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Central Excise - CENVAT credit on inputs procured from manufacturers availing exemption notification - Applicability of Rule 12 of CCR, 2004 - Department took the view that CENVAT credit on inputs cleared by exempted units was not admissible before the amendment in Rule 12 by way of Notification No.02/2014-CE dated 20.01.2014 - SCN invoking extended period of limitation demanding denial of CENVAT credit - Appellant contended that Rule 12 does not restrict availment of credit under Rule 3, the amendment is merely a clarification and should apply retrospectively - Whether CENVAT credit is admissible on inputs procured from m... [Read more]

Central Excise - CENVAT credit on inputs procured from manufacturers availing exemption notification - Applicability of Rule 12 of CCR, 2004 - Department took the view that CENVAT credit on inputs cleared by exempted units was not admissible before the amendment in Rule 12 by way of Notification No.02/2014-CE dated 20.01.2014 - SCN invoking extended period of limitation demanding denial of CENVAT credit - Appellant contended that Rule 12 does not restrict availment of credit under Rule 3, the amendment is merely a clarification and should apply retrospectively - Whether CENVAT credit is admissible on inputs procured from manufacturers availing exemption notification before the amendment in Rule 12 dated 20.01.2014 - HELD - The scheme of CENVAT credit has to be read in a harmonious manner and not in isolation with reference to one or two Rules. The scheme of CENVAT credit provides that credit of inputs or input service shall be admissible to the manufacturer under the following conditions: the input or input service has suffered duty, such input or input service are used in the manufacture of final products, and such credit is received under the cover of prescribed invoice or document. In the instant case, none of these conditions are disputed - CENVAT credit cannot be denied merely because express provision for credit from exempted supplies came at a later date by amendment. Before the amendment in Rule 12 there was no express prohibition in the CENVAT Credit Rules to deny credit availed by the appellant. The absence of an express permission at an earlier date cannot be construed to mean that credit is only admissible from the date of amendment - The amendment to Rule 12 is in the nature of clarification and does not create a new permission but merely clarifies what was permitted by the scheme - Regarding invocation of extended period, where the issue arises on basis of audit and involves legal interpretation of statutory provisions, extended period cannot be invoked. The fact that Department conducted audits regularly and processed refund claims shows Dept had knowledge of the facts. The appellant succeeds both on merits and on the question of limitation - The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Place of removal, Inclusion of transportation cost in assessable value in FOR destination sales - Appellant manufactured and supplied goods to customers on FOR destination basis. Audit revealed that the Appellant had not paid central excise duty on the value of transportation of goods from its factory to buyers' premises resulting in short payment of duty - Whether the place of removal for goods sold on FOR destination basis is the buyer's premises or factory gate - HELD - When goods are sold on FOR destination basis, the place of delivery is the buyer's premises and the cost of transportation up to the bu... [Read more]

Central Excise - Place of removal, Inclusion of transportation cost in assessable value in FOR destination sales - Appellant manufactured and supplied goods to customers on FOR destination basis. Audit revealed that the Appellant had not paid central excise duty on the value of transportation of goods from its factory to buyers' premises resulting in short payment of duty - Whether the place of removal for goods sold on FOR destination basis is the buyer's premises or factory gate - HELD - When goods are sold on FOR destination basis, the place of delivery is the buyer's premises and the cost of transportation up to the buyer's premises has to be included in the assessable value for the purpose of excise duty. However, during the relevant period there were conflicting decisions regarding the place of removal and therefore it was perfectly possible for the Appellant to have entertained a belief that the cost of transportation of goods from its premises to the buyer's premises was not includable in the assessable value. No mala fide can be attributed to the Appellant. It cannot be said that the non-payment or short payment of duty was due to fraud or collusion or willful misstatement or suppression of fact or violation of any Act or Rules with an intent to evade payment of duty - When a SCN was earlier issued for a prior period covering the same issue and all relevant facts were in the knowledge of the Department, the same facts cannot be taken as suppression of facts by the Appellant in a subsequent Notice as these facts were already in the knowledge of the authorities. The entire period of demand is beyond the normal period of limitation and accordingly the demand is barred by limitation - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax – Business Auxiliary Services – Appellant engaged in air travel agency services issued air travel tickets on behalf of domestic and international airlines. When appellant purchased tickets from other GSA/IATA agents, they received commissions or discounts from airlines - Revenue demanded service tax on commission retained by appellant, contending that commission was consideration for BAS rendered by appellant to other GSA/IATA agents - Whether commission retained from purchase of air travel tickets through other GSA/IATA agents constitutes taxable service under Service Tax provisions - HELD – Issue had be... [Read more]

Service Tax – Business Auxiliary Services – Appellant engaged in air travel agency services issued air travel tickets on behalf of domestic and international airlines. When appellant purchased tickets from other GSA/IATA agents, they received commissions or discounts from airlines - Revenue demanded service tax on commission retained by appellant, contending that commission was consideration for BAS rendered by appellant to other GSA/IATA agents - Whether commission retained from purchase of air travel tickets through other GSA/IATA agents constitutes taxable service under Service Tax provisions - HELD – Issue had been previously decided by same Bench for appellant for period 2006-07 to 2010-11. Statutory definition of Air Travel Agency Services covers any activity in relation to booking of passage by air travel agent whether ticket is bought directly from airline or through GSA, making no difference to the nature of service. Appellants are not rendering any service to other GSA/IATA operators. Commission earned by appellants is not exigible to service tax – The impugned order is set aside and the appeal is allowed [Read less]

GST - Prosecution of Director for company's offence - Vicarious liability and requirement to implead company - A complaint was filed against Petitioner, a Director, under Section 132 of CGST Act, 2017 for wrongfully availing Input Tax Credit. The Department alleged that M/s NIPL, a registered person and company of which Petitioner was Director, had availed fraudulent ITC without receipt of goods through invoices of dummy firms. Though the Department had issued Show Cause Notice to M/s NIPL and the company had filed appeal, the complaint was filed against the Petitioner individually without arraigning M/s NIPL as an accused... [Read more]

GST - Prosecution of Director for company's offence - Vicarious liability and requirement to implead company - A complaint was filed against Petitioner, a Director, under Section 132 of CGST Act, 2017 for wrongfully availing Input Tax Credit. The Department alleged that M/s NIPL, a registered person and company of which Petitioner was Director, had availed fraudulent ITC without receipt of goods through invoices of dummy firms. Though the Department had issued Show Cause Notice to M/s NIPL and the company had filed appeal, the complaint was filed against the Petitioner individually without arraigning M/s NIPL as an accused. Petitioner contended that prosecution against him without impleading the company was not maintainable - Whether a Director of a company can be prosecuted individually under Section 137 of CGST Act without the company being arraigned as an accused - HELD - Section 137 of CGST Act use the term ‘person’ and refer it to a Company. Applying strict construction of penal statutes and consistent with binding precedent of the Apex Court, the commission of offence by the company is an express condition precedent to attract vicarious liability of others - The words “as well as the company” appearing in Section 137 make it clear that when the company can be prosecuted, only then the persons mentioned in other categories could be vicariously liable. Commission of offence by the company-M/s NIPL is an express condition precedent to attract the vicariously liability of the petitioner, who was the Director of M/s NIPL at the relevant time – Further, it is M/s NIPL, which is a registered person within the meaning of Section 2(94) of the CGST Act. It is M/s NIPL which has availed the ITC fraudulently. It is also the admitted position that demand-cum-show cause notice was issued to M/s NIPL and it was M/s NIPL which filed an appeal before the Appellate Authority – The prosecution of the Director in personal capacity without arraigning the company cannot proceed against settled principles of law - The complaint against petitioner is quashed and all subsequent proceedings are set aside. The respondent is at liberty to proceed for the offence under Section 132 of CGST Act in accordance with law - The petition is allowed [Read less]

GST – Jurisdiction of Tribunal to examine transitioned ITC - Proceedings under pre-GST regime versus GST regime - Appellant transitioned ITC balance by filing Form GST TRAN-1 under Section 140 of CGST Act including credits of CENVAT credit of eligible duties and VAT credit on stock-in-trade goods. Department issued Notice disputing the transitioned ITC alleging non-production of relevant evidence to substantiate eligibility under GST law - Appellant contended that credits were never disputed under erstwhile regime and cannot be questioned under CGST regime - Whether CGST authorities can initiate proceedings under Section... [Read more]

GST – Jurisdiction of Tribunal to examine transitioned ITC - Proceedings under pre-GST regime versus GST regime - Appellant transitioned ITC balance by filing Form GST TRAN-1 under Section 140 of CGST Act including credits of CENVAT credit of eligible duties and VAT credit on stock-in-trade goods. Department issued Notice disputing the transitioned ITC alleging non-production of relevant evidence to substantiate eligibility under GST law - Appellant contended that credits were never disputed under erstwhile regime and cannot be questioned under CGST regime - Whether CGST authorities can initiate proceedings under Section 74 of CGST Act to question admissibility of ITC transitioned from pre-GST regime when such credits were never challenged under erstwhile law - HELD - Section 142(6)(a) and Section 174(2)(e) of CGST Act make it clear that recovery proceedings related to inadmissible credit under erstwhile laws can be initiated only under provisions of erstwhile laws even after enactment of CGST Act. The CGST authorities are not empowered to initiate proceedings under CGST Act for determining correctness of credits availed and transitioned from erstwhile regime - Following the ratio of High Court of Jharkhand in Usha Martin Ltd and in Steel Authority of India Ltd cases, the proceedings initiated by respondents to deny transitioned ITC on ground that such credits were inadmissible under erstwhile laws are beyond jurisdictional powers vested under CGST Act - An Appellant under Section 140(1) is entitled to carry forward CENVAT credit of eligible duties reflected in returns preceding 01.07.2017 subject to conditions specified. Since credit was never disputed or challenged under erstwhile regime, same cannot be questioned under CGST Act. Examination of correctness and eligibility of credit availed under erstwhile law under guise of powers under Section 140 is without authority of law - Reliance of the revenue on Section 174 of the CGST Act is also of no avail inasmuch as it only authorizes continuation of the proceedings initiated under the erstwhile law. However, it doesn’t authorize the officers appointed under the CGST Act to examine correctness of ITC availed by the appellant under the erstwhile regime - The ITC transitioned by the appellant is in accordance with law and same is held to be eligible. The impugned order is set aside and the appeal is allowed - Transition of Krishi Kalyan Cess (KKC) – HELD - The Appellant had transitioned the same into the GST regime by filing Form GST TRAN-1. However, due to lack of clarity regarding the availability of ITC in respect of KKC, the Appellant, out of abundant caution, reversed the amount under protest – As per the ratio of Godrej & Boyce Mfg Co Ltd judgment, transitional credit of Krishi Kalyan Cess is in order. Merely because the revenue is before the Hon’ble Supreme Court that cannot be sole reason to hold our decision, particularly when the Apex Court has not granted the stay from the operation of the Bombay High Court judgment. Moreover, the view on the issue of transition of KKC is not only based on the judgment in the case of Godrej & Boyce but also on our independent interpretation of the provision and Board’s Circular dated 02.01.2019. The transition of Krishi Kalyan Cess by the Appellant is in order - Transitioned VAT Credit under Section 140(6) – HELD - With respect to VAT credit transitioned into the GST regime, the Appellant had provided all the details required to claim VAT credit on Stock-in-Trade goods lying in stock as on 30.06.2017. There is no finding to the contrary to deny this amount of transitioned credit. Without giving any specific objection for denial of this credit, the lower authorities have rejected this credit considering it to be part and parcel of the other credits. Thus, in the absence of contrary findings, denial of this credit cannot be countenanced. Moreover, the revenue has not brought any material evidence on record to justify denial of VAT credit and consequent transition thereof to GST regime – Further, certain other reasons given to deny transitional credit such as incorrect address on the invoice, description of service not mentioned, copies of invoice or credit register not produced, etc are not sustainable at this stage especially when at the stage of claiming credit such objections were not raised. [Read less]

GST - Cross empowerment, Adjudication by Bureau of Investigation officers - Adjudication order was passed by Deputy Commissioner posted at Bureau of Investigation, State GST, holding that ITC claimed on inward supplies from five suppliers was ineligible - Petitioner contention that respondent officer being vested at Bureau of Investigation Unit lacks jurisdiction to adjudicate and that State Tax Authorities have no jurisdiction when petitioner is administratively assigned to Central Authorities without corresponding notification under Section 6 of CGST Act - Whether officers posted at Bureau of Investigation have power of ... [Read more]

GST - Cross empowerment, Adjudication by Bureau of Investigation officers - Adjudication order was passed by Deputy Commissioner posted at Bureau of Investigation, State GST, holding that ITC claimed on inward supplies from five suppliers was ineligible - Petitioner contention that respondent officer being vested at Bureau of Investigation Unit lacks jurisdiction to adjudicate and that State Tax Authorities have no jurisdiction when petitioner is administratively assigned to Central Authorities without corresponding notification under Section 6 of CGST Act - Whether officers posted at Bureau of Investigation have power of adjudication under Section 74 of CGST Act, 2017 - HELD - A jurisdictional issue questioning the competence of an authority to exercise power raised in a writ petition may be entertained even when alternative remedy exists if such issue is a pure question of law and does not involve adjudication of disputed facts - The order of adjudication was passed by officer posted at Bureau of Investigation who is vested with enforcement activity and investigation including ITC investigation but it prima facie appears such officers may lack jurisdiction to make adjudication under Section 74. There is divergence of opinion among High Courts on cross empowerment issue - The Madras High Court held that State authorities have no jurisdiction when assessee is administratively assigned to Central authority without corresponding notification under Section 6. However Kerala and Jammu and Kashmir High Courts held that cross empowerment is automatic by legislative mandate and no separate notification is required. Since various jurisdictional issues are involved and have not been decided by the adjudicating authority, the matter should be remanded to allow petitioner to raise all jurisdictional issues - The adjudication order and appellate order and all consequential steps were set aside and quashed. Liberty granted to petitioner to submit comprehensive reply to SCN raising all points including jurisdictional issues. The adjudicating authority was directed to fix date of hearing after expiry of reply period and decide jurisdictional issue as first issue and thereafter other issues afresh in accordance with law - The writ petition is allowed [Read less]

GST - Application of amended pre-deposit requirement in cases involving only penalty - Petitioners were issued Show Cause Notice proposing penalties under Section 122(1A) of CGST Act, 2017. Order-in-Original dated 16.12.2025 imposed penalties without accompanying tax demand. By Finance Act 2025 effective 01.10.2025, the proviso to Section 107(6) was substituted to require 10% deposit of penalty in orders demanding only penalty - Petitioners contended the deposit requirement should not apply as proceedings commenced before 01.10.2025 when no such requirement existed - Whether the amended proviso to Section 107(6) requiring ... [Read more]

GST - Application of amended pre-deposit requirement in cases involving only penalty - Petitioners were issued Show Cause Notice proposing penalties under Section 122(1A) of CGST Act, 2017. Order-in-Original dated 16.12.2025 imposed penalties without accompanying tax demand. By Finance Act 2025 effective 01.10.2025, the proviso to Section 107(6) was substituted to require 10% deposit of penalty in orders demanding only penalty - Petitioners contended the deposit requirement should not apply as proceedings commenced before 01.10.2025 when no such requirement existed - Whether the amended proviso to Section 107(6) requiring 10% deposit of penalty applies to appeals where adjudicatory proceedings were initiated before 01.10.2025 but final order was passed after that date - HELD - The right of appeal is substantive and vests when the lis commences with initiation of formal adjudicatory proceedings. In tax matters, the lis commences when the Department formulates and asserts a definite proposition of liability and places it for statutory adjudication by issuing SCN - The amended condition cannot burden the pre-existing appellate right. The substituted proviso operates after 01.10.2025 but does not apply retrospectively to pending adjudicatory proceedings. Since SCN issued on 25.06.2025, no 10% deposit requirement existed on the date the lis commenced. Subsequent steps including replies submission and hearing after 01.10.2025 do not postpone the commencement of proceedings - The substituted proviso to Section 107(6) can operate fully in respect of proceedings initiated on or after 01.10.2025 without applying to earlier proceedings - Petitioners are not required to deposit 10% of penalties as condition precedent for filing appeals – The writ petitions are allowed [Read less]

Service Tax - Scope of Entry No. 9(b) of Notification No. 25/2012-ST dated 20.06.2012 - Services relating to conduct of examination - Appellant conducted various National Level Talent Search Examinations and Olympiad and claimed exemption under Entry No. 9(b) of Notification No. 25/2012-ST as services provided to an educational institution by way of services relating to conduct of examination by such institution - Recovery of service tax on ground that the examinations conducted were optional talent search examinations not forming part of prescribed curriculum of schools and therefore not covered under exemption notificati... [Read more]

Service Tax - Scope of Entry No. 9(b) of Notification No. 25/2012-ST dated 20.06.2012 - Services relating to conduct of examination - Appellant conducted various National Level Talent Search Examinations and Olympiad and claimed exemption under Entry No. 9(b) of Notification No. 25/2012-ST as services provided to an educational institution by way of services relating to conduct of examination by such institution - Recovery of service tax on ground that the examinations conducted were optional talent search examinations not forming part of prescribed curriculum of schools and therefore not covered under exemption notification - Whether the services rendered by appellant are covered under Entry No. 9(b) of Notification No. 25/2012-ST or exemption can be denied by importing a condition that examinations should necessarily form part of prescribed curriculum or be Board Examinations - HELD - The Notification uses the expression "services relating to conduct of examination" and not narrower expressions like "services relating to conduct of curriculum examinations" or "Board Examinations". Plain reading shows the legislature consciously employed broad language. The Adjudicating Authority erred in importing an additional condition that examinations should form part of prescribed curriculum which amounts to judicial legislation - The words "relating to" are of wide amplitude and have consistently been interpreted by Courts to include all activities having direct and proximate nexus with principal activity. Preparation of question papers, printing and supply of examination material, OMR sheets, evaluation of answer scripts, tabulation of marks and declaration of results are all integral components of the process of conducting an examination. Once these services are rendered to an educational institution for conducting examinations, they fall squarely within Entry No. 9(b) - The schools are the recipients of service as they identify participating students, collect examination fees, forward list of students, conduct examinations within their premises and deduct tax at source. Merely because benefit of examination ultimately accrues to students cannot alter identity of recipient of service. Recipient is determined by contractual and commercial relationship and not by identifying ultimate beneficiary – Further, the optional nature of participation does not alter identity of recipient of service where educational institution itself engages the service provider for conducting examinations - The exemption notification is beneficial in nature and must be given liberal construction in accordance with object sought to be achieved. When exemption notification speaks of services relating to conduct of examination and not of examinations conducted pursuant to statutory mandate, interpretation limiting its scope is not permissible - The services rendered by appellant are covered by Entry No. 9(b) of Notification No. 25/2012-ST as services provided to educational institutions relating to conduct of examinations. The finding recorded by the Adjudicating Authority denying the exemption is set aside – The appeal is allowed - Service Tax - Extended period of limitation - Invocation on allegation of suppression of facts with intent to evade payment - Whether the extended period of limitation under Section 73(1) of the Finance Act, 1994 was validly invoked on the allegation of suppression of facts with intent to evade payment of Service Tax – HELD - For the Department to invoke extended period of limitation, there must be an active and deliberate act on part of the assessee to evade payment of tax. Mere non-payment of tax without element of intent or suppression is not sufficient to attract extended limitation period - The appellant had maintained regular books of accounts, disclosed receipts in financial statements and Income Tax Returns, and furnished requisite information during investigation. The entire demand was worked out from records maintained by the appellant itself – Further, during the relevant period, divergent judicial opinions existed regarding taxability of examination-related services and the issue travelled to various High Courts. Such divergence of legal opinion itself demonstrates that the dispute was interpretational in nature. Mere adoption of a legal interpretation subsequently found to be incorrect does not amount to suppression of facts or willful mis-statement so as to justify invocation of extended period - The extended period of limitation was wrongly invoked. The demand extending beyond the normal period is liable to be set aside - Service Tax - Penalty - Validity when underlying tax demand is not sustainable - Penalties were imposed under Section 78 (equivalent to tax amount), Section 77 and upon the director of the appellant based on allegation of suppression with intent to evade payment of tax - Whether the penalties imposed under Sections 77 and 78 can survive when the underlying tax demand itself is found to be not sustainable and the extended period invocation is found to be without authority of law - HELD - The penalty under Section 78 was entirely founded upon the allegation of suppression with intent to evade payment of tax. The penalties under Section 77 and upon the Director are only consequential to the principal demand. When the tax demand itself is liable to be set aside, the penalties automatically fall. The material on record clearly establishes that the appellant entertained bonafide belief regarding the applicability of exemption notification. The dispute concerns interpretation of statutory provisions and exemption notifications. There is nothing on record to suggest any deliberate attempt to evade tax. Therefore, even on independent ground, penal consequences would not have been justified - The penalties imposed under Section 77 and 78 as well as upon the Director are not sustainable - Once the demand itself is held to be not sustainable, the penalty cannot survive. [Read less]

Service Tax - Manpower supply service - Classification of contract as labour contract or job work - Appellant was engaged to operate plant and machinery and execute the entire manufacturing process by deploying its own labour for production of goods - Whether the activity undertaken by appellant was manpower supply service or contract for job work or manufacture of goods – HELD - The work order must be examined in entirety and not in isolation. Reading the various clauses of the work order as a whole leaves no manner of doubt that it was a work order for labour contract - Though the measure of consideration was on per MT... [Read more]

Service Tax - Manpower supply service - Classification of contract as labour contract or job work - Appellant was engaged to operate plant and machinery and execute the entire manufacturing process by deploying its own labour for production of goods - Whether the activity undertaken by appellant was manpower supply service or contract for job work or manufacture of goods – HELD - The work order must be examined in entirety and not in isolation. Reading the various clauses of the work order as a whole leaves no manner of doubt that it was a work order for labour contract - Though the measure of consideration was on per MT basis, the bills were explicitly stated to be labour bills to be submitted every month and to be paid every month - The settlement of contract clearly reflects consensus ad idem that appellant was appointed as labour contractor. The dominant nature of activity continues to be supply of manpower even when payment is linked to output or productivity - The activity undertaken by appellant constitutes manpower supply service which is taxable under service tax - The impugned order is upheld and the appeal is dismissed - Service Tax - Invocation of extended period on ground of suppression and intent to evade payment - Appellant was well aware of the nature of the contract being labour supply but chose not to disclose and pay service tax - Department seeks to validate demand on basis of Form 16A - Whether extended period of limitation was justified and whether penalty under Section 78 can be upheld - HELD - The appellant was well aware of the nature of contract as labour supply and there was no doubt of any kind. The fact that appellant did not come clean and produce all records justifies that investigation was to be done on basis of accounts available. Form 16A shows that appellant was paid certain sums and tax was deducted from them. The nature of business of appellant is clear from the contract. If the sums received were not for rendering taxable services but for some other purpose, it was for appellant to say so. No such indication was found in the submissions and synopsis of the appellant. The invocation of extended period of limitation was justified as there was willful non-payment of tax with intention to evade. The penalty under Section 78 is also justified - The extended period of limitation was rightly invoked. The penalty under Section 78 imposed by the Adjudicating Authority is sustainable. The impugned order upholding the demand with interest and penalty is upheld. [Read less]

Service Tax - Beneficiation of coal - Taxability of Activity of beneficiation and washing of coal undertaken by respondent prior to 01.06.2007 - Whether the activity undertaken by respondent is taxable under "Business Auxiliary Service" prior to 01.06.2007 - HELD - It is settled by judicial pronouncements that the activity of beneficiation and washing of coal is a taxable service in relation to mining of minerals only w.e.f. 01.06.2007. Prior to 01.06.2007 the activity undertaken by respondent does not fall under the category of BAS as the same is classified under Mining Service w.e.f. 01.06.2007. Following the principle t... [Read more]

Service Tax - Beneficiation of coal - Taxability of Activity of beneficiation and washing of coal undertaken by respondent prior to 01.06.2007 - Whether the activity undertaken by respondent is taxable under "Business Auxiliary Service" prior to 01.06.2007 - HELD - It is settled by judicial pronouncements that the activity of beneficiation and washing of coal is a taxable service in relation to mining of minerals only w.e.f. 01.06.2007. Prior to 01.06.2007 the activity undertaken by respondent does not fall under the category of BAS as the same is classified under Mining Service w.e.f. 01.06.2007. Following the principle that introduction of a new entry and inclusion of certain services in that entry would presuppose that earlier there was no entry covering the said service, the activity could not have been categorised under BAS prior to 01.06.2007 - The demand under the category of Business Auxiliary Service prior to 01.06.2007 is not sustainable and set aside - The impugned order dropping proceedings is upheld and the Revenue appeal is dismissed [Read less]

Customs – Majority Order - Valuation of Imported Goods, Renegotiated price – Determination of Transaction Value - Respondent imported polyester chips originally consigned by overseas exporter to another importer at agreed price but the said importer did not clear goods or honour bank letter of credit. Respondent then purchased same goods from overseas exporter at renegotiated price after first import attempt failed. Respondent filed bill of entry declaring assessable value based on price actually paid - Department rejected declared value and assessed goods at original price agreed between overseas exporter and first im... [Read more]

Customs – Majority Order - Valuation of Imported Goods, Renegotiated price – Determination of Transaction Value - Respondent imported polyester chips originally consigned by overseas exporter to another importer at agreed price but the said importer did not clear goods or honour bank letter of credit. Respondent then purchased same goods from overseas exporter at renegotiated price after first import attempt failed. Respondent filed bill of entry declaring assessable value based on price actually paid - Department rejected declared value and assessed goods at original price agreed between overseas exporter and first importer who did not take delivery - Whether value should be determined on basis of original contract price between overseas exporter and initial importer who did not take delivery, or on basis of price actually paid by respondent who took actual delivery and cleared goods from port – HELD – Section 14 of Customs Act, 1962 requires that transaction value shall be price actually paid or payable for goods when sold for export to India for delivery at time and place of importation where buyer and seller are not related and price is sole consideration. Following Supreme Court judgment in Chaudhary Ship Breakers Vs. Commissioner of Customs, Ahmedabad, the adjudicating authority is bound to accept price actually paid or payable as transaction value except where exceptions enumerated in Rule 4(2) are attracted - In present case all parameters of transaction value were satisfied only in transaction between overseas supplier and respondent as initial importer never took delivery, never paid any price to exporter and never filed any bill of entry. Since, the concept of ‘transaction value’ was brought into the statute book w.e.f. 10.10.2007, and the dispute involved in the present case relates to the period January, 2009, it is proper and justifiable in law, that the concept of ‘transaction value’ alone should be adopted for the purpose of ascertaining the customs duty liability. In the case in hand, since all the parameters laid down in the amended Section 14 of the Act of 1962 had been complied with by the respondent, the price actually paid to the overseas supplier for the imported goods should be considered as transaction value. In other words, no interpretation can be placed to upset the declared value as the price paid by the respondent to the overseas supplier is the sole consideration for the sale of the disputed imported goods - The impugned order is upheld and appeal filed by Revenue is dismissed [Read less]

Central Excise – Refund of Pre-deposit and Interest Entitlement – Appellant had deposited amount as pre-deposit in year 2009 under Section 35FF of Central Excise Act, 1944. After Tribunal passed final order, appellant sought refund of deposited amount along with interest in January 2025. Original authority and Commissioner (Appeals) sanctioned principal refund amount but denied interest. Ground for denial of interest was that only pre-deposits made on or after 06.08.2014 are entitled to interest from date of deposit, and since refund was paid within three months from date of refund application, no interest was payable ... [Read more]

Central Excise – Refund of Pre-deposit and Interest Entitlement – Appellant had deposited amount as pre-deposit in year 2009 under Section 35FF of Central Excise Act, 1944. After Tribunal passed final order, appellant sought refund of deposited amount along with interest in January 2025. Original authority and Commissioner (Appeals) sanctioned principal refund amount but denied interest. Ground for denial of interest was that only pre-deposits made on or after 06.08.2014 are entitled to interest from date of deposit, and since refund was paid within three months from date of refund application, no interest was payable - Whether pre-deposits made prior to amendment of Section 35FF are governed by unamended provisions and whether such pre-deposits are entitled to interest on refund – HELD – The Pre-deposits made prior to 06.08.2014 are governed by unamended provisions of Section 35FF. The proviso to Section 35FF post-amendment clearly states that amounts deposited prior to commencement of Finance Act, 2014, shall continue to be governed by provisions of Section 35FF as it stood before commencement. Under unamended provisions of Section 35FF, interest is payable only if pre-deposit amount is not refunded within period of three months from date of communication of order of adjudicating authority. As refund was sanctioned within three months of refund application in present case, no interest was payable - The impugned order is upheld and the appeal is dismissed [Read less]

Customs - Courier service - Liability for connivance in movement of contravened goods - Whether the courier service can be held liable for having connived with movement of contravened goods – HELD - Investigation revealed that three persons were masterminds behind entire smuggling operations and they admitted their role in matter. No evidence has been brought on record to implicate the courier service. The accused persons have not at any stage alleged that the authorized courier was aware of presence of gold in consignment - The contraband could be found out only when subjected to X-ray test on arrival at courier cell of... [Read more]

Customs - Courier service - Liability for connivance in movement of contravened goods - Whether the courier service can be held liable for having connived with movement of contravened goods – HELD - Investigation revealed that three persons were masterminds behind entire smuggling operations and they admitted their role in matter. No evidence has been brought on record to implicate the courier service. The accused persons have not at any stage alleged that the authorized courier was aware of presence of gold in consignment - The contraband could be found out only when subjected to X-ray test on arrival at courier cell of Customs Department. Except when consignment was subjected to such non-invasive probe, no one other than person who devised such ingenious method could have any idea of concealment. The authorized courier could not have noticed the concealment on his own given that declaration filed reflected innocent goods. The courier acted on bonafide belief that consignment was devoid of any contraband and cargo was genuine - No case for imposing penalty has been made out against the courier service. The courier is not at fault and did not commit any offence to warrant punitive measures. The impugned order dropping proceedings against the respondent is upheld. The appeal filed by Revenue is dismissed [Read less]

Customs - Penalty for mis-declaration and fraudulent importation - Role and liability of Customs Broker - Customs Broker and its G-Card Holder filed Bills of Entry for consignments of baby garments imported by a trader – DRI alleged mis-declaration with respect to quantity of the declared goods and fraudulent importation. The appellant-Customs Broker was proposed for penal action under Sections 112(a), 112(b) and 114AA of the Customs Act, 1962 - Whether penalties under Section 112(a)(ii) of the Customs Act, 1962 could be imposed on the Customs Broker for its role in the alleged mis-declaration and fraudulent importation ... [Read more]

Customs - Penalty for mis-declaration and fraudulent importation - Role and liability of Customs Broker - Customs Broker and its G-Card Holder filed Bills of Entry for consignments of baby garments imported by a trader – DRI alleged mis-declaration with respect to quantity of the declared goods and fraudulent importation. The appellant-Customs Broker was proposed for penal action under Sections 112(a), 112(b) and 114AA of the Customs Act, 1962 - Whether penalties under Section 112(a)(ii) of the Customs Act, 1962 could be imposed on the Customs Broker for its role in the alleged mis-declaration and fraudulent importation of goods - HELD - The role of the Customs Broker and its G-Card Holder was to get clearance of the consignment by processing the import documents and filing Bills of Entry on the basis of documents furnished by the importer. The appellants were not in possession of prior knowledge about the mis-declaration of the quantity of the goods in question - The Revenue failed to bring on record any corroborative evidence with regard to the appellants having prior information as to mis-declaration of the quantity of the goods imported by the importer. In the absence of such facts, it cannot be alleged that the appellants were involved in aiding and abetting customs duty evasion by mis-declaring the quantity of goods imported by the importer. There was no evidence that the appellant and importer were sharing benefits out of fraudulent imports - The Customs Broker and its G-Card Holder being mere processors of documents cannot be held liable for the alleged mis-declaration - The penalties imposed on the appellants under Section 112(a)(ii) of the Customs Act, 1962 are set aside and the appeals are allowed [Read less]

GST – Karnataka AAR - Classification of Service of loading of Ballast into Railway Wagons – Works Contract or Composite Supply – Applicant engaged in executing contracts for Indian Railways including supply and loading of ballast stacked adjacent railway tracks into railway wagons using JCB loader - Whether activity of loading ballast already owned by Railways into railway wagons constitutes works contract or composite supply with ballast, or is independent service subject to separate classification and rate – HELD – The definition of works contract under Section 2(119) of CGST Act, 2017 requires activity to invo... [Read more]

GST – Karnataka AAR - Classification of Service of loading of Ballast into Railway Wagons – Works Contract or Composite Supply – Applicant engaged in executing contracts for Indian Railways including supply and loading of ballast stacked adjacent railway tracks into railway wagons using JCB loader - Whether activity of loading ballast already owned by Railways into railway wagons constitutes works contract or composite supply with ballast, or is independent service subject to separate classification and rate – HELD – The definition of works contract under Section 2(119) of CGST Act, 2017 requires activity to involve building, construction, fabrication, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of immovable property with transfer of property in goods. Activity of supplying and loading ballast does not involve any such activity in relation to immovable property and therefore does not satisfy essential conditions of works contract - Supply of ballast and loading activity are separate and independently identifiable supplies since Letter of Acceptance prescribes separate rates for each item, separate invoices are raised at different points in time – The ownership of ballast transferred to Railways at delivery after which applicant has no custody or liability for ballast, and loading activity is executed subsequently only on separate instructions from Railways – The Composite supply under Section 2(30) requires supplies to be naturally bundled and supplied in conjunction with each other in ordinary course of business and one to be principal supply. In the present case, the supplies fail to satisfy requirement of being naturally bundled as contractual arrangement itself treats activities as separate obligations with distinct rates, separate consideration, and separate execution – The activity of ballast at Railway depot or nominated location and loading of Railway’s ballast collected at yard/depot into Railway wagons using Mechanical Loader constitute separate and independent supplies and cannot be regarded as a composite supply merely because both activities emanate from the same work order - From the nature of the activity, the scope of Heading 9967, and the Explanatory Notes to Group 99671 relating to cargo handling services, the activity of loading ballast into Railway wagons by using JCBs is appropriately classifiable under SAC 996719– “Other cargo and baggage handling services” falling under Heading 9967 as “Supporting services in transport”. The said service is liable to GST at the rate of 18% in terms of Entry No. 11 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended – Ordered accordingly [Read less]

GST - Condonation of delay in filing statutory appeal - Non-communication of order and denial of personal hearing - Whether delay in filing statutory appeal beyond prescribed period can be condoned when impugned order was not effectively communicated to the taxpayer and mandatory personal hearing was denied - HELD - While the Appellate Authority is bound by statutory provisions of limitation provided under Section 107 of CGST Act 2017, considering the reasons for non-filing of appeal being beyond the control of the petitioner, non-adjudication of the appeal on merits would cause grave injury and prejudice. The delay is bon... [Read more]

GST - Condonation of delay in filing statutory appeal - Non-communication of order and denial of personal hearing - Whether delay in filing statutory appeal beyond prescribed period can be condoned when impugned order was not effectively communicated to the taxpayer and mandatory personal hearing was denied - HELD - While the Appellate Authority is bound by statutory provisions of limitation provided under Section 107 of CGST Act 2017, considering the reasons for non-filing of appeal being beyond the control of the petitioner, non-adjudication of the appeal on merits would cause grave injury and prejudice. The delay is bona fide and occurred solely due to absence of effective communication of the impugned order and failure of respondents to afford the mandatory opportunity of personal hearing under Section 75(4) of CGST Act 2017. Immediately upon acquiring knowledge of the impugned order, the petitioner took prompt steps to seek legal recourse - Following the consistent view taken by this Court in similar cases, sufficient cause for delay has been demonstrated. Non-adjudication on merits would be against principles of justice and fair play - The writ petition is allowed to the extent of condoning the delay. The Appellate Authority is directed to entertain the appeal of the petitioner and adjudicate the same on merits – The petition is allowed [Read less]

Central Excise – Valuation of Goods Cleared to Related Parties - During relevant period, Appellant cleared granulated slag to joint venture at lower rates than rates charged from independent buyers. Department issued EA-2000 audit and deficiency memo alleging that Appellant cleared granulated slag at lower rates to joint venture. Subsequently Show Cause Notice was issued invoking extended period of limitation proposing demand alleging that Rule 10(b) of Central Excise Valuation Rules applicable only when goods solely cleared to interconnected units and since Appellant cleared goods to both joint venture and independent b... [Read more]

Central Excise – Valuation of Goods Cleared to Related Parties - During relevant period, Appellant cleared granulated slag to joint venture at lower rates than rates charged from independent buyers. Department issued EA-2000 audit and deficiency memo alleging that Appellant cleared granulated slag at lower rates to joint venture. Subsequently Show Cause Notice was issued invoking extended period of limitation proposing demand alleging that Rule 10(b) of Central Excise Valuation Rules applicable only when goods solely cleared to interconnected units and since Appellant cleared goods to both joint venture and independent buyers, Rule 10(b) inapplicable - Whether extended period of limitation was invocable in facts and circumstances of case – HELD – Tribunal in case of Kirloskar Brothers Ltd. held in identical factual situation that when EA-2000 audit team had requisite details from books of accounts maintained by assessee and rectification entries were put up before them, such conduct does not point to suppression. When reputed public limited company maintains proper books of accounts and rectifies mistakes by passing proper counter entries, extended period of limitation is not invocable. Facts in present case are similar to Kirloskar Brothers Ltd. case. Audit team had full access to records and entries were available. No suppression attributable to Appellant – Extended period of limitation is not invocable. Impugned proceedings not sustainable and set aside – The appeal is allowed [Read less]

Customs - Revocation of Customs Broker License and forfeiture of security deposit for alleged violations of KYC and due diligence requirements under Customs Brokers Licensing Regulations – Overvaluation of export goods to avail undue benefits under the MEIS and Duty Drawback Scheme - Whether the Customs Broker License could be revoked and security deposit forfeited for alleged violations of Regulations 10(d), 10(e), 10(m) and 10(n) CBLR, 2018 in relation to alleged overvaluation of exported goods by the exporter - HELD - There is no valid offence report as contemplated under Regulation 17 of CBLR, 2018 and in the absence... [Read more]

Customs - Revocation of Customs Broker License and forfeiture of security deposit for alleged violations of KYC and due diligence requirements under Customs Brokers Licensing Regulations – Overvaluation of export goods to avail undue benefits under the MEIS and Duty Drawback Scheme - Whether the Customs Broker License could be revoked and security deposit forfeited for alleged violations of Regulations 10(d), 10(e), 10(m) and 10(n) CBLR, 2018 in relation to alleged overvaluation of exported goods by the exporter - HELD - There is no valid offence report as contemplated under Regulation 17 of CBLR, 2018 and in the absence of a valid offence report, the revocation proceedings initiated under CBLR, 2018 are not sustainable. There is no evidence brought on record showing connivance, knowledge or involvement of the Appellant in the alleged overvaluation - A Customs Broker cannot be expected to function as an investigating agency and verify whether the valuation adopted by the Customs Broker for the goods exported are proper or not. The Customs Broker filed export documents before the Customs authorities on the basis of the documents furnished by the exporter. The shipping bills were assessed by Customs officers and Let Export Orders were issued after examination and clearance by the Customs authorities. The Customs Broker cannot be held responsible if at a later stage, the goods exported were found to be overvalued - The Customs Broker cannot be penalized merely because at a later stage, the exporter is alleged to have indulged in irregularities, particularly when the Appellant had completed KYC verification and acted upon documents appearing genuine on their face. The Customs Broker is a processing agent of documents and is not an inspector to weigh the genuineness of the transaction - The appellant has not violated any of the provisions of Regulations 10(d), 10(e), 10(m) and 10(n) of the CBLR, 2018 - The impugned order revoking the License, forfeiting the security deposit and imposing penalty on the appellant is set aside and the appeal is allowed [Read less]

GST - Pre-deposit requirement in cases involving only penalty, Validity of Retrospective application of amendment to Section 112(8) of CGST Act, 2017 to period prior to 01.10.2025 - Appellant preferred appeal before Tribunal but Registry pointed defects and raised question of statutory pre-deposit requirement. Appellant contended that the impugned order involved only penalty without any tax demand, and that pre-deposit requirement under proviso to Section 112(8) was introduced by Finance Act 2025 effective from 01.10.2025 whereas impugned order was issued on 12.01.2024, prior to such amendment - Whether statutory pre-depos... [Read more]

GST - Pre-deposit requirement in cases involving only penalty, Validity of Retrospective application of amendment to Section 112(8) of CGST Act, 2017 to period prior to 01.10.2025 - Appellant preferred appeal before Tribunal but Registry pointed defects and raised question of statutory pre-deposit requirement. Appellant contended that the impugned order involved only penalty without any tax demand, and that pre-deposit requirement under proviso to Section 112(8) was introduced by Finance Act 2025 effective from 01.10.2025 whereas impugned order was issued on 12.01.2024, prior to such amendment - Whether statutory pre-deposit is required under Section 112(8) of CGST Act for an appeal against order demanding only penalty when such order was issued prior to 01.10.2025 - HELD – The proviso to Section 112(8) was effective from 01.10.2025 vide Finance Act, 2025 dated 29.03.2025, wherein pre-deposit was prescribed in cases where issue involved is only the penalty - In the present case, the SCN was issued on 29.09.2022, Order-in-Original was issued on 28.08.2023 and impugned order was issued on 12.01.2024. Thus, the impugned order was issued very much before the amendment became effective i.e. 01.10.2025 - The requirement of pre-deposit in cases involving only penalty before the amendment became effective was decided by the High Court of Calcutta which held that where the appeal is carried against an order pertaining only to penalty and there is no amount of tax in dispute, no requirement for making any pre-deposit exists - When a statute provides for a right to prefer appeal, conditions can limit such right but non-existent conditions affecting substantive rights cannot be imported into statute by any authority. The amendment to proviso of Section 112(8) by Finance Act 2025 effective from 01.10.2025 did not indicate any retrospective application or necessary implication - As the impugned order was issued much before 01.10.2025, the requirement of pre-deposit shall not be applicable - No pre-deposit is required to be made for admission of the appeal in the present case – Ordered accordingly [Read less]

GST – Service of Notice on Common Portal – Petitioner contended that notices issued by uploading in common portal in terms of Section 169(1)(d) of the CGST Act, 2017 were not validly served as common portal was not specifically notified under Section 146 of CGST Act for purpose of serving notice under Section 169(1)(d) - Whether notices uploaded on common portal without specific notification under Section 146 of CGST Act identifying portal for service of notice under Section 169(1)(d) constitute valid service of notice – HELD – Section 169(1)(d) provides for service of notice through common portal but Section 146 o... [Read more]

GST – Service of Notice on Common Portal – Petitioner contended that notices issued by uploading in common portal in terms of Section 169(1)(d) of the CGST Act, 2017 were not validly served as common portal was not specifically notified under Section 146 of CGST Act for purpose of serving notice under Section 169(1)(d) - Whether notices uploaded on common portal without specific notification under Section 146 of CGST Act identifying portal for service of notice under Section 169(1)(d) constitute valid service of notice – HELD – Section 169(1)(d) provides for service of notice through common portal but Section 146 of CGST Act requires notification of such portal with specific reference to purpose for which portal is to be used. Punjab and Haryana High Court in Luxmi Traders case held that notification under Section 146 must contain reference to requirement of service of notice under Section 169(1)(d) and mere general notification of common portal without specific identification of service of notice as purpose is not sufficient. Review of notifications issued under Section 146 reveals none contain specific reference to service of notice under Section 169(1)(d) - Prima facie case established in favor of petitioner that service of notice through portal without proper statutory notification under Section 146 for that specific purpose is not valid – Interim stay granted on further proceedings for period of two months – Ordered accordingly [Read less]

Haryana General Sales Tax Rules, 1975 - Tax Concession – New Industrial Unit vs Expansion Unit – Classification and Eligibility – Appellant established manufacturing unit in 2000-2001 for manufacturing switches and other automobile parts. Appellant applied for tax concession claiming to be a new industrial unit under Rule 28C of the Haryana General Sales Tax Rules, 1975. Department rejected claim on ground that Appellant already had existing unit at Sonepat established in 1989 and that Gurugram unit was expansion of existing unit rather than new unit - Whether separate manufacturing unit at different location manufac... [Read more]

Haryana General Sales Tax Rules, 1975 - Tax Concession – New Industrial Unit vs Expansion Unit – Classification and Eligibility – Appellant established manufacturing unit in 2000-2001 for manufacturing switches and other automobile parts. Appellant applied for tax concession claiming to be a new industrial unit under Rule 28C of the Haryana General Sales Tax Rules, 1975. Department rejected claim on ground that Appellant already had existing unit at Sonepat established in 1989 and that Gurugram unit was expansion of existing unit rather than new unit - Whether separate manufacturing unit at different location manufacturing both same items and different items can be treated as new industrial unit or should be classified as expansion of existing unit – HELD – The Rule 28C(3)(f) defines expansion as industrial capacity set up during operative period creating additional production facilities for manufacture of same product as unit before expansion with additional fixed capital investment exceeding 25% of fixed capital investment of unit before expansion at same or new location. Rule 28C(k) defines new industrial unit as unit set up in State which has come into commercial production during operative period or having come into commercial production under prior Rule has not started availing any tax concessions - Appellant had existing unit at Sonepat since 1989 but had not availed any tax exemption for said unit. The mere fact that Appellant had existing unit earlier does not preclude it from being treated as new industrial unit for purposes of tax concession if it had not availed concession for existing unit. The application was considered on merits and accepted but classified as expansion rather than new unit. Tribunal erred in affirming view restricting tax exemption by treating appellant as existing unit undertaking expansion – The impugned order is set aside and matter is remitted to Tribunal for fresh adjudication - The appeal succeeds and allowed [Read less]

Customs – Valuation of Imported Goods – Related Parties and Administrative Control – Respondent imported bioceramics from Malaysia. Department alleged that Conybio Malaysia was real supplier and had administrative and financial control over Respondent company despite imports shown as from third party suppliers - Respondent contended aborted investment proposal did not materialize and no shares were ever allotted. Whether correspondence and requests for share certificates establish that Conybio Malaysia had administrative and financial control over Respondent – HELD – Adjudicating authority's finding that Conybio ... [Read more]

Customs – Valuation of Imported Goods – Related Parties and Administrative Control – Respondent imported bioceramics from Malaysia. Department alleged that Conybio Malaysia was real supplier and had administrative and financial control over Respondent company despite imports shown as from third party suppliers - Respondent contended aborted investment proposal did not materialize and no shares were ever allotted. Whether correspondence and requests for share certificates establish that Conybio Malaysia had administrative and financial control over Respondent – HELD – Adjudicating authority's finding that Conybio Malaysia had active participation rested entirely on correspondence requesting share certificates. In absence of evidence on record that share certificates were actually allotted or requests were complied with, mere requests cannot establish allotment of shares. Assumption that request for share certificate would arise only upon allotment of shares lacks evidentiary foundation. Being limited company registered under Companies Act, it would not be difficult to ascertain whether Malaysian personnel were shareholders if they actually were. Correspondence constituted part of aborted investment proposal which did not fructify and allotted no shares. Finding that Conybio Malaysia had administrative and financial control has no basis – The finding is set aside - Valuation of Imported Goods – Actual Supplier and Parallel Invoices – Department contended that Conybio Malaysia was actual supplier of goods imported and showed as from Bryncoch Malaysia, and alleged that parallel invoices at fifty percent higher prices proved undervaluation. Respondent submitted that parallel invoices were proforma invoices raised during aborted investment proposal and payment was made only to Bryncoch at invoiced prices without any excess remittance - Whether parallel invoices without evidence of actual payment or share allotment can constitute valid evidence of undervaluation – HELD – Adjudicating authority accepted parallel invoices as evidence despite allegation that undervaluation would be adjusted through share allotment which never occurred. Allegations that payments made for suppressed value lack supporting evidence of any remittances in excess of invoiced prices. Tribunal in Oswal Metal Works held that proforma invoices can never be basis for alleging undervaluation without supporting evidence of flowback of consideration. Charge of undervaluation based on proforma invoices without evidence of actual payment or share transfer is not sustainable. Business was at incipient stage and certain mix-ups cannot question legitimacy of transactions without evidence. Non-audited Statement of Accounts cannot lend authenticity to transactions – Confirmation of demand based on parallel invoices is not sustainable - Valuation of Imported Goods – Related Parties – Artificial Persons vs Natural Persons – Department alleged that directors of Rekamacro Resources were brother and mother of Respondent's president and concluded parties were related family members. Respondent contended that concept of members of same family under Rule 2(2)(viii) applies only to natural persons and not to artificial persons. Whether artificial persons like limited companies and Respondent can be related parties based on family connections of their individual directors and shareholders – HELD – Supreme Court in Alembic Glass Industries held that limited company is juridical person separate from its shareholders and directors and common directorship is no ground to treat companies as related. Cooper Pharma case held that limited company cannot be treated as related person based only on blood relations of shareholders/directors. Rule 2(2)(viii) concept of family members applies only to natural persons and not artificial persons. Relationship between Respondent and Malaysian companies through family connections of individuals is not sufficient to establish parties as related under Rule 2(2). Department failed to establish relationship under any clause of Rule 2(2) – Finding that Reka Network and Rekamacro Resources are related parties is not legally sustainable - Customs – Valuation – Retail Selling Price – Post-Import Redetermination – Respondent declared RSP for imported goods but Department redetermined RSP claiming misdeclaration. Respondent submitted details of invoices on which revised RSP was based were not furnished and prior to March 2008 no statutory provision existed for post-import redetermination of RSP. Whether Department can redetermine RSP post-import without statutory mechanism and without furnishing supporting documents to importer – HELD – No statutory machinery existed for redetermining RSP of imported goods prior to 01.03.2008. Section 4A Subsection 4 ascertaining or redetermining RSP was introduced only from 14.05.2003 and prescribed rules were notified only on 01.03.2008. During period prior to March 2008 no methodology was available for reassessing or redetermining RSP. Documentary evidence on which RSP was adopted/revised was not furnished to Respondent despite specific request, causing serious prejudice and negating principles of natural justice. Tribunal in Acer India case held there is no machinery or provisions for ascertaining RSP when RSP not declared by importer on imported articles. Demand based on RSP is unsustainable – Demand for Additional Duty based on RSP is set aside - Classification of Goods – Medicament vs Skin-Care Product – Department reclassified product Cony Takara from CTH 3004 (Medicament) to CTH 3304 (Skin-Care Product). Respondent contended that product possessed therapeutic and curative attributes being a foot-care sheet that promotes blood circulation and detoxification, placing it on skin, thereby meriting classification as medicament. Whether product with curative attributes for treating pain and promoting blood circulation should be classified as skin-care product – HELD – HSN Explanatory Notes for CTH 3004 specifically cover measured doses including in transdermal administrative form as patches for direct application to skin for therapeutic or prophylactic use. Supreme Court in Ciens Labs case held that when product contains pharmaceutical ingredients with therapeutic or curative properties, curative attributes render product a medicament not cosmetic. Product's primary function is cure not care and contains curative ingredients, it must be branded medicament. Adjudicating authority's finding that product is foot-care sheet with therapeutic attributes but classified as skin-care product lacks reasoning and explanation. Product used when person is in pain to ease pain and activate blood circulation is medicament for cure not skin-care product. Reclassification under CTH 3304 is not correct – Product Cony Takara merits classification under CTH 3004 as Medicament - Customs – Cross-Objections – Scope and Maintainability under Customs Act – Appellant Principal Commissioner of Customs challenged non-imposition of redemption fine in common order. Respondent importer filed cross-objections contesting substantive portions of order including charges of undervaluation and reclassification. Revenue raised preliminary objection that cross-objection scope is restricted to points raised in revenue appeal and cannot challenge entire order. Whether cross-objections filed under Section 129A(4) of Customs Act can be used to challenge substantive portions of adjudicating authority order beyond points raised in appeal filed by other party – HELD – Section 129A(4) clearly provides that Respondent in an appeal filed by other party can file cross-objections against any part of order appealed against within 45 days and CESTAT is obliged to dispose of cross-objection as if it were an appeal. Statutory provision employs clear and categorical language conferring right to contest order as whole or part thereof in addition to contesting grounds raised in appeal memorandum. Trib [Read less]

GST – Validity of issue of Composite Notice for Multiple Assessment Years – Whether single consolidated Show Cause Notice covering multiple assessment years can be legally issued or separate notices are required for each assessment year – HELD – In Joint Commissioner (Intelligence & Enforcement) Vs. M/s. Lakshmi Mobiles Accessories and Tharayil Medicals Vs. Deputy Commissioner, Audit Division, Division Bench of Kerala High Court held that issuance of composite notice for multiple assessment years is not legally sustainable. Separate Show Cause Notice is required to be issued for each assessment year - The consolida... [Read more]

GST – Validity of issue of Composite Notice for Multiple Assessment Years – Whether single consolidated Show Cause Notice covering multiple assessment years can be legally issued or separate notices are required for each assessment year – HELD – In Joint Commissioner (Intelligence & Enforcement) Vs. M/s. Lakshmi Mobiles Accessories and Tharayil Medicals Vs. Deputy Commissioner, Audit Division, Division Bench of Kerala High Court held that issuance of composite notice for multiple assessment years is not legally sustainable. Separate Show Cause Notice is required to be issued for each assessment year - The consolidated Show Cause Notice issued by the respondents for multiple financial years are quashed granting liberty to the respondent to issue separate notices for the relevant assessment years – The petition is disposed of [Read less]

Service Tax – Liability of Sub-contractor, Applicability of Extended Period of Limitation – Whether sub-contractor is liable to pay service tax on services provided to main contractor when principal contractor has already discharged service tax liability and whether extended period of limitation under Section 73(1) proviso can be invoked – HELD – On merits the issue is covered by decision of Larger Bench in CST New Delhi vs Melange Developers Pvt Limited establishing that even if main contractor has discharged service tax liability, it does not discharge sub-contractor of its independent obligation of paying tax on... [Read more]

Service Tax – Liability of Sub-contractor, Applicability of Extended Period of Limitation – Whether sub-contractor is liable to pay service tax on services provided to main contractor when principal contractor has already discharged service tax liability and whether extended period of limitation under Section 73(1) proviso can be invoked – HELD – On merits the issue is covered by decision of Larger Bench in CST New Delhi vs Melange Developers Pvt Limited establishing that even if main contractor has discharged service tax liability, it does not discharge sub-contractor of its independent obligation of paying tax on portion of consideration received by sub-contractor – Sub-contractor is essentially taxable service provider as services provided are used by main service provider for completion of work and does not alter fact of provision of taxable service by sub-contractor – Master Circular No. 96/7/2007-ST dated 23.08.2007 clarified that sub-contractor must discharge service tax liability while providing taxable service to main or principal contractor and cannot escape liability on plea that payment would amount to double taxation – However on issue of invocation of extended period of limitation, Department has not produced any substantive evidence to prove existence of ingredients for invoking extended period and in absence thereof cannot be said that appellant willfully suppressed facts to evade payment of tax – Issue of liability of sub-contractor to pay service tax was an interpretational issue which was settled by decision of Larger Bench and before that there were contradictory views – Extended period cannot be used against appellant in interpretational issues – The Show Cause Notice is time barred and demand is not sustainable – Impugned order modified to that extent – The appeal is allowed [Read less]

GST - Discrepancy in place of delivery in E-Way Bill - Evidentiary value of statement of driver not recorded in Form GST MOV-01 – During transit, the vehicle was intercepted by the respondent authorities on the ground that the place of delivery mentioned in the E-Way Bill was different from the place where the goods were being transported - Seizure order was passed under Section 129(1) of the CGST Act, 2017 and a show cause notice was issued under Section 129(3) for imposing penalty - The petitioner contended that the discrepancy was a technical error occurred due to a glitch in the software system and that the statement... [Read more]

GST - Discrepancy in place of delivery in E-Way Bill - Evidentiary value of statement of driver not recorded in Form GST MOV-01 – During transit, the vehicle was intercepted by the respondent authorities on the ground that the place of delivery mentioned in the E-Way Bill was different from the place where the goods were being transported - Seizure order was passed under Section 129(1) of the CGST Act, 2017 and a show cause notice was issued under Section 129(3) for imposing penalty - The petitioner contended that the discrepancy was a technical error occurred due to a glitch in the software system and that the statement of the driver relied upon by the authorities was not recorded in the prescribed Form GST MOV-01 and therefore has no evidentiary value - Whether a statement of the driver recorded on a plain sheet of paper and not in the prescribed statutory Form GST MOV-01 can be relied upon to support findings against the taxpayer - HELD - A statement recorded otherwise than in the prescribed Form GST MOV-01 is of very little evidentiary value and cannot be relied upon for making findings adverse to the taxpayer. The statutory scheme specifically prescribes Form GST MOV-01 for recording the statement of the owner, driver or the person in charge of the goods and conveyance. A statement recorded on a plain sheet of paper lacks the prescribed statutory format and sanctity. Such statements devoid of any evidentiary value inasmuch as the statutory scheme specifically prescribes the form for recording such statements - The impugned orders suffered from manifest procedural irregularity and warrant interference - The impugned order is set aside and the matter is remitted to the appellate authority for fresh decision – The petition is allowed - GST - Obligation of the Appellate authority to consider and deal with grounds raised in memorandum of appeal - Petitioner raised specific grounds in the memorandum of appeal assailing the detention and penalty order, including that the discrepancy was a bona fide technical error, there was no intention to evade tax, and the statement of driver had no evidentiary value as it was not recorded in Form GST MOV-01 - Whether the appellate authority was obliged to consider and deal with the grounds raised by the petitioner in the memorandum of appeal - HELD - Once specific grounds are raised in the memorandum of appeal, the appellate authority is duty-bound to accord due consideration to each of them. The authority may either accept or reject the contentions on merits, but it cannot brush them aside without assigning reasons - The right of appeal is a valuable statutory right and the appellate authority is obliged to deal with every material contention raised by the appellant by passing a reasoned and speaking order. The appellate authority cannot conveniently overlook and fail to deal with the grounds raised while affirming the order of the Original Authority. Failure to consider and address the grounds raised constitutes a grave procedural irregularity - The appellate order which failed to deal with the grounds raised warranted interference by the court. The matter is remitted to the appellate authority to pass fresh orders after affording an opportunity of hearing to the petitioner and after taking into consideration each and every contention raised. [Read less]

GST – Reply of SCN after prescribed due date, Opportunity of Hearing under Section 75(4) of the CGST Act – Petitioner filed reply to Show Cause Notice after due date and requested personal hearing. Authority passed assessment order without considering reply or granting personal hearing, proceeding on ground that no reply was filed within stipulated time - Whether opportunity of personal hearing must be granted where reply and request for hearing are received after prescribed due date but before order is passed – HELD – The Section 75(4) of CGST Act provides that opportunity of hearing shall be granted where written... [Read more]

GST – Reply of SCN after prescribed due date, Opportunity of Hearing under Section 75(4) of the CGST Act – Petitioner filed reply to Show Cause Notice after due date and requested personal hearing. Authority passed assessment order without considering reply or granting personal hearing, proceeding on ground that no reply was filed within stipulated time - Whether opportunity of personal hearing must be granted where reply and request for hearing are received after prescribed due date but before order is passed – HELD – The Section 75(4) of CGST Act provides that opportunity of hearing shall be granted where written request is received from person chargeable with tax or where adverse decision is contemplated. The issuance of Show Cause Notice itself indicates contemplation of adverse proceedings – The plain reading of Section 75(4) provides that written request is not even required in case where adverse decision is contemplated as contemplation of adverse decision triggers duty to grant hearing - The DRC-01 Form attached to SCN contemplates personal hearing even after due date for submission of reply and no material on record shows that date was fixed for personal hearing before written request was made. Impugned order does not refer to any date fixed for personal hearing and proceeds on false premise that no reply was filed, though reply was actually filed well before the assessment order. Authority failed to apply mind to proceedings and did not consider reply filed by assessee – The assessment order is set aside and fresh proceedings shall be initiated from stage of consideration of reply and after providing opportunity of personal hearing as required by law. Exemplary costs of Rs.10,000 imposed on respondent authority – The writ petition is allowed [Read less]

Service Tax – Taxability of Leasing of equipment - Deemed sale or supply of taxable service - Appellant collected lease rental charges from dealers and distributors on account of supply of computerized tinting machines used for mixing base paint with colour shades - Department interpreted the leasing activity as taxable service under category of Banking and Other Financial Services for leasing of equipment and raised service tax demand invoking extended period of limitation - Whether the leasing of tinting machines to dealers and distributors constitutes a taxable service or a deemed sale not liable to service tax - HELD... [Read more]

Service Tax – Taxability of Leasing of equipment - Deemed sale or supply of taxable service - Appellant collected lease rental charges from dealers and distributors on account of supply of computerized tinting machines used for mixing base paint with colour shades - Department interpreted the leasing activity as taxable service under category of Banking and Other Financial Services for leasing of equipment and raised service tax demand invoking extended period of limitation - Whether the leasing of tinting machines to dealers and distributors constitutes a taxable service or a deemed sale not liable to service tax - HELD - For determining whether a transaction involves transfer of right to use goods, the five-point criteria established by the Supreme Court in BSNL case must be examined. The agreement entered into by the appellant with dealers and distributors satisfied all five conditions laid down by the Supreme Court - The lease agreement specifically provided that goods are identified and delivered to lessee with acknowledgment of receipt, lessee uses equipment without intervention of lessor in daily activities, lease rentals are paid by lessee to lessor, equipment is kept and used only at lessee's premises and is returned upon completion of lease period in same condition - The CBIC Circular No. 198/08/2016-ST dated 17.08.2016 clarified that where goods or equipment is given under lease arrangement wherein both possession and effective control have been handed over to lessee, it would be categorised as deemed sale leviable to VAT and service tax will not be charged on such activities. The fact that VAT was already paid by the Appellant on lease rental charges and reflected in periodical VAT returns acknowledged that these activities are in nature of deemed sale not taxable service - In present case operating lease constitute deemed sale. The activities undertaken by appellant do not amount to taxable service under Finance Act, 1994. Extended period of limitation cannot be invoked for interpretation of law issues. Penalty cannot be imposed when service tax demand is not sustainable on merits - The impugned order is set aside and the appeal is allowed [Read less]

Central Excise – Demand of amount of 6% of the value of generated electricity - Department initiated proceedings treating electricity as exempted goods and demanded payment of amount equal to six percent of value of electricity sold under Rule 6(3) of CENVAT Credit Rules, 2004 - Whether electricity produced from bagasse and sold should attract payment of six percent under Rule 6(3) of CENVAT Credit Rules, 2004 – HELD – An identical dispute had been decided by the Commissioner in order passed wherein it was held that electricity produced from bagasse by assessees and sold cannot be subjected to payment of amount equal... [Read more]

Central Excise – Demand of amount of 6% of the value of generated electricity - Department initiated proceedings treating electricity as exempted goods and demanded payment of amount equal to six percent of value of electricity sold under Rule 6(3) of CENVAT Credit Rules, 2004 - Whether electricity produced from bagasse and sold should attract payment of six percent under Rule 6(3) of CENVAT Credit Rules, 2004 – HELD – An identical dispute had been decided by the Commissioner in order passed wherein it was held that electricity produced from bagasse by assessees and sold cannot be subjected to payment of amount equal to six percent of the value of electricity sold under Rule 6(3) of the CENVAT Credit Rules, 2004 - The Supreme Court in case of Union of India Vs. DSCL Sugar Ltd., Allahabad High Court in case of Balrampur Chini Mills Ltd. and Delhi High Court in case of Commissioner of Central Excise and S. Tax LTU, Delhi Vs. Nangalamal Sugar Complex, had all held that electricity produced and sold to such authority cannot be subjected to payment under Rule 6(3). The said order was accepted by the Committee of Chief Commissioners and no appeal was preferred against it, thus the issue attained finality - The impugned order confirming the adjudged demands cannot be sustained - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Foreign bank charges and place of provision of service - Appellant had not paid service tax on foreign bank charges and finance cost paid in foreign currency during period 2015 to March 2017 - Department issued notice demanding service tax under Section 66A, 68, 69 and 70 of Finance Act, 1994 - Whether foreign bank charges paid by exporter constitute taxable service in India and leviable under Reverse Charge Mechanism - HELD - The foreign bank of the buyer provided service to its client i.e. the buyer who has a letter of credit facility with the foreign bank after retaining its charges and commission, the net... [Read more]

Service Tax - Foreign bank charges and place of provision of service - Appellant had not paid service tax on foreign bank charges and finance cost paid in foreign currency during period 2015 to March 2017 - Department issued notice demanding service tax under Section 66A, 68, 69 and 70 of Finance Act, 1994 - Whether foreign bank charges paid by exporter constitute taxable service in India and leviable under Reverse Charge Mechanism - HELD - The foreign bank of the buyer provided service to its client i.e. the buyer who has a letter of credit facility with the foreign bank after retaining its charges and commission, the net amount is remitted to the appellant's bank in India where the appellant has facility of letter of credit. The appellant has received service if any from its bank in India with whom all documents were negotiated. The appellant does not have any direct connection or nexus with the foreign bank of the buyer. No service provider and service recipient relationship exists between the foreign bank and the appellant. The service provider and service recipient relationship exist between the foreign bank and the buyer. Both the foreign bank and the buyer are located outside India. When the provider of service i.e. the foreign bank and recipient of service i.e. the buyer both are located outside India, there is no question of taxing such service in India as the said service has been provided outside the taxable territory and outside the purview of Section 66B which is the charging section for levy of service tax - As per Circular No. 180/06/2014-ST, no service tax is leviable as place of provision of service is outside India. The issue has been settled in the appellant's own case for the earlier period and is no more res integra. The foreign bank has not supplied any service to the appellant in India. The appellant is not liable to pay any service tax under RCM - The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Determination of status as manufacturer vs trader - Applicability of representations made to secure business orders - The appellants were engaged in the business of trading and supplying goods and represented themselves to Power Supply Corporations as manufacturers for the purpose of securing orders – Dept alleged that the appellants were actual manufacturers and demanded duty invoking extended period - Whether the appellants were manufacturers or traders of the goods in question and whether Central Excise duty should be demanded from them based on their representations as manufacturers to Power Supply C... [Read more]

Central Excise - Determination of status as manufacturer vs trader - Applicability of representations made to secure business orders - The appellants were engaged in the business of trading and supplying goods and represented themselves to Power Supply Corporations as manufacturers for the purpose of securing orders – Dept alleged that the appellants were actual manufacturers and demanded duty invoking extended period - Whether the appellants were manufacturers or traders of the goods in question and whether Central Excise duty should be demanded from them based on their representations as manufacturers to Power Supply Corporations - HELD - The determination of whether a person is a manufacturer must be based on the definition under Section 2(f) of the Central Excise Act, 1944 and not merely on the basis of representations made to procure business. The representations made to Power Supply Corporations were made only for the purpose of securing orders and did not reflect actual manufacturing activity. The job workers were the actual manufacturers of the goods - The appellants did not have the infrastructure to manufacture the goods as evidenced by the inventory and an independent Chartered Engineer also confirmed that the machinery had been lying unused for many years and the commodities could not be manufactured using such equipment - The activities undertaken by the appellants would not amount to manufacture and hence the demand of duty in the normal period itself was not sustainable. The question of invoking extended period for demanding duty did not arise. The allegations of suppression could not be sustained and no penalty was imposable on the appellant company or its authorized representative - The demand of duty, interest and penalty against the appellant company are set aside and the appeals are allowed [Read less]

Service Tax – Limitation and Condonation of Delay, Exclusion of period of insanity – Commissioner (Appeals) rejected appeal on grounds that appeal was filed with delay that could not be condoned as permissible delay of thirty days had also been exhausted - Appellant furnished certificate of Psychiatrist and supporting medical prescriptions, death certificate of Director's mother and WHO guidelines on mental and neurological illness - Whether period of mental incapacity constitutes legal disability under Section 6 of Indian Limitation Act and can be excluded from computation period for condonation of delay – HELD – ... [Read more]

Service Tax – Limitation and Condonation of Delay, Exclusion of period of insanity – Commissioner (Appeals) rejected appeal on grounds that appeal was filed with delay that could not be condoned as permissible delay of thirty days had also been exhausted - Appellant furnished certificate of Psychiatrist and supporting medical prescriptions, death certificate of Director's mother and WHO guidelines on mental and neurological illness - Whether period of mental incapacity constitutes legal disability under Section 6 of Indian Limitation Act and can be excluded from computation period for condonation of delay – HELD – Mental incapacity constitutes legal disability and period of mental insanity can be deducted from period of computation in terms of Section 6 of Indian Limitation Act. Supreme Court in M.P. Steel Corporation has held that spirit of principle laid down in Indian Limitation Act for extension of limitation period upon contingencies enumerated between Sections 6 and 24 is to be pressed into service in advancing substantial justice - By excluding period of mental incapacity from computation, appeal is to be treated as filed within prescribed period and any remaining delay is condonable. The order disposing appeal only on ground of limitation without going into merits requires matter to be sent back for re-determination at Commissioner (Appeals) level – The appeal is allowed by way of remand [Read less]