any action for cancellation of the instrument, and the matter shall be decided only after the instrument has been cancelled by DGFT. The Tribunal observed that in the present case, no proceedings for cancellation of the MEIS Scrips have been initiated by the DGFT except in respect of 18 licences, and even those proceedings remain unadjudicated as on date - In the absence of any cancellation of the MEIS licenses by the DGFT, the recovery proceedings initiated by the Customs authorities are not sustainable. [Read less]

Service Tax - Mismatch in Form 26AS and ST-3 returns, Issue of Show cause notice based on information from the Income Tax Department - The SCN's figures, derived from Form 26AS, did not match for all years except 2016-17. The appellant contended that the incorrect figures in the SCN rendered it illegal - Whether a service tax demand is sustainable when the initial Show Cause Notice contains incorrect financial figures, despite subsequent corrections by the appellate authority – HELD - the Original Authority had failed to properly examine the appellant's records and submissions, instead simply confirming the demand based ... [Read more]

Service Tax - Mismatch in Form 26AS and ST-3 returns, Issue of Show cause notice based on information from the Income Tax Department - The SCN's figures, derived from Form 26AS, did not match for all years except 2016-17. The appellant contended that the incorrect figures in the SCN rendered it illegal - Whether a service tax demand is sustainable when the initial Show Cause Notice contains incorrect financial figures, despite subsequent corrections by the appellate authority – HELD - the Original Authority had failed to properly examine the appellant's records and submissions, instead simply confirming the demand based on information from the Income Tax Department - It is the responsibility of the executive to examine records and audit objections with reference to the facts of the case to determine if there is a sustainable basis for issuing a show cause notice. The charges in the SCN must be based on the assessee's books of account, records, and other admissible evidence and transactions recorded in the books of account cannot be held contrary to the facts - Further, without examining the reasons for differences between figures in Form 26AS and ST-3 returns, the Revenue cannot raise a demand solely based on such differences without establishing that the entire amount received was consideration for services provided and without examining whether the difference was due to any exemption or abatement - In addition, Section 67 of the Finance Act specifies that the value of taxable service should be the consideration in money charged by the service provider. It is crucial to determine the value on which service tax should be levied and this determination must consider activities covered by the negative list, exemptions, and the possibility of service tax being paid by the recipient. Therefore, arriving at the correct value of taxable service that has not suffered service tax is the essential first step, and this exercise was not undertaken in the present case - the impugned order is not sustainable and set aside - the appeal is allowed [Read less]

Customs Act, 1962 - Penalty on Clearing Agent; Knowledge of Overvaluation - The appellants, acting as clearing agents, filed manual shipping bills for the export of garments which were physically examined and allowed for export by the proper officer. Subsequently, the exporter was found to have fraudulently availed DEPB and Drawback benefits by grossly overvaluing substandard goods, with investigations revealing that the overseas consignee never received the goods - the Department imposed penalties on the clearing agents under Section 114 of the Customs Act, 1962, for their alleged role in the fraudulent export - Whether a... [Read more]

Customs Act, 1962 - Penalty on Clearing Agent; Knowledge of Overvaluation - The appellants, acting as clearing agents, filed manual shipping bills for the export of garments which were physically examined and allowed for export by the proper officer. Subsequently, the exporter was found to have fraudulently availed DEPB and Drawback benefits by grossly overvaluing substandard goods, with investigations revealing that the overseas consignee never received the goods - the Department imposed penalties on the clearing agents under Section 114 of the Customs Act, 1962, for their alleged role in the fraudulent export - Whether a penalty can be imposed on a clearing agent for fraudulent exports involving overvaluation and availment of undue benefits by the exporter, when the goods were physically examined and cleared for export by the proper officer and there is no evidence of the agent's knowledge of the fraud - HELD - In a scenario where self-assessment was not in force and shipping bills were filed manually, the role of the clearing agent is limited to the filing of export documents before the proper officer - Once the goods are physically examined and allowed for export by the customs authorities, the responsibility of the clearing agent concludes. The subsequent fraudulent availment of DEPB and Drawback benefits is an act attributable solely to the exporter, a process in which the clearing agent has no role. A penalty cannot be imposed on the clearing agent unless the Revenue can prove with evidence that the agent had knowledge of the overvaluation or the inferior quality of the goods - In the absence of any such evidence on record, the clearing agent cannot be held liable for the exporter's fraud. Accordingly, the imposition of a penalty is not sustainable and set aside - The appeal is allowed - Whether the extended period of limitation for issuing a show-cause notice can be invoked by the department when the export goods in question had been subjected to physical examination by the proper officer before being cleared for export - HELD - The extended period of limitation cannot be invoked when the Department had a clear opportunity to verify the particulars of the consignment, including its value and quality. Since the export goods were physically examined by the proper officer and subsequently allowed to be exported, the department is precluded from later alleging suppression or misstatement to justify invoking the extended limitation period. The act of examination by the proper officer negates the essential conditions required for such invocation. Therefore, a show-cause notice issued beyond the normal statutory period is time-barred and not legally tenable. [Read less]

Service Tax – Majority Order - Supply of Tangible Goods for Use (STGU) — Deemed Sale - Service Tax vs. VAT/CST - The assessee, a manufacturer, entered into "Parts Management Programme Contracts" to store its spare parts at its customers' premises for ready availability. For this arrangement, the assessee received a periodic consideration upon which it charged and paid VAT/CST, treating the transaction as a "deemed sale" - Revenue contended that since ownership and effective control of the goods were not transferred, the activity constituted a "Supply of Tangible Goods for Use" (STGU) service and demanded service tax on... [Read more]

Service Tax – Majority Order - Supply of Tangible Goods for Use (STGU) — Deemed Sale - Service Tax vs. VAT/CST - The assessee, a manufacturer, entered into "Parts Management Programme Contracts" to store its spare parts at its customers' premises for ready availability. For this arrangement, the assessee received a periodic consideration upon which it charged and paid VAT/CST, treating the transaction as a "deemed sale" - Revenue contended that since ownership and effective control of the goods were not transferred, the activity constituted a "Supply of Tangible Goods for Use" (STGU) service and demanded service tax on the consideration - Whether the services provided by the appellant would be classifiable as Supply of Tangible Goods Services for the purpose of levy of service tax as held by Member (Technical) or otherwise as held by Member (Judicial); and whether payment of sales tax/ vat be the necessary test for non levy of service tax, as held by Member (J) or otherwise as held by Member (T) – HELD - The issue is barred by res judicata, as an identical matter for the same assessee for prior periods had been decided in its favour by the Tribunal, and that order had attained finality as it was not appealed by the Revenue - when the matter was being argued before the Divisional Bench of the Tribunal, it was incumbent upon appellant to bring to the knowledge of Division Bench that identical issue in case of the same appellant already stands decided by the Allahabad Bench - Secondly, on the merits of the case, the transaction cannot be taxed as a service because the contractual agreement and invoices explicitly show that the assessee treated it as a "deemed sale" and discharged the applicable VAT/CST. The CBIC Circular No. 334/1/2008-TRU clarifies that a transaction leviable to sales tax/VAT as a deemed sale is not covered within the scope of STGU service. The circular further states that the payment of VAT/sales tax on a transaction is a key indicator that the transaction is treated as a sale of goods. Since the consideration for the activity was already subjected to VAT/CST, levying service tax on the same would be unsustainable. Therefore, the payment of sales tax/VAT is a valid test for the non-levy of service tax in this context, and the transaction falls outside the scope of taxable service - the services rendered by the Appellant is not classifiable under “supply of tangible goods service” and no service tax is required to be paid – Ordered accordingly [Read less]

GST - Right of Cross-Examination, Principles of Natural Justice, Maintainability of Writ Petition – Rejection of request for cross-examination on the grounds that it would cause a delay in the proceedings - The respondents challenged the maintainability of the writ petition, arguing that the petitioner had an alternative remedy of a statutory appeal - Whether an adjudication order is vitiated for violating the principles of natural justice when the assessee is denied the opportunity to cross-examine witnesses whose statements form the basis of the adverse order – HELD - The denial of the right to cross-examination is a... [Read more]

GST - Right of Cross-Examination, Principles of Natural Justice, Maintainability of Writ Petition – Rejection of request for cross-examination on the grounds that it would cause a delay in the proceedings - The respondents challenged the maintainability of the writ petition, arguing that the petitioner had an alternative remedy of a statutory appeal - Whether an adjudication order is vitiated for violating the principles of natural justice when the assessee is denied the opportunity to cross-examine witnesses whose statements form the basis of the adverse order – HELD - The denial of the right to cross-examination is a fundamental breach of the principles of natural justice which vitiates the entire proceeding - the settled legal position that a writ petition is maintainable against an order, even if appealable, when it suffers from a violation of the principles of natural justice - The reasons cited by the authority for rejecting the cross-examination request of potential delay and the apparent correctness of the statements, it unacceptable and legally untenable. It firmly established that the right to cross-examine witnesses whose testimony or statements are being relied upon against a party is an indispensable part of a fair hearing. Consequently, any decision or order passed without affording such an opportunity for cross-examination would be invalid and stand vitiated. Since the petitioner was denied this crucial right, the impugned order could not be sustained in law - The impugned order is set aside and the matter is remanded back to the adjudicating authority with a specific direction to proceed from the stage of cross-examination - The writ petition is allowed [Read less]

GST - Bail Application, Fraudulent Input Tax Credit – Arrest in connection with offenses under Sections 132(1)(b), 132(1)(c), 132(1)(l) and 132(1)(i) of the CGST Act, 2017 - Nexus of fake firms used to avail wrongful input tax credit and issue fake invoices without actual supply of goods - Whether the applicants entitled to regular bail considering the seriousness of the offenses and the prosecution's case against them – HELD - While the offenses are serious, the prosecution's case against the applicants is primarily based on their confessions and statements of other persons. The proprietors of the seven identified fir... [Read more]

GST - Bail Application, Fraudulent Input Tax Credit – Arrest in connection with offenses under Sections 132(1)(b), 132(1)(c), 132(1)(l) and 132(1)(i) of the CGST Act, 2017 - Nexus of fake firms used to avail wrongful input tax credit and issue fake invoices without actual supply of goods - Whether the applicants entitled to regular bail considering the seriousness of the offenses and the prosecution's case against them – HELD - While the offenses are serious, the prosecution's case against the applicants is primarily based on their confessions and statements of other persons. The proprietors of the seven identified firms were not interrogated, and their bank accounts were not examined to ascertain the authorized persons operating them – Further, the investigation against the applicants is complete, the trial has not yet commenced, and the maximum punishment for the offenses is five years imprisonment. Considering these factors, the court deemed it appropriate to grant regular bail to the applicants, as their further detention would not serve any useful purpose - The applicants are directed the applicants to furnish the requisite bail bonds and surety bonds to the satisfaction of the trial court and abide by the terms and conditions of bail - The bail applications of the three applicants are allowed [Read less]

GST - Mode of service of notices, Ex parte assessment order, Opportunity of hearing - The petitioner contended that the impugned order was passed without granting any opportunity of hearing as contemplated and without proper service of Show Cause Notic – HELD - The SCN did not mention the date, time, and venue of the personal hearing, which is mandatory under Section 75(4) of the CGST Act, 2017. The concerned authority failed to strictly adhere to the requirements of Section 75(4) by not providing the petitioner an opportunity of personal hearing - Merely uploading the proceedings on the GST portal under the heading "Add... [Read more]

GST - Mode of service of notices, Ex parte assessment order, Opportunity of hearing - The petitioner contended that the impugned order was passed without granting any opportunity of hearing as contemplated and without proper service of Show Cause Notic – HELD - The SCN did not mention the date, time, and venue of the personal hearing, which is mandatory under Section 75(4) of the CGST Act, 2017. The concerned authority failed to strictly adhere to the requirements of Section 75(4) by not providing the petitioner an opportunity of personal hearing - Merely uploading the proceedings on the GST portal under the heading "Additional Notices and Orders" does not amount to a valid mode of service as required under Section 169 of the CGST Act, 2017. It is mandatory for the authorities to comply with at least two modes of service mentioned in Section 169, and mere uploading on the portal is not sufficient - the ex parte assessment order is set aside and the authorities are directed to issue a fresh notice to the petitioner, providing the date, time, and venue of the personal hearing, and to proceed further in accordance with the provisions of the law – The writ petition is allowed [Read less]

Central Excise – Valuation of goods cleared to sister unit, Captive Consumption, Third Party Sales - Appellant cleared goods to its sister units for captive consumption and also sold the same goods to independent third-party buyers. The Revenue sought to assess the goods cleared to sister units based on Rule 8 of the Central Excise Valuation Rules, 2000 - The assessee contended that since they had contemporaneous sales to unrelated buyers, the assessable value should be determined based on the transaction value of such sales as per Rule 4, rendering Rule 8 inapplicable - Whether Rule 8 of the Central Excise Valuation Rul... [Read more]

Central Excise – Valuation of goods cleared to sister unit, Captive Consumption, Third Party Sales - Appellant cleared goods to its sister units for captive consumption and also sold the same goods to independent third-party buyers. The Revenue sought to assess the goods cleared to sister units based on Rule 8 of the Central Excise Valuation Rules, 2000 - The assessee contended that since they had contemporaneous sales to unrelated buyers, the assessable value should be determined based on the transaction value of such sales as per Rule 4, rendering Rule 8 inapplicable - Whether Rule 8 of the Central Excise Valuation Rules, 2000, is applicable for valuing goods cleared to a sister unit when the assessee also sells a part of the same goods to independent buyers - HELD - Rule 8 applies only in a situation where the entire production of excisable goods is captively consumed and not sold. When an assessee clears a part of the total production to third parties, the value for clearances to sister/related units must be the transaction value of sales to such independent buyers, not the value derived from the costing method under Rule 8 - The Larger Bench of the Tribunal has held that Rule 8 will not apply where some part of the production is cleared to independent buyers and that Rule 4 is to be preferred over Rule 8 as it is more consistent with the parent statute - The assessee produced ledger extracts which clearly demonstrated sales to various third-party, unrelated buyers. Therefore, the assessee was not required to follow the costing-plus-profit margin method prescribed under Rule 8 for determining the assessable value - The demand for differential duty on the ground of incorrect valuation was set aside - Further, when the excise duty paid by one unit is fully available as CENVAT credit to the receiving sister unit of the same assessee, the situation results in revenue neutrality. In such a scenario, there is no financial gain to the assessee by adopting a lower assessable value, and therefore, no motive to evade duty can be attributed. Consequently, the invocation of the extended period of limitation is not permissible as the ingredients for alleging suppression of facts with intent to evade duty are absent. Since the department was aware of the valuation through the assessee's monthly returns, there was no case of suppression - The demand was set aside on the grounds of revenue neutrality and also as being barred by limitation – The impugned order is set aside and the appeal is allowed - Whether a demand for excise duty can be confirmed solely on the basis of an uncorroborated debit note found during a search, without any evidence of the actual receipt of consideration - HELD - A demand cannot be sustained merely on the basis of a document like a debit note without any direct or corroborative evidence to prove its authenticity and the actual realization of the amount by the assessee. Documents or statements can raise doubts but cannot be taken as conclusive proof of clandestine removal in the absence of corroborative evidence such as statements from buyers or discrepancies in stock. Since the department failed to provide any evidence to corroborate that the assessee had received the amount mentioned in the debit note, the demand was not legally sustainable - The demand based on debit note is set aside. [Read less]

Central Excise - CENVAT Credit, No manufacturing on goods procured from another unit, Revenue Neutrality - Due to labour and infrastructure issues, the silico manganese produced at one unit was transferred in lump form to another Unit on payment of excise duty where is was then reprocessed and cleared the same on payment of excise duty - Whether the appellant was eligible to avail CENVAT credit on the silico manganese procured from one unit, even though no further manufacturing activity was undertaken at the another unit – HELD - The silico manganese was the finished goods for the Burdwan Unit and was despatched to the M... [Read more]

Central Excise - CENVAT Credit, No manufacturing on goods procured from another unit, Revenue Neutrality - Due to labour and infrastructure issues, the silico manganese produced at one unit was transferred in lump form to another Unit on payment of excise duty where is was then reprocessed and cleared the same on payment of excise duty - Whether the appellant was eligible to avail CENVAT credit on the silico manganese procured from one unit, even though no further manufacturing activity was undertaken at the another unit – HELD - The silico manganese was the finished goods for the Burdwan Unit and was despatched to the Mangalpur Unit on payment of excise duty under proper central excise invoices. The appellant was also a manufacturer of sponge iron and silico manganese, and the latter was an input for the manufacture of their finished goods - Further, the Department had accepted the excise duty paid by the appellant on the silico manganese cleared as finished goods, and there was no allegation that the excise duty paid fell short of the CENVAT credit claimed. Once the duty on the final products has been accepted by the Department, the CENVAT credit availed need not be reversed, even if the activity does not amount to manufacture - as the Department had failed to establish any suppression on the part of the appellant, the impugned order is also set aside on the ground of time-bar – The appeal is allowed [Read less]

Service Tax - Extended Period, Tyre Retreading – Recovery of service tax on the tyre retreading process under the Heading of Management, Maintenance or Repair Service - Whether the extended period for recovery of service tax can be invoked in the present case – HELD - The entry in the Central Excise Tariff with a NIL rate of duty and simultaneous introduction of the entry in the Service Tax Law w.e.f. 2003 is certainly a basis for the confusion, which was cleared by the CBEC in February 2012. Therefore, when the Department itself needed 09 years to clarify the issue after the entry was made in 2003 and the Deputy Commi... [Read more]

Service Tax - Extended Period, Tyre Retreading – Recovery of service tax on the tyre retreading process under the Heading of Management, Maintenance or Repair Service - Whether the extended period for recovery of service tax can be invoked in the present case – HELD - The entry in the Central Excise Tariff with a NIL rate of duty and simultaneous introduction of the entry in the Service Tax Law w.e.f. 2003 is certainly a basis for the confusion, which was cleared by the CBEC in February 2012. Therefore, when the Department itself needed 09 years to clarify the issue after the entry was made in 2003 and the Deputy Commissioner has issued a letter to the appellants in December 2012, a clear 10 months after the issue of circular, the bona fides of the appellants cannot be suspected - the appellants had requested the Department for clarification vide their letter dated 19.09.2006 which was never replied, and they promptly registered themselves and started paying service tax after receiving a letter dated 20.12.2012 from the Department. In these circumstances, the bona fides of the appellants cannot be suspected - the Department has not made out any case for invocation of extended period as there is no evidence of fraud, suppression, collusion, mis-declaration etc. with intent to evade payment of duty – The impugned order is set aside and the appeal is allowed [Read less]

Service Tax – Export of services, Refund of CENVAT Credit, Nexus with output services - Refund claims under Rule 5 of the CENVAT Credit Rules, 2004 for the unutilized CENVAT credit on various input services used for providing export services - Whether the Commissioner (Appeals) was correct in upholding the rejection of the refund of CENVAT credit on the grounds of absence of nexus between the input services and the output services, when the CENVAT credit, when availed, was not objected to by the department - HELD - each of the input service involved in the present case are held to be 'input services' by various decisions... [Read more]

Service Tax – Export of services, Refund of CENVAT Credit, Nexus with output services - Refund claims under Rule 5 of the CENVAT Credit Rules, 2004 for the unutilized CENVAT credit on various input services used for providing export services - Whether the Commissioner (Appeals) was correct in upholding the rejection of the refund of CENVAT credit on the grounds of absence of nexus between the input services and the output services, when the CENVAT credit, when availed, was not objected to by the department - HELD - each of the input service involved in the present case are held to be 'input services' by various decisions of the Tribunal and High Courts. The Circular No. 120/01/2010-ST dated 19.01.2010 clarifies that there cannot be two different yardsticks for determining the eligibility of CENVAT credit and the eligibility of refund - if the CENVAT credit has not been questioned at the time of availment, the same cannot be questioned at the time of refund - The appellant is entitled to the refund of the unutilized CENVAT credit - The impugned orders are set aside and the appeals are allowed - Denial of CENVAT credit on the service tax paid on the group medical insurance policy for the family members of the employees - Whether the CENVAT credit on the service tax paid on the group medical insurance policy for the family members of the employees was eligible - HELD - The Larger Bench of the Tribunal in the case of Tata Teleservices (Maharashtra) Ltd. vs CST, Mumbai-II had held that the CENVAT credit on the service tax paid on the group medical insurance policy for the family members of the employees is eligible - The denial of CENVAT credit on the service tax paid on the group medical insurance policy for the family members of the employees is set aside. [Read less]

Service Tax – Demand under Reverse Charge Mechanism on the expenditure incurred in foreign exchange, Authorised Service Station Service, Extended Period of Limitation, Revenue Neutrality – Adjudicating authority invoked the provisions of Section 66A of the Act on the expenditure incurred in foreign exchange without specifying the activity or service involved on such foreign exchange – Whether the appellant is liable to pay service tax under the Reverse Charge Mechanism (RCM) on the expenditure incurred in foreign exchange - HELD - The adjudicating authority had not specified the taxable service involved in the expend... [Read more]

Service Tax – Demand under Reverse Charge Mechanism on the expenditure incurred in foreign exchange, Authorised Service Station Service, Extended Period of Limitation, Revenue Neutrality – Adjudicating authority invoked the provisions of Section 66A of the Act on the expenditure incurred in foreign exchange without specifying the activity or service involved on such foreign exchange – Whether the appellant is liable to pay service tax under the Reverse Charge Mechanism (RCM) on the expenditure incurred in foreign exchange - HELD - The adjudicating authority had not specified the taxable service involved in the expenditure incurred in Foreign Exchange. For a demand under RCM, the adjudicating authority must establish that the service was imported into India as per the Taxation of Service (Provided from Outside India and Received in India) Rules, 2006. Since these aspects were not satisfied, the demand under RCM is prima facie unsustainable - Further, even if the appellant had paid service tax under RCM, they were eligible to claim CENVAT credit against such payment, resulting in a revenue neutral situation - The demand under RCM confirmed by invoking the extended period of limitation and the penalties imposed are unsustainable and set aside – The appeal is allowed - Whether the demand of service tax under Authorized Service Station category is sustainable - HELD - The definition of "Authorised Service Station" under Section 65(9) of the Finance Act, 1994 requires the service station to be authorized by the manufacturer of the motor vehicles to carry out any service or repair of the vehicles manufactured by that particular manufacturer. Since the appellant was the manufacturer of electric cars and had its own service station, the services provided by the appellant cannot be considered as falling under the category of Authorised Service Station. Accordingly, the demand under the Authorised Service Station category is set aside. [Read less]

Service Tax - Construction of residential complex, Works contract service, Composite contract – Demand under the category of "construction of complex service" for the period from February 2009 to July 2010. The appellant contended that the services rendered were composite in nature involving both material and service, and hence should be classified under "works contract service" and not "construction of complex service" - Whether the activities of the appellant are exigible to service tax under "construction of complex service" for the period from February 2009 to July 2010, or they should be classified under "works cont... [Read more]

Service Tax - Construction of residential complex, Works contract service, Composite contract – Demand under the category of "construction of complex service" for the period from February 2009 to July 2010. The appellant contended that the services rendered were composite in nature involving both material and service, and hence should be classified under "works contract service" and not "construction of complex service" - Whether the activities of the appellant are exigible to service tax under "construction of complex service" for the period from February 2009 to July 2010, or they should be classified under "works contract service" - HELD - The services rendered by the appellant were composite in nature involving both material and service, and hence should be classified under "works contract service" and not "construction of complex service”. The demand of service tax under "construction of complex service" is not sustainable in the case of composite contracts - Further the SCN itself had extended the benefit of abatement while computing the service tax demand, indicating the composite nature of the services - the demand of service tax under "construction of complex service" is set aside and the matter is remanded to the Department to examine the case under the appropriate classification of "works contract service" – the appeal is allowed by remand [Read less]

Service Tax – Misclassification of service, Change in classification of service, Manpower Supply Service, Works Contract Service - Appellant, a construction service provider, classified its services as 'manpower supply' for one period and 'works contract' for another, paying its share of service tax as per the partial payment mechanism under Notification No. 30/2012-ST. The service recipient also paid its corresponding share under the Reverse Charge Mechanism (RCM), a fact evidenced by a Chartered Accountant's certificate - Department, upon reclassifying the service, sought to recover the entire service tax amount from t... [Read more]

Service Tax – Misclassification of service, Change in classification of service, Manpower Supply Service, Works Contract Service - Appellant, a construction service provider, classified its services as 'manpower supply' for one period and 'works contract' for another, paying its share of service tax as per the partial payment mechanism under Notification No. 30/2012-ST. The service recipient also paid its corresponding share under the Reverse Charge Mechanism (RCM), a fact evidenced by a Chartered Accountant's certificate - Department, upon reclassifying the service, sought to recover the entire service tax amount from the appellant again, disregarding the tax already paid by the service recipient under RCM - Whether service tax can be demanded again from the service provider on the ground of misclassification, when the total tax liability on the transaction has already been discharged jointly by the service provider and the service recipient under the RCM – HELD - When the entire tax due has reached the exchequer through the combined payments of the service provider and the service recipient under the reverse charge mechanism, the service provider cannot be called upon to make the payment once over. The principle, as clarified by the CBEC is that the RCM should not lead to double taxation; once the tax liability is discharged, regardless of the person who discharges it, the assessee cannot be asked to pay the tax again - Furthermore, the Chartered Accountant's certificate, evidencing payment by the service recipient, cannot be disbelieved without any contrary material. As the certificate confirmed that the service recipient had discharged its service tax liability under RCM and the appellant had discharged its share, the entire tax on the consideration stood paid. Thus, demanding the service tax once again is impermissible and set aside - The appellant succeeds in its appeal on merits as well as on its plea against invoking the extended period of limitation - Whether a demand for service tax is sustainable on the ground of a change in service classification, when the tax has already been paid by the assessee under a different, albeit incorrect, classification, and the entire tax due has reached the Government – HELD - Tax already paid under a wrong category can always be considered towards the liability under the new, correct category. It is a settled principle that technicalities should not defeat the rendering of complete justice. There is no allegation that the appellant failed to discharge the service tax liability under the classification it had adopted. Since the entire service tax liability on the services rendered stood discharged, as evidenced by payments from both the appellant and the service recipient, the directions for remand to re-quantify liability are otiose and untenable. The state, when dealing with a citizen, should not ordinarily rely on technicalities but should act in a manner consistent with a broader concept of justice - Whether the extended period of limitation can be invoked to demand service tax when the entire demand is premised on information available in the assessee's own ST-3 returns and documents, without any evidence of a positive act of suppression or wilful misstatement with intent to evade tax – HELD - The extended period of limitation is not invokable. The demand was premised entirely on the ST-3 returns filed by the appellant, and there was no evidence adduced of any positive act of deliberate suppression of facts or wilful misstatement with an intent to evade payment of duty. It is a settled position in law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it, and the department failed to discharge this heavy burden. When the demand is based only on documents provided by the appellant, and the department has not brought forth any new or independent material that was not already disclosed, the charge of suppression cannot be sustained. It is for the department to scrutinize the returns filed, and a mere failure to correctly classify a service or pay tax, without an active intent to evade, does not amount to suppression of facts. [Read less]

GST - GSTR-2A and GSTR-3B Mismatch, Furnishing of Chartered Accountant Certificate - Notice for the differences in the GSTR-2A and GSTR-3B - The petitioner was unable to file the certificate from the Chartered Accountant as the supplier went into liquidation, but obtained the certificate from their own Chartered Accountant and filed the same, which was not considered by the respondent – HELD - Merely for not furnishing the Chartered Accountant's Certificate, the proceedings were initiated under Section 74. However, the petitioner had expressed its inability to produce the certificate from the supplier's Chartered Account... [Read more]

GST - GSTR-2A and GSTR-3B Mismatch, Furnishing of Chartered Accountant Certificate - Notice for the differences in the GSTR-2A and GSTR-3B - The petitioner was unable to file the certificate from the Chartered Accountant as the supplier went into liquidation, but obtained the certificate from their own Chartered Accountant and filed the same, which was not considered by the respondent – HELD - Merely for not furnishing the Chartered Accountant's Certificate, the proceedings were initiated under Section 74. However, the petitioner had expressed its inability to produce the certificate from the supplier's Chartered Accountant due to the supplier's liquidation, and instead produced a certificate from its own Chartered Accountant confirming the supplies, goods received, and payments made along with GST - When such a certificate is produced by the petitioner, the respondent should have applied its mind and arrived at a wise conclusion after verifying all the transactions and relevant documents. The respondent had arrived at a conclusion in a mechanical manner and passed the impugned order under Section 74 without considering the Chartered Accountant's certificate provided by the petitioner - the impugned order is not sustainable in law and set it aside. The matter was remanded back to the respondent with a direction to consider the notice issued under Section 74 as a proceeding under Section 73 of the CGST Act and pass appropriate orders accordingly – The writ petition is disposed of [Read less]

Madhya Pradesh Commercial Tax Act 1994 - Industrial Policy, Non-Resident Dealer, NRI Investment, Interpretation of Exemption Notification - Petitioner applied to have the SPEC Division recognized as a "Non-Resident Dealer" under Notification No. A-3(1)-95-ST-V (43) dated 06.06.1995, to extend the exemption period to 11 years - Industries Commissioner rejected this application on the ground that the NRI investment had already been considered and utilized for granting the status to the Saw Pipe Division and could not be considered again for the new SPEC Division - Whether the same Non-Resident Indian (NRI) equity investment,... [Read more]

Madhya Pradesh Commercial Tax Act 1994 - Industrial Policy, Non-Resident Dealer, NRI Investment, Interpretation of Exemption Notification - Petitioner applied to have the SPEC Division recognized as a "Non-Resident Dealer" under Notification No. A-3(1)-95-ST-V (43) dated 06.06.1995, to extend the exemption period to 11 years - Industries Commissioner rejected this application on the ground that the NRI investment had already been considered and utilized for granting the status to the Saw Pipe Division and could not be considered again for the new SPEC Division - Whether the same Non-Resident Indian (NRI) equity investment, which was the basis for granting tax exemption benefits to one industrial unit can be considered again to grant similar "Non-Resident Dealer" status and benefits to a new and separate industrial unit established by the same company – HELD - A single NRI investment cannot be used to claim tax exemption benefits for two separate and distinct industrial units - The petitioner itself had obtained two separate registrations and eligibility certificates for the Saw Pipe Division and the SPEC Division, treating them as distinct manufacturing units - The capital investment of 26% equity from NRI promoters had already been claimed and exhausted to secure the "Non-Resident Dealer" status and the associated 11-year tax exemption for the Saw Pipe Division. The notification does not permit the same investment to be leveraged a second time to obtain the same benefit for another new unit - The notification mandates a three-year lock-in period for the NRI equity from the commencement of production, during which the promoter must hold the minimum 26% stake. The investment made in the Saw Pipe Division was locked-in for that unit and could not be notionally transferred to the SPEC Division. The additional investment claimed for the SPEC Division was made after it had commenced production, failing to meet the pre-requisite condition of investment prior to establishment - the decision of the Industries Commissioner to deny "Non-Resident Dealer" status to the petitioner's SPEC Division is upheld. Consequently, the tax assessments raised against the petitioner for the relevant years were deemed to be rightly made – The wit petition is dismissed [Read less]

GST – Requirement of Pre-deposit when the dispute is factual, ex-parte order - Appeal against an interim order directing to deposit 10% of the tax in dispute - Appellants had challenged an ex parte order passed by the Assistant Commissioner alleging that the appellants had wrongly availed Input Tax Credit - Whether an order mandating a pre-deposit as a condition for a stay is sustainable when the dispute is factual in nature concerning the verification of ITC reversal – HELD - The imposition of a pre-deposit was not justified as the primary issue was a factual dispute that required verification and reconciliation - If ... [Read more]

GST – Requirement of Pre-deposit when the dispute is factual, ex-parte order - Appeal against an interim order directing to deposit 10% of the tax in dispute - Appellants had challenged an ex parte order passed by the Assistant Commissioner alleging that the appellants had wrongly availed Input Tax Credit - Whether an order mandating a pre-deposit as a condition for a stay is sustainable when the dispute is factual in nature concerning the verification of ITC reversal – HELD - The imposition of a pre-deposit was not justified as the primary issue was a factual dispute that required verification and reconciliation - If the appellant's claim of having reversed the wrongly availed ITC is substantiated, the entire matter would become "revenue neutral" and consequently, the question of making any pre-deposit would not arise – Further, the adjudicating authority's failure to levy interest in the original order could itself suggest that the ITC had already been reversed - the interim order of the Single Judge imposing the pre-deposit is set aside. The matter is remanded to the original authority with a direction to the appellant to treat the original order as a show-cause notice and submit a detailed reply with all documents – The petition is disposed of [Read less]

GST - Refund application, Issue of refund rejection order – Petitioner filed two refund applications under Section 54(3) of the CGST Act, 2017 on 17th May, 2019 for the period from July 2017 to March 2018, and another dated 12th June, 2019 for the period from June 2018 to March 2019 – Petitioner grievance that the respondent has not processed these applications despite the lapse of several years – HELD - The Department had issued a Show Cause Notice dated 5th July, 2019 and a rejection order dated 19th September, 2019 in relation to the first refund application. However, the petitioner claimed that these documents we... [Read more]

GST - Refund application, Issue of refund rejection order – Petitioner filed two refund applications under Section 54(3) of the CGST Act, 2017 on 17th May, 2019 for the period from July 2017 to March 2018, and another dated 12th June, 2019 for the period from June 2018 to March 2019 – Petitioner grievance that the respondent has not processed these applications despite the lapse of several years – HELD - The Department had issued a Show Cause Notice dated 5th July, 2019 and a rejection order dated 19th September, 2019 in relation to the first refund application. However, the petitioner claimed that these documents were not uploaded on the portal and it had no knowledge of the same – The assessee’s remedies cannot be shut out when the knowledge of the adverse order, which provides the cause of action for an appeal, is delayed - the petitioner became aware of the rejection order of 19th September, 2019, only on 11th February, 2025. Given these circumstances, the principles of fairness demand that the Petitioner be given an opportunity to exercise their statutory right of appeal. The delay in filing the appeal is directly attributable to the lack of knowledge of the order, and therefore, the Petitioner cannot be penalized by dismissing the appeal on grounds of limitation - The Petitioner was permitted to file an appeal under Section 107 of the CGST Act, 2017, challenging the rejection order – The petition is disposed of - Whether the department was justified in withholding the second refund application dated 12th June, 2019 on the ground that the deficiency memo could not be traced – HELD - The Department's own affidavit stated that the deficiency memo issued in relation to the second refund application could not be traced. In such circumstances, there is no valid ground to hold back the refund. Accordingly, the Department is directed to process the second refund application dated 12th June, 2019 and refund the amount along with statutory interest within two months. [Read less]

Service Tax - Export of services, Determination of place of provision of services – Appellant is engaged in software development, app development, web designing and graphic designing on freelance basis, was registered on online platforms like Upwork and Freelancer to provide services to overseas clients - The appellant did not pay service tax believing the services provided were export of services - Show cause notice demanding service tax, interest and penalties on the grounds that the services provided by the appellant were not export of services and were taxable in India - Whether the services provided by the appellant... [Read more]

Service Tax - Export of services, Determination of place of provision of services – Appellant is engaged in software development, app development, web designing and graphic designing on freelance basis, was registered on online platforms like Upwork and Freelancer to provide services to overseas clients - The appellant did not pay service tax believing the services provided were export of services - Show cause notice demanding service tax, interest and penalties on the grounds that the services provided by the appellant were not export of services and were taxable in India - Whether the services provided by the appellant to overseas clients qualify as "export of services" - HELD – The Circular No.209/1/2018-Service Tax dated 04.05.2018, provides that in the case of services pertaining to software development, the place of provision of service is the location of the service recipient - the place of provision of services provided by the Appellant is classifiable under Rule 3 of the POPS Rules and hence no other Rule is applicable for determination of the place of provision of services. Thus, in the instant facts, the place of provision of service shall be the location of the recipient of service, which is outside India and accordingly, such services shall qualify as export of services and hence not exigible to service tax - The appellant was located in the taxable territory (India), the service recipients were located outside India, the services provided were not in the negative list, the place of provision of service was outside India, the payment was received in convertible foreign exchange, and the appellant and the overseas clients were independent entities - Since the place of provision and consumption of the services in the present case was outside India, the same would not be taxable in India - In the present case, without even ascertaining the nature of taxable service, the demand of service tax has been confirmed merely on the ground that some income is appearing in the income tax return on which service tax has not been paid. Thus, the taxable event has been assumed, which is contrary to the settled law that burden to prove taxable event lies on the revenue and which has clearly not been discharged – The impugned order is set aside and the appeal is allowed [Read less]

Customs – Refund of additional customs duty paid on import of mobile phones - Dept challenge the order of the CESTAT directing refund to the Respondent instead of crediting the amounts to the Consumer Welfare Fund - The Adjudicating Authority had initially sanctioned the refund but directed the amounts to be credited to the Consumer Welfare Fund under Section 27(2) of the Customs Act, 1962 - Whether the Chartered Accountant's certificate is sufficient to prove that the incidence of duty had not been passed on to the consumers, without submitting the supporting accounting documents and ledger accounts – HELD - The CA ce... [Read more]

Customs – Refund of additional customs duty paid on import of mobile phones - Dept challenge the order of the CESTAT directing refund to the Respondent instead of crediting the amounts to the Consumer Welfare Fund - The Adjudicating Authority had initially sanctioned the refund but directed the amounts to be credited to the Consumer Welfare Fund under Section 27(2) of the Customs Act, 1962 - Whether the Chartered Accountant's certificate is sufficient to prove that the incidence of duty had not been passed on to the consumers, without submitting the supporting accounting documents and ledger accounts – HELD - The CA certificate, along with the documents submitted by the Respondent, are sufficient to discharge the burden of proof. Apart from the documents submitted by the Respondent, there may be no other way to prove that the incidence of duty was not passed on to the consumers, especially after a lapse of several years - In the absence of any contrary evidence from the Appellant-Dept, the Chartered Accountant's certificate should be accepted. The Adjudicating Authority had not provided any reasoning for directing the refund to be credited to the Consumer Welfare Fund - The refund of the principal and the interest as per law, be credited to the Respondent within a period of two months – The writ petition is disposed of [Read less]

Central Excise - Cenvat Credit on bright bars used for manufacture auto parts components – Denal of Cenvat Credit on the ground that no manufacturing process was involved in making bright bars from the bars and rods and therefore, no duty was required to be paid by the suppliers of these bright bars - Whether the appellant is eligible to avail Cenvat Credit on the central excise duty paid on the inputs i.e. bright bars even if the process does not amount to manufacture - HELD - The issue is no more res integra as it has been consistently decided in favor of the assessee in various cases - Cenvat Credit is admissible on t... [Read more]

Central Excise - Cenvat Credit on bright bars used for manufacture auto parts components – Denal of Cenvat Credit on the ground that no manufacturing process was involved in making bright bars from the bars and rods and therefore, no duty was required to be paid by the suppliers of these bright bars - Whether the appellant is eligible to avail Cenvat Credit on the central excise duty paid on the inputs i.e. bright bars even if the process does not amount to manufacture - HELD - The issue is no more res integra as it has been consistently decided in favor of the assessee in various cases - Cenvat Credit is admissible on the inputs if they are cleared on payment of duty, even if the process undertaken by the assessee does not amount to manufacture - the issue of eligibility of Cenvat Credit of central excise duty paid on inputs i.e. bright bars, even if they have been produced out of a process that does not manufacture, has already attained finality in the assessee’s favour – The impugned order is set aside and the appeal is allowed [Read less]

GST - Voluntary Cancellation of Registration, Cancellation of Registration with Retrospective effect - Rule 21A(2A) CGST Rules, 2017 – On petitioner’s application for the cancellation of its GST registration, after a significant delay of over two years and four months, the tax authorities issued a clarification notice stipulated in Rule 21A(2A) of the CGST Rules. The petitioner's application was subsequently rejected - Show Cause Notice proposing cancellation on the grounds of non-filing of returns for a continuous period of six months. While the petitioner's appeal against the rejection of its voluntary cancellation a... [Read more]

GST - Voluntary Cancellation of Registration, Cancellation of Registration with Retrospective effect - Rule 21A(2A) CGST Rules, 2017 – On petitioner’s application for the cancellation of its GST registration, after a significant delay of over two years and four months, the tax authorities issued a clarification notice stipulated in Rule 21A(2A) of the CGST Rules. The petitioner's application was subsequently rejected - Show Cause Notice proposing cancellation on the grounds of non-filing of returns for a continuous period of six months. While the petitioner's appeal against the rejection of its voluntary cancellation application was pending, the authorities cancelled the registration with retrospective effect from 1st July 2017 - Whether the retrospective cancellation of the petitioner's GST registration from 1st July 2017 is valid when the petitioner had already applied for voluntary cancellation on 28th March 2022, and the SCN for cancellation was based on the failure to file returns after the said application had been made – HELD - The clarification on the petitioner's cancellation application was sought beyond the time period prescribed under Rule 21A of the CGST Rules – Further, the SCN for cancellation was flawed because it was based on the non-filing of returns. When the petitioner applied for cancellation of registration, there is no question of the Petitioner filing returns thereafter. Therefore, the very foundation of the SCN was invalid - the impugned order gave no reasons for resorting to a drastic retrospective cancellation dating back to 1st July 2017. In light of these procedural lapses and the untenable reasoning, the retrospective cancellation to be arbitrary - the cancellation of the petitioner's GST registration shall take effect from the date the application for cancellation was filed by the petitioner, i.e., 28th March 2022, and not from 1st July 2017 - The writ petition is disposed of [Read less]

GST - Refund of tax paid on capital goods procured under Export Promotion Capital Goods (EPCG) Scheme, Non-speaking order, Principles of natural justice – Rejection of refund of tax paid on procurement of capital goods under the EPCG Scheme. The petitioner contended that the orders were passed without considering his reply to the show cause notice and the relevant statutory provisions and circulars – HELD – The Adjudicating authority's order rejecting the petitioner's refund application was not a reasoned and speaking order as it did not consider the petitioner's reply wherein he had quoted various circulars and prov... [Read more]

GST - Refund of tax paid on capital goods procured under Export Promotion Capital Goods (EPCG) Scheme, Non-speaking order, Principles of natural justice – Rejection of refund of tax paid on procurement of capital goods under the EPCG Scheme. The petitioner contended that the orders were passed without considering his reply to the show cause notice and the relevant statutory provisions and circulars – HELD – The Adjudicating authority's order rejecting the petitioner's refund application was not a reasoned and speaking order as it did not consider the petitioner's reply wherein he had quoted various circulars and provisions - The quasi-judicial authorities are bound to pass reasoned and speaking orders, as they are amenable to judicial review. The failure to consider the petitioner's reply and provide reasons for the decision amounted to a violation of principles of natural justice. Accordingly, the orders of the adjudicating authority and the appellate authority are set aside and matter is remanded to the adjudicating authority to decide the issue afresh after considering the petitioner's reply and passing a reasoned and speaking order - The writ petition is allowed by remand [Read less]

Customs – Section 114A of Customs Act, 1962 – Import of machinery – Denial of benefit of exemption - Appellant imported Asphalt Batch Mix Plant from China for home consumption – Appellant cleared imported goods without payment of customs duty, under Notification No.84/97-Cus – Investigation initiated by officers of DGCEI revealed that machinery was intended to be withdrawn from project, which was violation of condition of aforesaid Notification – After due process of law, Adjudicating Authority denied benefit of exemption under Notification No.84/97-Cus and confirmed demand of duty and also imposed equal penalt... [Read more]

Customs – Section 114A of Customs Act, 1962 – Import of machinery – Denial of benefit of exemption - Appellant imported Asphalt Batch Mix Plant from China for home consumption – Appellant cleared imported goods without payment of customs duty, under Notification No.84/97-Cus – Investigation initiated by officers of DGCEI revealed that machinery was intended to be withdrawn from project, which was violation of condition of aforesaid Notification – After due process of law, Adjudicating Authority denied benefit of exemption under Notification No.84/97-Cus and confirmed demand of duty and also imposed equal penalty under Section 114A of the Act on Appellant – Whether Appellant is entitled to benefit of exemption under Notification No.84/97-Cus – HELD – The Notification No. 84/97-Cus exempts all goods imported into India for execution of projects financed by United Nations or an International Organisation and approved by Government of India. Phrase “goods brought into project are not withdrawn by supplier or contractor” found in Explanation 2 inserted in Notification has to be understood as not being withdrawn when the project is in operation – Appellant has admitted that impugned goods were not supplied to project and was not intended to be brought into project on a permanent basis and accordingly, project certificate also came to be cancelled by Project Authority. Due to admission of officers of Appellant company and resultant cancellation of project certificate by Project Authority, benefit of exemption under notification has to be denied – Appellant by suppressing and mis-representing facts have sought an unfair tax advantage – Once Appellant is not eligible for exemption under notification, duty not paid needs to be paid with interest – Impugned order is sustained and appeal is dismissed [Read less]

Service Tax – Manufacture or Business Auxiliary Service, Activity of chilling of raw milk and then subjecting the milk to the process of separation, standardisation, and pasteurisation - Appellant undertook various processes such as chilling, separation, pasteurization, standardization, and packing of raw milk on behalf of principal. The Revenue authorities considered these activities as providing "Business Auxiliary Service" and accordingly issued a show cause notice demanding service tax - Whether the activities undertaken by the appellant on the raw milk, including chilling, separation, pasteurization, standardization... [Read more]

Service Tax – Manufacture or Business Auxiliary Service, Activity of chilling of raw milk and then subjecting the milk to the process of separation, standardisation, and pasteurisation - Appellant undertook various processes such as chilling, separation, pasteurization, standardization, and packing of raw milk on behalf of principal. The Revenue authorities considered these activities as providing "Business Auxiliary Service" and accordingly issued a show cause notice demanding service tax - Whether the activities undertaken by the appellant on the raw milk, including chilling, separation, pasteurization, standardization, and packing, amount to "manufacture" or are in the nature of providing BAS – HELD - The activities undertaken by the appellant on the raw milk, including chilling, separation, pasteurization, standardization, and packing, amount to "manufacture" as per the Chapter Notes of Chapter 4 of the Central Excise Tariff Act, 1985 and, therefore, excluded from the purview of "Business Auxiliary Service" under Section 65(19) of the Finance Act, 1994 - the provisions of Section 65(19) that the “BAS” does not include any activity that amounts to manufacture of excisable goods. Since the activity of chilling, separation, pasteurization, standardization, and packing in pouches have been held to be manufacture, the same is excluded from the purview of service under the category of BAS - the impugned order is set aside and the appeals are allowed [Read less]

GST - Late filing of appeal, Period of Limitation, Condonation of delay – Non-filing of appeal within the prescribed time limit of 3 months with a further extension of 1 month under Section 107(1) of the CGST Act, 2017 due to the demise of one of the key partners - Whether the High Court can entertain the writ petition and direct the appellate authority to decide the appeal of the petitioner on merits despite the delay in filing the appeal – HELD - The provisions of limitation under Section 107 of the CGST Act cannot be applied in a rigid manner – The petitioner had provided sufficient evidence, such as the death cer... [Read more]

GST - Late filing of appeal, Period of Limitation, Condonation of delay – Non-filing of appeal within the prescribed time limit of 3 months with a further extension of 1 month under Section 107(1) of the CGST Act, 2017 due to the demise of one of the key partners - Whether the High Court can entertain the writ petition and direct the appellate authority to decide the appeal of the petitioner on merits despite the delay in filing the appeal – HELD - The provisions of limitation under Section 107 of the CGST Act cannot be applied in a rigid manner – The petitioner had provided sufficient evidence, such as the death certificate and hospital records establishes that the delay in filing the appeal was due to reasons beyond the control of the petitioner. Considering the peculiar facts and circumstances of the case, the petitioner could not file the appeal within the prescribed time limit, and the High Court has the power to entertain the writ petition and direct the appellate authority to decide the appeal on merits - the Appellate authority is directed to register and decide the appeal of the petitioner on merits, subject to the petitioner depositing the late fees, penalty, and other statutory deposits for entertaining the appeal – The petition is allowed [Read less]

GST - Maintainability of Writ Petition, Principles of Natural Justice - Petitioner challenge the impugned order on the grounds of violation of principles of natural justice, contending that the Adjudicating Authority relied on a verification report from the Jurisdictional Range Officer that was never served to the petitioner – Petitioner argued that the final order traveled beyond the scope of the SCN, confirming a significantly higher demand on grounds not fully detailed in the notice, and that there were procedural lapses - Whether a writ petition is maintainable against an Order-in-Original passed under the GST Act wh... [Read more]

GST - Maintainability of Writ Petition, Principles of Natural Justice - Petitioner challenge the impugned order on the grounds of violation of principles of natural justice, contending that the Adjudicating Authority relied on a verification report from the Jurisdictional Range Officer that was never served to the petitioner – Petitioner argued that the final order traveled beyond the scope of the SCN, confirming a significantly higher demand on grounds not fully detailed in the notice, and that there were procedural lapses - Whether a writ petition is maintainable against an Order-in-Original passed under the GST Act when a statutory and efficacious appellate remedy is available - HELD - While the petitioner has framed the challenge on the grounds of violation of principles of natural justice and the adjudicating order exceeding the scope of the SCN, these are essentially contentions that can and should be raised before the statutory Appellate Authority - though the petitioner has tried to raise that there is a violation of principles of natural justice, such alleged violation of principles of natural justice is not forthcoming - the petitioner’s arguments, which it termed "technical pleas," regarding the non-provision of an Audit report or reliance on an undisclosed verification report, do not constitute such exceptional circumstances that warrant bypassing the statutory appeal mechanism. Section 107 of the CGST Act provides for a robust appellate process where the Appellate Authority is fully empowered to assess facts, appreciate material on record, and even conduct further inquiries. All grievances raised by the petitioner, including factual disputes and alleged procedural irregularities, fall squarely within the jurisdiction of the Appellate Authority – The writ petition is disposed of it granting liberty to the petitioner to avail the alternative statutory remedy of appeal – Ordered accordingly [Read less]

Customs/Service Tax - Double Taxation on software transaction, Payment of Service Tax, Demand of Customs Duty, Principle of Mohit Minerals case - Petitioners imported diamond scanning machines (hardware) and separately received invoices for the associated software - Department alleged undervaluation of imported goods, contending that the software value was an integral part of the machine and was suppressed to evade Customs duty. Simultaneously, the Service Tax department treated the same software transaction as an "Information Technology Software Service," levying and collecting service tax under Reverse Charge. The petiti... [Read more]

Customs/Service Tax - Double Taxation on software transaction, Payment of Service Tax, Demand of Customs Duty, Principle of Mohit Minerals case - Petitioners imported diamond scanning machines (hardware) and separately received invoices for the associated software - Department alleged undervaluation of imported goods, contending that the software value was an integral part of the machine and was suppressed to evade Customs duty. Simultaneously, the Service Tax department treated the same software transaction as an "Information Technology Software Service," levying and collecting service tax under Reverse Charge. The petitioners paid the service tax, and the adjudication order from the Service Tax authority attained finality - Whether a Show Cause Notice issued by the Customs authorities to levy Customs duty on software by treating it as part of imported goods is legally sustainable, when another the Service Tax Dept has already treated the same software transaction as a service, and has adjudicated, levied, and collected service tax upon it - HELD - Once the liability to pay service tax has been crystallized on a transaction by treating it as a "service," the same transaction cannot be subjected to customs duty by treating it as "goods" - Two different Revenue Departments cannot take diametrically opposite stands on the nature of the same transaction to levy taxes simultaneously. The Service Tax authority had passed a final adjudication order classifying the software as an "Information Technology Software Service" under the Finance Act, 1994, and this order was accepted and acted upon by the petitioners who paid the tax. This definitive classification as a service invalidates the very basis of the Customs' SCN, which proceeds on the premise that the software is part of the imported goods - The principle laid down by the Supreme Court in Union of India v. Mohit Minerals Private Limited is when a transaction is taxed as a composite supply (or in this case, definitively as a service), a separate levy on it by treating it as goods is impermissible. Therefore, when service tax is already levied under RCM by the Service Tax Authority on the Software purchased by the petitioner, the same cannot be subjected again to Custom duty and therefore, the very basis of issuance of impugned SCNs for levy of Custom duty on the alleged suppression of value of Software cannot be sustained - The impugned SCNs and consequential Order-in-Originals are quashed and set aside - The petitions are allowed [Read less]

GST - Adjudication Order, non-application of mind – Petitioner contends that the impugned order simply reproduced the notice without any application of mind by the Adjudicating Authority - Whether the impugned adjudication order is valid and in compliance with the requirements of Section 75(6) of the CGST Act, 2017 – HELD - The manner of passing of impugned order falls foul of the requirements of Section 75(6) of the Act, which requires that 'the proper officer, in his order shall set out the relevant facts and the basis of his decision - Even if no response was filed to the notice, it was incumbent on respondent to pa... [Read more]

GST - Adjudication Order, non-application of mind – Petitioner contends that the impugned order simply reproduced the notice without any application of mind by the Adjudicating Authority - Whether the impugned adjudication order is valid and in compliance with the requirements of Section 75(6) of the CGST Act, 2017 – HELD - The manner of passing of impugned order falls foul of the requirements of Section 75(6) of the Act, which requires that 'the proper officer, in his order shall set out the relevant facts and the basis of his decision - Even if no response was filed to the notice, it was incumbent on respondent to pass an order in compliance of the provisions of Section 75(6) of the Act, as a final order should be self contained and merely making reference to the previous notice while passing the said order does not suffice for making it a self contained order - the Adjudication Order is quashed and set aside and the matter is back to the respondents to provide the petitioner an opportunity to file a response to the show cause notice and thereafter, after providing an opportunity of hearing, to pass a fresh order in accordance with law – The petition is allowed [Read less]

GST - Ex-parte order, Principles of natural justice, Service of notice - Whether the impugned ex-parte order passed without affording a reasonable opportunity of being heard to the petitioner violates the principles of natural justice – HELD - Passing an order without ensuring due and effective service of notice amounts to a violation of the principle of audi alteram partem - While it is true that in a catena of decisions, Courts have upheld the validity of electronic service of notices under the GST regime, in the peculiar facts and circumstances of the present case, particularly having regard to the nature of the busin... [Read more]

GST - Ex-parte order, Principles of natural justice, Service of notice - Whether the impugned ex-parte order passed without affording a reasonable opportunity of being heard to the petitioner violates the principles of natural justice – HELD - Passing an order without ensuring due and effective service of notice amounts to a violation of the principle of audi alteram partem - While it is true that in a catena of decisions, Courts have upheld the validity of electronic service of notices under the GST regime, in the peculiar facts and circumstances of the present case, particularly having regard to the nature of the business, the substantive rights involved, and in the interest of fairness, the ends of justice would be better served if the petitioner is afforded an effective opportunity to participate in the proceedings before the Assessing Authority - the impugned order was quashed and the matter was remitted to the Adjudicating Authority for reconsideration afresh in accordance with law – The writ petition is allowed [Read less]

The N/Nos. 9/2023-CT & 56/2023-CT are held to be vitiated and illegal as they were based on recommendations made without examining relevant materials, and for meeting the statutory conditions precedent for invoking the 'force majeure' u/s 168A.

GST - Initiation of proceeding under Section 73 of the CGST Act, 2017 based on initial Audit observations, Final Audit Report - Whether an adjudication order passed under Section 73 of the Act, which is founded upon initial audit observations, is legally sustainable when the Department's own Final Audit Report, issued subsequently, concludes that the said observations were incorrect – HELD - The entire basis for the proceedings under Section 73, which was the alleged excess availment of ITC as noted in the initial audit observations, was completely effaced by the conclusion reached in the Final Audit Report – In view o... [Read more]

GST - Initiation of proceeding under Section 73 of the CGST Act, 2017 based on initial Audit observations, Final Audit Report - Whether an adjudication order passed under Section 73 of the Act, which is founded upon initial audit observations, is legally sustainable when the Department's own Final Audit Report, issued subsequently, concludes that the said observations were incorrect – HELD - The entire basis for the proceedings under Section 73, which was the alleged excess availment of ITC as noted in the initial audit observations, was completely effaced by the conclusion reached in the Final Audit Report – In view of the Department's own conclusive finding in the Audit Report exonerating the petitioner, the Adjudicating Authority could not have proceeded to confirm the demand based on the preliminary observations - Since the very foundation of the Show Cause Notice and the impugned order was nullified by the Department's own subsequent and final findings, the order demanding tax, interest, and penalty cannot be upheld - The impugned order and the consequential summary of the order are quashed - The writ petition is allowed [Read less]

Customs Act, 1962 - Regulations 2(1)(c), 2(1)(d), 3, 10(1)(l) of Sea Cargo Manifest and Transhipment Regulations, 2018 (SCMTR) - Detention and Demurrage Charges, Waiver Certificate; Authorised Sea Carrier (ASC) - Whether a delivery agent (Respondent No. 4) for a shipping line, registered with the Customs authorities as an 'Authorised Sea Agent' (ASA), is bound by a detention charge waiver certificate issued by Customs under Regulation 10(1)(l) of the Sea Cargo Manifest and Transhipment Regulations, 2018 - HELD - Under Regulation 2(1)(c) of the SCMTR, an "authorised carrier" includes an "authorised sea carrier". Furthermore... [Read more]

Customs Act, 1962 - Regulations 2(1)(c), 2(1)(d), 3, 10(1)(l) of Sea Cargo Manifest and Transhipment Regulations, 2018 (SCMTR) - Detention and Demurrage Charges, Waiver Certificate; Authorised Sea Carrier (ASC) - Whether a delivery agent (Respondent No. 4) for a shipping line, registered with the Customs authorities as an 'Authorised Sea Agent' (ASA), is bound by a detention charge waiver certificate issued by Customs under Regulation 10(1)(l) of the Sea Cargo Manifest and Transhipment Regulations, 2018 - HELD - Under Regulation 2(1)(c) of the SCMTR, an "authorised carrier" includes an "authorised sea carrier". Furthermore, the definition of an "authorised sea carrier" under Regulation 2(1)(d) explicitly includes "the master of the vessel carrying imported goods or his agent" – Further, the Customs authorities submitted evidence from the official portal proving that Respondent No. 4 was registered as an "Authorised Sea Agent (ASA)" under the SCMTR framework - By virtue of being a registered ASA, Respondent No. 4 qualifies as an "agent" of the Authorised Sea Carrier. Consequently, it falls within the ambit of an "authorised carrier" and is bound by all the responsibilities stipulated in the SCMTR, 2018, including Regulation 10(1)(l). This regulation unequivocally prohibits an authorised carrier from demanding container detention charges for goods detained by Customs for verification, if the entries are found to be correct. Since the Customs authorities had found the petitioner's entries correct and issued a waiver, Respondent No. 4 was obligated to comply - The petition was disposed of with a direction to Respondent No. 4 to release the petitioner's goods within four weeks by implementing the waiver letter dated 17.01.2025 and forgoing detention charges for the period from 24.12.2024 to 10.01.2025 – The petition is disposed of [Read less]