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GST - Denial of Input Tax Credit based on mismatch between GSTR-2A and GSTR-3B without proper verification, Scope of verification under Section 73 - Proceedings under Section 73 of the CGST Act on the ground of mismatch between ITC availed in GSTR-3B and in GSTR-2A - Appellant contended the reconciliation showed no excess under CGST and SGST and authorities failed to consider its reply and reconciliation - Whether a mismatch between GSTR-2A and GSTR-3B alone without verification of underlying transactions constitutes sufficient basis for denial of ITC - HELD - Initiation of proceedings on noticing discrepancy is justified ... [Read more]

GST - Denial of Input Tax Credit based on mismatch between GSTR-2A and GSTR-3B without proper verification, Scope of verification under Section 73 - Proceedings under Section 73 of the CGST Act on the ground of mismatch between ITC availed in GSTR-3B and in GSTR-2A - Appellant contended the reconciliation showed no excess under CGST and SGST and authorities failed to consider its reply and reconciliation - Whether a mismatch between GSTR-2A and GSTR-3B alone without verification of underlying transactions constitutes sufficient basis for denial of ITC - HELD - Initiation of proceedings on noticing discrepancy is justified as legitimate ground for scrutiny but existence of discrepancy is only beginning of enquiry not its end. Final liability must rest on proper examination of records and explanation furnished by registered person - The authorities below have proceeded merely on the assumption that difference in GSTR-2A, by itself, establishes that the supplier has not paid the tax, without any finding based on an enquiry into the concerned suppliers or their tax payments, and without properly examining the Appellant’s reconciliation - A difference between GSTR-2A and GSTR-3B may justify verification. It cannot, without more, be treated as conclusive proof that ITC has been wrongly availed - The impugned orders are set aside, and the matter is remanded to the Adjudicating Authority for fresh, reasoned adjudication in accordance with law - the appeal is disposed of by way of remand - Whether the reconciliation and the documentary material produced by the Appellant were properly considered by the authorities below – HELD - Neither the reconciliation furnished by the Appellant, nor the internal inconsistency between the two computations on record, has been properly considered by the authorities below. Moreover, the CGST/SGST working which FORM GST DRC-07 attributes to the Appellant’s reply does not correspond to that reply at all as the reply was confined to the IGST head. The demand cannot be sustained without first resolving this basic factual inconsistency, and without giving the Appellant a proper opportunity to meet a CGST/SGST demand that was never put to it in any notice - Whether Section 16(2)(c) has been correctly applied to the period involved in the present appeal – HELD - The authorities below have moved directly from the GSTR-2A difference to the conclusion that the supplier had not paid the tax, without any corresponding enquiry recorded in either order. The First Appellate Authority’s reliance on ALD Automotive Pvt. Ltd. does not answer this factual question as the said decision concerned the statutory conditions for availment of ITC in a limitation dispute, not the evidentiary value of a GSTR-2A mismatch - The authorities below have not established that the condition in Section 16(2)(c) was breached by the Appellant. Section 16(2)(aa) has no application to Financial Year 2019-20 - Whether CBIC Circular No. 183/15/2022-GST and Circular No. 193/05/2023-GST were correctly applied – HELD - The fact that the appellant did not furnish the certificates contemplated by these Circulars may well be relevant to the verification process the Circulars prescribe. It does not, however, dispense with the need to determine the actual ITC liability by reference to the substantive statutory provisions applicable to the relevant period - The Circulars No. 183/15/2022-GST dated 27.12.2022 and 193/05/2023-GST dated 17.07.2023 have not been applied with due regard to their respective periods of operation - Whether the interest and penalty confirmed against the Appellant can be sustained – HELD - In the present case, that tax liability has not itself been properly determined; the computation on which it was confirmed requires fresh verification, for the reasons recorded under the issues discussed above. It follows that the consequential interest and penalty cannot be sustained independently of that determination - Whether the impugned orders are reasoned, speaking orders as required under Section 75(6) of the CGST Act – HELD - Section 75(6) casts a mandatory obligation on the Proper Officer to set out the relevant facts and the basis of the decision in every order passed under Section 73 - The impugned orders do not contain adequate reasons for the computation and confirmation of the demand. They do not meet the requirement of a reasoned, speaking order under Section 75(6) of the CGST Act. [Read less]

Central Excise - Admissibility of CENVAT credit on Countervailing Duty paid on imported coal - The Respondent-assessee availed CENVAT credit of CVD paid at concessional rate of 1%/2% on imported steam coal under Customs Notification No. 12/2012-Cus - Department contended that CVD paid at concessional rate was not admissible as CENVAT credit in contravention of Rule 3 CENVAT Credit Rules 2004 - Department sought to import conditions from Central Excise exemption notifications into Customs notifications to deny credit - Whether CENVAT credit of CVD paid at concessional rate on imported steam coal is admissible under Rule 3(1... [Read more]

Central Excise - Admissibility of CENVAT credit on Countervailing Duty paid on imported coal - The Respondent-assessee availed CENVAT credit of CVD paid at concessional rate of 1%/2% on imported steam coal under Customs Notification No. 12/2012-Cus - Department contended that CVD paid at concessional rate was not admissible as CENVAT credit in contravention of Rule 3 CENVAT Credit Rules 2004 - Department sought to import conditions from Central Excise exemption notifications into Customs notifications to deny credit - Whether CENVAT credit of CVD paid at concessional rate on imported steam coal is admissible under Rule 3(1)(vii) CCR 2004 and whether conditions in Central Excise exemption notifications can be read into Customs notifications - HELD - Rule 3(1)(vii) CCR 2004 provides that additional duty leviable under Section 3 of the Customs Tariff Act 1975 is eligible for credit. CVD is a customs duty measured with reference to excise duty but retains its character as a customs duty under Customs Tariff Act. The rule contains no qualification that credit is admissible only if CVD is paid at tariff rate and not at concessional rate - The proviso to Rule 3(1)(i) applies exclusively to duty of excise paid under specific Central Excise notifications and not to CVD. Customs Notification No. 12/2012-Cus does not prescribe any condition barring availment of credit on CVD. It is settled law that exemption notifications must be interpreted strictly and no additional conditions can be implied. Conditions cannot be read into a notification when none exist. It is impermissible in law to read conditions from one notification into another, particularly across two different taxing statutes - The conditions prescribed under Central Excise exemption notifications cannot be imported into Customs notifications - CENVAT credit of CVD paid on imported steam coal under Customs Notification No. 12/2012-Cus at concessional rate of 2% is legally admissible - The Department's appeal is rejected [Read less]

GST – Voluntary reversal of excess ITC along with interest, Liability for interest and penalty on excess ITC when amount is voluntarily reversed prior to issuance of demand notice - Appellant inadvertently availed excess Input Tax Credit and upon detecting the error voluntarily reversed the entire amount of excess ITC along with applicable interest - Department issued demand notice proposing recovery of excess ITC, interest and penalty - Whether a taxpayer who has voluntarily reversed excess ITC along with applicable interest prior to issuance of demand notice is liable to pay interest and penalty under Section 73 of the... [Read more]

GST – Voluntary reversal of excess ITC along with interest, Liability for interest and penalty on excess ITC when amount is voluntarily reversed prior to issuance of demand notice - Appellant inadvertently availed excess Input Tax Credit and upon detecting the error voluntarily reversed the entire amount of excess ITC along with applicable interest - Department issued demand notice proposing recovery of excess ITC, interest and penalty - Whether a taxpayer who has voluntarily reversed excess ITC along with applicable interest prior to issuance of demand notice is liable to pay interest and penalty under Section 73 of the CGST Act - HELD - The burden of reversing excess ITC availed has been discharged by the appellant by reversing the entire amount along with applicable interest before issuance of demand-cum-show cause notice as evidenced by self-assessment made in return filed. Revenue itself admitted in cross-objections that appellant reversed exact amount of ITC and paid applicable interest in GSTR-3B prior to initiation of proceedings - Once entire amount of excess ITC is reversed by taxpayer along with applicable interest prior to issuance of demand-cum-show cause notice through voluntary correction mechanism available under GST, the taxpayer is not liable to pay any interest under Section 73 – The demand of interest under Section 73 is set aside and the appeal is allowed [Read less]

GST - Cancellation of registration under Section 29(2)(e) on ground of fraud, wilful misstatement or suppression of facts, Requirement to disclose factual foundation for allegation, Principles of natural justice - Whether an order cancelling GST registration on ground of fraud, wilful misstatement or suppression of facts can be sustained when the show cause notice and cancellation orders fail to disclose the specific facts on which such allegation is based - HELD - When an allegation of fraud is made against any party, the specific facts on the basis of which the department has reached the conclusion must be stated clearly... [Read more]

GST - Cancellation of registration under Section 29(2)(e) on ground of fraud, wilful misstatement or suppression of facts, Requirement to disclose factual foundation for allegation, Principles of natural justice - Whether an order cancelling GST registration on ground of fraud, wilful misstatement or suppression of facts can be sustained when the show cause notice and cancellation orders fail to disclose the specific facts on which such allegation is based - HELD - When an allegation of fraud is made against any party, the specific facts on the basis of which the department has reached the conclusion must be stated clearly and distinctly. Fraud is a serious allegation reflecting on the integrity of the Petitioner and cannot be established by mere assertion or bald statements - In absence of any factual details or foundation in the show cause notice and orders as to how fraud or wilful misstatement or suppression of facts occurred, the impugned orders cannot be sustained – The impugned orders cancelling registration are quashed. Department left open to proceed afresh strictly in accordance with law with specific factual details - the writ petition is allowed [Read less]

Central Excise – Liability to pay differential Central Excise duty on intermingled Superior Kerosene Oil (SKO) with High-Speed Diesel (HSD) or Motor Sprit (MS) – Appellant manufactures petroleum products by refining crude petroleum and transporting excisable goods via pipelines to distribution depots through sequential product-to-product pumping method. During pipeline transfers, when shifting from one product to another, an interface or transmix occurs at the inter-junction of each batch of product comprising a mixture of two products. The Appellant used SKO as an interface between MS and HSD to prevent contamination.... [Read more]

Central Excise – Liability to pay differential Central Excise duty on intermingled Superior Kerosene Oil (SKO) with High-Speed Diesel (HSD) or Motor Sprit (MS) – Appellant manufactures petroleum products by refining crude petroleum and transporting excisable goods via pipelines to distribution depots through sequential product-to-product pumping method. During pipeline transfers, when shifting from one product to another, an interface or transmix occurs at the inter-junction of each batch of product comprising a mixture of two products. The Appellant used SKO as an interface between MS and HSD to prevent contamination. The Department demanded differential Central Excise duty on the intermingled SKO-MS/HSD mixture quantified at higher values on the ground that the duty payable on gain/surge shall be the duty payable on MS/HSD rather than on SKO - Whether the differential Central Excise duty demand on interface quantity of SKO is legally sustainable – HELD – The differential duty demand on interface quantity of SKO is clearly not sustainable. The issue arising out of the present dispute for earlier periods has already been decided favourably in the case of the Appellant vide multiple Final Orders of the Tribunal. The Co-ordinate Bench of the Tribunal in the case of Indian Oil Corporation has examined similar issue and concluded that central excise duty demand on intermix products of SKO is not sustainable. The Hon'ble Supreme Court has upheld this position in Civil Appeal dated 14.09.2023 holding that the Board can only clarify existing law but cannot create law by itself and therefore the Board Circular having without support of any Act or Rule is not binding on the assessee. The activity of intermixing of SKO with MS/HSD does not amount to manufacture under Section 2(f) of the Central Excise Act, 1944 as the products are not specified under the Third Schedule and the adjudication order travelled beyond the scope of the Show Cause Notice which is not permissible in law. The issue arising out of the present dispute is no more res integra – The impugned order passed by the Commissioner of Central Excise (Appeals) is set aside and the appeal filed by the Appellant is allowed in their favour with consequential benefits, if any [Read less]

Delhi Sales Tax, 1975 - Levy of Sales Tax on rolling stock financed through Indian Railway Finance Corporation, Territorial taxability and situs of sale - The Petitioner, Ministry of Railways, financed rolling stock through the Indian Railway Finance Corporation Limited (IRFC) created to mobilise resources and acquire railway assets. IRFC raised funds through bonds and made available resources. Rolling stock was procured or manufactured through Railway administration - The Assessing Authority treated the entire arrangement as a sale by Railways to IRFC. The Petitioner contended the arrangement involved only a financing mec... [Read more]

Delhi Sales Tax, 1975 - Levy of Sales Tax on rolling stock financed through Indian Railway Finance Corporation, Territorial taxability and situs of sale - The Petitioner, Ministry of Railways, financed rolling stock through the Indian Railway Finance Corporation Limited (IRFC) created to mobilise resources and acquire railway assets. IRFC raised funds through bonds and made available resources. Rolling stock was procured or manufactured through Railway administration - The Assessing Authority treated the entire arrangement as a sale by Railways to IRFC. The Petitioner contended the arrangement involved only a financing mechanism with no intermediate sale by Railways to IRFC and that any sale was not exigible to tax - Whether the transfer of rolling stock by Railways to IRFC constitutes a taxable sale under Delhi Sales Tax Act and whether such transactions are taxable in Delhi or are inter-State sales - HELD - The Railways can answer the description of a dealer under DST Act. However, not every transaction involving Railway property constitutes a sale. A sale requires transfer of property in goods by one person to another for valuable consideration. The passing of property depends on intention of parties gathered from arrangement terms, conduct and circumstances - Three classes of rolling stock must be distinguished: (1) manufactured in Railway production units and owned by Railways before transfer to IRFC constitutes a sale; (2) purchased from private manufacturers by Railways in its own right and thereafter transferred to IRFC constitutes a sale; (3) procured by Railways on behalf of IRFC does not constitute sale – The Clause 8.1 of Lease Agreement appointing Railways as IRFC's agent for inspection and delivery prevents physical possession being treated as conclusive proof of ownership. The impugned Orders failed to maintain this distinction and treated entire financing amount as turnover from sales - Burden of proving non-liability under Section 6 DST Act lies on dealer only after sale is established. For transactions constituting sales, burden shifts to Railways to prove transactions fall within Section 8 - Movement from manufacturer to Railway destination does not establish inter-State character of alleged Railways-IRFC sale. Location of parties' Head Offices and administrative control do not determine situs of sale. Complete segregation of rolling stock by source and title history essential for establishing taxability - Neither the entire financing arrangement was taxable nor that it lay wholly outside the DST Act. Transactions involving rolling stock owned by the Railways and thereafter transferred to IRFC for consideration constituted sales. Transactions in which the Railways procured rolling stock on behalf of IRFC did not constitute sale - The Assessment Orders are set aside and the matters are remitted to Commissioner to segregate the transactions in accordance with law - The Writ Petitions are disposed of [Read less]

Service Tax - Exemption for services provided to Government entities and municipal authorities for water supply, Applicability of Entry No. 25 of Mega Exemption Notification No. 25/2012-ST - The Appellant provided operation and maintenance services for drinking water treatment plants (RO Plants or Nalkoops) installed at different locations for various government water supply entities and municipal authorities - Whether services for operation and maintenance of public water supply treatment plants for supply of treated drinking water through water supply infrastructure ordinarily entrusted to municipalities are exempt from ... [Read more]

Service Tax - Exemption for services provided to Government entities and municipal authorities for water supply, Applicability of Entry No. 25 of Mega Exemption Notification No. 25/2012-ST - The Appellant provided operation and maintenance services for drinking water treatment plants (RO Plants or Nalkoops) installed at different locations for various government water supply entities and municipal authorities - Whether services for operation and maintenance of public water supply treatment plants for supply of treated drinking water through water supply infrastructure ordinarily entrusted to municipalities are exempt from Service Tax under Entry No. 25 - HELD - Entry No. 25 of Mega Exemption Notification No. 25/2012-ST provides exemption for services relating to any function ordinarily entrusted to a municipality in relation to water supply. The services rendered by the Appellant pertain to the operation of Nalkoop at different locations for supply of water to the public. The rate of operation is prescribed per Nalkoop per shift and per day which reveals that the appellant is receiving consideration solely for operation and supply of water. Provision and supply of treated drinking water through properly functioning water supply systems is ordinarily a function entrusted to a municipality - The Appellant was providing the same service to multiple municipal and water authorities which have statutory responsibility for water supply. The nature of service is identical across all service recipients- namely operation and maintenance of water treatment and supply infrastructure on behalf of Government water authorities. Since the services relate to supply of water by carrying out an activity ordinarily entrusted to a municipality, they are eligible for exemption - The Service Tax demand is set aside and the appeal is allowed [Read less]

Service Tax - Secondment of employees between group companies, Taxability of manpower recruitment and supply services under Finance Act 1994, Invocation of extended period of limitation - Foreign group company paid salaries and statutory employment benefits to personnel outside India and recovered amounts from respondent assessee without markup by raising debit notes. All employment related costs and risks were borne by respondent. Department interpreted arrangement as import of manpower recruitment or supply agency services - First Appellate Authority set aside order and dropped confirmed demands and penalties. Revenue pr... [Read more]

Service Tax - Secondment of employees between group companies, Taxability of manpower recruitment and supply services under Finance Act 1994, Invocation of extended period of limitation - Foreign group company paid salaries and statutory employment benefits to personnel outside India and recovered amounts from respondent assessee without markup by raising debit notes. All employment related costs and risks were borne by respondent. Department interpreted arrangement as import of manpower recruitment or supply agency services - First Appellate Authority set aside order and dropped confirmed demands and penalties. Revenue preferred appeal contending issue was settled by Supreme Court in Northern Operating System Private Limited case - Whether secondment arrangement between group companies involving deputation of overseas employees to Indian associate constitutes taxable manpower supply service attracting service tax under Reverse Charge and whether extended period of limitation can be invoked - HELD - Secondment arrangement between group companies involving deputation of employees from overseas entity to Indian associate where overseas entity retains employer status and control over employee terms while Indian company exercises functional control over work performance constitutes provision of manpower recruitment and supply service taxable under reverse charge mechanism - Supreme Court in Northern Operating System case held that assessee was service recipient for service of manpower recruitment and supply services. However invocation of extended period of limitation in cases involving such secondment arrangements is not justified when view held by assessee about liability was neither untenable nor mala fide and when department itself has discharged later SCNs issued for subsequent periods. Mere non-payment of service tax without more is not equivalent to collusion or wilful misstatement or suppression of facts required to invoke extended period - Presence of essential ingredients of fraud collusion wilful mis-statement or suppression of facts or contravention with intent to evade tax cannot be found where assessee has acted on bonafide belief supported by judicial interpretations existing at relevant time. Demand relating to extended period cannot be sustained but demand for normal period of limitation can be recovered - The appeal filed by Revenue is dismissed. Demand of service tax and imposition of penalty are set aside in respect of extended period. Matter is remanded for quantification of demand for normal period of limitation only – Ordered accordingly [Read less]

Service Tax - Classification of remuneration paid to Directors of company, Taxability of Director's compensation - Appellant paid monthly remuneration to its Directors which was accounted for as 'Salary' in the books of accounts, TDS under the Income Tax Act was deducted under the head 'Salary' as shown in Form-16, and the Directors had shown the amounts in their individual income tax returns under the head salary - Adjudicating Authority included the remuneration paid to Directors as part of the taxable value for Service Tax computation - Whether remuneration paid by a company to its Directors for performing their duties ... [Read more]

Service Tax - Classification of remuneration paid to Directors of company, Taxability of Director's compensation - Appellant paid monthly remuneration to its Directors which was accounted for as 'Salary' in the books of accounts, TDS under the Income Tax Act was deducted under the head 'Salary' as shown in Form-16, and the Directors had shown the amounts in their individual income tax returns under the head salary - Adjudicating Authority included the remuneration paid to Directors as part of the taxable value for Service Tax computation - Whether remuneration paid by a company to its Directors for performing their duties constitutes taxable services - HELD - Remuneration paid to Directors for performing their duties as Directors constitutes salary for employment services and is not taxable under Service Tax. The remuneration has been properly accounted for as 'Salary' in the company's books of accounts which is consistent with the withholding of TDS under Income Tax Act and the reporting by Directors in their individual income tax returns under the head 'Salary' - Employment-related payments including salary paid for performing duties as Directors are covered under the negative list in Section 65B(44)(b) of the Finance Act 1994 and are therefore excluded from the scope of taxable services. The character of payment as determined by the statutory treatment under the Income Tax Act and the accounting treatment by both payer and payee cannot be recharacterized by the tax authorities for Service Tax purposes. Therefore, remuneration paid to Directors cannot be included as part of taxable service value - The remuneration paid to Directors shall be excluded from the taxable value and the demand of Service Tax shall be recomputed accordingly excluding the Director compensation – The impugned order is set aside and the appeal is allowed - Invocation of extended period of limitation, Requirement for suppression of facts with deliberate and willful intent to evade payment of duty - Adjudicating Authority invoked the extended period on the basis of differences observed in figures in balance sheet, profit and loss account and Form 26AS statement from Income Tax Department - Whether the extended period of limitation can be invoked merely on the basis of discrepancies in financial records and non-filing of Service Tax returns without establishing deliberate and willful suppression of facts with intent to evade - HELD - The extended period of limitation can be invoked only where there is suppression of facts with deliberate and willful intent to evade payment of Service Tax. The term 'suppression of facts' must be construed strictly and does not mean any omission but requires a deliberate act - Mere non-disclosure or failure to file returns does not amount to willful suppression. There must be some positive act from the side of the assessee evidencing deliberate intention not to disclose correct information or willful intent to evade payment of duty - Appellant had maintained regular books of accounts and statutory records in the ordinary course of business and the data was always open to Department scrutiny. Department has failed to bring any corroborative evidence to establish willful suppression with intent to evade - The extended period cannot be invoked for confirming the demand merely on basis of financial discrepancies without establishing deliberate suppression with intent to evade. The invocation of extended period is not sustainable in law. [Read less]

Customs - Preferential tariff treatment under AIFTA, Jurisdiction of Customs Authorities to recover short-levied duty, Applicability of Article 24 of ASEAN-India Free Trade Area, Scope of dispute resolution mechanism under international treaty - Petitioner imported High Grade Tin Ingots manufactured in Malaysia and availed concessional rate of BCD under Notification No. 46/2011-Cus on the basis of Certificate of Origin issued by the designated authority of Malaysia – DRI noted that the Regional Value Content calculated on basis of a cost sheet was overstated and when assessed with reference to the actual economic activit... [Read more]

Customs - Preferential tariff treatment under AIFTA, Jurisdiction of Customs Authorities to recover short-levied duty, Applicability of Article 24 of ASEAN-India Free Trade Area, Scope of dispute resolution mechanism under international treaty - Petitioner imported High Grade Tin Ingots manufactured in Malaysia and availed concessional rate of BCD under Notification No. 46/2011-Cus on the basis of Certificate of Origin issued by the designated authority of Malaysia – DRI noted that the Regional Value Content calculated on basis of a cost sheet was overstated and when assessed with reference to the actual economic activity including job work smelting charges, the regional value addition did not fulfil the criteria of origin under Rules of Origin 2009. The Customs Authorities issued demand notices - Petitioner challenged the proceedings contending that prior to invoking dispute resolution under Article 24 of AIFTA, the Customs Authorities lacked jurisdiction to proceed under Customs Act 1962 - Whether the Customs Authorities in India are required to first invoke the dispute resolution mechanism provided under Article 24 of AIFTA before proceeding against an importer under the Customs Act 1962 for recovery of duty short-levied on account of incorrect particulars in the Certificate of Origin - HELD - An international treaty, until transformed into domestic law by legislation, does not by itself confer rights or obligations enforceable in a municipal Court and does not operate to curtail powers validly conferred on a domestic authority by domestic statute. Article 24 of AIFTA has not been incorporated into Indian municipal law by any statute or subordinate legislation including the Rules of Origin 2009 which gives partial effect to AIFTA only for the limited purpose of prescribing origin criteria without incorporating the dispute resolution mechanism. An unincorporated treaty obligation cannot be directly enforced by a private party to displace the jurisdiction conferred by a domestic statute - The exercise of power under Section 28 of the Customs Act cannot be said to be without jurisdiction merely because the Article 24 consultation mechanism has not been separately invoked. The substantive provisions of the Customs Act 1962 have dominion over procedural aspects of international agreements where not expressly incorporated into domestic law - Accordingly, Article 24 of AIFTA not having been transformed into domestic law cannot operate to oust the jurisdiction of the Customs Authorities to proceed under the Customs Act 1962. The Customs Authorities were competent to proceed under Section 28 independently of any dispute resolution consultation under Article 24 of AIFTA. The writ petition is dismissed with liberty to file statutory appeal - Customs - Scope of recovery powers under Section 28 of Customs Act 1962 prior to insertion of Chapter V-AA and Section 28DA, Statutory basis for recovery of duty short-levied by reason of suppression of facts - Petitioner contended that prior to the insertion of Chapter V-AA including Section 28DA by the Finance Act 2020 with effect from 27.03.2020, the Customs Authorities lacked the requisite statutory power to initiate proceedings in respect of preferential tariff claims. The Petitioner sought to contend that Chapter V-AA created a new power to verify and recover duty in cases of incorrect preferential tariff claims - Whether the Customs Authorities possessed enabling power under Section 28 of the Customs Act 1962 as it stood prior to the insertion of Chapter V-AA to recover duty short-levied on account of suppression of facts in preferential tariff claims - HELD - Section 28 read with Section 46 of the Customs Act 1962 conferred sufficient power to recover duties that were short-levied by reason of suppression of facts independently of any Certificate of Origin specific verification mechanism. Section 28(4) provides that where any duty has been short-levied by reason of collusion, any wilful misstatement or suppression of facts by the importer, the proper officer shall within five years serve notice. Section 46(4) casts a statutory obligation upon the importer while presenting a Bill of Entry to make and subscribe to a declaration as to the truth of the contents and produce supporting documents. The particulars furnished in support of a preferential tariff claim including Regional Value Content particulars reflected in the Certificate of Origin fall within the scope of documents required under Section 46(4) and form part of the statutory declaration - The suppression of facts contemplated under Section 28(4) is not necessarily qualified by wilfulness and suppression simpliciter can be sufficient to invoke the extended period. Where an importer furnishes particulars which it knew or could not reasonably have been unaware were incorrect and nevertheless claims preferential duty, such non-disclosure may constitute suppression of facts. The insertion of Chapter V-AA and Section 28DA was in the nature of an additional and more elaborate procedural mechanism specifically calibrated to preferential tariff disputes and did not create a power that was until then altogether absent - Accordingly, the Customs Authorities possessed the enabling power under Section 28 read with Section 46 even prior to insertion of Chapter V-AA to recover duty short-levied by suppression of facts. The amendment was merely clarificatory and did not confer any new or substantive power. The grounds challenging the power of Customs Authorities are rejected. [Read less]

Customs - Enforcement of pre-CIRP customs liabilities after approval of Resolution Plan under IBC, Binding effect of approved Resolution Plan under Section 31(1), Interplay between Customs Act and IBC provisions - Petitioner challenged the Order-in-Original contending that the liability arises from a pre-CIRP transaction and that the approved Resolution Plan became binding on all governmental authorities and that claims not submitted during CIRP stand extinguished - Whether Customs authorities can continue adjudication and enforcement of pre-CIRP customs liabilities after a Resolution Plan has been approved by the NCLT whe... [Read more]

Customs - Enforcement of pre-CIRP customs liabilities after approval of Resolution Plan under IBC, Binding effect of approved Resolution Plan under Section 31(1), Interplay between Customs Act and IBC provisions - Petitioner challenged the Order-in-Original contending that the liability arises from a pre-CIRP transaction and that the approved Resolution Plan became binding on all governmental authorities and that claims not submitted during CIRP stand extinguished - Whether Customs authorities can continue adjudication and enforcement of pre-CIRP customs liabilities after a Resolution Plan has been approved by the NCLT when the customs demand was not submitted as a claim by the Department during CIRP - HELD - The definition of claim under Section 3(6) IBC is wide and includes a right to payment irrespective of whether it has been adjudicated or reduced to judgment - A claim is referable to the underlying right to payment and not merely to subsequent adjudication. An underlying customs liability arising from a pre-CIRP transaction constitutes a claim independent of whether adjudicated by that date. Upon CIRP commencement, the Interim Resolution Professional is required to issue public announcement inviting claims with last date specified. The statutory scheme does not require the Corporate Debtor to individually notify every possible creditor - The responsibility of identifying and filing claim lies upon the creditor. Once statutory mechanism of public announcement is followed, creditor's failure to submit cannot be overcome by alleging absence of individual intimation - Section 31(1) IBC provides that approved Resolution Plan shall be binding on corporate debtor and all stakeholders including Central Government and authorities to whom statutory dues are owed. The legislative intent is to freeze all claims upon approval so Successful Resolution Applicant commences on clean slate. The 2019 Amendment expressly brought governmental authorities within binding effect of approved plans. Section 238 gives IBC overriding effect where inconsistency with other law - While Customs Act confers power to determine liability during CIRP, power to enforce after plan approval is circumscribed by Section 31(1). Distinction between determination and enforceability is material. Pre-CIRP unfiled claim stands extinguished upon plan approval and cannot thereafter be enforced. Creditor cannot stand outside CIRP, await adjudication post-approval and seek enforcement as this exposes successful applicant to unascertained liabilities and defeats Section 31 finality. Accordingly, Customs authorities could not after plan approval continue adjudication and enforce pre-CIRP unfiled claim in violation of Section 31(1) read with Section 238 – The Order-in-Original is quashed and set aside – The writ petition is allowed [Read less]

Customs - Special Additional Duty exemption under Notification No. 45/2005-Customs dated 16.05.2005 for goods cleared from SEZ/FTWZ unit to DTA unit on stock transfer basis - Appellant company imported raw materials through a Free Trade Warehousing Zone unit for manufacture of process management equipment and cleared the goods to its DTA on stock transfer basis claiming exemption from SAD - Demand of Special Additional Duty along with interest and penalties invoking the extended period of limitation on the ground that Appellant had suppressed facts and availed benefit without entitlement - Whether the benefit of Notificati... [Read more]

Customs - Special Additional Duty exemption under Notification No. 45/2005-Customs dated 16.05.2005 for goods cleared from SEZ/FTWZ unit to DTA unit on stock transfer basis - Appellant company imported raw materials through a Free Trade Warehousing Zone unit for manufacture of process management equipment and cleared the goods to its DTA on stock transfer basis claiming exemption from SAD - Demand of Special Additional Duty along with interest and penalties invoking the extended period of limitation on the ground that Appellant had suppressed facts and availed benefit without entitlement - Whether the benefit of Notification No. 45/2005-Customs providing exemption from Special Additional Duty is available for goods cleared from SEZ or FTWZ unit to DTA unit on stock transfer basis when VAT is subsequently paid upon sale of final products - Extended period of limitation on ground of suppression of facts - HELD - The Notification exempts all goods cleared from a SEZ and brought to any other place in India and the nature of clearance whether by way of sale or stock transfer is not qualified or restricted in the notification. The proviso gets attracted only if the goods when sold in the Domestic Tariff Area are exempted from payment of sales tax or VAT - In the present case, the clearance is not by way of sale and the goods attract VAT when sold indicating there is no exemption from such tax but merely deferral until sale takes place. The practice adopted by Appellant in furnishing undertaking and CA certificate for compliance with statutory condition is consistent with instructions issued by Development Commissioner – Further, the B/E were assessed and countersigned by Customs officers and therefore the department was well aware that goods were cleared on stock transfer basis not attracting sales tax or VAT. No suppression or wilful misstatement with intent to evade payment of duty can be alleged when facts were known to and recorded by customs authorities - The question of leviability to duty or exemption thereof is a matter of interpretation of statute and does not require undertaking and no malafide intention can be inferred merely from furnishing certificate from Chartered Accountant - The impugned order confirming adjudged demands of SED along with confiscation of goods and imposition of penalty invoking extended period of limitation is set aside. The appeals filed by Appellant are allowed and demand of Special Additional Duty is set aside. The appeal filed by Revenue for imposition of mandatory penalty under Section 114A is dismissed [Read less]

Customs - EPCG Scheme duty exemption - Fulfillment of Conditions through Subsequently Produced Documents - Confirmation of Duty Demands - Appellant imported capital goods for which import duty was foregone and executed bonds undertaking to fulfill export obligation. Department found that appellant had failed to produce Capital Goods Installation Certificate upon importation and had not submitted Export Obligation Discharge Certificate in terms of applicable notification - Demand of duty foregone amount along with interest under Section 143 of the Customs Act and confiscation under Section 111(o) read with penalty under Sec... [Read more]

Customs - EPCG Scheme duty exemption - Fulfillment of Conditions through Subsequently Produced Documents - Confirmation of Duty Demands - Appellant imported capital goods for which import duty was foregone and executed bonds undertaking to fulfill export obligation. Department found that appellant had failed to produce Capital Goods Installation Certificate upon importation and had not submitted Export Obligation Discharge Certificate in terms of applicable notification - Demand of duty foregone amount along with interest under Section 143 of the Customs Act and confiscation under Section 111(o) read with penalty under Section 112(a) - After passage of impugned order appellant obtained installation certificates and EODC - Whether adjudged demands for duty foregone can be sustained when requisite export obligation has been fulfilled and EODC issued by competent licensing authority and installation certificates obtained subsequent to adjudication - HELD – Upon examining the documents placed in the appeal records including the letter issued by the Deputy Commissioner of Customs cancelling bonds executed for availing duty exemption and installation certificates from the jurisdictional Central Excise authorities, the requisite compliance with the notification conditions had been fulfilled by the Appellant. Non-production of EODC at the time of adjudication was beyond the control of the appellant as the same was not issued by the competent authorities despite action by the appellant for export of specified goods having been completed for fulfillment of export obligation and necessary documents having been submitted to DGFT - The proper course of action for the original authority would have been to keep the notice pending till the licensing authority had responded one way or the other rather than proceeding with haste to dispose of the SCN. The Customs authorities having themselves accepted the EODC and cancelled the bonds after passing the impugned order constituted apparent contradiction with their earlier confirmation of duty demands for non-production of EODC - No merits in confirmation of adjudged demands based on the premise of non-submission of requisite documents by the appellant - The impugned order to the extent it had confirmed the duty demands along with imposition of redemption fine and penalty is set aside - The appeal is allowed [Read less]

GST - Levy and collection of interest on belated payment of additional duties of customs, Absence of statutory authority to levy interest prior to amendment, Rule 96(10) CGST Rules regarding double benefit - As per Rule 96(10) CGST Rules, since petitioner claimed benefit both on import side (exemption) and export side (refund), petitioner was required to pay back one benefit. Petitioner chose to pay back additional duties of customs and also paid interest on such amounts - Whether Customs Authorities had statutory authority to levy and collect interest on belated payment of additional duties of customs and whether petition... [Read more]

GST - Levy and collection of interest on belated payment of additional duties of customs, Absence of statutory authority to levy interest prior to amendment, Rule 96(10) CGST Rules regarding double benefit - As per Rule 96(10) CGST Rules, since petitioner claimed benefit both on import side (exemption) and export side (refund), petitioner was required to pay back one benefit. Petitioner chose to pay back additional duties of customs and also paid interest on such amounts - Whether Customs Authorities had statutory authority to levy and collect interest on belated payment of additional duties of customs and whether petitioner is entitled to refund of interest paid - HELD – The Mahindra & Mahindra Ltd. and A.R. Sulphonates Pvt. Ltd. decisions held that no provisions existed under Customs Tariff Act 1975 during the relevant period empowering Customs Authorities to levy and collect interest on belated payment of additional duties of customs – The Supreme Court in Goodluck India Ltd. held that Rule 96(10) is deemed to have been omitted since inception. Since Rule 96(10) is deemed omitted since inception, there was no legal requirement or obligation on petitioner to make repayment of additional duties of Customs. Therefore, the question of levying interest on such repayment does not arise. Interest levied on amounts which did not legally fall due constitutes collection without authority of law – The petitioner's choice to pay back duties on import side was predicated on assumption that Rule 96(10) was valid, which it was not. Petitioner is entitled to recover interest paid on repayment of duties which were not legally required to be paid – The Respondent authorities are directed to process application for refund and refund the amount of interest paid expeditiously – The writ petition is allowed [Read less]

GST - Blocking of Electronic Credit Ledger under Rule 86A, Requirement of pre-decisional hearing as mandatory procedural safeguard, Principles of natural justice - Respondent blocked Electronic Credit Ledger of the Petitioner alleging that suppliers were non-existent, without affording any pre-decisional hearing despite petitioner's request - Whether blocking of Electronic Credit Ledger under Rule 86A can be done without providing pre-decisional hearing to the taxpayer and whether principles of natural justice require opportunity to explain and rebut allegations before blocking order is passed - HELD – The Supreme Court ... [Read more]

GST - Blocking of Electronic Credit Ledger under Rule 86A, Requirement of pre-decisional hearing as mandatory procedural safeguard, Principles of natural justice - Respondent blocked Electronic Credit Ledger of the Petitioner alleging that suppliers were non-existent, without affording any pre-decisional hearing despite petitioner's request - Whether blocking of Electronic Credit Ledger under Rule 86A can be done without providing pre-decisional hearing to the taxpayer and whether principles of natural justice require opportunity to explain and rebut allegations before blocking order is passed - HELD – The Supreme Court in K-9 Enterprises affirmed that principles of natural justice necessarily require that pre-decisional hearing be provided and granted before invoking Rule 86A and blocking ECL. Blocking carries serious civil consequences affecting taxpayer's ability to discharge statutory obligations. Such serious action cannot be taken without first giving opportunity to taxpayer to respond - Rules of natural justice mandate audi alteram partem principle. Even when authorities have reasons to believe credit ineligible, pre-decisional hearing must be provided. Post-decisional hearing or notice for document production after blocking is insufficient - Prima facie blocking order appears to have merit based on non-existent suppliers but procedural defect of not providing pre-decisional hearing vitiates the order – The impugned order is set aside. The petitioner is directed to file a detailed representation demonstrating bonafide of suppliers and justifying ITC claimed. The Respondents to consider representation and pass reasoned speaking order – The petition is disposed of [Read less]

Central Excise – Assessment under Section 4 of Central Excise Act, 1944 - Clearances to related parties at price below cost of manufacture – Appellant cleared identical batteries to two vendors at Rs 2.13 and Rs 2.20 per piece while clearing same batteries to its own Lucknow unit at Rs 2.90 and Rs 2.81 per piece under CAS-4 costing – MoU showed buyback arrangement where vendors manufactured torches as per appellant's design and specification and sold them back to appellant – Department invoked extended period alleging relationship and mutuality of interest – Appellant contended that prices were charged on transac... [Read more]

Central Excise – Assessment under Section 4 of Central Excise Act, 1944 - Clearances to related parties at price below cost of manufacture – Appellant cleared identical batteries to two vendors at Rs 2.13 and Rs 2.20 per piece while clearing same batteries to its own Lucknow unit at Rs 2.90 and Rs 2.81 per piece under CAS-4 costing – MoU showed buyback arrangement where vendors manufactured torches as per appellant's design and specification and sold them back to appellant – Department invoked extended period alleging relationship and mutuality of interest – Appellant contended that prices were charged on transaction value under Section 4 of Central Excise Act and buyers were independent entities not related parties - Whether identical batteries cleared to different buyers at significantly different prices where buyback arrangement exists is assessable on contractual price or whether cost-of-manufacture method applies - HELD – Where price at which goods are sold is exceptional and substantially below cost of manufacture, such price cannot be accepted as normal price for purposes of Section 4(1)(a) of CEA. The expression ‘ordinarily sold’ excludes extraordinary or unusual transactions. Where there is clear indication that extra-commercial consideration has entered into sale transaction, such as perpetual loss-making transactions, the price cannot be sole consideration contemplated under Section 4(1)(a) - In present case, battery prices were significantly lower than cost of manufacture and sales were made continuously, indicating extra-commercial consideration. The buyback agreement and nature of transaction indicate price not at arm's length - Where all three conditions of Section 4(1)(a) namely normal price, ordinarily sold and sole consideration are not satisfied, valuation must be done under Section 4(1)(b) read with Central Excise Valuation Rules - On extended period, where agreements and documents regarding related transactions are available on record and already known to Department through its own investigation, the conditions for invoking extended period are not satisfied as there is no wilful suppression. However, normal period of limitation being barred by date of SCN, demands within normal period are upheld along with interest. Penalties imposed under Section 11AC were set aside as they were wrongly imposed under Rule 15 of CENVAT Credit Rules which is inapplicable to undervaluation cases - The appeals are partly allowed [Read less]

GST - Applicability of Section 74 of CGST Act to ITC availed based on invoices from Non-Existent Suppliers, Discharge of burden under Section 155 of CGST Act – Respondent-assessee availed and utilized ineligible input tax credit on the basis of invoices issued by non-existent suppliers during the relevant period of supply claiming that during the transactions the registration status of all suppliers was active on the GST portal. However, scrutiny by the Revenue disclosed that each of the suppliers was a non-existent entity and none of them had ever conducted any business at all - Whether the Section 74 of the CGST Act is... [Read more]

GST - Applicability of Section 74 of CGST Act to ITC availed based on invoices from Non-Existent Suppliers, Discharge of burden under Section 155 of CGST Act – Respondent-assessee availed and utilized ineligible input tax credit on the basis of invoices issued by non-existent suppliers during the relevant period of supply claiming that during the transactions the registration status of all suppliers was active on the GST portal. However, scrutiny by the Revenue disclosed that each of the suppliers was a non-existent entity and none of them had ever conducted any business at all - Whether the Section 74 of the CGST Act is applicable when taxpayer who availed ITC on invoices issued by non-existent suppliers without proof of actual physical movement of goods - HELD - The burden of proving the rightful claim of input tax credit lies on the person claiming the credit as per Section 155 of the CGST Act. Mere production of tax invoices and banking details showing payment is not sufficient to discharge this burden. The purchasing taxpayer has to prove and establish the actual physical movement of goods and the genuineness of transactions by furnishing details of the vehicle which delivered goods, payment of freight charges, acknowledgement of taking delivery of goods and other corroborating evidence - In the present case there is no proof of actual physical movements of goods from the alleged suppliers to the Respondent who admittedly availed and utilised input tax credit based on invoices issued by these suppliers - The Respondent was fully aware that the suppliers on whose invoices the ITC was availed and utilised were non-existent. The Respondent was also completely aware that the goods for the supply on which the ITC was claimed were not actually delivered - There was a wilful misstatement in self assessment made by the Respondent in the monthly return. Such conduct clearly demonstrates that the Respondent deliberately defrauded the Revenue for taking ineligible input tax credit - The demand of input tax credit availed on the basis of invoices from non-existent suppliers is payable under Section 74 of the CGST Act along with applicable interest and penalty. The findings of the appellate authority in exonerating the Respondent from the liabilities under Section 74 are set aside and the demand confirmed by the adjudicating authority is restored – The Revenue appeal is allowed - Validity of Consolidated Show Cause Notice Covering Multiple Financial Years under Section 74, Meaning of period as against financial year - The Respondent contended that a single consolidated show cause notice could not have been issued covering multiple financial years from 2017-18 to 2023-24 - Whether the statutory scheme under the CGST Act permits issuance of a consolidated SCN under Section 74 covering multiple financial years - HELD - The statutory scheme does not prohibit issuance of a consolidated notice for multiple financial years. Sections 74(3) and 74(4) of the CGST Act employ the expressions for any period and for such periods, whereas Section 74(10) uses the term financial year for the purpose of prescribing limitation for passing the order. The Legislature is conscious that insofar as wrongfully availed ITC is concerned, the notice can relate to a period and need not be for a specific financial year. The nature of ITC fraudulent utilization and availment cannot be established on most occasions without connecting transactions over different financial years. The purchase could be shown in one financial year and the supply may be shown in the next financial year. It is only when either are found to be fabricated or the firms are found to be fake that the maze of transactions can be analysed and established as being fraudulent or bogus. A solitary availment or utilization of input tax credit in one financial year may actually not be capable by itself of establishing the pattern of fraudulent availment or utilization - The issuance of a consolidated show cause notice for multiple financial years under Section 74 of the CGST Act is valid and does not constitute a jurisdictional defect - Applicability of Section 74 of CGST Act to Demands under Reverse Charge Mechanism - Distinction between inadvertence and wilful misstatement – Respondent claimed that expenses incurred towards conveyance charges, hiring of labourers, freight and travelling expenses and legal charges were not taxable under the RCM - The First Appellate Authority concluded that there was no deliberate action to suppress material information with a view to evade tax and that the expenses were properly reflected in the annual financial statements of the Petitioner - Whether Section 74 of the CGST Act can be invoked for demands relating to RCM when there is no proof of deliberate suppression of facts with intent to evade tax - HELD - The term suppression of facts as contemplated under Section 74 of CGST Act must be construed strictly. Suppression of facts in taxation means that the correct information was not disclosed deliberately to escape payment of tax. Where facts are known to both the parties, the omission by one to do what one might have done and not that one must have done does not render it suppression - In the present case in so far as the demand under Reverse Charge Mechanism is concerned, no deliberate action to suppress material information with a view to evade tax has been proved against the Respondent. The expenses incurred were properly reflected in the annual financial statements of the Respondent indicating there was no attempt to evade tax liabilities. Therefore Section 74 of the CGST Act cannot be invoked for enforcement of demands under RCM - The demand under RCM is payable under Section 73 of the CGST Act along with applicable interest and penalty and not under Section 74 of the CGST Act - Power of First Appellate Authority to modify the demand determined by the Proper Officer - The Revenue contended that the First Appellate Authority exceeded its jurisdiction by modifying the amount of tax and confirming the liability itself instead of issuing directions to the proper officer for fresh computation as required under Section 75(2) and (3) of the CGST Act - Whether the First Appellate Authority has the power to modify the amount of tax determined by the proper officer without referring the matter back to the proper officer for fresh computation - HELD - Section 75 of the CGST Act which provides for general provisions relating to determination of tax empowers the Appellate Authority under sub-section (8) to modify the amount of tax determined by the proper officer - The First Appellate Authority has the inherent power to modify the amount of tax determined by the proper officer after meticulous examination and comparison of records and does not need to refer the matter back to the proper officer for fresh computation when the computation by the proper officer itself is found to be incorrect and the appellate authority has already re-examined and verified the records and computed the correct liability - The First Appellate Authority does not exceed its jurisdiction by modifying the tax amount itself. The challenge by the Revenue to the jurisdiction of the First Appellate Authority in respect of modification of tax amount by itself is devoid of merit - The appeal filed by the Revenue is partly allowed. [Read less]

Central Excise - Process of lamination of fabrics with plastic material as manufacture, Test of transformation into new and different article - The Appellant was engaged in lamination of cotton, jute and man-made fabrics with plastic materials (LDPE, PP and HDPE). During investigation, laminated fabrics seized and sent to CRCL for testing. The report confirmed goods were woven fabrics laminated with polypropylene. The Appellant contended lamination does not amount to manufacture relying on Shree Jee Laminators decision. The Revenue submitted that lamination amounts to manufacture as held by the Supreme Court in Laminated P... [Read more]

Central Excise - Process of lamination of fabrics with plastic material as manufacture, Test of transformation into new and different article - The Appellant was engaged in lamination of cotton, jute and man-made fabrics with plastic materials (LDPE, PP and HDPE). During investigation, laminated fabrics seized and sent to CRCL for testing. The report confirmed goods were woven fabrics laminated with polypropylene. The Appellant contended lamination does not amount to manufacture relying on Shree Jee Laminators decision. The Revenue submitted that lamination amounts to manufacture as held by the Supreme Court in Laminated Packings (P) Ltd. - Whether the process of laminating a fabric with plastic material amounts to manufacture - HELD - The principle for determining manufacture has been laid down by the Supreme Court in Union of India versus Delhi Cloth and General Mills Co. Ltd., which provides that manufacture implies transformation into a new and different article having a distinct name, character or use. A fabric and a plastic-laminated fabric are different articles known by different names with different uses - In Laminated Packings, the Supreme Court held that lamination of Kraft paper with polyethylene amounts to manufacture. The decision in Shree Jee Laminators, which held that lamination does not amount to manufacture, was decided without discussing or distinguishing Laminated Packings. The Supreme Court judgment must be followed - The process of laminating a fabric with plastic amounts to manufacture. The finding that lamination amounts to manufacture is upheld and the demand of duty is upheld - Exemption under job work notifications for goods manufactured on behalf of principals, Applicability of Notification No. 214/86-CE and Notification No. 83/94-CE, Requirement of undertaking from principal manufacturer, Effect of additional materials - The Appellant carried out lamination work on fabrics supplied by principal manufacturers and also purchased additional materials and claimed exemption under job work notifications provided the principal gives an undertaking to use goods for manufacturing final excisable products. The Commissioner denied the benefit contending that since only part of inputs were supplied by the principal and rest were purchased by the appellant, the work was not pure job work - Whether the appellant is entitled to exemption where the principal has given an undertaking and whether use of additional materials by job worker disentitles the work from being classified as job work - HELD - The exemption notifications require the principal to give an undertaking to use goods for manufacturing excisable products on which duty will be paid. The undertaking is not a formality but the very basis for the exemption. When a job worker works on material supplied by principal, some additional materials by job worker are likely to get used but that does not vitiate the character of arrangement as job work. The essence of job work exemption is the principal's undertaking to discharge duty on final products. Use of additional materials does not vitiate job work character. The appellant is therefore entitled to the benefit of exemption notifications to the extent requisite undertakings were produced by principals - The exemption from duty on goods manufactured on job work is allowed only to the extent requisite undertakings were provided by the principal. For goods where no undertaking was obtained, duty is liable to be paid - Exemption for small scale industries under Notification No. 8/2000-CE and subsequent notifications, Coverage of laminated HDPE fabrics, Proper interpretation of exclusion for strips of plastics under Chapter 39 - Whether the exemption for small scale industries is available for laminated HDPE fabrics or whether such goods are excluded as falling within Chapter 39 - HELD - The SSI exemption notifications cover all excisable goods except those specifically excluded in the Schedule. What is excluded is strips of plastics falling under Chapter 39 which are raw materials intended for weaving. Laminated HDPE fabrics are finished goods, not strips of plastics intended for weaving. The exclusion clause specifically refers to raw material strips, not to finished laminated fabrics. Therefore the Commissioner erred in holding that laminated HDPE fabrics were not covered by the exemption. The distinction between raw materials (strips for weaving) and finished products (laminated fabrics) is material to the application of the exemption - The appellant is entitled to the benefit of the SSI exemption notifications during the relevant years - Valuation of excisable goods manufactured on job work basis under Rule 10A of Central Excise (Determination of Price of Excisable Goods) Rules 2000, Whether notional profit can be added to cost of raw material and job charges - The Appellant contended that a notional profit was wrongly added in reckoning the value of goods cleared on job work basis. The Commissioner included notional profit to the cost of raw material and job charges in determining value - Whether notional profit can be added in determining the value of excisable goods manufactured on job work basis - HELD - Rule 10A of the Central Excise (Determination of Price of Excisable Goods) Rules 2000 prescribes the method for valuation of excisable goods produced by a job worker. Where goods are sold by the principal manufacturer, the value shall be the transaction value or normal transaction value of such goods sold. Where goods are not sold at the time of removal from the factory, the value shall be determined as per the foregoing rules. The Rule does not provide any provision for adding notional profit. The value must be determined strictly in accordance with Rule 10A and any addition of notional profit is contrary to the statutory valuation mechanism - The value of goods cleared on job work shall be determined strictly as per Rule 10A of the Valuation Rules 2000 without addition of any notional profit - Invocation of extended period of limitation, Circumstances justifying recourse to extended period - Whether the extended period of limitation was properly invoked where the assessee was aware of the requirement to obtain undertaking from principals but failed to do so for most of the goods - HELD - The appellant was aware that it was clearing goods manufactured on job work and that the exemption notifications required an undertaking from each principal. Despite this awareness, it obtained such undertaking from only one principal for 40% of goods. The assessee had no reason to not obtain undertakings from other principals when it was aware about the requirements of the notification. Without the undertaking, the appellant was required to pay central excise duty. The assessee's failure to comply with the statutory requirement despite being aware of it provides sufficient grounds to invoke the extended period of limitation in issuing the demand notice - The invocation of extended period of limitation is upheld and the demand covered by the extended period is justified - Penalty under Rule 209A of Central Excise Rules 1944 and Rule 26 of Central Excise Rules 2002, Imposition of penalty on employee of assessee - Whether penalty under Rule 209A and Rule 26 can be imposed on an employee where there is no order of confiscation - HELD - Both Rule 209A of the Central Excise Rules 1944 and Rule 26 of the Central Excise Rules 2002 provide for penalty for acts or omissions which render goods liable to confiscation under the Act. In the impugned order, there is no order of confiscation. Without confiscation of goods, the condition precedent for imposing penalty under these two Rules is not satisfied. Therefore penalty under these rules cannot be sustained - The penalty under Rule 209A of the Central Excise Rules 1944 read with Rule 26 of the Central Excise Rules 2002 is set aside. [Read less]

Service Tax - Refund of service tax paid by SEZ units for authorized operations, Limitation prescribed under Service Tax Notification, Overriding effect of SEZ Act - Adjudicating Authority sanctioned partial refund but rejected refund relating to the earlier period on the ground that the claim was beyond the six-month period prescribed under Notification No. 9/2009-ST - The Commissioner (Appeals) set aside the rejection and allowed the refund claim - whether refund of service tax paid on services admittedly used for authorised operations of a SEZ Unit can be denied solely on the ground of limitation prescribed under Notifi... [Read more]

Service Tax - Refund of service tax paid by SEZ units for authorized operations, Limitation prescribed under Service Tax Notification, Overriding effect of SEZ Act - Adjudicating Authority sanctioned partial refund but rejected refund relating to the earlier period on the ground that the claim was beyond the six-month period prescribed under Notification No. 9/2009-ST - The Commissioner (Appeals) set aside the rejection and allowed the refund claim - whether refund of service tax paid on services admittedly used for authorised operations of a SEZ Unit can be denied solely on the ground of limitation prescribed under Notification No. 9/2009-ST - HELD - The substantive exemption for authorized operations of Special Economic Zone units is conferred by Section 26(1)(e) of the SEZ Act 2005 and by virtue of Section 51 of the SEZ Act, the provisions of the SEZ Act have overriding effect over inconsistent provisions contained in other enactments. The exemption flowing from the SEZ Act cannot be curtailed by conditions imposed through notifications issued under other enactments. The refund arises only because service tax was paid on services which were otherwise eligible for exemption for authorized operations of the SEZ unit. Once the substantive entitlement under Section 26 is established, a procedural stipulation in the notification cannot be applied in a manner which completely defeats such entitlement - While refund claims before Departmental Authorities are ordinarily required to be processed within the statutory mechanism, such procedural requirements contained in notifications cannot be applied so as to defeat the substantive exemption available to SEZ units in respect of authorized operations - The present case is distinguishable from cases where the very entitlement to refund arises only from an exemption notification. The substantive exemption flows from Section 26 of the SEZ Act whereas the notification provides the machinery for extending the benefit by way of refund - Accordingly, the refund of service tax cannot be rejected solely on the ground that the claim was beyond the period prescribed under Notification No. 9/2009-ST - The appeal filed by the Revenue is dismissed [Read less]

Service Tax - CENVAT credit disallowance on services received at unregistered premises and work contract services, Extended period of limitation, Penalty under Section 77 and 78 of Finance Act 1994 - Whether CENVAT credit can be disallowed in respect of services received at unregistered premises whether work contract services used for construction and setting up can be denied CENVAT credit whether extended period of limitation can be invoked and whether interest and penalties are imposable when extended period is not sustainable - HELD - Jurisdictional High Court in Samsung India case has held that refund cannot be denied ... [Read more]

Service Tax - CENVAT credit disallowance on services received at unregistered premises and work contract services, Extended period of limitation, Penalty under Section 77 and 78 of Finance Act 1994 - Whether CENVAT credit can be disallowed in respect of services received at unregistered premises whether work contract services used for construction and setting up can be denied CENVAT credit whether extended period of limitation can be invoked and whether interest and penalties are imposable when extended period is not sustainable - HELD - Jurisdictional High Court in Samsung India case has held that refund cannot be denied to assessee merely on basis of non-registration of premises and that under Rules 3 of CENVAT Credit Rules 2004 it is not condition precedent that input services must be received at registered premises only. Demand relating to CENVAT credit on services at unregistered premises is set aside - Regarding work contract services Supreme Court in Larsen and Turbo Ltd has distinguished works contracts as separate species from service contracts. Work contract services exclude services used for construction or execution of works contract of building or civil structure except for specified services. Appellant has not produced evidence showing services were for repair renovation or modernization of existing facilities rather than construction or setting up of new premises - Appellant availed credit on work contract services for construction setting up of BPO branches and determination of proper officer is not shown to be perverse. Demand relating to work contract services is upheld - Demand for CENVAT credit on services at unregistered premises is set aside. Demand for work contract services is upheld for period 2014-15 only. Extended period of limitation is not invoked. Interest is confirmed for demand upheld. Penalties under Section 77 and 78 are set aside – The appeal is partly allowed - Extended period of limitation - Appellant declared CENVAT credit taken in ST-3 returns filed regularly and filed refund claims under Rule 5 of CENVAT Credit Rules 2004 showing all facts were in knowledge of department. Mere non-declaration or delayed knowledge at audit stage is not sufficient to invoke extended period when returns were regularly filed declaring credit taken. Act of commission or omission on part of appellant determines invocation of extended period not manner in which department determined inadmissible credit was taken. Extended period cannot be invoked as no act of omission or commission by appellant has been specified that led to conditions for invocation. Demand is restricted to normal period of limitation for 2014-15 only. Consequential interest is recoverable for period for which demand is upheld. Penalty under Section 78 cannot be sustained when extended period is not invoked as penalty is linked to invocation of extended period. [Read less]

Customs – Delay in payment of Foreign Travel Tax – Penalty for Delayed Payment – Distinction between Failure to Pay and Delay in Payment – Appellant airline company was charged with penalty under Section 38(3) of Finance Act 1979 for delayed deposit of Foreign Travel Tax collected from passengers. Delay in payment ranged from 1 day to 63 days in six instances. Appellant had prepared demand drafts before due dates but there were delays in depositing same into Government treasury. Appellant contended that delay should not attract penalty as distinct from non-payment and that provisions of Section 38(4) read with Rule... [Read more]

Customs – Delay in payment of Foreign Travel Tax – Penalty for Delayed Payment – Distinction between Failure to Pay and Delay in Payment – Appellant airline company was charged with penalty under Section 38(3) of Finance Act 1979 for delayed deposit of Foreign Travel Tax collected from passengers. Delay in payment ranged from 1 day to 63 days in six instances. Appellant had prepared demand drafts before due dates but there were delays in depositing same into Government treasury. Appellant contended that delay should not attract penalty as distinct from non-payment and that provisions of Section 38(4) read with Rule 4 and 9 would apply instead of Section 38(3) – Whether delayed payment of Foreign Travel Tax can be equated with non-payment and whether penalty under Section 38(3) is automatic once timeline is breached – HELD – Expression ‘fails to pay’ occurring in Section 38(3) means non-payment not delay in payment. Legislature has carefully used phrase fails to pay implying non-payment. If legislative intent was to cover delayed payment different expression would have been used. Failure to pay cannot be equated with delay in making payment. Delayed payment of Foreign Travel Tax into Government treasury cannot be equated with non-payment. Section 38(4) read with Rules 4 and 9 deals with delayed payment situation - Timeline for deposit of Foreign Travel Tax and filing of returns is not inflexible. Discretion is vested on Collector of Customs to condon delay on sufficient cause shown. Imposition of penalty is not automatic moment timeline is breached. Officer of customs may exercise discretion to decide whether penalty is imposable - Mere delay in depositing tax or filing returns cannot trigger mandatory penalty. Penalty is not imposable insofar Appellant concerned – The penalty imposed on appellant for late deposit of Foreign Travel Tax is set aside and quashed. Any amount paid as penalty shall be refunded with interest at nine percent per annum. Bank guarantee furnished by Appellant stands discharged – The appeal is allowed [Read less]

Service Tax - Delay in Assessment Proceedings – Violation of Statutory Timelines – Arbitrary Order – Petitioner filed writ petition challenging Order-in-Original dated 12.03.2025 confirming demand for Service Tax and imposing penalties under Finance Act 1994. Show cause notice was issued on 05.10.2016. First personal hearing was granted only on 05.04.2024 after nearly 2704 days. Order was passed on 12.03.2025 after approximately 8.5 years from issuance of show cause notice – Whether impugned order was manifestly arbitrary and time-barred for violation of timelines prescribed under Section 73(4B) of Finance Act 1994... [Read more]

Service Tax - Delay in Assessment Proceedings – Violation of Statutory Timelines – Arbitrary Order – Petitioner filed writ petition challenging Order-in-Original dated 12.03.2025 confirming demand for Service Tax and imposing penalties under Finance Act 1994. Show cause notice was issued on 05.10.2016. First personal hearing was granted only on 05.04.2024 after nearly 2704 days. Order was passed on 12.03.2025 after approximately 8.5 years from issuance of show cause notice – Whether impugned order was manifestly arbitrary and time-barred for violation of timelines prescribed under Section 73(4B) of Finance Act 1994 – HELD – Section 73(4B) provides that Central Excise Officer shall determine amount of service tax due within one year from date of notice where it is possible to do so in cases falling under proviso to sub-section 1 or proviso to sub-section 4A. Extended period of limitation under proviso to Section 73(1) has been invoked on grounds of willful suppression attracting Section 73(4B)(b). Authority was duty bound to complete adjudication as expeditiously as possible. Respondents have failed to provide any justifiable cause or reason for the inordinate delay. No representation or request for exemption can indefinitely extend statutory timeline. Section 33A limits adjournments to three during proceedings. Impugned order being passed after undue and unexplained delay of nearly 8.5 years is violative of Section 73(4B)(b) of Finance Act 1994 and is arbitrary and bad in law – The impugned order is set aside and quashed. Writ petition stands allowed [Read less]

Service Tax – Taxability of services received from outside India through permanent establishment in foreign country – Applicability of Section 66A of Finance Act, 1994 – Treatment of foreign permanent establishment as separate person – Whether services received by Appellant through its permanent establishment in foreign country are taxable under Section 66A of Finance Act, 1994 and whether demand for period prior to 01.07.2012 is barred by period of limitation - HELD – Where a person carries on business through a permanent establishment in India and through another permanent establishment in a country outside Ind... [Read more]

Service Tax – Taxability of services received from outside India through permanent establishment in foreign country – Applicability of Section 66A of Finance Act, 1994 – Treatment of foreign permanent establishment as separate person – Whether services received by Appellant through its permanent establishment in foreign country are taxable under Section 66A of Finance Act, 1994 and whether demand for period prior to 01.07.2012 is barred by period of limitation - HELD – Where a person carries on business through a permanent establishment in India and through another permanent establishment in a country outside India, such permanent establishments are treated as separate persons for purposes of Section 66A. The R&D facility established in the foreign country to undertake research and development activities is liable to be treated as fixed establishment. Expenses incurred by the Indian establishment in relation to services provided by the foreign establishment constitute consideration for services received from outside India. Such services are taxable under Section 66A read with provisions relating to reverse charge mechanism. However, in the absence of allegation of mala fide intention in the show cause notice, demand for period prior to 01.07.2012 is barred by period of limitation as the extended period of limitation cannot be invoked – The appeal is partly allowed to the extent that demand for period prior to 01.07.2012 is set aside and only the amount already deposited being confirmed along with interest due thereon - Service Tax – Show Cause Notice vagueness – Specificity of demand for services received from outside India – Applicability of principle that SCN must specify nature of taxable service and statutory category – Whether plea of vagueness can be entertained when assessee has provided detailed reply to show cause notice with invoice-wise and year-wise details and supporting documents – HELD – Though show cause notice lacked specific classification for other heads of expenditure, in respect of Annexure C the demand was clearly indicating the nature of service received and expenditure incurred for which money was transferred to branch office in foreign country. The plea of vagueness cannot be entertained when the assessee has itself made detailed submissions to SCN providing invoice-wise and year-wise details of transactions, supporting documents and relevant contractual agreements. Having fully understood the SCN and provided comprehensive reply thereto admitting to the payments and furnishing documentary evidence, the assessee cannot thereafter take the plea of vagueness. The principle that adjudicating authority should not traverse beyond SCN and that SCN should not be generic but must contain specific clarification is settled law – Appeal rejected on this ground - Service Tax – Reimbursable expenses – Distinction between reimbursement and consideration for services – Applicability of benefit of exemption for reimbursements – Whether amounts paid to foreign service providers represent reimbursable expenses or consideration for services rendered – HELD – Expenditures incurred represent consideration for services provided by foreign service provider and not reimbursable expenses. Reimbursable expenses are those which are incurred by service provider over and above the value of service provided as per transaction agreement. In present case, amounts paid to foreign service provider either directly or through branch office were consideration for services actually rendered. Such charges do not fall under category of reimbursable expenses and are not eligible for exemption granted in respect of reimbursements. The principle laid in Intercontinental Consultants case regarding exclusion of reimbursable expenses applies only to true reimbursements and not to consideration for services received – Appeal rejected on this ground - Service Tax – Valuation of taxable services on reverse charge basis – Applicability of Section 67(2) of Finance Act, 1994 – Whether service tax value to be determined on cum tax basis - Whether Section 67(2) providing for cum tax valuation is applicable to reverse charge mechanism of service tax – HELD – Section 67(2) which provides for determination of value of taxable service as cum tax amount applies only to cases where service tax is demanded from service provider on forward charge basis. In reverse charge mechanism, service tax is demanded from service recipient who is the person receiving services from outside India. Section 67(2) is not applicable to reverse charge cases. The demand of service tax worked out by treating entire amount paid to foreign service provider as consideration for services is correct and sustainable. The reliance placed on decisions regarding forward charge basis are not applicable to reverse charge mechanism – Appeal rejected on this ground - Service Tax – Period of limitation – Extended period under proviso to Section 73 – Invocation of extended period in absence of mala fide intention – Whether extended period of limitation under proviso to Section 73 can be invoked in absence of allegation or finding of mala fide intention – HELD – In the absence of any allegation of mala fide intention or conscious and deliberate wrongdoing in show cause notice, the demand for period prior to 01.07.2012 is barred by the normal period of limitation. Extended period of limitation can be invoked only where there is evidence of fraud, collusion, wilful misstatement or suppression of facts or contravention of provisions with intent to evade payment of tax. Mere non-payment or non-disclosure of transactions when no mala fide intention is attributed does not justify invocation of extended period. Further, for period prior to 01.07.2012 when positive list regime was in operation, show cause notice must establish specific taxable service and statutory category thereunder which was not done – Demand for this period is set aside - Service Tax – Penalty under Section 78 of Finance Act, 1994 – Imposition of penalty for non-payment – Condition of wilful non-disclosure for invocation of penalty – – Whether penalty under Section 78 can be imposed without allegation or finding of wilful non-disclosure with intent to evade payment of tax – HELD – Penalty under Section 78 cannot be imposed where the notice does not allege or the order does not record a finding that the assessee wilfully suppressed facts or committed non-disclosure with intent to evade payment of tax. The fact that service tax was not paid does not by itself attract penalty. In the present case since the demand pertains to services for which credit would have been available as input service credit and the entire demand is revenue neutral, there is no mala fide intention attributable to assessee. In absence of wilful and deliberate wrongdoing, penalty under Section 78 cannot be sustained – Penalty set aside - Service Tax – Penalty under Section 77 of Finance Act, 1994 – Contravention of provisions of Section 70 – Non-filing of true and correct returns – Whether penalty under Section 77 can be imposed where assessee has regularly filed service tax returns throughout the period – HELD – Penalty under Section 77 for alleged contravention of Section 70 pertaining to non-filing of true and correct ST-3 returns cannot be imposed where the assessee has filed returns regularly throughout the entire period under consideration. Penalty provision applies only where there is evidence of deliberate failure to file prescribed returns. Regular filing of returns by assessee demonstrates compliance with procedural requirements – Penalty set aside. [Read less]

GST - Audit under Section 65 - Communication of audit findings under Rule 101(5) CGST Rules, 2017 in Form GST ADT-02 - Apprehension of recovery without adjudication - Distinction between audit report and adjudication order - Petitioner apprehended that recovery would be effected on basis of audit findings without there being any adjudication proceeding - HELD - The communication of audit findings is administrative action in nature only and does not constitute adjudication. Rule 101(5) provides that on conclusion of audit, proper officer shall inform findings of audit to registered person in accordance with provisions of su... [Read more]

GST - Audit under Section 65 - Communication of audit findings under Rule 101(5) CGST Rules, 2017 in Form GST ADT-02 - Apprehension of recovery without adjudication - Distinction between audit report and adjudication order - Petitioner apprehended that recovery would be effected on basis of audit findings without there being any adjudication proceeding - HELD - The communication of audit findings is administrative action in nature only and does not constitute adjudication. Rule 101(5) provides that on conclusion of audit, proper officer shall inform findings of audit to registered person in accordance with provisions of sub-section 6 of Section 65 in Form GST ADT-02. Such communication is merely informing registered person of audit findings and does not amount to adjudication order. It is obvious that GST Department shall take further action in accordance with provisions of CGST Act - The apprehension of petitioner that recovery will be effected on basis of such information is misconceived – The petition is disposed of with finding that impugned communication is merely administrative in nature and does not vitiate the proceedings - the petition is disposed of [Read less]

GST - Violation of principles of natural justice - Denial of opportunity to submit supporting documents before passing adverse order - Authority held that appellant could not submit purchase and sales ledger, purchase and sales register and taxable and exempted sales bills and invoices till date and that submitted documents were not sufficient to refute allegations levelled in SCN. Accordingly, appeal was decided against petitioner without allowing submission of all documents - Whether denial of opportunity to produce documents in support of claim before passing adverse order amounts to violation of natural justice - HELD ... [Read more]

GST - Violation of principles of natural justice - Denial of opportunity to submit supporting documents before passing adverse order - Authority held that appellant could not submit purchase and sales ledger, purchase and sales register and taxable and exempted sales bills and invoices till date and that submitted documents were not sufficient to refute allegations levelled in SCN. Accordingly, appeal was decided against petitioner without allowing submission of all documents - Whether denial of opportunity to produce documents in support of claim before passing adverse order amounts to violation of natural justice - HELD - Not allowing petitioner to produce documents in support of its claim amounts to violation of principle of natural justice more so when authorities are deciding matter which is against petitioner and to its detriment. Petitioner who is being penalized ought to be given every chance to defend himself before authorities concerned who have decided to impose penal order on petitioner. The right to defend one's case before a decision is made against one is a fundamental principle of natural justice and cannot be denied merely because adjournment was sought to gather documents - The fact that documents were sought to be submitted during proceedings itself demonstrates petitioner's bonafides and intention to support its case with evidence. Writ petition is disposed of by directing petitioner to submit all documents relating to proceeding within period of two weeks. Respondents directed to pass fresh order upon consideration of documents so submitted by petitioner and to pass reasoned order – The petition is disposed of [Read less]

GST - Scope of High Court interference under Article 226 when statutory remedy is available, Distinction between denial of hearing and challenge to merits of adjudication - Show Cause Notice was issued under Section 74 of the CGST Act alleging fraud, wilful misstatement and suppression of facts - Whether, notwithstanding the availability of an efficacious statutory remedy of appeal under Section 107 of the CGST Act, the High Court should entertain a writ petition under Article 226 when the challenge essentially relates to the correctness of factual findings and appreciation of material placed on record - HELD - Although an... [Read more]

GST - Scope of High Court interference under Article 226 when statutory remedy is available, Distinction between denial of hearing and challenge to merits of adjudication - Show Cause Notice was issued under Section 74 of the CGST Act alleging fraud, wilful misstatement and suppression of facts - Whether, notwithstanding the availability of an efficacious statutory remedy of appeal under Section 107 of the CGST Act, the High Court should entertain a writ petition under Article 226 when the challenge essentially relates to the correctness of factual findings and appreciation of material placed on record - HELD - Although an alternative statutory remedy does not operate as an absolute bar to the exercise of writ jurisdiction, the High Court may entertain a petition under Article 226 only in exceptional circumstances - A distinction must be maintained between a case where a party is denied an opportunity of hearing and one where, despite having been heard, the party disputes the manner in which its defence or documents have been considered. The latter constitutes a challenge to the merits of the adjudication and is ordinarily amenable to the statutory appellate remedy - In the present case, the Petitioner participated in the adjudication proceedings, filed a detailed reply to the SCN and placed documents in support of its defence. The Petitioner did not demonstrate any patent denial of an opportunity to present its case. Accordingly, the grounds urged did not disclose any manifest violation of the principles of natural justice or exceptional circumstance warranting exercise of the extraordinary jurisdiction under Article 226 - The writ petition is dismissed - Validity of Consolidated Show Cause Notice Covering Multiple Financial Years - The Petitioner contended that a single Show Cause Notice could not have been issued covering the financial years 2017-18 to 2021-22 - Whether the statutory scheme under the CGST Act permits issuance of a consolidated Show Cause Notice covering multiple financial years - HELD - The statutory scheme does not prohibit issuance of a consolidated notice covering multiple financial years. Sections 73(3) and 74(3) of the CGST Act employ the expressions for any period and for such periods, whereas Sections 73(10) and 74(10) refer to the financial year for the purpose of prescribing the limitation for passing the order. The distinction is material and the fact that the limitation prescribed is computed with reference to the financial year does not impose a requirement that a separate Show Cause Notice must necessarily be issued for each financial year - The statutory language contemplates a notice relating to a period which may extend beyond one financial year. Particularly in cases involving alleged fraudulent availment or utilisation of input tax credit, transactions spread across different financial years may be required to be examined together to ascertain the alleged pattern of fraud or suppression. The mere issuance of a consolidated Show Cause Notice covering multiple financial years does not constitute a patent lack of jurisdiction warranting interference under Article 226 of the Constitution - The consolidated Show Cause Notice covering multiple financial years is valid and does not constitute a jurisdictional defect. The question of limitation with respect to individual demands shall be examined by the appellate authority in accordance with law. [Read less]

GST - Inadvertent payment of tax under CGST and SGST instead of IGST, Remedy for taxes wrongfully paid, Appropriation of amounts towards correct tax head instead of refund mechanism - Petitioner declared outward supply as IGST in GSTR 1 return but inadvertently paid the tax under CGST and SGST heads while filing GSTR 3B return – Dept issued order imposing tax and interest acknowledging the clerical error but noting no mechanism exists to transfer tax from one head to another - The Department contended the only remedy is to discharge liability and apply for refund of erroneously paid amounts under the refund mechanism - W... [Read more]

GST - Inadvertent payment of tax under CGST and SGST instead of IGST, Remedy for taxes wrongfully paid, Appropriation of amounts towards correct tax head instead of refund mechanism - Petitioner declared outward supply as IGST in GSTR 1 return but inadvertently paid the tax under CGST and SGST heads while filing GSTR 3B return – Dept issued order imposing tax and interest acknowledging the clerical error but noting no mechanism exists to transfer tax from one head to another - The Department contended the only remedy is to discharge liability and apply for refund of erroneously paid amounts under the refund mechanism - Whether a registered person who has inadvertently paid tax under CGST and SGST instead of IGST due to clerical error can claim appropriation of such amounts towards the correct tax head or must follow refund mechanism, and whether interest is chargeable where entire tax liability was ultimately discharged - HELD - Section 77 CGST Act, 2017 addresses situations where CGST and SGST are paid erroneously under misconception that transaction is intra-State when subsequently held to be inter-State supply, providing refund and exempting interest. The present situation differs as it involves inadvertent clerical error in remittance under wrong tax heads when entire tax liability was intended and ultimately discharged - The principle underlying Section 77 that interest should not be charged when taxable person has remitted necessary taxes may apply by analogy. The petitioner has discharged entire tax liability within prescribed period. Requiring petitioner to first pay additional liability and thereafter seek refund would constitute unjustified penalisation - Procedural appropriation of amounts already available towards correct liability should be permitted rather than requiring full refund-claim mechanism – The petitioner may file application requesting aggregate amount inadvertently remitted under CGST and SGST heads be appropriated towards IGST liability; if procedurally necessary, refund application may be submitted - Respondents are directed to appropriate amounts already available towards petitioner's IGST liability. No interest to be charged - the writ petition is disposed of [Read less]

Customs - Invocation of Extended Period of Limitation under Section 28(4) of Customs Act in cases of alleged mis-declaration of Country of Origin - Mis-declaration of Country of Origin of imported polyester knitted fabrics – Appellant imported polyester knitted fabrics and submitted certificates of origin issued by Malaysian authorities. Departmental authorities alleged that the goods were actually of Chinese origin and the certificates of origin were fabricated. Show cause notice invoking extended period of limitation was issued alleging evasion of customs duty through mis-declaration of country of origin - Whether exte... [Read more]

Customs - Invocation of Extended Period of Limitation under Section 28(4) of Customs Act in cases of alleged mis-declaration of Country of Origin - Mis-declaration of Country of Origin of imported polyester knitted fabrics – Appellant imported polyester knitted fabrics and submitted certificates of origin issued by Malaysian authorities. Departmental authorities alleged that the goods were actually of Chinese origin and the certificates of origin were fabricated. Show cause notice invoking extended period of limitation was issued alleging evasion of customs duty through mis-declaration of country of origin - Whether extended period of limitation under Section 28(4) can be invoked for alleged mis-declaration of country of origin when the appellant had no conscious knowledge of the infirmity in the certificates and was not instrumental in obtaining fabricated certificates – HELD – Extended period of limitation under Section 28(4) can be invoked only when there is specific and explicit averment in the show cause notice and credible evidence establishing that the appellant was involved in collusion, wilful misstatement or suppression of facts. The burden to prove mala fide conduct lies on the department - In the present case, the appellant consistently maintained throughout the proceedings that he had received the certificates of origin from the foreign supplier and had no reason to believe they were not genuine. Department failed to establish any positive act by the appellant to obtain fabricated certificates or that he had conscious knowledge of the inaccuracies in the certificates - Merely because goods were imported with certificates of origin later found to be fabricated does not render the importer liable to extended period unless it is established that the importer stepped into the shoes of the supplier and was instrumental in obtaining the fabricated certificate. The absence of any culpatory statement and the consistent non-committal stance of the appellant throughout multiple recorded statements cannot be interpreted as admission of involvement in fraud. Extended period cannot be invoked on the basis of bare assertions or suspicions arising from delayed overseas verification reports - The delay in conducting verification beyond the stipulated time period of two months and even thereafter obtaining verification response only after considerable inordinate delay further militates against invocation of extended period. The SCN having not specifically alleged the ingredients of Section 28(4) against the appellant, the invocation of extended period is not legally sustainable – The extended period of limitation is not invokable. The demand for differential duty on the basis of alleged mis-declaration cannot be sustained and set aside – The appeals are allowed - Country of Origin Certificates – Verification procedure under Rule 7(c) and Rule 7(d) of Customs Tariff Determination of Origin of Goods under Preferential Trade Agreement Rules 2009 – Appellant submitted country of origin certificates purportedly issued by Malaysian authorities - Department sought verification of certificates from Malaysian authorities but only 15 certificates out of 29 were verified - Whether the mandatory procedural requirements of Rule 7(c) and Rule 7(d) can be dispensed with on the ground that fraud is alleged and Rule 23 relating to fraudulent acts applies – HELD – Rule 23 merely provides for cooperation between member countries in taking action against persons involved in fraudulent acts and does not dispense with the procedural requirements of Rule 7(c) and Rule 7(d). These are duly incorporated domestic provisions forming part of the binding statutory framework and cannot be ignored. When a treaty provision has not been incorporated into domestic law, it cannot be enforced in derogation of municipal law. However, when Rules have been incorporated into domestic law and given statutory recognition, they must be followed by the customs authorities - Rule 23 may justify deeper investigation but cannot be read to dispense with requirements of Rule 7(c) and Rule 7(d). In the present case, only 15 certificates were verified and the verification report merely stated that certificates were not authentic and belonged to other company without providing detailed exhaustive clarification addressing the grounds raised by the importing authority or specifying to whom the actual certificates were issued. The procedure contemplated under Rule 7(c) and Rule 7(d) had not been properly followed - The verification process having not been followed in totality, the allegation of fraud cannot be held to be established - Confiscation of Imported Goods on Ground of alleged Mis-declaration of Country of Origin - Goods imported and cleared by Customs authorities as well as goods seized were proposed to be confiscated on ground of misdeclaration of country of origin. The department alleged that goods were of Chinese origin but declared to be of Malaysian origin - Whether goods already cleared by customs authorities can be confiscated on ground of subsequent allegation of mis-declaration of country of origin when the allegation of mis-declaration is not established through credible and authenticated evidence – HELD – Goods when already cleared by Customs after due examination and satisfying themselves as to the conditions for clearance cease to be imported goods as per Section 2(f) of Customs Act. Once goods have been imported and cleared for home consumption by the proper officer, it is not open for the revenue to subsequently propose confiscation on allegations not supported by credible authenticated evidence. Unauthenticated photocopies and bare unverified reports from overseas authorities are not sufficient to reject declared transaction value or country of origin. The evidence produced in the case consisting of printouts from overseas authority websites, unsigned documents and letters not bearing official stamps and seals do not possess evidentiary value - The goods were exported and imported on the basis of country of origin certificates purportedly issued by competent Malaysian authorities and samples drawn were not subjected to test analysis that was shared with appellant. The mere suspicion arising from delayed and incomplete overseas verification report is not sufficient to confiscate goods already cleared. The country of origin of goods cannot be held to be established as Chinese when proper verification procedure had not been followed – Confiscation of goods already cleared for home consumption cannot be upheld. The allegation of mis-declaration of country of origin not having been established through credible and authenticated evidence, the goods stand to be of Malaysian origin as declared. [Read less]

Customs - Interest on voluntary deposit during investigation – Rejection of interest claim on ground that refund had been sanctioned within 03 months from date of filing refund application - Whether Appellant was entitled to interest on amounts voluntarily deposited during investigation when refund has been allowed within 03 months – HELD - The issue regarding payment of interest on amounts voluntarily deposited during investigation is no more res intergra and has been decided by various case law. The consistent legal approach of High Courts and Supreme Court allowing interest even in absence of statutory provisions is... [Read more]

Customs - Interest on voluntary deposit during investigation – Rejection of interest claim on ground that refund had been sanctioned within 03 months from date of filing refund application - Whether Appellant was entitled to interest on amounts voluntarily deposited during investigation when refund has been allowed within 03 months – HELD - The issue regarding payment of interest on amounts voluntarily deposited during investigation is no more res intergra and has been decided by various case law. The consistent legal approach of High Courts and Supreme Court allowing interest even in absence of statutory provisions is now a judicial precedent. When a decision has been consistently followed at various fora including Divisional Benches of the Tribunal and various High Courts, same becomes a judicial precedent worthy to be followed even in absence of statutory provisions - The Tribunal is bound by law laid down by Hon'ble Supreme Court. Interest shall be calculated at 12% from date of deposit till date of refund – The appeal is allowed [Read less]

Central Excise - Valuation of excisable goods - Tooling advances received from buyer - Inclusion in assessable value - Application of Rule 6 of Central Excise Valuation Rules, 2000 - Appellant contended that tooling cost required to be amortised over finished goods manufactured with tools and that proportionate cost had already been included in assessable value through supplementary invoices - Adjudicating Authority accepted amortisation method and dropped proceedings. Commissioner (Appeals) relayed on Circular No.170/4/96-CX to mandate Cost Accountant certificate and remanded for fresh determination - Whether entire tooli... [Read more]

Central Excise - Valuation of excisable goods - Tooling advances received from buyer - Inclusion in assessable value - Application of Rule 6 of Central Excise Valuation Rules, 2000 - Appellant contended that tooling cost required to be amortised over finished goods manufactured with tools and that proportionate cost had already been included in assessable value through supplementary invoices - Adjudicating Authority accepted amortisation method and dropped proceedings. Commissioner (Appeals) relayed on Circular No.170/4/96-CX to mandate Cost Accountant certificate and remanded for fresh determination - Whether entire tooling advance is includible in assessable value or only proportionate amortised tooling cost attributable to finished goods - HELD - Section 4 of Central Excise Act and specifically Rule 6 of Central Excise Valuation Rules, 2000, with its Explanation 1, contemplate that value of tools, dies, moulds used in production must be apportioned as appropriate and not automatically loaded on single clearance. What is required is determination of portion attributable to goods being valued - Circular No.170/4/96-CX proceeds on principle of proportionate valuation and does not mandate Cost Accountant as inflexible requirement. Evidence on record including tooling records with tool descriptions and values, production records, supplementary invoice referring to tool amortisation cost with corresponding assessable value and duty, and Chartered Accountant certificate establishes actual tooling activity and inclusion of amortised cost in assessable value. Department has not identified any specific deficiency in amortisation – Further, extended period invocation cannot be sustained as tooling advances and proposed method of amortisation were specifically brought to Department's notice during audit. Mere failure or negligence in adopting correct valuation does not establish suppression with intent to evade where dispute concerns valuation methodology and facts disclosed to Department. No material establishing deliberate suppression or intent to evade duty warranting penalty under Section 11AC. The Order-in-Original dropping proceedings is restored and the appeal is allowed [Read less]

Central Excise - Sugar syrup as intermediate product manufactured for captive consumption - Marketability test - Applicability of Section 2(d) of Central Excise Act, 1944 - Appellant manufactured biscuits exempt from excise duty under Notification No.03/2006-CE and also manufactured sugar syrup captively for use in biscuit production without paying excise duty during September 2009 to September 2011, claiming that sugar syrup being non-marketable intermediate product was not excisable goods. Revenue issued show cause notice proposing recovery of central excise duty under Section 11A(4) along with interest and penalty - Whe... [Read more]

Central Excise - Sugar syrup as intermediate product manufactured for captive consumption - Marketability test - Applicability of Section 2(d) of Central Excise Act, 1944 - Appellant manufactured biscuits exempt from excise duty under Notification No.03/2006-CE and also manufactured sugar syrup captively for use in biscuit production without paying excise duty during September 2009 to September 2011, claiming that sugar syrup being non-marketable intermediate product was not excisable goods. Revenue issued show cause notice proposing recovery of central excise duty under Section 11A(4) along with interest and penalty - Whether sugar syrup containing 80 percent sugar content manufactured by appellant and captively consumed in manufacture of exempt biscuits is an excisable good - HELD - The test of marketability under Section 2(d) of CEA, 1944, as explained in the explanation inserted by Finance Act, 2008, requires that goods must be capable of being bought and sold for a consideration and are deemed to be marketable. So long as product is capable of being bought and sold, it is excisable - Marketability is a decisive test of dutiability and not actual marketing. The sugar syrup in the present case contains sugar content of 80 percent by weight and would have shelf life without addition of any preservative. The sugar syrup satisfies the requirement of marketability and is therefore both marketable and excisable goods - The sugar syrup manufactured as per own specifications with sugar content of 80 percent by weight and intended for their principal comes into existence as result of process of manufacture and is distinct product capable of being bought and sold - Regarding invocation of extended period, the appellant had sent letter indicating various ingredients used in biscuit manufacture, which was generic in nature and not an intimation regarding non-payment of excise duty on sugar syrup as same was manufactured captively and not shown in ER-1 returns filed with department. Accordingly, defence taken by appellant for non-invocation of extended period is not correct and extended period is justified - In case duty liability on sugar syrup is held, appellant should be allowed the Cenvat credit on the quantity of sugar so consumed to manufacture sugar syrup - The demand of central excise duty, recovery of interest and imposition of penalty under Section 11AC are upheld - The appeal is partially allowed [Read less]

GST - Denial of Input Tax Credit on account of GSTR-3B and GSTR-2A Mismatch - Reliance on mismatch without Invoice-Wise Verification - Appellant claimed Input Tax Credit pertaining to prior financial year invoices in the subsequent financial year. Revenue alleged excess Input Tax Credit based on mismatch between FORM GSTR-3B and FORM GSTR-2A without examining the Appellant's contention that the difference arose because credit pertaining to prior financial year was availed within the time permitted under Section 16(4) of the CGST Act, 2017 - Whether the difference between credit claimed in FORM GSTR-3B and credit reflected ... [Read more]

GST - Denial of Input Tax Credit on account of GSTR-3B and GSTR-2A Mismatch - Reliance on mismatch without Invoice-Wise Verification - Appellant claimed Input Tax Credit pertaining to prior financial year invoices in the subsequent financial year. Revenue alleged excess Input Tax Credit based on mismatch between FORM GSTR-3B and FORM GSTR-2A without examining the Appellant's contention that the difference arose because credit pertaining to prior financial year was availed within the time permitted under Section 16(4) of the CGST Act, 2017 - Whether the difference between credit claimed in FORM GSTR-3B and credit reflected in FORM GSTR-2A can be treated as inadmissible excess without invoice-wise verification – HELD - The statutory provision Section 16(4) as it stood for the transition period permitted a taxpayer to claim credit on prior year invoices up to the due date of the subsequent year return. FORM GSTR-2A was at the relevant time a facilitation tool and not a statutory bar to credit. The Circular No. 183/15/2022-GST specifically directs the Proper Officer to verify, not summarily disallow, cases where prior year credit has been claimed in subsequent year returns - The finding that non-appearance of an invoice in FORM GSTR-2A shows that the supplier did not pay tax is an assumption, not a finding reached after verification. The three precedents relied upon by the First Appellate Authority namely Mahalakshmi Cotton Ginning Processing and Oil Industries v. State of Maharashtra, ALD Automotive Private Limited v. CTO, and Microqual Techno Ltd. v. State of Karnataka rest on facts and statutory provisions materially different from the present case and could not have been relied upon to disallow the credit - The demand cannot be sustained as it stands without invoice-wise verification of the prior year credit - The demand for excess credit raised is not sustainable without proper invoice-wise verification and reconciliation. The matter is remanded to the Proper Officer for de novo adjudication with directions to carry out invoice-wise verification with reference to prior year records - The appeal is allowed by way of remand - Violation of Natural Justice - Mandatory personal hearing - Section 75(4) - Absence of personal hearing before confirmation of demand - The Show Cause Notice issued under Section 73 recorded the date, time and venue of personal hearing as NA and no personal hearing was granted to the Appellant before the Order-in-Original was passed confirming the entire demand - Whether the absence of a personal hearing before confirmation of demand under Section 73(9) vitiates the Order-in-Original – HELD - The Section 75(4) makes a hearing mandatory once an adverse decision is contemplated against the person, irrespective of whether a specific request for hearing was made. The absence of any such hearing before the Order-in-Original was passed is a clear infirmity - The Show Cause Notice itself records the date, time and venue of personal hearing as NA and nothing on the record shows that any hearing was in fact granted before the demand was confirmed. The absence of a personal hearing, by itself, justifies setting aside the Order-in-Original – The Appellant shall be granted a proper opportunity of personal hearing, with the date, time and venue duly communicated, and shall be permitted to produce its books of account, invoices and any further reconciliation statements, before any fresh order is passed. The issue is answered in favour of assessee - Notice under Section 61 / Form GST ASMT-10 - Scrutiny of returns - Independent provisions Section 61 and Section 73 - Absence of notice in FORM GST ASMT-10 - The Proper Officer initiated proceedings under Section 73 read with Rule 142 following an audit assignment, not pursuant to scrutiny under Section 61 - Whether the absence of a notice in FORM GST ASMT-10 under Section 61 renders proceedings initiated directly under Section 73 invalid – HELD - Section 61 and Section 73 are independent provisions. Section 61 provides one particular route for scrutiny of returns which requires a notice in FORM GST ASMT-10. Where the Proper Officer proceeds directly under Section 73 read with Rule 142 without first invoking Section 61, the absence of a FORM GST ASMT-10 notice does not, by itself, invalidate the proceedings. The present proceedings were initiated pursuant to a specific assignment under Section 73 read with Rule 142 following an audit reference, and not pursuant to scrutiny under Section 61. The decisions relied upon by the Appellant on this point are distinguishable on facts and do not invalidate the proceedings under Section 73. However, this ground does not cure the infirmities found on the prior issues which go to the root of the impugned orders. [Read less]

Service Tax - Classification of mining activities as cargo handling service - Appellant engaged in activities of excavation, loading, transportation and unloading of limestone from mine face to crusher situated within mining lease area - On introduction of taxable service of Mining of Mineral, Oil or Gas with effect from 01.06.2007, Appellant obtained service tax registration and discharged service tax under that category - Show cause notice for earlier period from February 2005 to December 2009 proposed to classify activities as Cargo Handling Service and invoking extended period of limitation. Commissioner confirmed dema... [Read more]

Service Tax - Classification of mining activities as cargo handling service - Appellant engaged in activities of excavation, loading, transportation and unloading of limestone from mine face to crusher situated within mining lease area - On introduction of taxable service of Mining of Mineral, Oil or Gas with effect from 01.06.2007, Appellant obtained service tax registration and discharged service tax under that category - Show cause notice for earlier period from February 2005 to December 2009 proposed to classify activities as Cargo Handling Service and invoking extended period of limitation. Commissioner confirmed demand under Cargo Handling Service - Whether activities of excavation, loading, transportation and unloading of limestone carried out within mining area are liable to service tax under Cargo Handling Service particularly for period prior to introduction of Mining of Mineral, Oil or Gas service with effect from 01.06.2007 – HELD - The activities constitute an integrated set of operations within mining area. Cargo handling service contemplates handling of cargo as cargo. Mere loading, unloading or movement of goods when performed in course of execution of another principal service does not ipso facto bring entire composite activity within taxable category of Cargo Handling Services. The real nature and dominant character of the contract are required to be examined - Appellant was not independently engaged for handling limestone as cargo but handling and movement took place within mining area as necessary part of mining operation. Revenue itself accepted these very same activities as mining service after 01.06.2007. No material change in nature of activity before and after 01.06.2007 has been demonstrated - Once essential character is found to be mining mere fact that excavation involves loading and movement cannot convert it into Cargo Handling Service for earlier period. Classification of composite activity cannot be determined by isolating one or two incidental elements - Introduction of specific taxable entry from particular date is relevant circumstance while examining legislative scheme. Extended period cannot be invoked as there was no deliberate suppression with intent to evade payment of service tax - Demand of service tax, interest and penalties is not sustainable and set aside - The appeal is allowed [Read less]

Central Excise - Fraudulent availment of CENVAT Credit - Documentary Evidence - The Appellant manufacturer was alleged to have fraudulently availed CENVAT credit amounting on invoices for raw materials supplied by M/s Bhiwadi Cylinders without actual receipt of goods - Department initiated proceedings based on investigations revealing that the ultimate vendor M/s MAI had not maintained manufacturing facility and had issued invoices without receiving raw materials. Appellant furnished Goods Receipts from the transporter showing delivery to its factory and entries in RG 23A Part-II register showing receipt and usage of the r... [Read more]

Central Excise - Fraudulent availment of CENVAT Credit - Documentary Evidence - The Appellant manufacturer was alleged to have fraudulently availed CENVAT credit amounting on invoices for raw materials supplied by M/s Bhiwadi Cylinders without actual receipt of goods - Department initiated proceedings based on investigations revealing that the ultimate vendor M/s MAI had not maintained manufacturing facility and had issued invoices without receiving raw materials. Appellant furnished Goods Receipts from the transporter showing delivery to its factory and entries in RG 23A Part-II register showing receipt and usage of the raw materials - Whether the Appellant's CENVAT credit should be disallowed on the basis of third-party data and oral statements from investigation when the Appellant produced documentary evidence supporting receipt and usage of goods – HELD - The Appellant had placed sufficient documentary evidence including Goods Receipts from the transporter and RG 23A records establishing receipt of raw materials. The Department had not produced any credible evidence except oral statements recorded during investigation and as per the Indian Evidence Act documentary evidence must prevail over oral evidence - Department had not conducted enquiry from the Appellant or searched its premises and had not followed compliance under Section 9D of the Central Excise Act necessary for admissibility of oral evidence. The burden of proof was on the Department to establish fraudulent availment which stood falsified by the documentary evidence produced by the appellant - The order disallowing the CENVAT credit is set aside and the appeal is allowed [Read less]

Service Tax - Adjustment of excess Service Tax Paid - Succeeding Month or Quarter - Rule 6(4A) of Service Tax Rules - Appellant availed CENVAT credit on service tax paid under Reverse Charge Mechanism on services received from foreign service providers and had made advance tax payments which were utilized against its liability in succeeding years - Department disallowed the adjustment contending that under Rule 6(4A) of the Service Tax Rules such adjustments of excess payment could be made only during the immediate succeeding month or quarter - Whether the adjustment of excess advance service tax paid could be made to a su... [Read more]

Service Tax - Adjustment of excess Service Tax Paid - Succeeding Month or Quarter - Rule 6(4A) of Service Tax Rules - Appellant availed CENVAT credit on service tax paid under Reverse Charge Mechanism on services received from foreign service providers and had made advance tax payments which were utilized against its liability in succeeding years - Department disallowed the adjustment contending that under Rule 6(4A) of the Service Tax Rules such adjustments of excess payment could be made only during the immediate succeeding month or quarter - Whether the adjustment of excess advance service tax paid could be made to a subsequent month or quarter beyond the immediate succeeding month or quarter under Rule 6(4A) of Service Tax Rules – HELD - The Rule 6(4A) does not contain the word immediate and the plain reading of the Rule allows an assessee to adjust the excess amount paid against service tax liability for the succeeding month or quarter. If adjustment could be made only in the immediate succeeding month or quarter, a situation would arise where an assessee has no service tax liability in that immediate period or excess paid is higher than the immediate period's liability making the Rule provision impractical. The Rule intends an assessee to adjust excess payment to liability accrued later thereby avoiding hassles of refund claims and since the excess amount is already in the hands of the Revenue there is no revenue loss in such adjustment and the Revenue is enriched by the interest on the excess amount till adjustment - The adjustment of excess service tax can be made not only in subsequent month or quarter but also in subsequent months or quarters - The impugned order is set aside and the appeals are allowed [Read less]

GST - Applicability of GST on Affiliation Services, Exemption under Entry 66 of Exemption Notification, Issuance of consolidated SCN for multiple tax period - Appellant engaged in field of education undertaking activities such as granting affiliation to schools, conducting public examinations and registering students - Show Cause Notice was issued proposing demand of tax alleging that affiliation services rendered by appellant do not fall within exemption entries 66(a), 66(aa), or 66(b)(iv) of the Exemption Notification No.12/2017-CT(Rate) dated 28.06.2017 - Whether affiliation services provided by appellant to schools con... [Read more]

GST - Applicability of GST on Affiliation Services, Exemption under Entry 66 of Exemption Notification, Issuance of consolidated SCN for multiple tax period - Appellant engaged in field of education undertaking activities such as granting affiliation to schools, conducting public examinations and registering students - Show Cause Notice was issued proposing demand of tax alleging that affiliation services rendered by appellant do not fall within exemption entries 66(a), 66(aa), or 66(b)(iv) of the Exemption Notification No.12/2017-CT(Rate) dated 28.06.2017 - Whether affiliation services provided by appellant to schools constitute supply within the meaning of Section 7(1)(a) read with Section 2(17) of the CGST Act, 2017 and whether affiliation is an independent taxable supply falling outside the exemption under Entry 66(b)(iv) of the Exemption Notification - HELD - The affiliation services provided by appellant to schools constitute independent taxable supply not forming integral part of services relating to admission to or conduct of examination. Entry 66(b)(iv) of the Exemption Notification dated 28.06.2017 is confined to services relating to admission to or conduct of examination by an educational institution. The affiliation provided by appellant relates to defining and accrediting the functionality of the school which is much broader in scope compared to conduct of an entrance examination. Affiliation to the colleges by university is prerequisite for any college to admit students for the course offered. Only after affiliation is granted the interface with the university and the admission of students in the affiliated college will commence - The service of granting affiliation is not part of admission of students or conduct of examination for them. Appellant being a registered society under Societies Registration Act 1860 and not a statutory university constituted under any Parliamentary or State legislative enactment discharging compulsory statutory functions cannot avail benefit of decisions rendered exclusively in context of statutory bodies – The activities of appellant constitute supply under Section 7 read with Section 9 of the CGST Act and are chargeable to GST - The affiliation services provided by appellant including affiliation processing or form charges constitute independent taxable supply not falling within exemption and accordingly demand for affiliation fees for the period 18.06.2021 to November 2023 is upheld - Issuance of SCN for a consolidated period, covering various limitations and the order passed in furtherance thereto for a consolidated period is in accordance with the law or not – HELD – The CGST Act nowhere prohibits issuance of a common Show Cause Notice covering multiple tax periods where the issues arise from the same investigation or audit - The validity of the notice has to be examined with reference to compliance with limitation for each tax period individually, and not merely on the ground that several years have been clubbed together in a single notice - The statutory language of Sections 73(3), 73(4), 74(3) and 74(4) of the Act 2017, employs the expressions “for any period” and “for such periods”, in contradistinction to the expression “financial year” used in Sections 73(10) and 74(10) of the CGST Act, thereby expressly contemplating a notice covering a period spanning more than one financial year - Where a consolidated notice under Section 73 or Section 74 of the Act has been issued and the appellant has been afforded a full and fair opportunity to respond to the allegations therein, the mere fact of consolidation, in the absence of demonstrable prejudice, cannot vitiate or invalidate the proceedings under the GST regime. The appellant has not demonstrated any prejudice flowing from the consolidated format - The proceedings in this particular matter are not vitiated solely on the ground of the issuance of a consolidated SCN and order passed for a consolidated period covering July 2017 to November 2023 - Taxability Of Annual Registration and Late Registration Charges - Appellant contended that annual registration charges as well as late annual registration charges are in nature of affiliation fee for continuance of affiliation of schools being charged annually for continuance of affiliation in default whereof school would stand de-affiliated. Appellant contended that these charges should be exempted not only for period July 2017 to 17th June 2021 but also for subsequent period 18th June 2021 to November 2023 under the Exemption Notification - Whether annual registration charges and late charges qualify for exemption under Entry 66(b)(iv) of the Exemption Notification or receive benefit of regularization granted for affiliation charges - HELD - The annual registration charges as credited in books of account under head annual charges and collected from affiliated schools annually and failure to pay may result in de-affiliation are administrative and preparatory in nature. Exemption entry applies only to services expressly covered therein and exemption cannot be extended to administrative or preparatory charges – The strict construction rule mandated by Constitution Bench does not permit extension of exemption to activities that are preparatory to and not constitutive of conduct of examination. The fact that non-payment may lead to de-affiliation is commercial consequence of contractual obligation and does not transform administrative charge into examination related service - The Circular No. 234/28/2024 dated 11.10.2024 subject matter is confined to affiliation services simpliciter and there is no reference express or implied to annual registration charges renewal charges or late fees for registration as falling within ambit of regularization. Being clarificatory instrument issued in specific context of affiliation services its benefit cannot be extended by inference to distinct category of receipt merely because both arise from same underlying regulatory relationship - Exemption or regularization dispensation being in nature of fiscal concession must be strictly construed and scope cannot be enlarged by implication to categories of supply not expressly covered therein - The annual registration charges and late charges are independent supply distinct from services relating to admission of students or conduct of examinations and do not qualify for exemption - Finding of appellate authority upholding levy of GST on annual registration and late charges is affirmed - Cum-Tax Valuation Under Rule 35 of CGST Rules 2017 - Appellant contended that amounts collected by appellant if taxable at all should be treated as inclusive of GST under Rule 35 of the Rules 2017 - Whether amounts collected by appellant are to be treated as inclusive of GST under Rule 35 of the CGST Rules, 2017 – HELD - Where tax has not been collected separately, gross amount received must be treated as value of taxable service inclusive of tax for purpose of quantifying tax liability. Settled cum-duty or cum-tax jurisprudence developed under erstwhile Central Excise and Service Tax regime applies with equal force to valuation under the CGST Act. Burden placed upon appellant to independently establish GST inclusiveness stands discharged in law once it is demonstrated that no tax was separately collected from recipients - Where gross amount charged does not separately disclose tax component amount charged is to be regarded as inclusive of such tax - In present case first appellate authority has observed that no documentary evidence has been furnished by appellant to substantiate its version that fees collected were inclusive of GST. The burden of proof placed upon appellant is discharged – The appellant is entitled to benefit of cum-tax valuation under Rule 35 of the Rules 2017 and amounts collected by appellant are to be treated as inclusive of GST. This issue is decided in favour of appellant - Invocation of Section 74 of CGST Act 2017 - Fraud Wilful [Read less]

GST - Denial of appellate remedy - Non-communication of adjudication order to updated address - Recovery notice issued without furnishing copy of adjudication order - Petitioner had updated change in registered address in year 2023 but adjudication order dated 27.03.2024 was sent to old address. Accordingly, petitioner did not receive adjudication order and recovery notice in Form DRC-13 was subsequently - Whether recovery notice can be issued when adjudication order has not been communicated to petitioner due to outdated address and whether limitation for appeal starts from date of recovery notice or from date of communic... [Read more]

GST - Denial of appellate remedy - Non-communication of adjudication order to updated address - Recovery notice issued without furnishing copy of adjudication order - Petitioner had updated change in registered address in year 2023 but adjudication order dated 27.03.2024 was sent to old address. Accordingly, petitioner did not receive adjudication order and recovery notice in Form DRC-13 was subsequently - Whether recovery notice can be issued when adjudication order has not been communicated to petitioner due to outdated address and whether limitation for appeal starts from date of recovery notice or from date of communication of adjudication order - HELD – The adjudication order must be communicated to petitioner at registered address and if petitioner has updated address, order must be sent to updated address. Even if petitioner may have come to know about SCN and participated in proceedings, that cannot be held against petitioner to infer knowledge of adjudication order as of its date. Admittedly, adjudication order was sent to address from which petitioner had moved. There could be intervening circumstances which may justify inference that petitioner was not aware of order until service of recovery notice - Period of limitation for appellate remedy is required to be reckoned from date of communication of order to petitioner. Petitioner has now received copy of order and limitation for challenging order must commence from date of receipt of adjudication order by petitioner - Recovery notice issued during period when petitioner was not aware of adjudication order cannot be sustained - Petition is allowed by quashing recovery notice. Petitioner granted liberty to avail remedy against adjudication order with limitation for appeal being computed from date of receipt of adjudication order – The petition is allowed [Read less]

GST - Rejection of Input Tax Credit claim on construction-cum-leasing services under Section 17(5)(d) of the CGST Act, 2017 - Construction not on own account versus construction on own account, Applicability of Supreme Court judgment in Safari Retreats - Petitioner claimed Input Tax Credit on supplies received for construction undertaken with intention to lease the completed properties. The Assessing Authority rejected the ITC claim on the ground that construction for ownership irrespective of subsequent commercial usage falls within Section 17(5)(d) exclusion blocking credit. The Petitioner contended that the assessment o... [Read more]

GST - Rejection of Input Tax Credit claim on construction-cum-leasing services under Section 17(5)(d) of the CGST Act, 2017 - Construction not on own account versus construction on own account, Applicability of Supreme Court judgment in Safari Retreats - Petitioner claimed Input Tax Credit on supplies received for construction undertaken with intention to lease the completed properties. The Assessing Authority rejected the ITC claim on the ground that construction for ownership irrespective of subsequent commercial usage falls within Section 17(5)(d) exclusion blocking credit. The Petitioner contended that the assessment orders ignored the Supreme Court judgment in Safari Retreats case - Whether construction of immovable property intended for subsequent leasing or licensing constitutes construction on own account under Section 17(5)(d) - HELD - Supreme Court in Safari Retreats held that construction cannot be said to be on taxable person's own account if intended to be sold or given on lease or license. Construction is on own account only when made for personal use and not as setting where business is carried out - Ineligibility for ITC arises where construction is for personal use of taxable person or used as premises from where business is carried out. By contrast construction intended for sale, lease or license does not fall within own account exclusion. Leasing is independent outward taxable supply arising after completion of construction and cannot retrospectively alter nature of inward supplies during construction – The findings that expression ‘on own account’ includes situations where registered person constructs property for ownership irrespective of subsequent commercial usage and that leasing does not convert blocked credit into eligible credit are contrary to Supreme Court's legal principles. Proper officer should have dealt with Supreme Court judgment before entering findings - The assessment orders rejecting ITC are set aside and the matters are remanded for reconsideration applying correct principles from Safari Retreats judgment - Respondents directed to re-credit or refund amounts debited from electronic cash or credit ledgers as recovery was initiated without compliance with Rule 142B(1) – The writ petitions are disposed of [Read less]

GST - Cancellation of GST Registration - Opportunity of Hearing and Procedural Defect - Fixing date of hearing before show cause period expires - The date for personal hearing was fixed on 05.03.2024 while the date for filing show cause was 07.03.2024, meaning the hearing was fixed prior to show cause period expiring. Appellant did not submit show cause response and registration was cancelled ex-parte by order dated 22.04.2024 - Whether proper opportunity of hearing was granted as required under Section 75(4) of CGST Act, 2017 which provides that opportunity of hearing shall be granted where adverse decision is contemplate... [Read more]

GST - Cancellation of GST Registration - Opportunity of Hearing and Procedural Defect - Fixing date of hearing before show cause period expires - The date for personal hearing was fixed on 05.03.2024 while the date for filing show cause was 07.03.2024, meaning the hearing was fixed prior to show cause period expiring. Appellant did not submit show cause response and registration was cancelled ex-parte by order dated 22.04.2024 - Whether proper opportunity of hearing was granted as required under Section 75(4) of CGST Act, 2017 which provides that opportunity of hearing shall be granted where adverse decision is contemplated against person – HELD - As per Section 75(4), opportunity of hearing is required to be fixed only where adverse decision is contemplated against person. When no show cause is filed within given period of 30 days, date of hearing is required to be fixed thereafter or in case show cause is filed but authorities not satisfied then date for hearing is required to be fixed. Fixing date of hearing on 05.03.2024 while show cause filing period was 07.03.2024 was an empty formality and procedurally defective - Permanent cancellation of registration inflicts civil death to livelihood of person. The impugned orders are set aside and competent authority shall consider application for revocation on its own merit without rejecting it on limitation ground alone – The writ application stands allowed [Read less]

Service Tax - Classification of services rendered by shipping agents and freight forwarders - Distinction between taxable support services and non-taxable transportation - Appellant raises invoices on customers including freight component with mark-up along with ancillary charges such as LCL charges, documentation charges, terminal handling charges and delivery order charges - Appellant discharges service tax on ancillary charges but not on ocean/air freight in the belief that the same was not taxable/exempt during the relevant period - Respondent alleges that mark-up charged by appellant on freight charged by shipping com... [Read more]

Service Tax - Classification of services rendered by shipping agents and freight forwarders - Distinction between taxable support services and non-taxable transportation - Appellant raises invoices on customers including freight component with mark-up along with ancillary charges such as LCL charges, documentation charges, terminal handling charges and delivery order charges - Appellant discharges service tax on ancillary charges but not on ocean/air freight in the belief that the same was not taxable/exempt during the relevant period - Respondent alleges that mark-up charged by appellant on freight charged by shipping companies constitutes consideration for taxable service classified - Whether freight component recovered by appellant on principal-to-principal basis with a commercial mark-up constitutes taxable consideration for Business Support Service - HELD - Prior to 01.07.2012 transportation of goods by vessel or aircraft from place outside India to customs station in India did not fall within definition of taxable service - With effect from 01.07.2012 the activity stood expressly excluded by Section 66D(p)(ii) of negative list and continued till its omission with effect from 01.06.2016 - Freight component paid by appellant to shipping lines and airlines recovered from its customers therefore represents consideration for an activity which statute itself has by deliberate design kept outside tax net throughout the period in question. Where principal activity is non-taxable by legislative design the profit or margin earned in course of that very activity cannot be severed and taxed as if it were consideration for distinct service - Rule 5 of Valuation Rules cannot itself be source of taxability nor can it convert non-taxable transaction into taxable one merely because person recovering amount fails to qualify as pure agent - Classification and taxability of activity must be determined with reference to its substance and charging provisions applicable to it not with reference to manner of billing or presence of margin - The mark-up earned by Custom House agent or freight forwarder on ocean or air freight recovered on principal-to-principal basis does not constitute consideration for business support service – The invocation of extended period of limitation is not justified as issue involved is interpretational dispute and ingredients of fraud collusion wilful misstatement or suppression with intent to evade tax are not established - Demand of service tax on freight/mark-up amount for entire period is set aside - Impugned order is set aside and appeal is allowed [Read less]

GST - Denial of Input Tax Credit to bona fide purchaser for default of supplier - Appellant was denied Input Tax Credit on the ground that suppliers had not deposited tax and had not filed GSTR-3B and invoices were not reflected in GSTR-2A of recipients - Whether Input Tax Credit can be denied to bonafide purchaser for default of supplier in depositing tax / non-filing of GSTR-3B / non-reflection of invoice in GSTR-2A - HELD - A bona fide purchaser who has received tax invoices from registered suppliers cannot be denied ITC merely because the supplier has defaulted in depositing tax or filing GSTR-3B - The conditions under... [Read more]

GST - Denial of Input Tax Credit to bona fide purchaser for default of supplier - Appellant was denied Input Tax Credit on the ground that suppliers had not deposited tax and had not filed GSTR-3B and invoices were not reflected in GSTR-2A of recipients - Whether Input Tax Credit can be denied to bonafide purchaser for default of supplier in depositing tax / non-filing of GSTR-3B / non-reflection of invoice in GSTR-2A - HELD - A bona fide purchaser who has received tax invoices from registered suppliers cannot be denied ITC merely because the supplier has defaulted in depositing tax or filing GSTR-3B - The conditions under Section 16(2)(a) and 16(2)(b) of CGST Act, 2017 are satisfied when purchaser is in possession of tax invoice issued by supplier registered under Act and has received goods or services - The only dispute under Section 16(2)(c) is whether tax charged has actually been paid to Government. The Department itself admits that proceedings have been initiated against defaulting supplier for non-filing of GSTR-3B. Having done so Department cannot doubly recover once from supplier and again from recipients - Department must first proceed for recovery against defaulting supplier under Section 79 of CGST Act. Mere non-reflection of invoices in GSTR-2A cannot by itself lead to automatic denial of Input Tax Credit to bona fide purchaser - The principle laid down in Suncraft Energy Private Limited which has been affirmed by Supreme Court squarely applies to facts of present case – Further, the Section 74 cannot be invoked mechanically merely to cover up the limitation under Section 73(10). The SCN must specifically allege how fraud was inferred or how concealment was detected - Bare invocation of words fraud willful misstatement and suppression of facts without listing out reasons is not sufficient to invoke extended limitation – The impugned is quashed and set aside and Respondents are directed to revisit issue by reconsidering reply with all documents in light of judgments in Suncraft Energy case - Respondent shall pass a reasoned and speaking order in accordance with law after affording opportunity of personal hearing to petitioners – The writ petition is allowed [Read less]

GST - Issuance of Show Cause Notice in the name of a deceased person - Assessment of tax liability of a deceased person - Appellant issued Show Cause Notice and Order in Original against a deceased proprietor instead of his legal heirs determining tax demand - Whether a Show Cause Notice can be issued in the name of a deceased person for determination of tax liability - HELD - It is a well settled proposition of law that issuance of a notice in the name of a dead person is a nullity non est and void ab initio in the eye of law - A SCN cannot be issued in the name of a dead person for determination of the liability of the d... [Read more]

GST - Issuance of Show Cause Notice in the name of a deceased person - Assessment of tax liability of a deceased person - Appellant issued Show Cause Notice and Order in Original against a deceased proprietor instead of his legal heirs determining tax demand - Whether a Show Cause Notice can be issued in the name of a deceased person for determination of tax liability - HELD - It is a well settled proposition of law that issuance of a notice in the name of a dead person is a nullity non est and void ab initio in the eye of law - A SCN cannot be issued in the name of a dead person for determination of the liability of the deceased without giving an opportunity to the legal representative - The determination of taxes in the name of a non-existing entity or person is not legally permissible and stands vitiated - Section 93(1) is a charging provision which says legal heirs is liable to pay tax due from deceased to the extent estate capable but it does not provide machinery to determine such liability - The machinery for determination remains Section 73 and 74 which require issuance of show cause notice to the person liable - Therefore the correct machinery is to issue Show Cause Notice to legal heirs in their own name describing them as legal heirs of deceased and to determine the liability - Department cannot issue Show Cause Notice to deceased and then direct the legal heirs to give reply to the same - The Show Cause Notice and Order in Original and the recovery notice are quashed and set aside - the writ petition stands disposed of without going into the merits of the case [Read less]

Central Excise - Refund of Education Cess and Secondary and Higher Education Cess - Scope of Section 11B of the Central Excise Act, 1944 - Applicability to amounts paid without authority of law - Appellant rejected refund claims for EC and SHEC that respondents had mistakenly paid for the period October 2013 to June 2017 on crude oil produced under NELP blocks arguing that the refund claims were barred by the limitation period prescribed in Section 11B of the Act, which prescribes a one year period for claiming refund from the relevant date - Whether the time limit prescribed in Section 11B of the Central Excise Act, 1944 ... [Read more]

Central Excise - Refund of Education Cess and Secondary and Higher Education Cess - Scope of Section 11B of the Central Excise Act, 1944 - Applicability to amounts paid without authority of law - Appellant rejected refund claims for EC and SHEC that respondents had mistakenly paid for the period October 2013 to June 2017 on crude oil produced under NELP blocks arguing that the refund claims were barred by the limitation period prescribed in Section 11B of the Act, which prescribes a one year period for claiming refund from the relevant date - Whether the time limit prescribed in Section 11B of the Central Excise Act, 1944 applies to refund claims for EC and SHEC when the same were paid by mistake and do not constitute duties of excise - HELD - Section 11B of the Act prescribes limitation for refund of duty of excise and interest and does not refer to other amounts collected without authority of law - EC and SHEC are not duties of excise as they are levied on the aggregate of excise duties and are not calculated as excise duty proper - The amount paid as EC and SHEC on Oil Industry Development Cess does not take the character of duty of excise but is simply an amount paid under a mistake of law - The provisions of Section 11B of the Act would therefore not be applicable to an application seeking refund of EC and SHEC paid under mistake - Since EC and SHEC are not duties of excise, the limitation prescribed under Section 11B of the Act would not apply and the general provisions under the Limitation Act, 1963 would be applicable - Section 17 of the Limitation Act inter alia provides that when a suit or application is for relief from consequences of a mistake, the period of limitation would not begin to run until the plaintiff or applicant has discovered the mistake or could with reasonable diligence have discovered it - The retention of EC and SHEC which have been paid on a mistaken notion by the respondents without any authority of law is not permitted under Article 265 of the Constitution which provides that no tax shall be levied or collected except by authority of law - A mistake does not confer any right on any party and can be corrected - Section 11B of the CEA, 1944 cannot be a bar to refund the EC and SHEC that has been paid mistakenly by the respondents to the appellant - The Revenue appeals are dismissed [Read less]

Customs – Amendment of shipping bills under Section 149 of Customs Act, 1962 – Maintainability of departmental appeal in view of monetary limit prescribed under Section 131BA – Respondent manufacturer and exporter of Barium Carbonate exported goods during F.Y. 2017-18 to 2019-20 under 59 shipping bills with MEIS reward column marked as "NO" and subsequently sought amendment by changing declaration to "YES" to pursue Merchandise Export from India Scheme benefit. Request was initially rejected. Matter went to High Court which remanded for reconsideration. Deputy Commissioner again rejected request. Commissioner (Appeal... [Read more]

Customs – Amendment of shipping bills under Section 149 of Customs Act, 1962 – Maintainability of departmental appeal in view of monetary limit prescribed under Section 131BA – Respondent manufacturer and exporter of Barium Carbonate exported goods during F.Y. 2017-18 to 2019-20 under 59 shipping bills with MEIS reward column marked as "NO" and subsequently sought amendment by changing declaration to "YES" to pursue Merchandise Export from India Scheme benefit. Request was initially rejected. Matter went to High Court which remanded for reconsideration. Deputy Commissioner again rejected request. Commissioner (Appeals) allowed appeal on ground that Section 149 as applicable during relevant period prescribed no limitation for seeking amendment and omission appeared inadvertent. Revenue appealed before CESTAT. Preliminary objection raised regarding maintainability citing Board instruction dated 02.11.2023 prescribing monetary limit of Rs. 50,00,000/- for filing departmental appeals under Section 131BA of Customs Act - Whether the appeal is maintainable and whether respondent could seek post-export amendment of shipping bills under Section 149 for enabling claim of MEIS benefit – HELD – On preliminary issue of maintainability, no Customs duty, interest, fine or penalty is involved in dispute. If Customs duty is taken as basis for amount in dispute, it is Nil. If monetary value of MEIS benefit is taken as basis, it is only Rs. 47,19,103/- which falls below prescribed threshold of Rs. 50,00,000/-. Board under Section 131BA can prescribe monetary limits for departmental appeals and statutory scheme requires tribunal to have regard to circumstances whether appeal should be filed. Present appeal falls below threshold from both angles and Revenue has not demonstrated that case falls within specified exceptional categories warranting appeal irrespective of monetary limit. Object of monetary limits is to reduce Government litigation and concentrate Departmental resources on disputes involving prescribed Revenue effect. Section 131BA cannot be rendered otiose by continuing appeal below threshold without exceptional circumstances. Respondent's contention on maintainability deserves acceptance. On merits, Section 149 empowers proper officer to authorize amendment of documents even after export where supported by contemporaneous documentary evidence. When Section 149 was applicable during relevant period, it prescribed no limitation period for amendment. Subsequently introduced time limitation cannot be retrospectively applied to exports completed before such introduction. What matters is existence of documentary evidence supporting amendment and whether proposed amendment can be verified from documents existing at time of export. Repeated "NO" declarations in 59 bills over 3 years is relevant but cannot alone conclude issue - proper inquiry must examine whether amendment is supported by documentary material existing contemporaneously. Amendment of shipping bills merely enables respondent to place corrected bills before competent authority administering scheme - whether respondent ultimately satisfies all requirements and is entitled to benefit is separate matter for competent authority free to examine admissibility under Foreign Trade Policy and scheme conditions uninfluenced by mere fact that amendment was permitted. Permitting amendment does not automatically result in loss of Revenue. Fact that request made after considerable delay is relevant while exercising discretion but delay by itself cannot operate as absolute jurisdiction bar where statute as applicable fixed no outer limitation – Respondent is entitled to seek amendment of 59 shipping bills under Section 149 by changing MEIS declaration - Commissioner (Appeals) order is sustainable - Appeal filed by Revenue is dismissed both on ground of applicable monetary limit and even otherwise on merits [Read less]

Customs – Tariff classification of mixed lot polyester warp knitted fabrics – Appellant imported mixed lot polyester warp knitted fabrics from foreign suppliers under five Bills of Entry and classified the goods under Tariff Item 6005 9000 claiming concessional Basic Customs Duty at 10 per cent under Notification No. 82/2017-Customs. The Revenue rejected the classification and proposed reclassification under Tariff Items 6005 3500 to 6006 3900 as warp knitted fabrics of synthetic fibres, demanding differential duty with penalties under Sections 114A and 114AA of Customs Act, 1962 - Whether the Revenue established that ... [Read more]

Customs – Tariff classification of mixed lot polyester warp knitted fabrics – Appellant imported mixed lot polyester warp knitted fabrics from foreign suppliers under five Bills of Entry and classified the goods under Tariff Item 6005 9000 claiming concessional Basic Customs Duty at 10 per cent under Notification No. 82/2017-Customs. The Revenue rejected the classification and proposed reclassification under Tariff Items 6005 3500 to 6006 3900 as warp knitted fabrics of synthetic fibres, demanding differential duty with penalties under Sections 114A and 114AA of Customs Act, 1962 - Whether the Revenue established that the appellant's classification is incorrect by adducing requisite technical and scientific evidence before reclassifying the goods – HELD – It is a settled position that the burden to prove that classification adopted by importer is incorrect lies upon Revenue and mere suspicion is insufficient. Classification under Chapter 60 depends upon fibre composition, weight, predominance, textile construction etc. which cannot be determined from invoice, packing list or visual examination alone. The term polyester warp knitted fabrics does not prove that the fabric is made up of 100 per cent polyester as the weft can be made up of any other material, thus mixed lot of fibres cannot automatically be treated as 100 per cent synthetic unless fibre composition is scientifically determined. The Revenue failed to produce Test reports, Technical literature, Textile Committee opinion, Expert witness, Chemical Examiner's report, Market enquiry, Manufacturer's specification, Fibre composition, Yarn composition, GSM analysis or any other laboratory report in support of allegation of mis-classification. No samples were drawn to ascertain constituent material or fibre content. The Proper Officer examined goods and accepted the classification without raising any objection and the assessment attained finality as it was not challenged. The Revenue failed to bring fresh evidence to allege mis-declaration. Reclassification without fresh evidence is legally not sustainable. In absence of any cogent or corroborative evidence available on record to dispute the classification claimed by Appellant under Tariff Item 6005 9000, the classification is upheld and the appellant is eligible for benefit of concessional rate of Basic Customs Duty under Serial No. 166 of Notification No. 82/2017-Customs - The differential duty demand of Rs.39,12,198/- together with applicable interest is set aside - The penalties imposed under Sections 114A and 114AA are set aside – The appeal is allowed with consequential relief [Read less]

GST - Bail Application – Fraudulent Availment of Input Tax Credit – Petitioner arrested on allegation of claiming input tax credit in illegal manner without actual transaction of goods, causing huge loss to the State Exchequer on basis of fake invoices. Petitioner in custody for approximately four months. Petitioner contended that all purchases and supplies were supported by valid tax invoices and delivery challans with payments through banking channels. Petitioner also alleged that grounds of arrest and order under Section 69 of CGST Act were not communicated to him – Whether Petitioner is entitled to bail in case i... [Read more]

GST - Bail Application – Fraudulent Availment of Input Tax Credit – Petitioner arrested on allegation of claiming input tax credit in illegal manner without actual transaction of goods, causing huge loss to the State Exchequer on basis of fake invoices. Petitioner in custody for approximately four months. Petitioner contended that all purchases and supplies were supported by valid tax invoices and delivery challans with payments through banking channels. Petitioner also alleged that grounds of arrest and order under Section 69 of CGST Act were not communicated to him – Whether Petitioner is entitled to bail in case involving alleged fraudulent availment of input tax credit considering principles governing bail in economic offences, violation of fundamental rights, and right to speedy trial – HELD – Arrest must proceed on belief supported by reasons relying on material and not on suspicion alone. Once a Court finds that fundamental rights under Articles 21 and 22 of Constitution have been violated while arresting the accused, it is the duty of the Court to release the accused on bail as the arrest stands vitiated. The benefit of bail cannot be denied merely on severity of offence. The primary purposes of bail are to release the accused of imprisonment, to release the State of burden of keeping him pending trial, and to keep the accused constructively in custody to ensure submission to jurisdiction of the Court - Petitioner has already undergone custody for approximately four months, has clean antecedents, maximum punishment is five years, entire evidence is documentary in nature and detention in judicial custody is not likely to serve any purpose. There is nothing on record to show that while on bail Petitioner will tamper with evidence or influence witnesses or will not cooperate in trial – Petitioner is entitled to benefit of bail. The petitioner is ordered to be released on bail on furnishing personal bond and surety bond subject to conditions including not making inducement or threat to any person, notifying change of address to trial Court, and not leaving India without prior permission of trial Court – The petition is allowed [Read less]

Service Tax – Taxability of construction services provided to land owners/existing tenants under redevelopment scheme where service tax already discharged on gross consideration received from independent buyers – Appellant is a builder engaged in construction of residential and commercial complex services undertaken a redevelopment project of air building property constructing 44 flats and 2 shops of which 41 flats and 1 shop were handed back to existing tenants without any consideration under redevelopment scheme and 3 flats and 1 shop were retained for independent sale. Department demanded service tax on construction... [Read more]

Service Tax – Taxability of construction services provided to land owners/existing tenants under redevelopment scheme where service tax already discharged on gross consideration received from independent buyers – Appellant is a builder engaged in construction of residential and commercial complex services undertaken a redevelopment project of air building property constructing 44 flats and 2 shops of which 41 flats and 1 shop were handed back to existing tenants without any consideration under redevelopment scheme and 3 flats and 1 shop were retained for independent sale. Department demanded service tax on construction services provided to existing tenants/land owners based on value of similar flats sold to independent buyers on per square feet basis citing extended period under Section 73(1) and imposed penalty and interest. Appellant contended that service tax is not levable on flats handed free of cost when service tax already discharged on consideration received from independent buyers and that no statutory mechanism exists for determining value of taxable service involving land element - Whether appellant is liable to pay service tax on construction services provided to existing tenants when it has already discharged complete service tax liability on gross consideration received from independent buyers under redevelopment scheme – HELD – Once service tax liability has been discharged on the gross amount of construction service received by the builder from both categories of service recipients i.e. land owner in the form of land or development rights and from independent buyers in the form of cash, the demand of service tax on the same construction service again based on presumed consideration to land owners cannot be sustained as it would amount to double taxation. The taxable value of services provided to land owners cannot be determined on basis of sale value of flats to independent buyers as the comparison must be made between service recipients standing on same footing and not between recipients with different economic interest. The principle established in law is that price of oranges is determined by comparing with price of oranges and not apples. Once appellant has complied with the service tax liability on the gross amount covering land owner consideration in kind and buyer consideration in cash as per CBEC instruction dated 16-2-2006 and CBEC Circular dated 10.2.2012 which are in accordance with Section 67 of Finance Act, 1994 and Rule 3 of Service Tax (Determination of Value) Rules, 2006, further demand for service tax on consideration received from land owners would constitute double taxation. As settled law that for application of any provisions of this type the comparison should be made between service recipients on same footing and as appellant has already discharged the complete service tax liability on gross consideration received, the presumed consideration to land owners cannot be separately taxed - The reliance placed on cases like Etics Infra Development Pvt Ltd., Vasantha Green Projects and LCS City Makers Pvt Ltd. supports the contention that facts and circumstances in this case do not warrant assessment of service tax on different value - Service tax demand on 41 flats and 1 shop handed to existing tenants is not sustainable - Consequently demands of interest under Section 75 and penalty under Section 78 are also set aside - Service tax amount paid by appellant during investigation shall be appropriated against any other tax liability or refunded – The impugned order is set aside and appeal is allowed [Read less]

Service Tax - Export of services, Services provided by e-commerce marketplace operator to foreign affiliate - Determination of location of service use - Appellant provides services to affiliate eBay International AG such as promotion coordination with vendors marketing market data collection remittance of revenue operation of helpdesk and other administrative services for eBay India website - Appellant contends that services qualify as export since they are provided to recipient located outside India and payment received in foreign exchange and benefit of services accrue to foreign affiliate - Whether services provided in ... [Read more]

Service Tax - Export of services, Services provided by e-commerce marketplace operator to foreign affiliate - Determination of location of service use - Appellant provides services to affiliate eBay International AG such as promotion coordination with vendors marketing market data collection remittance of revenue operation of helpdesk and other administrative services for eBay India website - Appellant contends that services qualify as export since they are provided to recipient located outside India and payment received in foreign exchange and benefit of services accrue to foreign affiliate - Whether services provided in relation to business activities in India for foreign affiliate constitute export of services - HELD - Export of Services Rules 2005 provides three categories of services - Category I applies to services with nexus to immovable property - Category II applies to services where place of performance can be established - Category III applies to remaining services generally including knowledge or technique based services not linked to identifiable immovable property or whose location of performance cannot be readily identified - For Category III services which include BAS the relevant factor is location of service receiver and not place of performance. For Category III services export of service may take place even when all relevant activities take place in India so long as benefits of these services accrue outside India - Board's circular dated 24.02.2009 clarifies that for Category III services the phrase used outside India is to be interpreted to mean that benefit of service should accrue outside India - Board's circular dated 13.05.2011 further clarified that words accrual of benefit are not restricted to mere impact on bottom-line of person who pays for service. All activities extended by appellant to foreign subsidiary including marketing research consultancy promotion of sales through advertisement take place in India. Appellant did not conduct any market research or activity outside India while providing BAS – The services failed to satisfy essential qualification of service being delivered and used outside India. However Revenue concluded that services provided were not export of services they were provided within taxable territory in India. In absence of any notice for recovery of service tax due from appellant in respect of services not considered to be export of services in appropriate proceedings the refund claims filed in terms of Rule 5 of CCR, 2004 cannot be rejected. Revenue cannot have two stands in respect of same services - If Revenue's case is that activities undertaken do not amount to export of service then proceedings need to be initiated for demanding service tax in respect of taxable services provided. By not initiating any such proceedings, Revenue itself has allowed these taxable services as export of services. Having done so Revenue cannot in proceeding under Rule 5 for refund take contrary stand and deny refund treating services not to be export of services - Impugned order is set aside and appeals are allowed [Read less]

GST - Consideration of Replies to Show Cause Notice – Petitioners filed writ petitions seeking quashing of a consolidated Order-in-Original passed against 629 firms and individuals. The Department had found large-scale availment of ineligible input tax credit on basis of fake invoices. Petitioners submitted detailed replies to Show Cause Notice which were not considered by the Adjudicating Authority – Whether the Adjudicating Authority was required to consider replies submitted by Petitioners and render a reasoned order, and whether failure to do so renders the statutory right of appeal nugatory – HELD – The judgme... [Read more]

GST - Consideration of Replies to Show Cause Notice – Petitioners filed writ petitions seeking quashing of a consolidated Order-in-Original passed against 629 firms and individuals. The Department had found large-scale availment of ineligible input tax credit on basis of fake invoices. Petitioners submitted detailed replies to Show Cause Notice which were not considered by the Adjudicating Authority – Whether the Adjudicating Authority was required to consider replies submitted by Petitioners and render a reasoned order, and whether failure to do so renders the statutory right of appeal nugatory – HELD – The judgment in M/s. ASP Traders v. State of Uttar Pradesh relied upon by Petitioners is clearly distinguishable on facts as it concerned an order passed against an individual assessee and did not deal with a common order passed against more than 600 firms and individuals. Whether the replies submitted by Petitioners were duly considered and the precise role attributable to them in the transactions in question are matters which can appropriately be examined by the Appellate Authority. In a case where detailed and disputed questions of fact are required to be examined and adjudicated, exercise of writ jurisdiction thereby permitting Petitioners to bypass the statutory remedy of appeal would not be appropriate - The Adjudicating Authority has recorded finding that certain persons were the masterminds behind the alleged racket involving creation of 107 fake firms for availing ineligible input tax credit – The Court is not inclined to exercise writ jurisdiction and relegated Petitioners to the statutory remedy of appeal - The writ petitions along with pending applications were disposed of [Read less]

Bihar VAT Act, 2005 – Refund of penalty under Section 68 of BVAT Act, 2005 – Prescribed authority for processing refund – Authority competent to grant refund and payment of interest – Whether Joint Commissioner of State Tax is competent prescribed authority for refund when amount exceeds Rs. 50,000/- and whether petitioner entitled to interest from date of communication of Tribunal order or from date of filing refund application – HELD – As per Rule 43(1) prescribed authority for refund shall be Joint Commissioner when amount to be refunded exceeds Rs. 50,000/-. After re-designation of officers under BGST Act, ... [Read more]

Bihar VAT Act, 2005 – Refund of penalty under Section 68 of BVAT Act, 2005 – Prescribed authority for processing refund – Authority competent to grant refund and payment of interest – Whether Joint Commissioner of State Tax is competent prescribed authority for refund when amount exceeds Rs. 50,000/- and whether petitioner entitled to interest from date of communication of Tribunal order or from date of filing refund application – HELD – As per Rule 43(1) prescribed authority for refund shall be Joint Commissioner when amount to be refunded exceeds Rs. 50,000/-. After re-designation of officers under BGST Act, 2017, Joint Commissioner of Commercial Taxes was re-designated as Additional Commissioner of State Tax. However, when petitioner filed application before Joint Commissioner of State Tax such application could have been forwarded by Joint Commissioner to Additional Commissioner - Technical objection taken by respondent refusing refund on ground of non-filing before Additional Commissioner after re-designation cannot be accepted as it would defeat purpose of procedural provisions. Upon harmonious reading of Section 68, Section 70 and Rule 43 of VAT Rules, payment of interest is not automatic after expiry of sixty days from date of communication of Tribunal order but petitioner must file application for refund. Since petitioner filed defective Form A-VIII on 21.05.2024 and despite direction by authority on 18.06.2025 failed to remove defects for one year before approaching Court, delay in processing refund is attributable to petitioner - Under Section 70(2) delay attributable to dealer is excluded from period for which interest is payable. Petitioner is directed to file fresh application in Form A-VIII before Additional Commissioner of State Tax within ten days and authority directed to grant refund within ten days from receipt of application with interest @ 6% per annum payable from authority's personal pocket if refund not made within specified period – The petition is disposed of [Read less]

Customs - Misclassification and undervaluation of imported kitchen-wares - Appellant imported goods declared as Urea Houseware Trays and Bowls classified under CTH 68159990 but investigation revealed goods were made of Urea Formaldehyde Resin kitchenwares. Show Cause Notice proposed recovery of differential customs duty based on mis-declaration of description and undervaluation of goods. Respondent's statement acknowledged the goods were Urea Formaldehyde kitchenwares and deposited Rs. 3 lakhs without protest. Chemical composition test by CRCL confirmed goods were polymeric material composed of Urea Formaldehyde Resin with... [Read more]

Customs - Misclassification and undervaluation of imported kitchen-wares - Appellant imported goods declared as Urea Houseware Trays and Bowls classified under CTH 68159990 but investigation revealed goods were made of Urea Formaldehyde Resin kitchenwares. Show Cause Notice proposed recovery of differential customs duty based on mis-declaration of description and undervaluation of goods. Respondent's statement acknowledged the goods were Urea Formaldehyde kitchenwares and deposited Rs. 3 lakhs without protest. Chemical composition test by CRCL confirmed goods were polymeric material composed of Urea Formaldehyde Resin with inorganic filler. Documents obtained from Chinese Customs through proper overseas enquiry showed exporter declared value approximately 65% higher than value declared by importer before Indian Customs despite suitable adjustments for freight and insurance - Whether goods were correctly classified and whether transaction value was rightly rejected - HELD - Goods were correctly identified as Urea Formaldehyde Resin based kitchenwares classifiable under CTH 39091010 and not under CTH 68159990 as declared. Transaction value was rightly rejected under Rule 12 of Customs Valuation Rules. Sequential rules for valuation have been followed while re-determining the value based on identical goods received from same exporter in previous consignments. Mandatory penalty under Section 114A was rightly imposed as the importer had clearly admitted the undervaluation and undervalue declaration - The demand of differential customs duty and penalty under Section 114A are upheld and appeals are allowed - Admissibility of documents obtained from foreign customs authorities under Section 139 of the Customs Act - In investigation, department obtained documents from Consulate of Hong Kong Customs with respect to four consignments through proper overseas enquiry channel and comparative chart prepared by Indian Customs in English translation. Respondent importer objected to these documents on ground that they were in alien language, did not bear seal or signature of Hong Kong customs officials and were not obtained through proper channel - Whether documents obtained from foreign customs authorities are admissible under Section 139 of the Customs Act - HELD - Documents obtained from Chinese Customs are covered under sub-clause (ii) of Section 139 as they were received from any place outside India in course of investigation through proper channel from competent authorities. The presumption of correctness is attached to documents under Section 139(ii) except when contrary is proved. Nothing on record proves the contrary except oral claim of importer. The said documents have been duly stamped by Indian Customs and chart prepared in English translation. The section nowhere mandates that document under that section shall only be in original. Department has sufficiently proved that documents were obtained through proper channel from competent authorities. Irrespective that documents are photo copies of declaration made before Chinese customs, Section 139 of the Customs Act has rightly been invoked by original adjudicating authority - Presumption of correctness attached to documents is upheld and appeals are allowed. [Read less]

Customs – Fraudulent export allegations under DEEC scheme and clandestine removal of duty-free imported scrap – Appellant was issued a DEEC Licence permitting duty-free import of non-alloy re-rollable scrap cuttings against export obligation of non-alloy steel bars and rods. Material was imported under three Bills of Entry and a portion was manufactured into CTD bars by the manufacturing unit and exported to Bangladesh while the remaining unmanufactured material was exported with special permission. DRI initiated investigation alleging fraudulent export of maize instead of specified goods and clandestine removal of dut... [Read more]

Customs – Fraudulent export allegations under DEEC scheme and clandestine removal of duty-free imported scrap – Appellant was issued a DEEC Licence permitting duty-free import of non-alloy re-rollable scrap cuttings against export obligation of non-alloy steel bars and rods. Material was imported under three Bills of Entry and a portion was manufactured into CTD bars by the manufacturing unit and exported to Bangladesh while the remaining unmanufactured material was exported with special permission. DRI initiated investigation alleging fraudulent export of maize instead of specified goods and clandestine removal of duty-free material. CBI investigation concluded that actual exports to Bangladesh had taken place. The Adjudicating Authority confirmed demand of customs duty forgone with interest and penalties under Sections 112(a) and 114(i) of the Customs Act, 1962 - Whether the Revenue established through reliable and corroborative evidence that duty-free imported material was diverted to the domestic market or that fraudulent exports occurred and whether departmental proceedings based on identical set of facts and evidence can be sustained when criminal proceedings have resulted in acquittal – HELD – The burden of proof lies on the Revenue to establish allegations through cogent and reliable evidence. The CBI as the premier investigating agency examined the material facts including vehicle movement through Immigration Check Posts, DEEC records and realization of export proceeds and found that actual exports of non-alloy steel bars and rods to Bangladesh had taken place. The statements of Surendra Kumar Gangwal, Vikas Kumar Jain and Samir Saha which formed the basis of allegations were subsequently retracted and cannot constitute the substantive basis of allegations in the absence of independent corroboration as laid down by the Supreme Court. No independent evidence was produced establishing diversion of duty-free material including absence of evidence of buyers of alleged diverted goods, cash trail or seizure of offending goods. For allegations of clandestine removal, positive evidence is required such as purchase of excess raw materials, shortage or excess of raw materials or finished goods found in stock or factory premises, excess consumption of electricity or seizure of cash or clandestinely removed goods made during investigation. Despite cash transactions to the extent of Rs.11.23 Crores involved in the transactions, no seizure of cash was made and no clandestinely removed goods were seized or any shortage or excess of materials was found in the factory premises. The Supreme Court in Capt. M. Paul Anthony v. Bharat Gold Mines Ltd. held that when criminal case and departmental proceedings are based on identical set of facts and evidence and the criminal court has acquitted the appellant, there is no basis to sustain punishment in the departmental proceedings as this would amount to double jeopardy. Section 135 of the Customs Act provides for without prejudice clause for both penalty provision and prosecution but there is no provision permitting the imposition of penalty under Section 112 notwithstanding acquittal in prosecution proceedings. The Show Cause Notice was materially defective as the supporting manufacturer was not made a noticee. The Adjudicating Authority traveled beyond the allegations in the Show Cause Notice in arriving at findings. The Export Obligation Discharge Certificate issued by the competent authority was neither shown to have been cancelled nor subjected to any adverse proceedings and cannot be brushed aside without credible evidence to the contrary. The extended definition of manufacture under the EXIM Policy, 1997-2002 then applicable supported the appellant's position. All the allegations against the principal noticee fail for want of reliable and corroborative evidence and the allegations of connivance or abetment against co-appellants cannot independently survive. The principle that fraud vitiates everything cannot be invoked without reliable and corroborative evidence. The entire case of the Revenue is based upon surmises and conjectures while the evidences brought into record are incomplete, inconsistent and not reliable pieces of evidence – Demand of customs duty forgone together with consequential interest and penalties imposed is not sustainable - The impugned order is set aside and the appeals are allowed [Read less]

Customs - Judicial Review of Settlement Commission Order - Challenge to Show Cause Notice on Ground of Limitation after Settlement - Petitioner filed application before Settlement Commission for settlement of proceedings arising from Show Cause Notice demanding duty along with interest. Instead of pursuing statutory appellate remedy against adjudication order petitioner consciously elected to invoke jurisdiction of Settlement Commission. Settlement Commission passed order determining duty liability at reduced amount - Settlement Commission directed jurisdictional Commissioner to verify and quantify interest liability and i... [Read more]

Customs - Judicial Review of Settlement Commission Order - Challenge to Show Cause Notice on Ground of Limitation after Settlement - Petitioner filed application before Settlement Commission for settlement of proceedings arising from Show Cause Notice demanding duty along with interest. Instead of pursuing statutory appellate remedy against adjudication order petitioner consciously elected to invoke jurisdiction of Settlement Commission. Settlement Commission passed order determining duty liability at reduced amount - Settlement Commission directed jurisdictional Commissioner to verify and quantify interest liability and intimate Petitioner if further amount was payable. Subsequently, interest was quantified at higher amount. Petitioner challenged order of Settlement Commission seeking to set aside interest direction from remaining part of order and challenged validity of Show Cause Notice on ground of limitation – HELD - The scope of judicial review over orders of Settlement Commission is narrow and restricted to grounds such as contravention of statutory provisions, prejudice, fraud, bias or malice. Sufficiency of material placed before Settlement Commission and conclusions drawn therefrom ordinarily fall outside scope of judicial review - Once Petitioner consciously invoked jurisdiction of Settlement Commission and had settlement order passed, they cannot thereafter reopen validity of underlying Show Cause Notice by challenging it on ground of limitation. Petitioner cannot isolate direction regarding interest computation and under guise of challenging interest determination reopen validity of Show Cause Notice. Liability to pay interest is statutory consequence of liability to pay duty and does not stand extinguished merely because quantum of duty is settled – The mere fact that interest ultimately quantified is higher than amount initially computed by Petitioner cannot constitute ground for interference with Settlement Commission's order. Petitioner's challenge to Show Cause Notice on ground of limitation cannot be permitted to be indirectly raised by isolating direction relating to interest from settlement order as whole. Writ petition was dismissed as no ground existed to interfere with the order passed by the Settlement Commission [Read less]

Service Tax - Exemption for renting of immovable property to educational institution under clause 9(b) of Mega Exemption Notification No. 25/2012-ST - Appellant let out immovable property under lease deed dated 01.05.2004 to Ritnand Balved Education Foundation, a registered society engaged in providing educational services. Department issued Show Cause Notice for recovery of service tax amounting to Rs. 2,15,769/- along with interest and penalties under Sections 70 and 78 of Finance Act for the period 2012-13 on the ground that appellant did not file service tax returns and was liable to pay service tax for rendering servi... [Read more]

Service Tax - Exemption for renting of immovable property to educational institution under clause 9(b) of Mega Exemption Notification No. 25/2012-ST - Appellant let out immovable property under lease deed dated 01.05.2004 to Ritnand Balved Education Foundation, a registered society engaged in providing educational services. Department issued Show Cause Notice for recovery of service tax amounting to Rs. 2,15,769/- along with interest and penalties under Sections 70 and 78 of Finance Act for the period 2012-13 on the ground that appellant did not file service tax returns and was liable to pay service tax for rendering service of renting immovable property. Appellant claimed exemption under clause 9(b) of the notification which provides exemption for services provided to or by an educational institution in the form of renting of immovable property - Whether the service of renting immovable property to Ritnand Balved Education Foundation qualifies for exemption under clause 9(b) - HELD - The bare perusal of the lease deed reveals that education is not the only purpose for the leased premises. The premises were taken on rent for various other purposes including commercial use as well as hostel for the students. The lease deed nowhere defines the lessee/tenant to be an educational institute. The document is silent about the nature of activities being carried out. Ritnand Balved Education Foundation is not proven to be an educational institute. The certificate issued by Amity University is dated 27.07.2020 whereas the impugned order is dated 16.06.2020 hence the document cannot be relied upon at this stage. The anus of claiming eligibility under exemption notification rests upon the assessee. Exemption notifications are required to be interpreted strictly. Since the lessee/tenant is not proven to be an educational institute the exemption does not apply. The benefit has to be given strictly when the rented premises are used by the educational institute. Appellant has failed to discharge the said burden. Hence the denial of exemption is justified and demand for service tax is confirmed - The appeal is partly allowed - Applicability of extended period of limitation under Section 73 read with Section 75 of Finance Act - Appellant claimed that extended period of limitation is not invoable as the appellant was under bona fide belief of applicability of exemption under the Mega Exemption Notification and interpretational reason for non-payment of tax should not attract extended period of limitation - Whether extended period of limitation is rightly invoked when appellant did not file service tax returns despite liability - HELD - It is a settled law that it is not merely the non-payment of service tax but a positive act on part of the assessee as may prove the intention or mens ria of the assessee to evade the payment of tax which is relevant for invoking the extended period of limitation. The appellant was not filing service tax returns despite having liability to pay service tax. This amounts to suppression of facts to evade the payment of tax. The plea that the society was under bona fide belief of eligibility of exemption under Mega Exemption Notification and due to interpretational reason the tax was not paid is not acceptable as the appellant has already failed to prove itself to be an educational institute and the premises did not remain used for education purposes only. The extended period of limitation has rightly been invoked while issuing the Show Cause Notice. However the normal period has to reckon from the last date of filing of service tax return and partial demand in the question beyond five years hence is hereby set aside. Demand for the remaining period including normal period is hereby confirmed. The penalty also is proportionately reduced. [Read less]

Central Excise - Scope of Judicial Review of Settlement Commission Orders - Sufficiency of Evidence - The Petitioner approached the Settlement Commission for adjustment of CENVAT credit reversal in respect of its manufacturing activities during 2005. The Settlement Commission rejected the claim for adjustment on the ground that the documentary evidence furnished by the petitioner was insufficient to establish the reversal - Whether the High Court could interfere with the Settlement Commission's order on grounds of sufficiency and adequacy of evidence placed before it – HELD - The jurisdiction of the High Court under Arti... [Read more]

Central Excise - Scope of Judicial Review of Settlement Commission Orders - Sufficiency of Evidence - The Petitioner approached the Settlement Commission for adjustment of CENVAT credit reversal in respect of its manufacturing activities during 2005. The Settlement Commission rejected the claim for adjustment on the ground that the documentary evidence furnished by the petitioner was insufficient to establish the reversal - Whether the High Court could interfere with the Settlement Commission's order on grounds of sufficiency and adequacy of evidence placed before it – HELD - The jurisdiction of the High Court under Article 226 while examining an order of the Settlement Commission does not exercise appellate jurisdiction and the question is not whether the material placed before the Settlement Commission was sufficient in the Court's opinion but whether the order suffers from an infirmity warranting judicial interference within narrow parameters recognised by law - The sufficiency, adequacy and evidentiary value of material placed before the Settlement Commission are matters within the domain of the Settlement Commission and the High Court cannot undertake re-appreciation of such material as if sitting in appeal. The absence of an appellate remedy against the order of the Settlement Commission does not enlarge the scope of judicial review and the exercise of such jurisdiction remains subject to well-settled limitations governing judicial review of orders passed by specialised statutory bodies. The Court declined interference with the impugned order – The Writ Petition is dismissed [Read less]

Service Tax - Joint Venture operations – Demand under Manpower supply and Business Support Services - Scope of taxable service - Appellant as designated Operator for three petroleum exploration blocks allotted under NELP entered into Joint Operating Agreements with co-venturers and raised cash calls upon JV partners towards manpower and BSS rendered by appellant as Operator – Respondent-Dept alleged that gross amounts recovered by appellant from respective JVs towards manpower and business support services constitute consideration for taxable services rendered by appellant and are exigible to Service Tax - Whether cash... [Read more]

Service Tax - Joint Venture operations – Demand under Manpower supply and Business Support Services - Scope of taxable service - Appellant as designated Operator for three petroleum exploration blocks allotted under NELP entered into Joint Operating Agreements with co-venturers and raised cash calls upon JV partners towards manpower and BSS rendered by appellant as Operator – Respondent-Dept alleged that gross amounts recovered by appellant from respective JVs towards manpower and business support services constitute consideration for taxable services rendered by appellant and are exigible to Service Tax - Whether cash calls raised by operator of joint venture on its co-venturers for allocation of manpower costs and office expenses constitute consideration for taxable services - HELD - Contributions made by co-venturers towards execution of common venture do not constitute taxable consideration for services rendered inter se between Joint Venture and its constituents - In a joint venture the arrangement amongst parties is contractual for undertaking common enterprise for profit with joint control over strategic financial and operative decisions. Whatever a partner does for furtherance of business of partnership he does so only for advancing his own interest as he has a stake in success of venture. There is neither intention to render a service to other partners nor is there any consideration fixed as quid pro quo for any particular service - A contractor-contractee or principal-agent relationship which is an essential element of any taxable service is absent in relationship amongst co-venturers or between co-venturers and joint venture. The element of consideration which is necessary ingredient of any taxable service is absent in such arrangement - The activities undertaken by appellant as designated Operator do not constitute taxable service within meaning of Finance Act 1994. They merely represent discharge of contractual obligations undertaken by co-venturer in furtherance of common enterprise and allocation of resultant expenditure amongst participating members in accordance with their agreed participating interests – Further, extended period of limitation under proviso to Section 73(1) of Finance Act 1994 was invoked in purely mechanical manner without establishing indispensable statutory ingredients of fraud collusion willful misstatement or suppression of facts with intent to evade payment of Service Tax – The impugned demand of service tax together with interest thereon are set aside – The appeal is allowed [Read less]

GST - Interest and penalty on returns filed after due date, Maintainability of writ petition - Claim for refund of over-deposited taxes - Petitioner filed returns for financial year 2017-18 at the rate of 18 per cent instead of statutory rate of 12 per cent and subsequently issued credit notes to correct the inadvertent error in March 2018 - Despite the full discharge of tax liability by the petitioner and correction through credit notes, respondent authorities issued Show Cause Notice for alleged delayed filing of returns and imposed interest under Section 50 of CGST Act - Whether interest is sustainable when there is no ... [Read more]

GST - Interest and penalty on returns filed after due date, Maintainability of writ petition - Claim for refund of over-deposited taxes - Petitioner filed returns for financial year 2017-18 at the rate of 18 per cent instead of statutory rate of 12 per cent and subsequently issued credit notes to correct the inadvertent error in March 2018 - Despite the full discharge of tax liability by the petitioner and correction through credit notes, respondent authorities issued Show Cause Notice for alleged delayed filing of returns and imposed interest under Section 50 of CGST Act - Whether interest is sustainable when there is no tax arrear and only an inadvertent error in rate has been committed and corrected - HELD - The Court is prima facie satisfied with regard to the point of maintainability. The present Writ Petition is maintainable despite existence of alternative remedy when impugned orders suffers from lack of jurisdiction and violation of natural justice - the issue involved herein cannot be decided without exchange of affidavits. The respondent authorities are directed to file an Affidavit in Opposition. Let the matter be listed on 1st October 2026 - In the meantime the respondent authorities are directed not to give effect to the impugned orders till the next date of hearing – Ordered accordingly [Read less]

Service Tax - Taxability of services as Goods Transport Agency Services - Whether services are classifiable as GTA Services where service provider issued bills instead of consignment notes - Appellant provided clearing and forwarding agent services and GTA services and charged Service Tax from service receivers for clearing and forwarding agent services and deposited to revenue. For GTA services, appellant was under bona fide belief that services come under reverse charge and therefore neither charged Service Tax nor deposited to revenue. On basis of third-party data from Income Tax Department showing difference between re... [Read more]

Service Tax - Taxability of services as Goods Transport Agency Services - Whether services are classifiable as GTA Services where service provider issued bills instead of consignment notes - Appellant provided clearing and forwarding agent services and GTA services and charged Service Tax from service receivers for clearing and forwarding agent services and deposited to revenue. For GTA services, appellant was under bona fide belief that services come under reverse charge and therefore neither charged Service Tax nor deposited to revenue. On basis of third-party data from Income Tax Department showing difference between receipts and ST-3 values, department issued Show Cause Notices proposing demand of Service Tax. Department denied classification as GTA services on ground that appellant had issued bills instead of consignment notes. Appellant contended that bills issued contained essential particulars of consignment note and acknowledged transportation of goods. Service recipients issued certificates categorically certifying they received GTA services from appellant and discharged applicable Service Tax under Reverse Charge Mechanism - HELD - Section 65(50b) of Finance Act 1994 defines Goods Transport Agency as any person who provides service in relation to transport of goods by road and issues a consignment note by whatever name called. The statute does not prescribe any particular format or nomenclature for a consignment note. The expression by whatever name called makes it abundantly clear that the document issued by service provider need not necessarily be titled as consignment note. What is material is the substance and contents of the document evidencing the transportation of goods. Bills issued by appellant contain essential particulars of consignment note and acknowledge transportation of goods. Service recipients issued certificates categorically certifying they received GTA services from appellant and discharged applicable Service Tax under Reverse Charge Mechanism. These certificates constitute cogent and reliable evidence establishing that appellant provided GTA services during relevant period. Certificate given for GTA on letterhead is sufficient and certificate on each consignment note is not required. The denial of benefit merely on ground that appellant issued bills instead of documents titled as consignment notes is unsustainable - Appeals are allowed and demands are set aside - Limitation for demand - Applicability of extended period of limitation based on Form-26AS data from Income Tax Department - Appellant regularly filed ST-3 returns on time and was under bona fide belief that GTA services come under reverse charge. Department issued first Show Cause Notice dated 24.10.2019 for period April 2014 to March 2015 based on third-party data received from Income Tax Department through data sharing protocol showing difference between receipts as per Form-26AS and values shown in ST-3 returns. Subsequently department issued another Show Cause Notice dated 06.07.2021 for period April 2015 to June 2017 invoking extended period of limitation alleging suppression of facts. Appellant contended that Form-26AS is not a statutory document for determining taxable turnover for service tax and that subsequent SCN invoking extended period is not sustainable as all facts were already in knowledge of department when first SCN was issued - HELD - Form-26AS maintained by Income Tax Department is not a statutory document for determining taxable turnover for service tax purposes. The entire basis of Form-26AS and service tax payment are different. The impugned order confirming service tax demand on basis of payment released by service recipients is bad in law and not sustainable. Appellant was regularly filing ST-3 returns and SCNs were issued consecutively for years 2015-16, 2016-17 and 2017-18. All necessary information was available to department based on which first SCN was issued. Subsequent SCN invoking extended period of limitation alleging suppression of facts is not sustainable. Supreme Court, High Courts and Tribunal have held that allegation of suppression of facts cannot be sustained if all relevant facts were in knowledge of department. Appellant was regularly filing ST-3 returns and therefore while issuing second SCN, same/similar facts could not be taken as suppression of facts as these facts were already in knowledge of authority. The impugned orders are set aside and appeals are allowed with consequential relief. [Read less]

Customs – Target Plus Scheme – Requirement of nexus between goods imported and goods exported – Appellant exported iron ore fines and other minerals and obtained duty credit certificates for import of continuous cast copper rods – Department contended that copper rods had no nexus with minerals exported and benefit of Notification No. 32/2005-Cus could not be claimed – Appellant contended that broad nexus as contemplated in paragraph 3.2.5 of Handbook of Procedures was sufficient and that ambiguity in policy provisions had been interpreted in favour of exporters – Whether strict one-to-one nexus between importe... [Read more]

Customs – Target Plus Scheme – Requirement of nexus between goods imported and goods exported – Appellant exported iron ore fines and other minerals and obtained duty credit certificates for import of continuous cast copper rods – Department contended that copper rods had no nexus with minerals exported and benefit of Notification No. 32/2005-Cus could not be claimed – Appellant contended that broad nexus as contemplated in paragraph 3.2.5 of Handbook of Procedures was sufficient and that ambiguity in policy provisions had been interpreted in favour of exporters – Whether strict one-to-one nexus between imported goods and specific goods exported required or broad nexus with product group sufficient - HELD – Broad nexus between imported goods and any product group of exported goods is sufficient not strict one-to-one nexus. Policy as judicially interpreted by Hon'ble High Courts did not require that imported goods be usable in manufacture of very goods exported. It was sufficient to demonstrate that imported goods could be used as input in manufacture of goods falling within same defined product group as specified in Conditions Sheet attached to certificate – The harmonious interpretation between expression ‘broad nexus’ in Handbook of Procedures and words ‘input’ and use in FTP accepted – Further, extended period of limitation cannot be invoked without establishing intent to evade duty. Where policy provisions are ambiguous and capable of multiple interpretations and assessee proceeded on interpretation later upheld by Hon'ble High Courts, extended period cannot be invoked – Duty credit certificates used were never revoked, cancelled or amended by licensing authority DGFT. No evidence of fraud, collusion, wilful misstatement or suppression of facts – The CESTAT order upholding benefit of Notification is upheld and the Revenue appeal is dismissed [Read less]

Central Sales Tax Act, 1956 - Classification of Stock Transfers as Inter-State Sales - Vehicles manufactured at factory in Andhra Pradesh were transferred to regional sales offices in other States. Appellant claimed exemption under Section 6A of CST Act, 1956 on ground that these were branch stock transfers. Tax authority disallowed exemption and treated them as inter-state sales under Section 3(a) of CST Act, 1956 - Whether stock transfers of vehicles from manufacturing unit to regional sales offices qualify for exemption under Section 6A of CST Act or constitute inter-state sales under Section 3(a) of CST Act, 1956 – H... [Read more]

Central Sales Tax Act, 1956 - Classification of Stock Transfers as Inter-State Sales - Vehicles manufactured at factory in Andhra Pradesh were transferred to regional sales offices in other States. Appellant claimed exemption under Section 6A of CST Act, 1956 on ground that these were branch stock transfers. Tax authority disallowed exemption and treated them as inter-state sales under Section 3(a) of CST Act, 1956 - Whether stock transfers of vehicles from manufacturing unit to regional sales offices qualify for exemption under Section 6A of CST Act or constitute inter-state sales under Section 3(a) of CST Act, 1956 – HELD - The appellant's characterization of impugned transactions as branch stock transfers simpliciter is not acceptable. The function and effect of the APO document which originates in dealer-level demand is aggregated at central planning stage and directly triggers manufacture and despatch of vehicles to branch from which demand emanated is indistinguishable from an indent or purchase order. Data gathered at audit establishes concrete material that dealers placed firm orders on branches accompanied by advance payments before vehicles were despatched. The transactions bear all essential incidents of a pre-existing contract of sale occasioning inter-state movement of goods – The Form F declarations do not immunize transactions where material establishes that movement was occasioned by pre-existing contract of sale. The presumption raised by Form F is rebuttable and stands rebutted here by appellant's own admitted business practice read together with evidence gathered at stage of audit regarding advance orders and payments at branch level - The denial of exemption is sustainable both for non-compliance with statutory requirements and on independent ground that transactions satisfy ingredients of Section 3(a) CST Act - The impugned order is upheld. Transactions constitute inter-state sales and are exigible to tax – The writ petition is dismissed [Read less]

GST – Appeal period under Section 107(1) and (4) of CGST Act, 2017 – Computation of period of limitation from date of order-in-original – Delay in uploading Form GST DRC-07 – Appellant preferred appeal on 30.03.2024 against order-in-original dated 30.10.2023 relating to tax period 2018-19. Form GST DRC-07 was uploaded on 11.03.2024 - Appellate authority rejected appeal as time barred reckoning period from date of order-in-original, treating appeal as being beyond condonable period of one month over three months period prescribed under Section 107(1) and (4) – Whether appeal period is computed from date of order-i... [Read more]

GST – Appeal period under Section 107(1) and (4) of CGST Act, 2017 – Computation of period of limitation from date of order-in-original – Delay in uploading Form GST DRC-07 – Appellant preferred appeal on 30.03.2024 against order-in-original dated 30.10.2023 relating to tax period 2018-19. Form GST DRC-07 was uploaded on 11.03.2024 - Appellate authority rejected appeal as time barred reckoning period from date of order-in-original, treating appeal as being beyond condonable period of one month over three months period prescribed under Section 107(1) and (4) – Whether appeal period is computed from date of order-in-original or from date of uploading of Form GST DRC-07 when there is delay in uploading summary of order – HELD – Ordinarily summary of order is uploaded same day or following day after passing of order-in-original and period of limitation is counted from date of communication of order-in-original. However, when summary of order is delayed in uploading due to inherent defect in proceedings and assessee has filed appeal on bona fide belief that appeal would lie upon uploading of Form GST DRC-07, such inherent defect should enure to benefit of assessee. In circumstances where delay exists in uploading Form GST DRC-07, matter should be remitted to appellate authority to take fresh decision on appeal in accordance with law. Procedural defect in uploading form cannot be visited upon assessee – Impugned order-in-appeal setting aside appeal as time barred is set aside and matter is remitted to appellate authority to entertain appeal on merits taking into account observations made – The petition is allowed by remand [Read less]

Service Tax – Authority of the Tribunal to constitute Larger Bench on conflicting High Court judgments - CESTAT observed conflicting views rendered by two different High Courts on interpretation of Section 142(3) of CGST Act, 2017. One judgment from jurisdictional High Court and another from another High Court on same issue. CESTAT directed constitution of Larger Bench to decide questions regarding refund of CENVAT credit in cash and doctrine of vested rights - Whether Tribunal can constitute a Larger Bench to examine conflicting High Court judgments and determine which judgment should be followed – HELD - Tribunal was... [Read more]

Service Tax – Authority of the Tribunal to constitute Larger Bench on conflicting High Court judgments - CESTAT observed conflicting views rendered by two different High Courts on interpretation of Section 142(3) of CGST Act, 2017. One judgment from jurisdictional High Court and another from another High Court on same issue. CESTAT directed constitution of Larger Bench to decide questions regarding refund of CENVAT credit in cash and doctrine of vested rights - Whether Tribunal can constitute a Larger Bench to examine conflicting High Court judgments and determine which judgment should be followed – HELD - Tribunal was confronted with unusual situation arising out of conflicting judgments rendered by two different High Courts on same issue. Judgment of jurisdictional High Court is binding on all Tribunals and subordinate Courts functioning within its territorial jurisdiction and cannot be ignored. The Tribunal ought not to have constituted a Larger Bench for purpose of examining correctness or applicability of judgment rendered by jurisdictional High Court as such exercise is impermissible in law - Judgment of jurisdictional High Court continues to bind all Tribunals unless it is stayed, reversed or overruled by Supreme Court. However, appropriate course for Tribunal would have been to defer further proceedings until Supreme Court renders decision in pending Special Leave Petition. It is impermissible for Tribunal to examine whether judgment of jurisdictional High Court should prevail over that of another High Court particularly when former is binding upon it – The order directing constitution of Larger Bench set aside. Service Tax Appeal shall remain pending and further proceedings deferred until final outcome of Special Leave Petition pending before Supreme Court – The writ petition stands allowed [Read less]

Service Tax - Maintainability of Appeal under Section 35G of Central Excise Act - Classification of Taxable Services - Revenue preferred an appeal under Section 35G of the Central Excise Act against the CESTAT's order which had allowed the Respondent's appeal and set aside the demand on the ground that the services rendered were not taxable under Section 65(105) of the Finance Act - Whether an appeal involving determination of classification of services falls within the prohibition against appeals on grounds of rate of duty or value of goods under Section 35G(1) of the Central Excise Act – HELD - The questions relating t... [Read more]

Service Tax - Maintainability of Appeal under Section 35G of Central Excise Act - Classification of Taxable Services - Revenue preferred an appeal under Section 35G of the Central Excise Act against the CESTAT's order which had allowed the Respondent's appeal and set aside the demand on the ground that the services rendered were not taxable under Section 65(105) of the Finance Act - Whether an appeal involving determination of classification of services falls within the prohibition against appeals on grounds of rate of duty or value of goods under Section 35G(1) of the Central Excise Act – HELD - The questions relating to classification of services and whether they are taxable fall within the expression determination of any question having relation to rate of duty. Section 35L(2) of the Central Excise Act clarifies that determination of disputes relating to taxability or excisability of goods is covered under the term determination of any question having relation to rate of duty and hence appeals in such matters should lie before the Supreme Court under Section 35L and not before the High Court under Section 35G - The amendment inserting Section 35L(2) is clarificatory in nature and does not create any new legal position but merely gives statutory expression to what was already the natural consequence of reading Sections 35G and 35L collectively. The phrase ‘shall include’ denotes inclusive and expansive definition clarifying the scope of an existing expression rather than adding a new category. The appeal under Section 35G is not maintainable and dismissed. Revenue would have to prefer the appeal before the Supreme Court under Section 35L if it intends to – The appeal is dismissed [Read less]

Andhra Pradesh General Sales Tax Rules, 1957 - Applicability of Rule 6(3)(i) to Works Contracts spread beyond One Year - Petitioner executed three different works contracts, two of which extended beyond one year. Department assessed the value of goods purchased considering Rule 6(3)(ii) instead of Rule 6(3)(i) applicable for works spread beyond one year - Whether in respect of contracts spread over a period of more than one year, the provision of Rule 6(3)(i) of the APGST Rules, 1957 would be applicable – HELD - The Rule 6(3)(i) merely provides another method of determining the turnover liable to tax for works spread bey... [Read more]

Andhra Pradesh General Sales Tax Rules, 1957 - Applicability of Rule 6(3)(i) to Works Contracts spread beyond One Year - Petitioner executed three different works contracts, two of which extended beyond one year. Department assessed the value of goods purchased considering Rule 6(3)(ii) instead of Rule 6(3)(i) applicable for works spread beyond one year - Whether in respect of contracts spread over a period of more than one year, the provision of Rule 6(3)(i) of the APGST Rules, 1957 would be applicable – HELD - The Rule 6(3)(i) merely provides another method of determining the turnover liable to tax for works spread beyond one year, based on the value of goods purchased and supplied or used in the execution of the works contract in that year, instead of the method prescribed in Rule 6(2) of arriving at turnover by deducting certain items of expenditure from gross receipts - The value of goods under Rule 6(3)(i) includes not only the cost of acquisition of goods but also transportation charges to deliver the goods to the situs of the works, cost of establishment relatable to supply of material, other charges incurred till incorporation in the works and profits relatable to the value of goods. The profit element may be estimated considering factors like profits ordinarily made by other contractors in similar works, profits earned by the contractor in previous years and profit percentage norms accepted in the industry - The deemed turnover under Rule 6(3)(i) would exclude profits on labour component and actual cost of incorporation in the works - The issue involved in the present writ petitions is covered by Full Bench decision of High Court of Andhra Pradesh in the case of State of Andhra Pradesh v. Seven Hills Constructions - The impugned order is set aside and the matter is remanded for fresh computation taking into consideration the provision of Rule 6(3)(i) after verifying whether the works executed by the petitioner actually spread over beyond one year – The writ petition is allowed [Read less]