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Service Tax - Supply of Tangible Goods - Aircraft Lease - Possession and Control - Appellant offers flight training and placed aircraft with its related concern under a dry-lease arrangement. The lease agreement provided for per-hour charges with a monthly minimum commitment, with the lessor retaining the right to use aircraft when idle and requiring the lessee to return the aircraft in the same condition after each trip - Whether the arrangement between the appellant and its related concern constitutes Supply of Tangible Goods service or involves transfer of possession and effective control of the aircraft – HELD - In t... [Read more]

Service Tax - Supply of Tangible Goods - Aircraft Lease - Possession and Control - Appellant offers flight training and placed aircraft with its related concern under a dry-lease arrangement. The lease agreement provided for per-hour charges with a monthly minimum commitment, with the lessor retaining the right to use aircraft when idle and requiring the lessee to return the aircraft in the same condition after each trip - Whether the arrangement between the appellant and its related concern constitutes Supply of Tangible Goods service or involves transfer of possession and effective control of the aircraft – HELD - In the instant case, the clause allowing the lessor to use the aircraft when not in use by the lessee means the lessee does not have exclusive custody. Legal possession cannot constantly shift based on hourly usage. The aircraft must be returned to the lessor's custody after each trip. The stipulation that the price includes running cost and all expenses are borne by the lessor indicates the lessor is paying for operational costs and maintenance, thus retaining proprietary control over the asset. The per-hour charges with a monthly minimum resemble a commercial hiring or service level agreement. The simple thirty-day termination clause unlike a typical asset lease with heavy penalties gives the agreement the character of an ongoing service agreement for supply of tangible goods. Though the agreement uses terms like lease and lessee, the actual operational clauses show the lessor retains effective control and legal possession. Therefore, the activity is rightly classifiable as Supply of Tangible Goods service and not transfer of right to use with possession and control - Further, the other collections reflected in the balance sheet which were not subject of any allegation in the show cause notice and bore no nexus with the lease transaction are not includible in the taxable value as an adjudicating authority cannot travel beyond the show cause notice which constitutes the foundation of proceedings. Also, as the identical lease receipts had already formed part of the demand raised on the related concern under an earlier show cause notice, confirmation of tax on the same receipts in the hands of the appellant would result in double taxation. The extended period of limitation cannot be invoked where the facts constituting alleged suppression were already within the Department's knowledge at the time of an earlier notice issued on the same or similar facts. Penalties under Section 78 for fraud, collusion, wilful misstatement or suppression with intent to evade tax are not sustainable as these ingredients have not been established - Appeals partly allowed, demands confined to normal period upheld, all penalties set aside [Read less]

Customs - Export Valuation - Transaction Value - Iron Ore Fines - Appellant exported iron ore fines under a contract which provided for price adjustment based on quality parameters including Fe content, Alumina, and Silica, with final destination results to determine the contractual price. The appellant declared the export at the transaction value based on the final commercial invoice and Bank Realization Certificate reflecting the amount actually realized from the overseas buyer. However, the customs authority enhanced the assessable value based on their laboratory analysis showing different quality parameters than those ... [Read more]

Customs - Export Valuation - Transaction Value - Iron Ore Fines - Appellant exported iron ore fines under a contract which provided for price adjustment based on quality parameters including Fe content, Alumina, and Silica, with final destination results to determine the contractual price. The appellant declared the export at the transaction value based on the final commercial invoice and Bank Realization Certificate reflecting the amount actually realized from the overseas buyer. However, the customs authority enhanced the assessable value based on their laboratory analysis showing different quality parameters than those reflected in the final commercial invoice - Whether the customs authorities can enhance the assessable value of exported goods on the basis of laboratory analysis when the final transaction value has been settled with the foreign buyer and the amount actually realized is evidenced by the final commercial invoice and Bank Realization Certificate – HELD - Section 14 of the Customs Act recognizes transaction value namely the price actually paid or payable for goods when sold for export from India as the basis for valuation. The Customs Valuation Rules make transaction value the primary basis for valuation. A laboratory report may be relevant for establishing composition or quality of goods but cannot substitute transaction value with a hypothetical value unless the statutory requirements for rejection of transaction value are satisfied - The Department cannot presume that the exporter received higher consideration merely because the Fe content found in the Department laboratory is higher. The taxable event is export but valuation is governed by price actually paid or payable subject to statutory provisions. Final invoice and Bank Realization Certificate have material relevance to transaction value where unrelated parties are involved and no evidence of additional consideration is produced. A test report relied upon against an assessee cannot ordinarily be kept undisclosed. Selective adoption of different reports for different parameters lacks satisfactory justification. Enhancement of assessable value is not sustainable in absence of evidence of additional remittance or consideration – The appeal is allowed [Read less]

Central Excise – Majority Order - Revenue Deposit - Interest on Delayed Refund - Appellant officers conducted a search regarding fraudulent Cenvat Credit availment. Respondent deposited amounts during investigation as persuaded by the department. Later the enquiry was transferred to the central investigating agency which issued a demand cum show cause notice proposing recovery of Cenvat Credit. During pendency of the notice, respondent applied for refund of the deposited amount. The refund application was rejected by the adjudicating authority but the first appellate authority allowed the refund along with interest from ... [Read more]

Central Excise – Majority Order - Revenue Deposit - Interest on Delayed Refund - Appellant officers conducted a search regarding fraudulent Cenvat Credit availment. Respondent deposited amounts during investigation as persuaded by the department. Later the enquiry was transferred to the central investigating agency which issued a demand cum show cause notice proposing recovery of Cenvat Credit. During pendency of the notice, respondent applied for refund of the deposited amount. The refund application was rejected by the adjudicating authority but the first appellate authority allowed the refund along with interest from the date of deposit. Revenue preferred appeals contending that no statutory provision authorized payment of interest on such deposits and that provisions of Section 11B and 11BB of the Central Excise Act were not applicable to deposits made during investigation - Whether interest is payable on refund of amounts deposited during investigation when provisions of Section 11B and Section 11BB of the Central Excise Act do not apply to such deposits – HELD - The amounts deposited during the pendency of investigation and proceedings, if not adjudged as duty, fine or penalty, are to be treated as revenue deposits and not as duty. Unspent balance lying in Personal Ledger Account is an advance towards duty and takes colour of duty only when utilized for payment of duty. Hence the limitation provisions of Section 11B of the Central Excise Act are not applicable for refund of such unspent amounts in Personal Ledger Account. Further, as Section 11BB itself provides that it applies only to refunds granted under Section 11B, the provisions of Section 11BB are not applicable when Section 11B does not apply. However, on general principles of equity and commercial law, assessee ought to be compensated, and on general commercial principles, interest on refund is automatic and has to be granted in absence of any statutory provision. Applying the principles laid down by the Supreme Court in Sandvik Asia Ltd. case that an assessee is entitled to compensation when Government wrongfully withholds the assessee's funds, interest on such revenue deposits is automatically payable from the date of deposit. The Tribunal in various decisions has held that interest on such deposits is payable at the rate of 12 percent per annum from the date of deposit till the date of actual realization – The revenue appeals are dismissed by Majority Order [Read less]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Service Tax - Pre-Deposit Condition - Appellate Jurisdiction - Principles of Natural Justice - Appellant failed to comply with the pre-deposit condition and instead submitted representation requesting Commissioner to consider legal submissions. Commissioner dismissed the appeal without adjudicating merits solely on the ground of non-compliance with the pre-deposit condition - Whether dismissal of appeal for non-compliance with pre-deposit condition, without adjudicating merits and considering legal submissions, violates principles of natural justice – HELD - The right of appeal is a statutory right and is subject to the ... [Read more]

Service Tax - Pre-Deposit Condition - Appellate Jurisdiction - Principles of Natural Justice - Appellant failed to comply with the pre-deposit condition and instead submitted representation requesting Commissioner to consider legal submissions. Commissioner dismissed the appeal without adjudicating merits solely on the ground of non-compliance with the pre-deposit condition - Whether dismissal of appeal for non-compliance with pre-deposit condition, without adjudicating merits and considering legal submissions, violates principles of natural justice – HELD - The right of appeal is a statutory right and is subject to the conditions prescribed by the statute. Under the then applicable unamended Section 35F of the Central Excise Act, the Commissioner (Appeals) possessed jurisdiction to insist upon a suitable pre-deposit while considering waiver applications. Once such a condition was imposed, it was incumbent upon the appellant either to comply with the condition or to seek appropriate relief before the competent forum. Failure to comply with the condition entitled the Appellate Authority to dismiss the appeal. The law is well settled that where the statute makes pre-deposit a condition precedent for entertaining an appeal, non-compliance with such condition empowers the Appellate Authority to dismiss the appeal. The Commissioner (Appeals) granted an opportunity of personal hearing to the appellant - The appellant sought adjournment which was considered and reasons for declining were recorded having regard to the statutory requirement of expeditious disposal. The stay order was a reasoned order and not passed mechanically. Merely because the appellant requested adjournment, no indefeasible right accrued in its favour to obtain the adjournment sought. The authority exercised its discretion judicially by recording reasons. In the absence of any procedural illegality or perversity, violation of principles of natural justice cannot be established. The impugned order upheld and the appeal is dismissed [Read less]

Customs – Warehousing of imported goods - Appellant imported Manganese Ore and obtained permission to warehouse goods in designated Public Bonded Warehouse but goods were diverted to private yard instead - Whether diversion from specified warehouse to unauthorized premises violates warehousing provisions and attracts confiscation and whether acts of warehouse operator engaged by appellant are attributable to importer - HELD - Diversion of imported goods from notified warehouse to unauthorized private yard amounts to violation of Section 59 and 60 of Customs Act read with Warehouse Goods (Removal) Regulations 2016. Wareho... [Read more]

Customs – Warehousing of imported goods - Appellant imported Manganese Ore and obtained permission to warehouse goods in designated Public Bonded Warehouse but goods were diverted to private yard instead - Whether diversion from specified warehouse to unauthorized premises violates warehousing provisions and attracts confiscation and whether acts of warehouse operator engaged by appellant are attributable to importer - HELD - Diversion of imported goods from notified warehouse to unauthorized private yard amounts to violation of Section 59 and 60 of Customs Act read with Warehouse Goods (Removal) Regulations 2016. Warehousing is statutory concession subject to strict compliance with statutory conditions and importer cannot unilaterally alter place of storage on grounds of commercial convenience. The acts of agent or contractor engaged for handling warehousing and transportation operations are deemed to have been done with knowledge and consent of importer under Section 147 unless importer establishes contrary with cogent evidence. Contemporaneous communications and statements of persons connected with appellant establish diversion was known to appellant - Liability to confiscation under Section 111(j) does not depend on proof of actual duty evasion or clandestine clearance but on violation of statutory conditions governing removal and warehousing - Redemption fine under Section 125 is imposable despite provisional release of goods as statutory consequences flow from confiscation. Penalty under Section 112(a) correctly imposed for failure to ensure compliance with statutory obligation - The appeal is dismissed [Read less]

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

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

GST – Service of Show Cause Notice and Assessment Order - Signature Requirement under Rule 26(3) of CGST Rules, 2017 - Service through GST Portal - The show cause notice and the order were uploaded on the GST portal under the tab "Additional Notices and Orders" instead of "View Notices and Orders" tab, bore no digital signature or physical signature though they carried a system generated reference number – Whether a show cause notice and an assessment order devoid of digital signature or physical signature as mandated by Rule 26(3) of CGST Rules, 2017 can be sustained in law – HELD - Rule 26(3) of CGST Rules, 2017 is... [Read more]

GST – Service of Show Cause Notice and Assessment Order - Signature Requirement under Rule 26(3) of CGST Rules, 2017 - Service through GST Portal - The show cause notice and the order were uploaded on the GST portal under the tab "Additional Notices and Orders" instead of "View Notices and Orders" tab, bore no digital signature or physical signature though they carried a system generated reference number – Whether a show cause notice and an assessment order devoid of digital signature or physical signature as mandated by Rule 26(3) of CGST Rules, 2017 can be sustained in law – HELD - Rule 26(3) of CGST Rules, 2017 is couched in mandatory language and requires that all notices, certificates and orders shall be issued electronically through digital signature certificate or E-signature as specified under Information Technology Act, 2000 or through such other mode of verification as notified by the Board. The issuance and authentication are two distinct and cumulative requirements. Mere electronic generation of a document on the portal satisfies only the requirement of electronic issuance but not the requirement of authentication - A digital or physical signature is not an empty formality or procedural nicety but is the very mode by which an electronic document acquires legal existence and binding character in a paperless GST regime. A reference number or document identification number merely tracks and catalogues the document within the system and shows when the document was created but does not show that the proper officer authenticated it. Tracking is not authentication and one cannot substitute the other - A show cause notice and order which are neither digitally signed nor physically signed are no notice and no order in the eyes of law. The defect is not a mere curable irregularity but goes to the root of the matter and strikes at the very authority to proceed - The denial of an authenticated notice and effective opportunity of personal hearing vitiates the entire proceedings and violates the principles of natural justice. The impugned show cause notice is set aside. As a consequence thereof, the consequential proceedings culminating in the impugned order and the recovery notice are also set aside - The Respondent authorities are liberty to proceed afresh by issuing a duly authenticated show cause notice and passing a fresh order after affording the Petitioner an effective opportunity of hearing in accordance with law - The writ petition is disposed of [Read less]

GST – Real Estate Housing Project - Anti-profiteering complainant alleged that the Respondent had failed to pass on the benefit of Input Tax Credit by way of commensurate reduction in price in contravention of Section 171 of the CGST Act, 2017 – HELD - Upon examination of the DGAP Report, it is observed that the ratio of ITC availed to the purchase value decreased from 8.26% during the pre-GST period to 7.87% during the post-GST period. Thus, no additional benefit of ITC accrued to the Respondent upon implementation of GST - The Respondent has undertaken multiple projects, and its returns and financial statements conta... [Read more]

GST – Real Estate Housing Project - Anti-profiteering complainant alleged that the Respondent had failed to pass on the benefit of Input Tax Credit by way of commensurate reduction in price in contravention of Section 171 of the CGST Act, 2017 – HELD - Upon examination of the DGAP Report, it is observed that the ratio of ITC availed to the purchase value decreased from 8.26% during the pre-GST period to 7.87% during the post-GST period. Thus, no additional benefit of ITC accrued to the Respondent upon implementation of GST - The Respondent has undertaken multiple projects, and its returns and financial statements contain consolidated figures for all such projects. As per the DGAP report and clarification, the, project-wise bifurcation was not feasible. Accordingly, the investigation has been based on the duly CA-certified data submitted by the Respondent - As per the records, the Respondent had availed VAT credit as transitional SGST credit and passed on the corresponding benefit to the eligible purchasers in accordance with Maharashtra Trade Circular No. 18T of 2017. However, in the case of the Applicant, the agreement was executed and registered after the implementation of GST. Accordingly, VAT was collected only on the pre-GST advance, which was duly deposited with the VAT Department. Therefore, no VAT credit had accrued to the Respondent in respect of the Applicant’s transaction and, consequently, no corresponding benefit was available for passing on to the Applicant - The Report submitted by the DGAP is accepted and the present proceedings are disposed of [Read less]

Service Tax - Exemption from Service Tax to Governmental Authorities - Statutory Interpretation of Entry No. 60 of Notification No. 25/2012-ST - Appellant provided works contract services by way of construction, repair and painting of shops pertaining to Mandi Samiti to the Rajya Krshi Utpad Mandi Parishad and Mandi Samiti, which are bodies corporate established under an Act of State Legislature - Revenue confirmed the demand of service tax on the ground that services rendered do not fall under the category of services mentioned in Entry No. 60 of Notification - Whether the works contract services provided to Governmental ... [Read more]

Service Tax - Exemption from Service Tax to Governmental Authorities - Statutory Interpretation of Entry No. 60 of Notification No. 25/2012-ST - Appellant provided works contract services by way of construction, repair and painting of shops pertaining to Mandi Samiti to the Rajya Krshi Utpad Mandi Parishad and Mandi Samiti, which are bodies corporate established under an Act of State Legislature - Revenue confirmed the demand of service tax on the ground that services rendered do not fall under the category of services mentioned in Entry No. 60 of Notification - Whether the works contract services provided to Governmental Authorities relating to marketing of agricultural produce are exempt from service tax under Entry No. 60 of Notification No. 25/2012-ST – HELD - The Mandi authorities qualify as Governmental Authorities as they are bodies corporate set up by an Act of the State Legislature and expressly deemed to be local authorities - The functions assigned to Panchayats under the eleventh schedule include agriculture and promoting agricultural extension - The Appellant's services relating to repair and painting of shops pertaining to Mandi Samiti facilitating marketing of agricultural produce fall within the ambit of Article 243G of the Constitution and are in relation to promoting marketing activity of agricultural produce by farmers – The Works contract services rendered by Appellant are exempted from payment of service tax as per Entry No. 60 of Notification No. 25/2012-ST dated 20.06.2012 - As the issue involves interpretation of statutory provisions and no allegation of suppression with intent to evade duty can be attributed to interpretation issues, and no evidence of suppression, fraud, collusion or misstatement has been adduced by the Department, the entire demand raised by invoking extended period of limitation is barred by limitation - For rent income received, as the gross taxable value is less than the prescribed threshold, the appellant is eligible for threshold exemption - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax – Time Share Holiday Scheme - Classification of Service - Club or Association Service or Short-term Accommodation Service - Appellant introduced a Time Share Holiday Scheme under which interested persons purchased a right to occupy specified accommodation for one week annually for a period of 12 years upon payment of predetermined consideration. Department alleged that the consideration represented subscription collected from Club Members and attracted service tax under Club or Association Service - Whether the consideration received by the appellant under its Time Share Holiday Scheme is liable to service ta... [Read more]

Service Tax – Time Share Holiday Scheme - Classification of Service - Club or Association Service or Short-term Accommodation Service - Appellant introduced a Time Share Holiday Scheme under which interested persons purchased a right to occupy specified accommodation for one week annually for a period of 12 years upon payment of predetermined consideration. Department alleged that the consideration represented subscription collected from Club Members and attracted service tax under Club or Association Service - Whether the consideration received by the appellant under its Time Share Holiday Scheme is liable to service tax under the taxable category of Club or Association Service and whether the appellant is entitled to the benefit of Section 73(3) of the Finance Act – HELD - The statutory definition of Club or Association contemplates an organization providing facilities, services or advantages primarily to its Members for a subscription or any other amount. Taxability cannot depend merely upon the terminology employed in an agreement - The Time Share Agreement demonstrates that the customer merely acquires a contractual right to occupy specified accommodation for limited duration every year for a fixed number of years. The consideration is directly linked with the category of accommodation selected. The agreement neither confers ownership rights nor management rights in the company. The relationship remains that of service provider and customer - The appellant is a company incorporated under the Companies Act, 1956. Membership of a company is acquired only in accordance with the provisions of the Companies Act. The persons enrolled under the Time Share Scheme do not satisfy the statutory requirements for becoming Members of the Company - If accommodation provided through Time Share Scheme was already taxable under Club or Association Service, there was little necessity for Parliament to create an entirely separate taxable entry - The commercial substance clearly establishes that the appellant is selling accommodation rights and not Membership of a Club. The activity undertaken by the appellant is essentially one of providing accommodation and cannot be classified as “Club or Association Service”. The introduction of “Short Term Accommodation Service” with effect from 01.05.2011 itself supports the conclusion that such activity was not taxable under the earlier entry - The appellant had voluntarily discharged service tax together with interest relating to other services before the issuance of the SCN. The appellant is therefore entitled to statutory benefit under Section 73(3) of the Finance Act, 1994 – The appeal is partly allowed [Read less]

Central Excise - Rule 8(3A) of Central Excise Rules, 2002 - Whether the provision requiring a defaulter assessee to clear goods on payment of duty without utilizing CENVAT credit is Constitutional and not violative of Articles 14 and 19(1)(g) of the Constitution - HELD - the applicability of Rule 8(3A) of Central Excise Rules, 2002, allowing the assesse to pay central excise duty by utilizing the Cenvat credit is squarely answered in favour of the assessee in view of the decision of this Court in the case of Indsur Global Limited v. Union of India which has now achieved finality. No question of law, much less any substanti... [Read more]

Central Excise - Rule 8(3A) of Central Excise Rules, 2002 - Whether the provision requiring a defaulter assessee to clear goods on payment of duty without utilizing CENVAT credit is Constitutional and not violative of Articles 14 and 19(1)(g) of the Constitution - HELD - the applicability of Rule 8(3A) of Central Excise Rules, 2002, allowing the assesse to pay central excise duty by utilizing the Cenvat credit is squarely answered in favour of the assessee in view of the decision of this Court in the case of Indsur Global Limited v. Union of India which has now achieved finality. No question of law, much less any substantial question of law arises from the impugned order of the Tribunal - The Revenue appeals are accordingly dismissed [Read less]

GST – Cancellation of GST Registration and revocation thereof - Petitioner's GST registration was cancelled by Proper Officer on ground that petitioner failed to furnish statutory returns and pay taxes. Appeal against cancellation order was dismissed by Appellate Authority on limitation grounds only without considering merits - Whether petitioner can be permitted to apply for revocation of cancellation order under Section 30 of CGST Act - HELD - Appeal dismissed on limitation grounds only as appeal was not filed within prescribed period. However, petitioner who is willing and able to deposit all taxes due with interest a... [Read more]

GST – Cancellation of GST Registration and revocation thereof - Petitioner's GST registration was cancelled by Proper Officer on ground that petitioner failed to furnish statutory returns and pay taxes. Appeal against cancellation order was dismissed by Appellate Authority on limitation grounds only without considering merits - Whether petitioner can be permitted to apply for revocation of cancellation order under Section 30 of CGST Act - HELD - Appeal dismissed on limitation grounds only as appeal was not filed within prescribed period. However, petitioner who is willing and able to deposit all taxes due with interest and penalties should not be denied opportunity to apply for revocation of registration under Section 30. Dismissal of appeal on limitation ground does not preclude petitioner from seeking revocation if conditions are satisfied - Petitioner is given two weeks from date of judgment to furnish all pending returns and deposit entire amount of tax with interest and penalties. Proper Officer directed to consider and decide application for revocation within four weeks from filing of representation application - The writ petition is disposed of [Read less]

Central Excise - Refund of Duty paid Under Protest - Time-Barred Demand - Appellant-Company challenged the order of the Tribunal dismissing its appeal for refund of CENVAT credit which it had debited in its account on receipt of show-cause notice proposed to recover the credit under Rule 57C and 57AD of the Central Excise Rules, 1944. The appellant accepted the liability on merits before the Tribunal but the demand was held time-barred both by the Tribunal. Thereafter the appellant filed refund application which was allowed by the Deputy Commissioner but rejected in review by the Commissioner - Whether an assessee is entit... [Read more]

Central Excise - Refund of Duty paid Under Protest - Time-Barred Demand - Appellant-Company challenged the order of the Tribunal dismissing its appeal for refund of CENVAT credit which it had debited in its account on receipt of show-cause notice proposed to recover the credit under Rule 57C and 57AD of the Central Excise Rules, 1944. The appellant accepted the liability on merits before the Tribunal but the demand was held time-barred both by the Tribunal. Thereafter the appellant filed refund application which was allowed by the Deputy Commissioner but rejected in review by the Commissioner - Whether an assessee is entitled to refund of CENVAT credit debited by it under protest on receipt of show-cause notice when the demand for recovery is subsequently held to be time-barred and the assessee is found not to be liable for payment - HELD - The assessee is entitled to refund of the CENVAT credit which was debited under protest on receipt of the show-cause notice when the demand is subsequently held to be time-barred and the assessee is found not to be liable to pay the demand. It is immaterial whether the show-cause notice is set aside on the ground of limitation or on merits, the fact remains that the assessee was not liable to pay the demand and accordingly the amount deposited was rightly refunded - The decision in India Cements Limited is not applicable in the facts of the case because in that case there was an accepted liability on merits and what was barred was only the machinery of recovery under Section 11A of the Act. However, in the instant case, the liability itself is found not to be legally due and payable when the extended period of limitation could not be invoked. The distinction is material- where a liability is legally due on merits but time-barred under the limitation provisions, one category of cases arises; where a liability is found not to be legally due at all, an entirely different situation is presented - When the demand is held to be time-barred, implying the assessee has no liability, the amount deposited must be refunded. The assessee's obligation to pay ceases to exist when the demand is adjudged as time-barred and not legally due. Unjust enrichment does not arise when duty is paid subsequent to clearance of goods and no burden lies on the assessee to prove it was not passed on to the buyers - Both the Commissioner (Appeals) and CESTAT have committed an error in applying the decision of India Cements Ltd. which is not applicable in the facts of the case – The impugned orders are set aside and the appeals are allowed [Read less]

GST – Time period for availing of Input Tax Credit - Petitioner availed Input Tax Credit on 20.12.2019 for FY 2018-19 whereas prescribed deadline under Section 16(4) of CGST Act was 20.10.2019. Respondent issued assessment order directing petitioner to reverse irregularly availed ITC - Whether assessment order requiring reversal is valid when legislature subsequently introduced Section 16(5) extending time for availing Input Tax Credit up to 30.11.2021 for FY 2017-18 to 2020-21 - HELD – The Section 16(4) of CGST Act prescribed time limit of 20.10.2019 for availing Input Tax Credit for FY 2018-19. Assessment order was i... [Read more]

GST – Time period for availing of Input Tax Credit - Petitioner availed Input Tax Credit on 20.12.2019 for FY 2018-19 whereas prescribed deadline under Section 16(4) of CGST Act was 20.10.2019. Respondent issued assessment order directing petitioner to reverse irregularly availed ITC - Whether assessment order requiring reversal is valid when legislature subsequently introduced Section 16(5) extending time for availing Input Tax Credit up to 30.11.2021 for FY 2017-18 to 2020-21 - HELD – The Section 16(4) of CGST Act prescribed time limit of 20.10.2019 for availing Input Tax Credit for FY 2018-19. Assessment order was issued directing reversal as ITC was availed on 20.12.2019 beyond prescribed date. However, subsequent insertion of Section 16(5) extended time limit for availing Input Tax Credit in any return under Section 39 up to 30.11.2021 for FY 2017-18 to 2020-21. Since Input Tax Credit in question was availed before 30.11.2021 as per new provision, assessment order requiring reversal stands vitiated by change in law – The impugned order set aside and the writ petition is allowed [Read less]

Customs – Refund of Special Additional Duty - Importer claimed refund of Special Additional Duty paid at time of import following Notification No.102/2007-Cus for refund on sale of goods in open market on payment of appropriate Sales Tax or VAT. Appellant-Revenue rejected refund claims on ground that they were filed beyond stipulated time limit of one year from date of payment of duty in view of Notification No.93/2008-Cus. Tribunal allowed appeals of importer - Whether time period of one year for refunding Special Additional Duty can be prescribed through subordinate legislation by notification when Section 27 of the Cu... [Read more]

Customs – Refund of Special Additional Duty - Importer claimed refund of Special Additional Duty paid at time of import following Notification No.102/2007-Cus for refund on sale of goods in open market on payment of appropriate Sales Tax or VAT. Appellant-Revenue rejected refund claims on ground that they were filed beyond stipulated time limit of one year from date of payment of duty in view of Notification No.93/2008-Cus. Tribunal allowed appeals of importer - Whether time period of one year for refunding Special Additional Duty can be prescribed through subordinate legislation by notification when Section 27 of the Customs Act, 1962 does not cover Special Additional Duty - HELD - Section 27 of the Customs Act, 1962 prescribes the limitation for filing refund claims before expiry of one year from the date of payment of duty. However, Special Additional Duty is not covered by the provisions of Section 27. Therefore, the time limit for refunding Special Additional Duty cannot be further prescribed by subordinate legislation through notification. The attempt to prescribe a one-year limit for SAD refunds through notification amounts to amending the substantive provisions of the Act itself, which is not permissible in law. The notification cannot extend the provisions of the Act or prescribe limitation as a matter of subordinate legislation dealing with substantive rights - Since the mechanism of filing refund claims under Section 27 of the Act would not be applicable to Special Additional Duty, the same period of limitation could not have been extended through notification without statutory amendment. The imposition of a period of limitation by way of notification without statutory amendment is not permissible in law. The Tribunal was justified in following the decision of the Delhi High Court and holding that the time period of one year would not be applicable from the date of payment of the duty – The Revenue appeal is dismissed [Read less]

Customs - Confiscation of Goods - Classification of Burnt and Damaged Vehicles - Negative List of Imports - Vessel carrying Japanese manufactured motor cars caught fire while sailing from Colombo off the Sri Lankan coast. After salvage operation, the vessel and cargo consisting of burnt and damaged cars were brought to Alang port for ship-breaking - The Customs Authorities seized the cargo and vessel alleging that the cars were imported without valid import license in violation of Serial No.3 Part J of Negative List of Imports requiring license for commercial and passenger automobile vehicles - Whether burnt and damaged ca... [Read more]

Customs - Confiscation of Goods - Classification of Burnt and Damaged Vehicles - Negative List of Imports - Vessel carrying Japanese manufactured motor cars caught fire while sailing from Colombo off the Sri Lankan coast. After salvage operation, the vessel and cargo consisting of burnt and damaged cars were brought to Alang port for ship-breaking - The Customs Authorities seized the cargo and vessel alleging that the cars were imported without valid import license in violation of Serial No.3 Part J of Negative List of Imports requiring license for commercial and passenger automobile vehicles - Whether burnt and damaged cars which lost their complete identity and utility as motor vehicles due to extensive fire damage and were to be scrapped only can be classified as commercial and passenger automobile vehicles requiring import license under Serial No.3 Part J of Negative List of Imports - HELD - The burnt and damaged cars which suffered extensive fire damage and completely lost their identity and utility as motor vehicles cannot be considered as commercial and passenger automobile vehicles requiring import license under Serial No.3 Part J of Negative List of Imports. All parties to the transaction including the insurers, vessel owner, salvor and subsequent buyers recognized and accepted through contractual provisions and agreements that the cargo was not cars in any serviceable condition but scrap resulting from damage by fire. The distinction between bringing the vessel alongside a port and physically unloading cargo from the vessel is material - Merely bringing the vessel to port does not constitute unloading of cargo. Unloading is physical removal of cargo from the ship, which occurred only after seizure by the department. No unloading in contravention of Section 33 or 34 took place by or under the direction of the appellant before seizure. The vessel was brought to Talaja port which had been notified as a port for ship-breaking under Section 7 of the Act, and no specific permission was required under the Act for the vessel to enter the port - The Customs authorities had wrongly refused permission which was not required by law. Section 111(d) requiring import license, Section 111(h) relating to unloading in contravention of Sections 33 or 34, and Section 115(2) relating to confiscation of conveyance carrying contravened cargo were not attracted in the facts of the case. The CESTAT correctly held that the burnt cars converted into scrap cannot be classified as prohibited goods and are not liable for confiscation – The appeal is answered in favor of assessee and against the revenue - The Appeals are accordingly disposed of [Read less]

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

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

GST - Refund of IGST on Exports - Rule 96(10) of CGST Rules, 2017 – Applicability of Rule 96(10) inserted by Notification No.54/2018-CT dated 09.10.2018 - Petitioner challenged the show cause notice issued under Rule 96(10) of the CGST Rules, 2017 which placed restrictions on claiming refund of IGST paid on exports of goods. The petitioner sought to quash the show cause notice and for declaration that Rule 96(10) is ultra vires the provisions of Section 16 of the IGST Act - HELD - The issue in controversy is directly and squarely covered by judgment in the case of M/s Hikal Limited Vs Union of India. In view of striking ... [Read more]

GST - Refund of IGST on Exports - Rule 96(10) of CGST Rules, 2017 – Applicability of Rule 96(10) inserted by Notification No.54/2018-CT dated 09.10.2018 - Petitioner challenged the show cause notice issued under Rule 96(10) of the CGST Rules, 2017 which placed restrictions on claiming refund of IGST paid on exports of goods. The petitioner sought to quash the show cause notice and for declaration that Rule 96(10) is ultra vires the provisions of Section 16 of the IGST Act - HELD - The issue in controversy is directly and squarely covered by judgment in the case of M/s Hikal Limited Vs Union of India. In view of striking down of Rule 96(10) of the CGST Act coupled with the fact that respondents themselves have omitted Rule 96(10) vide Notification dated 08.10.2024, the impugned Show Cause Notice and all further proceedings pursuant thereto are quashed – The writ petition is allowed [Read less]

GST - Consolidated Show Cause Notice - Jurisdiction of proper officer to issue consolidated demand for multiple financial years - Petitioner received consolidated Demand-cum-Show Cause Notice dated 17.04.2024 for four financial years issued by Deputy Director DGGI - Petitioner contended notice was barred by limitation and should have been issued only under Section 73 and not Section 74 - Petitioner approached High Court almost one year after issuance of notice and an interim order was passed staying coercive action - Whether proper officer has jurisdiction to issue consolidated Show Cause Notice for multiple financial year... [Read more]

GST - Consolidated Show Cause Notice - Jurisdiction of proper officer to issue consolidated demand for multiple financial years - Petitioner received consolidated Demand-cum-Show Cause Notice dated 17.04.2024 for four financial years issued by Deputy Director DGGI - Petitioner contended notice was barred by limitation and should have been issued only under Section 73 and not Section 74 - Petitioner approached High Court almost one year after issuance of notice and an interim order was passed staying coercive action - Whether proper officer has jurisdiction to issue consolidated Show Cause Notice for multiple financial years - HELD - Issue already decided by Coordinate Bench in case of M/s Tata Projects Limited holding that it is permissible to issue consolidated Show Cause Notice for different financial years under Section 73 or 74. No bar in passing consolidated order for different financial years together under Section 73 or Section 74. Proper officer was within jurisdiction conferred by law to issue consolidated SCN – The aspect as to whether case is made out under Section 73 or 74 depends on factual adjudication which cannot be decided in proceedings under Article 226 of Constitution - For deciding whether fraud collusion or willful misstatement present factual adjudication required which can be addressed before forums available under Act - Petitioner granted 30 days to submit reply raising all contentions except jurisdictional aspect settled by coordinate bench – The petition is disposed of [Read less]

GST - Appellate remedy - Petitioner claimed it could not contest the assessment proceedings properly due to difficulties arising from fraudulent activities of a partner, health issues of another partner and having entrusted the entire matter to its lawyer - Petitioner seeks writ petition relief for setting aside the orders and for giving an opportunity to challenge the orders - HELD – The statutory assessment orders issued under Section 74 of the CGST Act can be challenged only through the appellate remedy available under Section 107 of the CGST Act and not through writ petition. The mere execution of a vakalathnama in f... [Read more]

GST - Appellate remedy - Petitioner claimed it could not contest the assessment proceedings properly due to difficulties arising from fraudulent activities of a partner, health issues of another partner and having entrusted the entire matter to its lawyer - Petitioner seeks writ petition relief for setting aside the orders and for giving an opportunity to challenge the orders - HELD – The statutory assessment orders issued under Section 74 of the CGST Act can be challenged only through the appellate remedy available under Section 107 of the CGST Act and not through writ petition. The mere execution of a vakalathnama in favour of a lawyer and entrusting the entire matter to the lawyer does not absolve the petitioner of the responsibility to track and monitor the proceedings. It is the petitioner's responsibility to track notices uploaded in the web portal and to intimate the lawyer about the hearing dates so that the lawyer can conduct the hearing and contest the matter. The responsibility for tracking notices and communicating with the lawyer lies with the petitioner and not with the lawyer. Once notices are uploaded in the web portal accessible to the petitioner, such uploading constitutes valid and sufficient service under the CGST Act. The petitioner failed to intimate the lawyer about the hearing dates or about the uploaded order, which was the petitioner's obligation. In such circumstances, there are no justifiable reasons to entertain the writ petition and the petitioner cannot be allowed to circumvent the statutory appellate remedy by filing a writ petition – The writ petition is dismissed [Read less]

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

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

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