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GST - Penalty under Section 129(3) for un-updated Part-B of e-way bill - Appellant's consignment was intercepted in transit accompanied by a tax invoice disclosing the correct vehicle number, delivery challans and an active Part-A e-way bill, but Part-B was un-updated - The appellate authority confirmed the penalty on the ground that failure to generate Part-B before transit of a high-value consignment is a serious violation - Whether a technical omission of updating Part-B, alongside a genuine tax invoice, valid purchase order and active Part-A can justify penalty under Section 129(3) in the absence of mens rea or intent ... [Read more]

GST - Penalty under Section 129(3) for un-updated Part-B of e-way bill - Appellant's consignment was intercepted in transit accompanied by a tax invoice disclosing the correct vehicle number, delivery challans and an active Part-A e-way bill, but Part-B was un-updated - The appellate authority confirmed the penalty on the ground that failure to generate Part-B before transit of a high-value consignment is a serious violation - Whether a technical omission of updating Part-B, alongside a genuine tax invoice, valid purchase order and active Part-A can justify penalty under Section 129(3) in the absence of mens rea or intent to evade tax - HELD - Reliance on legacy rulings on entry tax and physical check-post systems, where everything relied on manual paper declarations, is misconceived, as the GST system is an integrated destination-based electronic network built for digital transparency - Section 129 is meant to catch persons actively trying to cheat the system and not honest clerical mistakes where the transaction is fully accounted for - Where goods moved under a valid tax invoice and Part-A and reached the destination, technical tracking errors or minor procedural omissions must be evaluated using a reasonableness test, and procedural transit glitches do not automatically raise a presumption of tax evasion without proof of a guilty mind - Non-filling of Part-B alone cannot attract Section 129 penalty without independent recorded findings on an attempt to evade tax; each case has to pass the test of intention to evade tax, the burden of which rests on the tax authorities - The appellate authority sustained the penalty without establishing the essential ingredient of intent to evade tax, making the penalty arbitrary and unsustainable - The order of the appellate authority and the penalty order are quashed and set aside - The appeal is allowed [Read less]

GST - Penalty under Section 129 of the CGST Act, 2017 for non-filling of Part-B of e-way bill - Requirement of mens rea - Appellant's consignment of customised goods was intercepted and detained as Part-A of the e-way bill was intact and genuine tax invoices accompanied the goods, but Part-B containing vehicle particulars had remained unpopulated due to inadvertent technical omission - Appellant deposited the tax and penalty under protest, whereupon the appellate authority confirmed the penalty while the Respondent contended that generation of Part-B before movement is mandatory and attracts civil liability irrespective of... [Read more]

GST - Penalty under Section 129 of the CGST Act, 2017 for non-filling of Part-B of e-way bill - Requirement of mens rea - Appellant's consignment of customised goods was intercepted and detained as Part-A of the e-way bill was intact and genuine tax invoices accompanied the goods, but Part-B containing vehicle particulars had remained unpopulated due to inadvertent technical omission - Appellant deposited the tax and penalty under protest, whereupon the appellate authority confirmed the penalty while the Respondent contended that generation of Part-B before movement is mandatory and attracts civil liability irrespective of fraudulent intent - Whether a technical omission of populating Part-B can sustain penalty under Section 129 when the transaction is fully documented and tax-paid - HELD - Penal provisions of this magnitude cannot be invoked mechanically divorced from mens rea - A technical or procedural variation in documentation cannot automatically raise a presumption of intent to evade tax, and documentation anomalies which are rectifiable or clerical must be adjudicated through the prism of proportionality - The burden rests on tax authorities to establish actual intent to evade tax before imposing penalty, and penalties are to be reserved for cases where an intentional act to defraud the tax system is evident - The decisions relied upon by the Respondent were rendered under legacy entry tax and sales tax check-post regimes and cannot be applied to the GST framework, which is an integrated destination-based tax system designed around digital transparency. The Section 129 targets wilful evasion and not isolated non-fraudulent clerical errors. No positive proof of intent to evade tax was established and the imposition of penalty under Section 129 is arbitrary and unsustainable, hence set side - The appeal is allowed - GST - Detention under Section 129 - Failure to issue final order in Form GST MOV-09 - Goods were detained under Section 129(1) and the Appellant deposited the tax and penalty under protest, but the Respondent did not issue a final speaking order in Form GST MOV-09 - Whether omission to issue Form GST MOV-09 vitiates the penalty demand - HELD - Under Section 129(3), upon detention and receipt of objections, the proper officer is statutorily mandated to pass a final speaking order in Form GST MOV-09 quantifying tax and penalty after affording an opportunity of hearing - The Respondent failed to issue Form GST MOV-09 and directly bypassed the statutory adjudication safeguards, and the omission to issue the mandatory final order severely prejudices the assessee's statutory rights and vitiates the underlying penalty demand - the order of the appellate authority is set aside and the penalty deposited under protest is to be refunded to appellant. [Read less]

GST - Penalty under Section 129 of the CGST Act for expired e-way bill - The pin code of the consignor and consignee was wrongly entered due to a typographical error, which reduced the distance and validity period - Appellant's consignment of goods for purchase return was intercepted while accompanied by a delivery challan and an e-way bill which had expired - whereupon the proper officer treated the movement as one without e-way bill and imposed penalty under Section 129, which the appellate authority confirmed - Whether imposition of penalty under Section 129 is justified for non-validation or non-extension of the e-way ... [Read more]

GST - Penalty under Section 129 of the CGST Act for expired e-way bill - The pin code of the consignor and consignee was wrongly entered due to a typographical error, which reduced the distance and validity period - Appellant's consignment of goods for purchase return was intercepted while accompanied by a delivery challan and an e-way bill which had expired - whereupon the proper officer treated the movement as one without e-way bill and imposed penalty under Section 129, which the appellate authority confirmed - Whether imposition of penalty under Section 129 is justified for non-validation or non-extension of the e-way bill period as per Rule 138 - HELD - Though Section 129 does not specifically provide for mens rea, the object of enacting such a section in a taxing enactment is only to prevent evasion of tax and mens rea should be read into it - The Board Circular giving instances where Section 129 need not be invoked is binding on the proper officer by virtue of Section 168 - Physical verification found the quantity and description of goods in order with the documents - The decision relied upon by the Respondent on Part-B is not applied as the jurisdictional High Court did not subscribe to it, and the other decisions relied upon by the Respondent support the Appellant, holding that a distinction is made between serious and substantive violations and minor or procedural ones and that Section 129 is a machinery provision to check evasion of tax - Procedural lapses or mistakes cannot be a ground for invoking Section 129 in the absence of intention to evade payment of tax, and the reasonableness of the explanation is a relevant factor – When the appellate authority did not allege mens rea, invoking Section 129 was not valid and justified - The order confirming the penalty is set aside and the appeal is allowed [Read less]

GST - Anti-Profiteering - Methodology for Determination of Profiteering Benefit in Real Estate Projects - Treatment of Unavailed Pre-GST CENVAT Credit - Petitioner's residential project was subjected to profiteering proceedings under Section 171 of the CGST Act, 2017 - Remand order directing recomputation of the total savings on account of introduction of GST divided by total area - DGAP recalculated the profiteered amount by determining the additional input tax credit availed post-GST as against the purchase value of goods and services, apportioning the resultant saving over the project area and sold area, and adding GST ... [Read more]

GST - Anti-Profiteering - Methodology for Determination of Profiteering Benefit in Real Estate Projects - Treatment of Unavailed Pre-GST CENVAT Credit - Petitioner's residential project was subjected to profiteering proceedings under Section 171 of the CGST Act, 2017 - Remand order directing recomputation of the total savings on account of introduction of GST divided by total area - DGAP recalculated the profiteered amount by determining the additional input tax credit availed post-GST as against the purchase value of goods and services, apportioning the resultant saving over the project area and sold area, and adding GST and interest thereon, which determination was upheld by the GSTAT - Whether the methodology adopted on remand, and the treatment of pre-GST CENVAT credit which was legally available to the petitioner on input services but not actually availed, is sustainable - HELD - The methodology adopted after remand, which determined the total saving at the project level by reference to the purchase value of goods and services and thereafter divided the saving by the total project area to arrive at a per square feet figure applied to the sold area, was materially different from the ratio of ITC to turnover methodology earlier found to be flawed, and consistent with the binding direction in Reckitt Benckiser case to calculate total project savings and distribute the same on a per square feet basis - The distinction between eligibility and actual availment of credit is material. The relevant enquiry under the anti-profiteering provision is the benefit of ITC actually accruing to the supplier and required to be passed on, and not whether a credit could theoretically have been availed had the assessee acted differently in the pre-GST period - Since the statutory returns for the pre-GST period reflected nil credit actually availed, the tax paid on input services constituted a cost during that period. The ITC actually availed after introduction of GST cannot be excluded merely because a corresponding credit was legally available but not utilised earlier - The contention that only credit relatable to goods and not services could constitute the benefit was not sustainable, as the distinction between goods and services is not determinative of the total additional credit actually availed after introduction of GST - Addition of tax on the additional realisation to the profiteered amount, and the direction for payment of interest, followed the governing precedent and the statutory scheme. A mere disagreement with the methodology or appreciation of material, where the methodology is within the parameters laid down by binding precedent and the contentions were duly considered, does not constitute a ground for interference in writ jurisdiction – The petitioner has failed to establish any ground warranting interference with the impugned order passed by GSTAT – The writ petition is dismissed [Read less]

GST - Penalty under Section 129 for movement of goods on expired e-way bill - Appellant's consignment accompanied by lorry receipt, tax invoices, e-way bills and test certificate was intercepted - The e-way bills had expired as the software, on entry of the destination, calculated distance and validity period on a wrong place name - Proper officer treated the movement as one without e-way bill and invoked Section 129, which the appellate authority confirmed relying on the view that non-extension of validity showed awareness of the provisions - Whether the imposition of tax and penalty under Section 129 is justified for the... [Read more]

GST - Penalty under Section 129 for movement of goods on expired e-way bill - Appellant's consignment accompanied by lorry receipt, tax invoices, e-way bills and test certificate was intercepted - The e-way bills had expired as the software, on entry of the destination, calculated distance and validity period on a wrong place name - Proper officer treated the movement as one without e-way bill and invoked Section 129, which the appellate authority confirmed relying on the view that non-extension of validity showed awareness of the provisions - Whether the imposition of tax and penalty under Section 129 is justified for the reason that the period of the e-way bill had expired and validity was not extended as per Rule 138 - HELD - The only defect was the expiry of the e-way bill, the integrated tax had been charged in the invoices, and physical verification in Form GST MOV-04 found no discrepancy between the description of goods as per invoice and as verified - The proper officer did not find that movement with an expired e-way bill had resulted in evasion of tax - The Board Circular itself distinguishes between serious and substantive violations and those that are minor or procedural in nature - The decisions relied upon by the Respondent are distinguished, being either not subscribed to by the jurisdictional High Court, rendered in the context of blank declaration forms, concerned with a mandatory penalty under another statute, or confined to the quantum of penalty under Article 142 and not a binding precedent - Intention to evade tax is the relevant factor for invoking Section 129, and there was no such intention - Invoking Section 129 was not valid and unjustified, the order confirming tax and penalty is set aside and the appeal is allowed [Read less]

GST - Dismissal of first appeal for non-payment of additional court fee - Appellant's first appeal under Section 107 was dismissed without going into merits for non-payment of additional court fee under Section 76 of the State Court Fees and Suits Valuation Act - Appellant contended that it was not liable as the appeal was filed before the notification making the additional fee applicable to GST appeals - Whether additional court fee is payable on the first appeal under Section 107 - HELD - The Tribunal is confined to the ground on which the appellate authority dismissed the appeal - The applicability of court fee to GST f... [Read more]

GST - Dismissal of first appeal for non-payment of additional court fee - Appellant's first appeal under Section 107 was dismissed without going into merits for non-payment of additional court fee under Section 76 of the State Court Fees and Suits Valuation Act - Appellant contended that it was not liable as the appeal was filed before the notification making the additional fee applicable to GST appeals - Whether additional court fee is payable on the first appeal under Section 107 - HELD - The Tribunal is confined to the ground on which the appellate authority dismissed the appeal - The applicability of court fee to GST first appeals before State authorities is well settled by the decision of the jurisdictional High Court, which was delivered much before the filing of the appeal, and there is no doubt regarding the levy - Though Section 107(6) limits the conditions for filing to payment of the specified pre-deposit and mentions no other fee, the High Court has held that the levy under Section 76 on appeals before the first appellate authority is proper and not discriminatory and its collection is binding on State authorities including the State GST. The taxpayer is bound to comply with State legislation of the State in which it conducts business - The Appellant voluntarily undertook to pay the fee - The order of the appellate authority is set aside and the matter is remanded to decide the case on merits within three months after following the principles of natural justice – Ordered accordingly [Read less]

GST – Availment of excess credit in Form GSTR-3B over Form GSTR-2A - Role of Sections 16 and 155 and Circular No. 183/15/2022-GST – Appellant was alleged to have availed excess IGST credit in Form GSTR-3B compared with Form GSTR-2A – Appellant obtained supplier certificate stating that three invoices were inadvertently reported as B2C instead of B2B in GSTR-1 - Appellant relied on the Circular and the supplier certificate, while the Respondent relied on Section 155 and the burden of proof - Whether the disputed credit can be denied merely because it is absent from GSTR-2A and whether the supplier certificate, invoice... [Read more]

GST – Availment of excess credit in Form GSTR-3B over Form GSTR-2A - Role of Sections 16 and 155 and Circular No. 183/15/2022-GST – Appellant was alleged to have availed excess IGST credit in Form GSTR-3B compared with Form GSTR-2A – Appellant obtained supplier certificate stating that three invoices were inadvertently reported as B2C instead of B2B in GSTR-1 - Appellant relied on the Circular and the supplier certificate, while the Respondent relied on Section 155 and the burden of proof - Whether the disputed credit can be denied merely because it is absent from GSTR-2A and whether the supplier certificate, invoices, ledger and transport material prove the asserted reporting error and payment of tax - HELD - For FY 2018-19, credit could not be denied merely because an invoice did not appear in GSTR-2A, as clause (aa) of Section 16(2) was not in force, and an old-period mismatch requires examination of underlying eligibility. However, Section 155 places the burden of proving eligibility on the person claiming credit, and a mismatch, once put to the claimant, requires the claimant to place material to establish the credit - The Circular applies in principle where an invoice bearing the recipient's GSTIN was wrongly reported as B2C, and the supplier certificate for differences up to the specified limit is contemplated, without making supplier's GSTR-1 data or ledgers an additional mandatory condition, but the certificate is evidentiary material and not a statutory deeming provision or irrebuttable - The certificate was obtained after the proceedings had commenced, was not tendered before the adjudicating authority - No contemporaneous material explained how invoices bearing the recipient's GSTIN came to be classified as B2C. The e-way bill corroborated only movement and identity of the recipient and not the supplier's return classification or payment of tax - The decisions relied upon by the Appellant are distinguished as there the taxpayer had replied and placed material before the authority - The Appellant failed to discharge the burden and the demand of tax on the three invoices is sustained – The appeal is dismissed - Unexplained residual difference and set-off of overall credit across tax heads - Appellant's three invoices accounted for an amount lower than the disputed IGST credit - Appellant contended that credit under CGST and SGST heads was lower than in GSTR-2A so that overall credit was not excessive - Whether the residual difference is explained and whether the overall credit position answers the excess integrated tax claim - HELD - The residual amount was not supported by any identified invoice, supplier certificate or transaction-wise explanation. Rule 36 and Section 155 require documentary foundation for the credit claimed, and the difference cannot be described as minor to obtain relief - Integrated, Central and State taxes are distinct statutory tax heads subject to the utilisation mechanism under Sections 49 and 49A, and a shortfall under one head cannot as arithmetic extinguish excess credit under another unless the same transactions and a legally permissible head-wise reconciliation are shown, which was not established. The demand to that extent independently survives - Non-consideration of documentary evidence, additional evidence and remand before the Tribunal - Appellant did not place documents before the adjudicating authority, filed them with the first appeal, did not appear on either date of personal hearing before the appellate authority, and pleaded violation of natural justice and sought remand - Whether the grievance of non-consideration of evidence is made out and whether remand is warranted - HELD - The adjudicating authority cannot be faulted for not considering material which had not been placed before it - The appellate authority was empowered under Section 107(11) to make further inquiry but was expressly prohibited from remanding the case - Uploading of documents after the order, would not amount to admission of additional evidence. Additional evidence is not a device to fill an evidentiary lacuna after the hearing has exposed it - The Tribunal has wider powers under Section 113 including remand, but the power is discretionary and to be exercised where further factual inquiry is necessary for a fair decision, and does not require repeated opportunities to a party which failed to use opportunities already afforded - The Appellant was heard at length and given a further opportunity, the available documents were assessed on merits, and remand is not warranted - Interest and penalty on wrongly availed input tax credit - Appellant challenged interest and penalty as consequential to the disputed principal demand - Whether interest and penalty call for interference - HELD - Interest is payable under Section 50(3) read with Rule 88B(3) where credit has been wrongly availed and utilised; as the utilisation of the disputed credit was not disputed and the Appellant neither raised a specific objection to the period or calculation of interest nor furnished any alternative computation, the interest is sustained - The adjudication being under Section 73, which provides for penalty equivalent to ten per cent of tax or the specified minimum, whichever is higher, the penalty corresponds to the statutory minimum and, as the principal demand is sustained, calls for no interference - The appeal is dismissed and the demand of tax, interest and penalty confirmed by the appellate authority is upheld. 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Service Tax - Taxability of amount received from Metro Rail Corporation by trade association - Appellant, a trade association, received an amount from the Metro Rail Corporation under a sanction order, which the Department treated as consideration for taxable service under Section 65B(44) of Finance Act, 1994, while the Appellant contended that it was compensation on behalf of shopkeepers for loss caused by metro construction and that there was no quid pro quo - Whether the amount received under the sanction order is consideration for a service liable to service tax or compensation for loss - HELD - The sanction order conv... [Read more]

Service Tax - Taxability of amount received from Metro Rail Corporation by trade association - Appellant, a trade association, received an amount from the Metro Rail Corporation under a sanction order, which the Department treated as consideration for taxable service under Section 65B(44) of Finance Act, 1994, while the Appellant contended that it was compensation on behalf of shopkeepers for loss caused by metro construction and that there was no quid pro quo - Whether the amount received under the sanction order is consideration for a service liable to service tax or compensation for loss - HELD - The sanction order conveyed release of financial assistance for organising lighting and decoration along with display of Metro banners and live model of Metro Rail during the festival, and required separate accounting and a utilisation certificate with the balance to be returned, which establishes the nexus between the money and the activity required by the Corporation and negates the plea of absence of quid pro quo - The sanction order was not compensation to overcome loss, as the Corporation expected publicity and advertisement of the Metro at an occasion of major footfall - The activity of providing facility of advertisement and publicity is covered by the definition of service under Section 65B(44), is not in the negative list under Section 66D, and no exemption was shown - The Appellant's balance sheet recorded the amount, as and when spent, as advertisement expenses - The amount was received as consideration for service and is liable to service tax – The appeal is partly allowed - Remand by Commissioner (Appeals) for want of specification of taxable service clause - Period post introduction of negative list - Commissioner (Appeals) remanded the matter to the adjudicating authority on the ground that no effort was made in the Order-in-Original to explain under which specific clause of the erstwhile service categories under Section 65 the Appellant's activity fell - Whether the remand was justified where the entire demand period is after introduction of the negative list under Section 66D - HELD - Since the entire demand period is post introduction of the negative list, the concept of specific service clauses under Section 65 has become redundant and only the definition of service under Section 65B(44) is relevant - The Commissioner (Appeals) wrongly remanded the matter to the adjudicating authority - The direction of remand is set aside, the other findings are endorsed, the order under challenge is modified accordingly. [Read less]

Central Excise - Eligibility of credit of Additional Excise Duty (Goods of Special Importance) paid on unprocessed nylon tyre cord fabrics under Rule 57C of Central Excise Rules, 1944 read with Notification No. 5/94-CE(NT) – Respondent availed MODVAT credit of additional excise duty paid on unprocessed nylon tyre cord fabrics used in manufacture of processed tyre cord wrap sheets, which are used in manufacture of tyres. The processed tyre cord wrap sheets were exempted from additional excise duty, and tyres attracted basic excise duty - Dept disallowed the credit, but the Tribunal allowed the appeals holding that the fin... [Read more]

Central Excise - Eligibility of credit of Additional Excise Duty (Goods of Special Importance) paid on unprocessed nylon tyre cord fabrics under Rule 57C of Central Excise Rules, 1944 read with Notification No. 5/94-CE(NT) – Respondent availed MODVAT credit of additional excise duty paid on unprocessed nylon tyre cord fabrics used in manufacture of processed tyre cord wrap sheets, which are used in manufacture of tyres. The processed tyre cord wrap sheets were exempted from additional excise duty, and tyres attracted basic excise duty - Dept disallowed the credit, but the Tribunal allowed the appeals holding that the final product was tyres, which were not exempt from duty. The Revenue filed appeals - Whether the Respondent is eligible to take credit of additional excise duty (Goods of Special Importance) paid on inputs when the final product is exempt from such duty - HELD - Rule 57C provides that no credit of specified duty shall be allowed on inputs used in the manufacture of final products which are exempt from the whole of the duty of excise or are chargeable to nil rate of duty. The second proviso to Notification No. 5/94-CE(NT) provides that credit of specified duty insofar as it relates to additional excise duty shall be utilised only towards payment of duty of excise leviable under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 on the final products – For the purpose of the MODVAT scheme, to claim credit there should be a nexus between the availment of credit and the dutiability of the final product - Unless the final product is chargeable to duty under the Act, credit for the specified duty on inputs cannot be availed. Tyres are not chargeable under the said Act, and the processed tyre cord wrap sheets are exempt from it. Either way, the bar under Rule 57C operates, and the credit cannot be utilised towards payment of MODVAT or basic excise duty - The respondent is not entitled to the credit of AED paid on unprocessed nylon tyre cord fabrics for claiming credit for discharge of its MODVAT liability - The CESTAT erroneously relied on the Notification No.13/2003, dated 01.03.2003 and the Board Circular dated 12.03.2003 and allowed the assessee appeals. The subsequent Notification and the Circular cannot be given retrospective effect so as to give a fresh right to the respondent since the law during the relevant period was unequivocal that the AED [GSI] credit could not be utilised for discharging any other liability – The Tribunal order is set aside and Revenue appeals are allowed [Read less]

Central Excise - Exemption for goods procured on behalf of Metro Rail Corporation under Serial No. 90 of Notification No. 06/2006-CE - Fulfilment of Condition No. 18 - Appellant, a manufacturer of bus bodies built on chassis separately purchased by the Metro Rail Corporation, cleared buses at nil rate of duty claiming the exemption, the demand was earlier confirmed and, after remand, the adjudicating authority excluded the value of chassis but denied the exemption on the balance and confirmed the rest of the demand - Whether the Appellant is entitled to the benefit of exemption under Serial No. 90 of the notification subje... [Read more]

Central Excise - Exemption for goods procured on behalf of Metro Rail Corporation under Serial No. 90 of Notification No. 06/2006-CE - Fulfilment of Condition No. 18 - Appellant, a manufacturer of bus bodies built on chassis separately purchased by the Metro Rail Corporation, cleared buses at nil rate of duty claiming the exemption, the demand was earlier confirmed and, after remand, the adjudicating authority excluded the value of chassis but denied the exemption on the balance and confirmed the rest of the demand - Whether the Appellant is entitled to the benefit of exemption under Serial No. 90 of the notification subject to Condition No. 18 - HELD - Condition No. 18 requires a certificate from the specified officer of the Metro Rail Corporation that the goods are procured by or on behalf of the Corporation for use in the MRTS project and are part of its inventory and shall be finally owned by it - The adjudicating authority itself recorded in the impugned order that the certificate issued by the Director of the Corporation certified that the Appellant would build the bus bodies on the chassis, the goods are procured on behalf of the Corporation for use in the MRTS project, and are part of the inventory and shall be owned by the Corporation, which clearly fulfils Condition No. 18 - The Appellant is entitled to the exemption and no duty is payable, consequently no interest is payable and any amount paid is refundable – The appeals are disposed of [Read less]

GST - Constitutional validity of Section 93(1)(b) of the CGST Act, 2017, Construction of Section 93 of the CGST Act - Proceedings for determination of penalty against a legal representative after the death of the person alleged to have committed the contravention – Issue of Show Cause Notice more than three years after the death of the petitioner's husband, proposing penalty under Section 122(3)(a) for his alleged acts and invoking Section 93 against the petitioner as his legal representative - Whether the expression "is determined after his death" in Section 93(1) permits commencement of fresh proceedings after death, o... [Read more]

GST - Constitutional validity of Section 93(1)(b) of the CGST Act, 2017, Construction of Section 93 of the CGST Act - Proceedings for determination of penalty against a legal representative after the death of the person alleged to have committed the contravention – Issue of Show Cause Notice more than three years after the death of the petitioner's husband, proposing penalty under Section 122(3)(a) for his alleged acts and invoking Section 93 against the petitioner as his legal representative - Whether the expression "is determined after his death" in Section 93(1) permits commencement of fresh proceedings after death, or is confined to completion of proceedings already commenced during the deceased's lifetime - HELD - Section 93 contemplates a liability, including penalty, which is "determined after his death", and its concluding words distinguish a liability determined before death but remaining unpaid from one determined thereafter, without making a notice during the deceased's lifetime a condition precedent to the latter determination - The opening words "where a person, liable to pay tax, interest or penalty under this Act, dies" cannot be confined to a liability already quantified before death, since the provision itself contemplates the liability being determined thereafter, provided it arises from conduct attributable to the deceased under the substantive provisions of the Act - Investigation and adjudication are distinct stages, and the fact that investigation had commenced and a statement was recorded during the deceased's lifetime does not itself constitute the source of the power to proceed after death; that authority is found in Section 93 itself - Section 93 must be kept distinct from Section 122(3)(a), which supplies the substantive penalty. Section 93 is not an independent penal provision against the legal representative but enables liability arising under the substantive provisions to be determined and enforced through the legal representative, subject to the conditions of clause (a) or (b), with liability under clause (b) confined to the estate of the deceased to the extent it is capable of meeting the charge - The Show Cause Notice is not without jurisdiction solely because it was issued after death. The lapse of time after death does not by itself create a bar under Section 93, without prejudice to any applicable limitation requirements - The Petitioner is granted liberty to institute an appeal under Section 107 of the CGST Act against the impugned order – The petition is disposed of - GST - Constitutional validity of Section 93(1)(b) of the CGST Act, 2017 - Challenge to Section 93(1)(b), insofar as it permits determination of penalty against a legal representative after the death of the person alleged to have committed the contravention, as arbitrary and violative of Article 14 of the Constitution, on the ground that a legal representative cannot meaningfully answer allegations concerning matters within the personal knowledge of a person no longer alive - HELD - The provision preserves liabilities attributable to the deceased's lifetime conduct for lawful determination and satisfaction from his estate, and the resulting distinction bears a direct relation to the statutory purpose; Section 93 does not deem the representative to have committed the alleged wrong, and clause (b) confines payment to the estate's capacity to meet the charge, with the underlying contravention and conditions of representative liability still required to be established by the Adjudicating Authority - Section 126(3) of the Act requires an effective opportunity of hearing, under which the representative must receive the relied-upon material and be permitted to contest the alleged contravention - These safeguards answer the contention that Section 93 confers unguided power or necessarily denies a defence; that a particular adjudication may fail for want of evidence or a fair opportunity does not establish that every determination after death must be unfair - The statutory purpose, representative procedure and limitation of liability to estate assets provide a rational basis for the provision, which is neither discriminatory nor manifestly arbitrary, and the Constitutional challenge to Section 93(1)(b) is rejected. [Read less]

GST - Scope of the bar against parallel proceedings under Section 6(2)(b) of the CGST Act, 2017, Maintainability of writ petition challenging an order under Section 73 of the CGST Act, 2017 - Petitioner did not appeal against the order raising a demand and instead filed a rectification application, followed by the present writ petition nearly two years after the order - Whether the writ petition is maintainable in the face of an efficacious alternative statutory remedy of appeal not availed within the prescribed period, and whether the delay in approaching the Court is explained - HELD - The existence of an efficacious alt... [Read more]

GST - Scope of the bar against parallel proceedings under Section 6(2)(b) of the CGST Act, 2017, Maintainability of writ petition challenging an order under Section 73 of the CGST Act, 2017 - Petitioner did not appeal against the order raising a demand and instead filed a rectification application, followed by the present writ petition nearly two years after the order - Whether the writ petition is maintainable in the face of an efficacious alternative statutory remedy of appeal not availed within the prescribed period, and whether the delay in approaching the Court is explained - HELD - The existence of an efficacious alternative statutory remedy is a material consideration while exercising discretionary jurisdiction under Article 226 of the Constitution, and the petitioner did not demonstrate any circumstance warranting bypassing the statutory appellate mechanism, the challenge being essentially jurisdictional and factual in nature, appropriately examinable in appellate proceedings - The writ petition was instituted with a substantial lapse of time after the impugned order. The mere filing of a rectification application cannot obliterate the delay in challenging the original order, particularly where the petitioner consciously chose not to avail the statutory appeal - The writ jurisdiction is discretionary and equitable, and a party challenging an order after the statutory appeal period has lapsed must satisfactorily explain the delay, which has not been done - The pendency of a rectification application does not confer a fresh or extended period of limitation for challenging the original order, nor constitutes sufficient explanation for the delay - The petition suffers from unexplained delay and laches and is liable to fail on this ground - Scope of the bar against parallel proceedings under Section 6(2)(b) of the CGST Act, 2017 where two proceedings arise from overlapping periods but under different statutory provisions and different allegations - A Notice under Section 73 was issued by one authority alleging incorrect declaration of tax liability and inadmissible ITC, while a separate Notice under Section 74 had earlier been issued by the DGGI, alleging fraudulent availment of ITC without actual supply of goods or services, which proceedings were later treated as concluded upon payment by the principal noticee - Whether the subsequent proceedings under Section 73 were barred under Section 6(2)(b) of the CGST Act as being on the "same subject matter" as the earlier DGGI proceedings under Section 74 - HELD - The mere fact that two proceedings arise out of the affairs of the same assessee, relate to overlapping periods, or originate from transactions with some common factual background does not by itself establish identical ‘subject matter’ - The proceedings under Section 73 were directed towards determination of correct tax liability including admissibility of ITC under Section 16(2)(c), whereas the DGGI proceedings under Section 74 were founded on allegations of fraudulent availment of ITC without actual supply of goods or services and involved forty-five notices - The statutory provisions invoked, the nature of allegations and the liability sought to be determined in the two proceedings are materially different, and the bar under Section 6(2)(b) is not attracted - The conclusion of the DGGI proceedings, consequent upon payment by the principal noticee, resulted in no tax, interest or penalty being directed to be recovered from the petitioner in those proceedings; such conclusion cannot retrospectively invalidate the independently initiated proceedings under Section 73, which concerned a different statutory basis and subject matter - The bar under Section 75(13) requires a prior imposition of penalty for the same act or omission, and since no such prior penalty upon the petitioner has been shown, the said provision is not attracted - The challenge to the impugned order fails on merits as well - The writ petition is dismissed. [Read less]

GST – Gujarat AAR - Taxability of amount recovered from employees towards canteen facility provided at factory, R&D facility and Corporate office – Applicant provides canteen facility through canteen service providers in terms of a canteen policy. A part of the cost of meals is deducted from the salaries of employees and the remaining cost is borne by the Applicant. The canteen service providers issue tax invoices on the Applicant and charge GST - Whether GST is liable to be discharged on the portion of the amount recovered by the Applicant from its employees towards the canteen facilities - HELD - The canteen facility... [Read more]

GST – Gujarat AAR - Taxability of amount recovered from employees towards canteen facility provided at factory, R&D facility and Corporate office – Applicant provides canteen facility through canteen service providers in terms of a canteen policy. A part of the cost of meals is deducted from the salaries of employees and the remaining cost is borne by the Applicant. The canteen service providers issue tax invoices on the Applicant and charge GST - Whether GST is liable to be discharged on the portion of the amount recovered by the Applicant from its employees towards the canteen facilities - HELD - The canteen facility at the plant and R and D facility is provided as mandated in Section 46 of the Factories Act, 1948, and at the corporate office as mandated in Section 23 of the Gujarat Shops and Establishment (Regulation of Employment and Condition of Service) Act, 2019 - The Applicant provides a demarcated space and the amount is paid to the canteen service provider, a part of which is collected from the employees, on behalf of the employees for administrative convenience - In terms of Circular No. 172/04/2022-GST, perquisites provided by the employer to the employee in terms of contractual agreement entered into between the employer and the employee will not be subjected to GST. The Applicant has provided a copy of the agreement for canteen services to employees under the canteen facility policy - The deduction made by the Applicant from the employees availing food at the factory, R and D facility and corporate office would not be considered as a supply under Section 7 of the CGST Act, 2017, and GST is not liable to be discharged on the amount so recovered – Ordered accordingly - Eligibility of input tax credit on GST charged by canteen service provider under Section 17(5)(b) of CGST Act, 2017 - Whether the Applicant is eligible to avail input tax credit of the GST charged by the canteen service provider for canteen facility provided to its employees - HELD - Circular No. 172/04/2022-GST clarifies that the proviso after sub-clause (iii) of clause (b) of Section 17(5), providing that input tax credit shall be available where it is obligatory for an employer to provide the same to its employees under any law for the time being in force, is applicable to the whole of clause (b) - The Applicant is mandated to provide canteen facility under Section 46 of the Factories Act, 1948 at the factory and R and D facility, and under Section 23 of the Gujarat Shops and Establishment (Regulation of Employment and Condition of Service) Act, 2019 at the corporate office - Input tax credit is available in respect of food and beverages as canteen facility is obligatorily to be provided under law. However, the ITC is restricted to the extent of cost borne by the Applicant, and proportionate credit to the extent embedded in the cost of goods recovered from the employees is not eligible for ITC. [Read less]

Customs - Classification of imported cuvettes used with an in-vitro diagnostic analyser - Appellant imported goods described as micro cuvettes for use with an Analyser under a self-assessed Bill of Entry, classifying them under CTH 9027 9090 - Department alleged that the goods were consumable/disposable in nature and could not be treated as parts or instruments, and were more appropriately classifiable under CTI 3926 9099 - Whether the imported cuvettes, being specially designed for use with a particular analytical instrument, merit classification as 'parts' under CTH 9027 9090 in terms of Note 2(b) to Chapter 90, or as an... [Read more]

Customs - Classification of imported cuvettes used with an in-vitro diagnostic analyser - Appellant imported goods described as micro cuvettes for use with an Analyser under a self-assessed Bill of Entry, classifying them under CTH 9027 9090 - Department alleged that the goods were consumable/disposable in nature and could not be treated as parts or instruments, and were more appropriately classifiable under CTI 3926 9099 - Whether the imported cuvettes, being specially designed for use with a particular analytical instrument, merit classification as 'parts' under CTH 9027 9090 in terms of Note 2(b) to Chapter 90, or as an article of plastic under the residuary entry CTI 3926 9099 - HELD - A similar item was examined by the Bench in an earlier decision and found classifiable as a 'part' of a machine under CTI 9027 9090 and not as an article of plastic - Chapter 90 Note 2(b) provides that parts and accessories suitable for use solely or principally with a particular kind of machine, instrument or apparatus are to be classified with that machine, instrument or apparatus, and permanent physical attachment is not required - A part is an essential component of the whole without which the whole cannot function, and the relevant criteria for determining whether an item qualifies as a part include operational necessity, being an integral component, physical installation and common trade usage - 'Disposable' and 'consumable' are not synonymous, and single use, short durability or disposal after use does not by itself preclude an article from being a part or accessory - The imported cuvettes are not ordinary plastic containers but are specially designed to enable accurate analysis through the Analyser. The Revenue has not established any practical use of the goods with instruments other than the Analyser or for general use as a plastic article - These characteristics are integral to the analytical function of the Analyser and satisfy the essential characteristics of a part, and classification must be determined by the goods' objective characteristics and function rather than merely by material of manufacture - Applying Chapter 90 Note 2(b), the goods are classifiable under CTI 9027 9090. The classification adopted by appellant is upheld. Since the classification is decided in favour of the appellant, the question of interest, confiscation and penalty does not arise - The impugned order is set aside and the appeal is allowed [Read less]

Customs - Classification of imported surgical instruments as 'Orthopaedic Instruments' under CTH 9018 or 'Orthopaedic Appliances' under CTH 9021 - Assessee imported items including a power console/handpiece driver, motorized handpiece and footswitch used in arthroscopic and spinal surgery, declaring them as 'Orthopaedic Appliances' under CTH 90211100 and availing 'Nil' Basic Customs Duty under Notification No.50/2017-Customs - Department, on scrutiny of supplier's catalogues and noting that identical goods had earlier been classified under CTH 9018, reclassified the goods under CTH 9018 and confirmed differential duty - Wh... [Read more]

Customs - Classification of imported surgical instruments as 'Orthopaedic Instruments' under CTH 9018 or 'Orthopaedic Appliances' under CTH 9021 - Assessee imported items including a power console/handpiece driver, motorized handpiece and footswitch used in arthroscopic and spinal surgery, declaring them as 'Orthopaedic Appliances' under CTH 90211100 and availing 'Nil' Basic Customs Duty under Notification No.50/2017-Customs - Department, on scrutiny of supplier's catalogues and noting that identical goods had earlier been classified under CTH 9018, reclassified the goods under CTH 9018 and confirmed differential duty - Whether the imported goods, being surgical tools used by doctors during surgery, are classifiable as 'Orthopaedic Instruments' under CTH 9018 or as 'Orthopaedic Appliances' under CTH 9021 - HELD - Chapter Note 6 to Chapter 90 defines 'orthopaedic appliances' for the purpose of Heading 9021 as appliances for preventing or correcting bodily deformities, or for supporting or holding parts of the body following an illness, operation or injury, and a conjoint reading of Heading 9021 with Chapter Note 6 shows that Tariff Item 90211000 covers goods actually used by patients suffering from orthopaedic disease or illness, which are implanted or strapped to their body - 'Orthopaedic Instruments' are different from 'Orthopaedic Appliances', instruments being those used during surgery or operation by surgeons, as covered by the preamble to the HSN Explanatory Notes to Heading 9018 - The Assessee did not dispute its own earlier declaration of the very same items under CTH 9018 in prior imports and offered no appreciable explanation for the change in classification - The goods, verified against the sellers' website, are surgical tools/instruments used by doctors or health professionals during surgery and are not implanted or strapped to the body, and CTH 9021 does not cover such surgical tools or instruments - The Assessee has not made any attempt to dislodge the reasoning of the adjudicating authority or to justify its claim of classification under CTH 9021 - The goods are classifiable as 'Orthopaedic Instruments' under CTH 9018 - The appeal filed by the Assessee against reclassification is dismissed - Eligibility of surgical instruments used in spinal surgery for exemption from Basic Customs Duty as goods for the disabled under Notification No.50/2017-Customs, Serial No.578 read with List 30 - Whether goods classifiable as 'spinal instruments', though not 'appliances' for the disabled, are covered by the entry at Serial No.E(9) of List 30 to Notification No.50/2017-Customs for the period prior to its amendment - HELD - Serial No.578 of Notification No.50/2017-Customs, as applicable during the disputed period, covers "Assistive devices, rehabilitation aids and other goods for disabled, specified in List 30", and Serial No.E(9) of List 30, prior to its amendment by Notification No.1/2020-Customs, expressly covered "Instruments and implants for severely physically handicapped patients and joints replacement and spinal instruments and implants including bone cement" - The goods in question, being specifically designed as surgical tools used in various spinal surgeries, are 'spinal instruments' falling within the express language of the unamended entry, and the Adjudicating Authority correctly extended the benefit of the Notification for the period from 16.07.2018 to 12.12.2019 - This issue is decided against the Revenue - Eligibility of the same surgical instruments for IGST exemption under Notification No.01/2017-Integrated Tax (Rate), Serial No.257 read with List 3, for the period during which they were eligible for the parallel Customs Notification benefit - Whether the Assessee was correctly extended the benefit of IGST exemption on the ground that the entry at Serial No.E(9) of List 3 is identical to Serial No.E(9) of List 30 of Notification No.50/2017-Customs - HELD - The entry at Serial No.E(9) of List 3 of Schedule-I of Notification No.01/2017-Integrated Tax (Rate) is identical to Serial No.E(9) of List 30 of Notification No.50/2017-Customs, and since the goods imported during the period 16.07.2018 to 12.12.2019 were held eligible for the benefit of the Customs Notification, there is no difficulty in extending the benefit of the identical IGST Notification entry for the same period - Since no corresponding amendment restricting the scope of Entry E(9) was made to List 3, unlike the amendment made to List 30 with effect from 02.02.2020, the items continue to enjoy the benefit of classification under Schedule-I for the entire period of the Notification - No case is made out for interference with the order of the Principal Commissioner, and this issue is also decided against the Revenue - The appeal filed by the Revenue is rejected. [Read less]

Customs - Interest on delayed refund under Section 27A of the Customs Act, 1962 - Relevant date for computation of interest - Commissioner (Appeals) allowed interest at the rate of 6% per annum computed from three months after the date of filing of the original refund application - Whether interest under Section 27A of the Customs Act, 1962 is payable from the date of expiry of three months from the date of receipt of the refund application, or only from the date of expiry of three months from the date of the order finally sanctioning the refund - HELD - Section 27A mandates payment of interest where duty ordered to be ref... [Read more]

Customs - Interest on delayed refund under Section 27A of the Customs Act, 1962 - Relevant date for computation of interest - Commissioner (Appeals) allowed interest at the rate of 6% per annum computed from three months after the date of filing of the original refund application - Whether interest under Section 27A of the Customs Act, 1962 is payable from the date of expiry of three months from the date of receipt of the refund application, or only from the date of expiry of three months from the date of the order finally sanctioning the refund - HELD - Section 27A mandates payment of interest where duty ordered to be refunded is not refunded within three months from the date of receipt of the application for refund, and the explanation thereto deems an order of refund passed by the Commissioner (Appeals), the Tribunal or any court to be an order passed under Section 27(2) for the purpose of Section 27A - The explanation only extends the deeming fiction to appellate orders and has no bearing on postponing the date from which interest becomes payable - Reliance was placed on the decision of the Hon'ble Supreme Court which held that liability to pay interest commences from the expiry of three months from the date of receipt of the application for refund and not from the date on which the order of refund is made - In this case, the application for refund was filed on 29.10.2018 and three months expired on 28.01.2019 and the refund has been granted to the assessee after long litigation on 16.09.2025, therefore, relying on the decision of the Hon’ble Apex Court in the Ranbaxy Laboratories’ case, respondent-assessee is entitled for interest from 28.01.2019 till 16.09.2025 - The appeal filed by the Revenue is dismissed [Read less]

Service Tax - Imposition of penalty in proceedings for refund of pre-deposit, contrary to a final order of the Tribunal setting aside such penalty - Appellant's pre-deposit made pursuant to a stay order of the Tribunal became refundable following the Tribunal's final order setting aside penalties and part of the demand; in the refund proceedings, however, the adjudicating authority again computed and appropriated penalty and interest against the refund due - Whether the Revenue could, in proceedings for refund of pre-deposit, impose or recover fresh penalties contrary to the Tribunal's final order which had set aside the p... [Read more]

Service Tax - Imposition of penalty in proceedings for refund of pre-deposit, contrary to a final order of the Tribunal setting aside such penalty - Appellant's pre-deposit made pursuant to a stay order of the Tribunal became refundable following the Tribunal's final order setting aside penalties and part of the demand; in the refund proceedings, however, the adjudicating authority again computed and appropriated penalty and interest against the refund due - Whether the Revenue could, in proceedings for refund of pre-deposit, impose or recover fresh penalties contrary to the Tribunal's final order which had set aside the penalties earlier imposed - HELD - Penalties under Section 78 and Section 76 imposed by the original adjudication order were set aside by the Tribunal's final order, and the demand in respect of Event Management Service was further set aside by the Hon'ble Supreme Court - In refund proceedings seeking refund of pre-deposit made pursuant to the stay order of the Tribunal, the Revenue could not initiate another proceeding for imposition of fresh penalties on the appellant; if permissible in law, they could have proceeded separately, but not within the refund proceedings - Imposition of penalty and its appropriation against the refund due to the appellant, in refund proceedings, is contrary to settled principles of judicial discipline, since the refund claim ought to have been examined strictly in accordance with the order of the Tribunal setting aside the demand - There is no merit in the imposition of penalties and their appropriation against the refund due to the appellant - The matter remanded for re-computation of refund and the interest – The appeal is allowed - Service Tax - Interest on delayed refund of pre-deposit made under Section 35F of the Central Excise Act, 1944 as applied to service tax - Whether interest on refund of pre-deposit made pursuant to an appeal filed prior to the amendment of Section 35F with effect from 06.08.2014 is governed by the unamended or the amended provisions of Section 35FF - Appellant's appeal before the Tribunal was filed on 16.05.2014, prior to the amendment of Section 35F, and pre-deposit was made pursuant to a stay order passed thereafter - HELD - The proviso to the amended Section 35F expressly provides that the amended provisions shall not apply to stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No.2) Act, 2014 - The relevant consideration for applicability of the amended or unamended provision is not the date of deposit but the provision under which the appeal was pending and the amount was deposited - Since the appellant's appeal was filed and pending prior to the amendment, the refund of the pre-deposit is governed by the unamended provisions of Section 35FF - The refund arising consequent to the Tribunal's order and, further, consequent to the Hon'ble Supreme Court's order setting aside the demand in respect of Event Management Service, the exact amount due, the date from which it is due, and the interest payable thereon require recomputation - The matter is remanded to the original authority for computation of the refund amount due and the interest payable in terms of the unamended provisions of Section 35FF. [Read less]

Service Tax - Taxability of licence fees and additional licence fees paid to the State Government for grant of exclusive privilege to trade in liquor - Appellant, a State Government undertaking vested with the exclusive right and privilege of importing, exporting and carrying on wholesale trade and distribution of foreign liquor, paid licence fees and additional licence fees under the applicable excise law - Whether the statutory grant or continuance of a liquor licence, and the fees paid therefor, constitute a 'service' within the meaning of Section 65B(44) of the Finance Act, 1994 - HELD - The mere statutory grant or con... [Read more]

Service Tax - Taxability of licence fees and additional licence fees paid to the State Government for grant of exclusive privilege to trade in liquor - Appellant, a State Government undertaking vested with the exclusive right and privilege of importing, exporting and carrying on wholesale trade and distribution of foreign liquor, paid licence fees and additional licence fees under the applicable excise law - Whether the statutory grant or continuance of a liquor licence, and the fees paid therefor, constitute a 'service' within the meaning of Section 65B(44) of the Finance Act, 1994 - HELD - The mere statutory grant or continuance of a licence to carry on the regulated liquor trade cannot by itself establish the essential relationship of service provider and service recipient - The right to manufacture, possess, transport, purchase or sell intoxicating liquor is within the exclusive regulatory domain of the State under Entry 8 of List II of the Seventh Schedule, and the amount charged for permitting exercise of such privilege, though termed a licence fee, cannot be equated with consideration for a service, there being no reciprocity, quid pro quo or corresponding obligation upon the State Government to provide any service against such payments - The grant of a statutory licence does not constitute "support services" within the meaning of Section 65B(49) as it does not answer the description of infrastructural, operational, administrative, logistic, marketing or other support that entities ordinarily perform themselves and may elect to outsource - For the period up to 31.03.2016, the grant of licence or exclusive privilege remained covered by the Negative List under Section 66D(a) - For the period from 01.04.2016, the amendment substituting "any service" for "support services" in Section 66D(a)(iv) merely altered the scope of the Negative List and did not dispense with the threshold requirement of an activity performed for consideration under Section 65B(44) - In any event, the levy for the period from 01.04.2016 to 30.06.2017 stands expressly neutralised by the retrospective statutory dispensation under Section 117 of the Finance (No. 2) Act, 2019, which provides that no service tax shall be levied on services provided by the State Government by way of grant of liquor licence against consideration in the form of licence fee or application fee for that period - Licence fees and additional licence fees paid by the appellant do not constitute consideration for any service rendered by the State Government - The demand of service tax, along with interest and penalties is set aside – The appeal is allowed - Invocation of extended period of limitation - Whether the extended period could be invoked against a State Government undertaking whose activities are in the public domain - HELD - The appellant is a Government undertaking incorporated for the purpose of regulating the wholesale trade and distribution of foreign liquor in the State, and all activities undertaken by the appellant are in the public domain, with no suppression of information from the Department - Suppression of facts with intention to evade tax is not established, and the extended period cannot be invoked to demand service tax in this case. [Read less]

Service Tax – Eligibility for exemption to Rent-a-cab service provided to a unit in SEZ - Denial of exemption under Notification No.4/2004 - Whether the denial of exemption under Notification No.4/2004 on the ground that the rent-a-cab service was not utilized within the SEZ area is sustainable - HELD - The Appellant had filed FORM A-1 issued by the Specified Officer of SEZ, clearly indicating the Appellant as providing 'Rent-a-cab service', and there was no dispute that the service was an 'Authorized Service' as per the said Form - The only reason for denial, namely that the service was not utilized within the SEZ area,... [Read more]

Service Tax – Eligibility for exemption to Rent-a-cab service provided to a unit in SEZ - Denial of exemption under Notification No.4/2004 - Whether the denial of exemption under Notification No.4/2004 on the ground that the rent-a-cab service was not utilized within the SEZ area is sustainable - HELD - The Appellant had filed FORM A-1 issued by the Specified Officer of SEZ, clearly indicating the Appellant as providing 'Rent-a-cab service', and there was no dispute that the service was an 'Authorized Service' as per the said Form - The only reason for denial, namely that the service was not utilized within the SEZ area, is a basic fallacy, since the officer himself admitted that the Appellant provided services to the SEZ by way of pick-up and drop of staff, and not accepting this as service consumed within the SEZ defeats the very purpose of rent-a-cab service - The situs of rendering services is not relevant so long as the taxable services are provided to a unit in a SEZ to carry on authorised operations - The lower authorities erred in ignoring FORM A-1 issued by the Authorized Officer. The denial of exemption is unsustainable - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Taxability of income from sale of cargo space under 'Business Auxiliary Service' - Appellant, appointed as General Sales Agent of an airline, received commission for acting as such agent and separately earned income from trading of cargo space, being the difference between the purchase price and the selling price of cargo slots - Service tax was demanded on such difference on the ground that it constituted consideration for Business Auxiliary Service - Whether the difference between the sale price and the purchase price of cargo space, arising from trading of cargo slots as an independent buyer, is exigible t... [Read more]

Service Tax - Taxability of income from sale of cargo space under 'Business Auxiliary Service' - Appellant, appointed as General Sales Agent of an airline, received commission for acting as such agent and separately earned income from trading of cargo space, being the difference between the purchase price and the selling price of cargo slots - Service tax was demanded on such difference on the ground that it constituted consideration for Business Auxiliary Service - Whether the difference between the sale price and the purchase price of cargo space, arising from trading of cargo slots as an independent buyer, is exigible to service tax under BAS - HELD - Under the agreement between the appellant and the airline, the appellant is entitled to sales commission only for services rendered as General Sales Agent, and where there is a specific rate arrangement for a particular consignment, the appellant is not entitled to any commission - The appellant has discharged service tax on the commission received as General Sales Agent, and the demand is confined to the difference between the sale price and purchase price of cargo slots purchased and resold by the appellant in the capacity of an independent buyer. Such trading of cargo space, where the appellant may make a profit or incur a loss, does not partake the character of commission earned as an agent and does not fall within the ambit of BAS - The amount received on sale of cargo space is only trading of cargo space and not subject to levy of service tax - The issue stands settled by earlier orders of the Bench in the appellant's own case on identical facts, which have attained finality - The impugned order is set aside and the appeals are allowed [Read less]

GST - Requirement of a reasoned and speaking order by the First Appellate Authority - Appellants raised specific grounds of appeal before the FAA - The first appellate authority merely observed that the appellant had failed to produce satisfactory evidence and confirmed the orders without considering any of the specific grounds or the precedents relied upon - Whether an order of the first appellate authority which fails to consider or deal with any of the specific grounds of appeal and the judicial precedents relied upon constitutes a valid, reasoned and speaking order - HELD - Recording of reasons is an essential componen... [Read more]

GST - Requirement of a reasoned and speaking order by the First Appellate Authority - Appellants raised specific grounds of appeal before the FAA - The first appellate authority merely observed that the appellant had failed to produce satisfactory evidence and confirmed the orders without considering any of the specific grounds or the precedents relied upon - Whether an order of the first appellate authority which fails to consider or deal with any of the specific grounds of appeal and the judicial precedents relied upon constitutes a valid, reasoned and speaking order - HELD - Recording of reasons is an essential component of a judicial or quasi-judicial order and constitutes the soul of every such order - An order that reproduces an identical conclusion across separate appeals without independent consideration of the grounds and citations raised in each amounts to a failure to exercise the appellate jurisdiction vested in the authority, and cannot be regarded as a reasoned and speaking order - The appellate authority accordingly failed to adhere to the principle of natural justice requiring recording of reasons - Where the first appellate authority has failed to consider and adjudicate any ground raised before it, remand for proper consideration is necessary in the interest of justice - Deciding the matter on merits at the second appellate stage would curtail the valuable right of appeal available to the aggrieved party - Given that the original adjudication also raised fundamental objections including alleged absence of effective opportunity of personal hearing and adjudication ex parte on disputed demands founded on seized material, the matters are remanded to the original adjudicating authorities, rather than merely the first appellate authority, for fresh adjudication in accordance with law, with the relied-upon documents to be identified and made available, reasonable opportunity to reply afforded, and reasoned orders passed after effective personal hearing - The impugned Orders-in-Appeal and the corresponding Orders-in-Original are set aside and the appeals are allowed by way of remand [Read less]

Central Excise - Reversal of CENVAT Credit on common input services used in trading activity under Rule 6 of the CENVAT Credit Rules, 2004 - Whether the CENVAT credit reversed by the appellant, computed in accordance with Explanation I(c) to Rule 6(3A) as the difference between the sale price and the cost of goods sold, is correctly determined - Demand of CENVAT credit on account of common input services used in trading - HELD - Under Explanation I to Rule 6(3) and (3A), the value for trading is to be calculated as the difference between the sale price and the cost of goods sold, or ten per cent of the cost of goods sold, ... [Read more]

Central Excise - Reversal of CENVAT Credit on common input services used in trading activity under Rule 6 of the CENVAT Credit Rules, 2004 - Whether the CENVAT credit reversed by the appellant, computed in accordance with Explanation I(c) to Rule 6(3A) as the difference between the sale price and the cost of goods sold, is correctly determined - Demand of CENVAT credit on account of common input services used in trading - HELD - Under Explanation I to Rule 6(3) and (3A), the value for trading is to be calculated as the difference between the sale price and the cost of goods sold, or ten per cent of the cost of goods sold, whichever is higher, and the entire sale price cannot be treated as the value for this purpose - The calculations adopted by the appellant for arriving at the value of trading and for reversing the CENVAT credit attributable to common input services used in trading are in accordance with the explanation clause, and the finding of the adjudicating authority to the contrary is contrary to the legal provision - A Co-ordinate Bench, in the appellant's own case on identical facts, has held that once proportionate credit is reversed along with interest for the delayed period, a demand computed at a percentage of the value of exempted goods/services under Rule 6(3) cannot be sustained - Trading activity was included within the definition of 'exempted services' only with effect from 01.04.2011 by the explanation inserted in Rule 2(e) of the CENVAT Credit Rules, 2004, and there is accordingly no requirement for reversal of CENVAT credit on trading activity prior to that date - The appellant has correctly determined and paid the CENVAT amount payable in respect of common input services involved in trading activity for the disputed period, under intimation to the department, and no further demand is sustainable - The impugned order confirming the CENVAT demand is set aside and the appeal is allowed [Read less]

Customs - Classification of ‘Digital Axle Counter’ used for railway signalling, safety and traffic control - Appellant-company imported Digital Axle Counters and classified the same under Customs Tariff Item 86080030, whereas the Department alleged that the goods were more appropriately classifiable under Customs Tariff Item 85301010 - Whether ‘Digital Axle Counter’ is classifiable as mechanical (including electro-mechanical) signalling, safety or traffic control equipment under Chapter Heading 8608, or as electrical signalling, safety or traffic control equipment under Chapter Heading 8530 - HELD - Heading 8530 ex... [Read more]

Customs - Classification of ‘Digital Axle Counter’ used for railway signalling, safety and traffic control - Appellant-company imported Digital Axle Counters and classified the same under Customs Tariff Item 86080030, whereas the Department alleged that the goods were more appropriately classifiable under Customs Tariff Item 85301010 - Whether ‘Digital Axle Counter’ is classifiable as mechanical (including electro-mechanical) signalling, safety or traffic control equipment under Chapter Heading 8608, or as electrical signalling, safety or traffic control equipment under Chapter Heading 8530 - HELD - Heading 8530 expressly excludes equipment falling under Heading 8608 by the words "other than those of heading 8608", and Heading 8608 expressly includes mechanical, including electro-mechanical, signalling, safety and traffic control equipment. The mere presence of electrical or electronic components, or the use of electricity and electromagnetic effects during operation, does not by itself determine classification under Chapter 85, since such an interpretation would render the words "including electro-mechanical" in Heading 8608 otiose - The technical literature, including the Maintenance Handbook published by the Ministry of Railways and the publication on Signalling Relays and Cables, establishes that the vital relay driven by the Central Evaluator is an essential and integral component of the apparatus - the DAC is a single, functionally integrated railway safety and signalling system, notwithstanding that its constituent stages may be separately identifiable and, depending upon the manner of importation, separately packaged or installed. The Vital Relay is not an external electrical switch added after completion of the DAC; it is the mechanism through which the system's electronic determination is converted into the physical, fail-safe signalling condition required by the railway interlocking system - The essential character, functional architecture and principal use of the complete DAC are consistent with the description of electro-mechanical signalling, safety or traffic control equipment covered by Heading 8608. The presence of electronic and digital components does not take the apparatus outside that heading - The relay is not an adventitious or independently functioning electrical switch but the electro-mechanical extension through which the electronic determination of the apparatus is translated into the physical signalling condition, and in its absence the system would be incapable of performing its dedicated railway safety function - The burden lay upon the Revenue to establish that the goods were appropriately classifiable under Heading 8530 and that their essential character did not bring them within Heading 8608, which burden has not been discharged - The classification adopted by the appellant under Customs Tariff Item 86080030 is found to be in consonance with the tariff structure, the relevant Chapter and Section Notes and the technical literature. The reclassification under Customs Tariff Item 85301010 is devoid of merit. The consequential demand of Integrated Tax, together with interest, is set aside – The appeal is allowed - Confiscation of imported goods under Section 111(m) of the Customs Act, 1962 - Whether goods declared as Digital Axle Counters, in respect of which only the tariff classification was disputed, are liable to confiscation for not corresponding with the particulars declared in the bill of entry - HELD - Section 111(m) is attracted where the goods do not correspond, in respect of value or any other particular, with the entry made under the Act, and the statutory pre-condition is a material discrepancy between the goods imported and the particulars declared - No such discrepancy exists where the identity, quantity, value, country of origin and physical description of the goods were disclosed to the Department, and the dispute is confined to the tariff classification applicable to goods whose identity, nature and function had been disclosed - Once the classification adopted by the appellant is found to be correct, the very foundation of the alleged misclassification is untenable, and the consequential invocation of Section 111(m) cannot survive - The order of confiscation is set aside, and the redemption fine imposed under Section 125, being purely consequential to confiscation, does not survive - Invocation of extended period of limitation under Section 28(4) of the Customs Act, 1962 - Whether the extended period could be invoked on the ground of collusion, wilful misstatement or suppression of facts, where the revised classification was disclosed to the jurisdictional authorities - HELD - The extended period under Section 28(4) requires collusion, wilful misstatement or suppression of facts with intent to evade duty - The appellant had commenced declaring the goods under the revised classification and, by a representation to the jurisdictional authorities, expressly disclosed its understanding of the classification along with supporting product literature, following which the bills of entry continued to be assessed and the goods cleared under the declared classification without objection from the Department - The classification was thus neither concealed nor adopted clandestinely, and mere disclosure of a classification carrying a lower rate of tax, even if subsequently found untenable, does not amount to misdeclaration or furnish the foundation for alleging wilful misstatement or suppression with intent to evade duty - In the absence of material establishing collusion, wilful misstatement or suppression of facts with the requisite intent, the essential ingredients for invocation of the extended period are not established, and the differential duty demand, insofar as founded upon such invocation, is unsustainable and set aside. 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Service Tax - Taxability of commission earned on export of Business Auxiliary Service - Appellant, under contract with a foreign principal for soliciting orders and promoting sale of its goods, earned commission based on sales made directly by the foreign principal to customers in India and neighbouring countries, and did not pay service tax treating the activity as export of service - Whether such commission earned for procuring orders for a foreign entity qualifies as export of service under the Export of Services Rules, 2005 and the Place of Provision of Services Rules, 2012, and is accordingly not liable to service tax... [Read more]

Service Tax - Taxability of commission earned on export of Business Auxiliary Service - Appellant, under contract with a foreign principal for soliciting orders and promoting sale of its goods, earned commission based on sales made directly by the foreign principal to customers in India and neighbouring countries, and did not pay service tax treating the activity as export of service - Whether such commission earned for procuring orders for a foreign entity qualifies as export of service under the Export of Services Rules, 2005 and the Place of Provision of Services Rules, 2012, and is accordingly not liable to service tax - HELD - Business Auxiliary Services were classified under Rule 3(1)(iii) of the Export of Services Rules, 2005 and qualified as export if provided to a recipient located outside India - Since the foreign principal is the recipient of the service and is located outside India, and consideration is received in foreign exchange, the service qualified as export under the Export of Services Rules, 2005 up to 30.06.2012, and under Rule 3 of the Place of Provision of Services Rules, 2012 thereafter, the place of provision being based on the location of the recipient - The service of procuring orders for the foreign entity qualifies as export and the Appellant is not liable to pay service tax on the commission earned - The demand of service tax under Business Auxiliary Services is set aside – The appeal is allowed - Taxability under 'Supply of Tangible Goods' service where effective control and possession of rented equipment is transferred to the customer and VAT is discharged as a deemed sale - Appellant entered into agreements for renting out equipment, transferring possession, custody and effective control of the equipment to customers during the rental period, and discharged VAT on the transaction as a deemed sale - Whether service tax is additionally payable under 'Supply of Tangible Goods' service where VAT has already been discharged on the transaction - HELD - The terms of the agreement establish that the equipment was under the control, custody and possession of the customer during the tenure of the agreement, with the customer liable to pay VAT/CST and other statutory levies, and the appellant did not use or withdraw the equipment during the currency of the agreement - Such transfer of effective control, possession and custody takes the transaction out of the ambit of a taxable service and into the nature of a deemed sale - The issue stands covered by earlier decisions in the Appellant's own case setting aside the demand of service tax on rental income where VAT has been discharged thereon - The service tax demand under 'Supply of Tangible Goods' service is not sustainable and is set aside - Invocation of extended period of limitation for demand under reverse charge mechanism on import of software, based solely on balance sheet figures - Demand under RCM for import of software was confirmed solely on the basis of figures available in the balance sheet, which are public records, without any evidence of suppression or wilful misstatement - Whether the extended period of limitation is invocable where the demand is based solely on the assessee's balance sheet/profit and loss account or on records maintained in the usual course of business, and whether the demand is in any event revenue-neutral - HELD - Where the demand is based solely on balance sheet or profit and loss account figures or on records made in the usual course of business, without evidence of suppression or wilful misstatement, the extended period of limitation is not invocable - Had the Appellant discharged service tax under RCM on import of the services, it would undisputedly have been eligible to avail Cenvat credit thereon in light of the wide definition of 'input service', rendering the exercise revenue-neutral, and on this ground also the demand raised by invoking the extended period is time-barred - The demand confirmed under RCM for import of software is set aside - CENVAT Credit - Denial of credit carried forward in opening balance upon demerger under Rule 10 of the CENVAT Credit Rules, 2004 - Appellant, on demerger from its parent company pursuant to an order of the High Court, took credit of the parent's Cenvat balance in its opening balance for the return filed for April 2010 to September 2010 under Rule 10, duly intimating the fact to the Department - Whether the demand disallowing such credit, raised by a Show Cause Notice issued on 19.04.2016 in respect of credit availed in the return for April 2010 to September 2010, is barred by limitation, and whether the credit was in any event validly availed under Rule 10 - HELD - Raising a demand for the period April 2010 to September 2010 by a Show Cause Notice issued on 19.04.2016 is beyond even the extended period of limitation of five years, and the demand is liable to be set aside on this ground alone - In any event, as a result of the demerger, the Appellant was eligible to carry forward the closing balance of Cenvat credit under Rule 10, and in the absence of a specific column for availing such credit, correctly added it to its opening balance, a fact duly intimated to the Department - The disallowance of the credit availed under Rule 10 upon demerger is set aside - Denial of credit for want of documents where invoices and reconciliation statements were furnished but not considered - Cenvat credit was denied on the ground of non-submission of documents, though the Appellant had submitted the list of invoices, the input service tax register, sample invoices and a reconciliation statement of the Cenvat credit register with the ST-3 return along with its reply to the Show Cause Notice - Whether denial of credit on the ground of want of documents is sustainable where such documents were in fact furnished but were not considered by the adjudicating authority - HELD - The documents furnished by the Appellant, establishing the eligibility of Cenvat credit on the input services in question, were blatantly ignored, and the Department failed to consider the documents submitted along with the reply to the SCN, denying credit solely on the ground of non-submission - Given the undisputed eligibility of Cenvat credit on such input services, the Appellant cannot be denied the credit, and the denial of Cenvat credit for want of documents is legally not sustainable and is set aside. 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Service Tax - Exemption under Mega Exemption Notification No.25/2012-ST for works contract service of widening and strengthening a road, including provision of footpath, provided to a Government authority - Appellant rendered works contract service for widening and strengthening of a road, including construction of double lane, slow lane and footpath, to the Public Works (Roads) Department of the State Government, a 'Government Authority' as defined under Notification No.25/2012-ST, and claimed exemption under Entry 13 thereof for services relating to construction of road - The adjudicating authority denied exemption on th... [Read more]

Service Tax - Exemption under Mega Exemption Notification No.25/2012-ST for works contract service of widening and strengthening a road, including provision of footpath, provided to a Government authority - Appellant rendered works contract service for widening and strengthening of a road, including construction of double lane, slow lane and footpath, to the Public Works (Roads) Department of the State Government, a 'Government Authority' as defined under Notification No.25/2012-ST, and claimed exemption under Entry 13 thereof for services relating to construction of road - The adjudicating authority denied exemption on the ground that only the footpath had been widened/strengthened on the edge of the road and that 'Road' had not been constructed - Whether widening and strengthening of a road, including provision of footpath as part of a composite road-development work order, amounts to construction of a road exempted under Entry 13 of Notification No.25/2012-ST - HELD - The expression 'road' is not restrictively defined under the service tax law, and in its ordinary and legal meaning a public road encompasses its integral components and facilities meant for movement of the public, including pedestrian pathways/footpaths, which cannot be artificially segregated from the road merely to deny exemption - The work, described in the Work Orders as widening and strengthening of the road including footpath, has to be examined as a composite road-development project and not by isolating the footpath component, providing a footpath being part of the construction of a road - The work order was awarded by the Public Works (Roads) Directorate responsible for planning, survey, design, construction and maintenance of roads, and the services of widening/strengthening of road for providing footpath amount to construction of road - The appellant neither charged nor collected service tax from the Government department, bona fide treating the services as exempt - The appellant is eligible for exemption under Entry 13 of Mega Exemption Notification No.25/2012-ST - The demand of service tax is set aside; as the demand is not sustained, the question of interest or penalty does not arise – The appeal is allowed - Service Tax - Invocation of extended period of limitation where demand is based solely on Form 26AS/Income Tax Return data - Show Cause Notice was issued on the basis of figures available in Form 26AS, Income Tax Returns and the Statement of Receipt furnished by the appellant, treating the differential turnover as suppression of taxable value and invoking the extended period under Section 73(1) of the Finance Act, 1994 - Whether the extended period of limitation is invocable where the demand is based solely on Form 26AS/ITR data without independent investigation or evidence of wilful suppression - HELD - Where the demand is based solely on Form 26AS/ITR data, the extended period is not invocable and the demand is liable to be set aside on limitation alone - Suppression of facts and wilful violation to invoke the extended period were claimed only on assumption and presumption, without verification or due diligence, and the Show Cause Notice was issued without going through the relevant facts, figures and documents submitted by the appellant - The term 'suppression' must be construed strictly and does not mean any omission; the act must be deliberate and wilful to evade payment of duty, and mere failure to declare does not amount to wilful suppression in the absence of a positive act on the part of the assessee - The demands confirmed in the impugned order by invoking the extended period of limitation are not sustainable and set aside. [Read less]

Service Tax - Invocation of extended period of limitation against a statutory municipal corporation - Whether the extended period of limitation is invocable against a municipal corporation constituted under Article 243W of the Constitution of India, where the Show Cause Notice alleges suppression, wilful misstatement, fraud or collusion with intent to evade payment of service tax - HELD - The appellant, being a municipal corporation constituted in terms of Article 243W of the Constitution of India and a creature of the Constitution, cannot be alleged to have had any intent to evade payment of tax or to have suppressed mate... [Read more]

Service Tax - Invocation of extended period of limitation against a statutory municipal corporation - Whether the extended period of limitation is invocable against a municipal corporation constituted under Article 243W of the Constitution of India, where the Show Cause Notice alleges suppression, wilful misstatement, fraud or collusion with intent to evade payment of service tax - HELD - The appellant, being a municipal corporation constituted in terms of Article 243W of the Constitution of India and a creature of the Constitution, cannot be alleged to have had any intent to evade payment of tax or to have suppressed material facts with wilful intention of not paying tax, or to have committed fraud or collusion - In the absence of these elements, the extended period of limitation is not invocable - Since the Show Cause Notice in this case was issued by invoking the extended period of limitation, the whole of the demand is barred by limitation - The demand confirmed by the impugned order is set aside and no penalty is imposable on the appellant – The appeal is allowed [Read less]

Service Tax - Liability of a Goods Transport Agency to pay service tax where the consignment note is issued in favour of a service receiver not covered under the reverse charge notification - Appellant, engaged in providing GTA service, was found on scrutiny of ITR/TDS data to have a mismatch between taxable receipts reflected in income tax returns and 'nil' figures reflected in ST-3 returns, resulting in confirmation of service tax - Whether the appellant, having issued the consignment note in favour of a service receiver not falling within the class of persons liable to pay service tax under reverse charge in terms of Ru... [Read more]

Service Tax - Liability of a Goods Transport Agency to pay service tax where the consignment note is issued in favour of a service receiver not covered under the reverse charge notification - Appellant, engaged in providing GTA service, was found on scrutiny of ITR/TDS data to have a mismatch between taxable receipts reflected in income tax returns and 'nil' figures reflected in ST-3 returns, resulting in confirmation of service tax - Whether the appellant, having issued the consignment note in favour of a service receiver not falling within the class of persons liable to pay service tax under reverse charge in terms of Rule 2(1)(d)(B) of the Service Tax Rules, 1994 read with Notification No. 26/2012-ST dated 20.06.2012, is itself liable to discharge the service tax on such service - HELD - The appellant issued the consignment note in favour of the recipient of taxable service, who does not fall under the purview of Rule 2(1)(d)(B) of the Service Tax Rules, 1994 read with the relevant Notification - The appellant is accordingly liable to pay service tax in respect of the taxable service provided to such recipient, and since the appellant did not discharge such liability, the demand was rightly confirmed - The contention that the SCN did not capture the facts of the case properly is not tenable, since the appellant had itself submitted the background facts, including that the recipients of service had discharged service tax liability either as consignor or consignee in respect of the substantial part of the demand – Further, since the appellant, though registered with the department, did not correctly capture the figures in its service tax returns, the department had no scope or occasion to ascertain the actual taxable service provided, and the show cause proceedings were initiated based on information subsequently submitted by the appellant. The show cause notice cannot be said to be barred by limitation of time – The matter is remanded to the original authority for the limited purpose of quantification of the abatement benefit, actually extendable to the appellant, if any - The appeal is disposed of [Read less]

Central Excise - Denial of Cenvat credit on the allegation of non-receipt of goods on the strength of invoices issued by a registered dealer - Appellant availed Cenvat credit on the basis of invoices issued by a registered dealer for supply of Sponge Iron, which was alleged to be fraudulent on the ground that the dealer had supplied only invoices without actual supply of goods - Whether the disallowance of Cenvat credit on the ground of non-receipt of goods, based on such third-party statements not tested by examination-in-chief under Section 9D of the Central Excise Act, 1944, and in the absence of any investigation at th... [Read more]

Central Excise - Denial of Cenvat credit on the allegation of non-receipt of goods on the strength of invoices issued by a registered dealer - Appellant availed Cenvat credit on the basis of invoices issued by a registered dealer for supply of Sponge Iron, which was alleged to be fraudulent on the ground that the dealer had supplied only invoices without actual supply of goods - Whether the disallowance of Cenvat credit on the ground of non-receipt of goods, based on such third-party statements not tested by examination-in-chief under Section 9D of the Central Excise Act, 1944, and in the absence of any investigation at the appellant's factory, is sustainable - HELD - The appellant had recorded receipt of the goods in RG-23A Part-I, made payments to the supplier through proper banking channel, disclosed the credit availed in monthly ER-1 returns, and produced certified copies of the invoices, road permits and freight vouchers. There was no case of excess or shortage of raw materials or finished goods, nor any evidence of alternative sourcing of raw material or refund of cash by the dealer - Consumption of the goods in manufacture of the final product was not disputed and duty on clearance of the final product was accepted by the department - No investigation was carried out at the factory or office premises of the appellant to ascertain the genuineness of the documents produced, and the onus lies on the department to establish that the documents relied upon by the appellant are fake, which onus has not been discharged - The dealer alleged to have supplied only invoices without goods was not made a party to the notice, nor was any penalty proposed against it, rendering the allegation of receipt of invoices without receipt of goods against the appellant alone unsustainable - Statements of the supplier, the customer's representative and the transporter, not tested by examination-in-chief as mandated under Section 9D of the Central Excise Act, 1944, have no evidentiary value and cannot form the basis for confirming the demand - In the absence of any positive and substantial evidence establishing that the appellant availed irregular credit without receipt of goods, the disallowance of Cenvat credit on inputs and input services, along with interest, cannot be sustained - The demand is set aside and the appeal is allowed [Read less]

GST - Refund of unutilised input tax credit on exports under Letter of Undertaking - Appellate order beyond the Show Cause Notice - Petitioner applied for refund of accumulated input tax credit on export of goods without payment of tax under Letter of Undertaking - Show Cause Notice alleged inadmissibility of refund on the ground that manual shipping bill records were not found in ICEGATE tracking - Adjudicating Authority rejected the refund application and the appellate authority affirmed the rejection, taking additional grounds relating to Rule 96A, Rule 96B and Rule 89(4)(c) of the CGST Rules, 2017 which never formed pa... [Read more]

GST - Refund of unutilised input tax credit on exports under Letter of Undertaking - Appellate order beyond the Show Cause Notice - Petitioner applied for refund of accumulated input tax credit on export of goods without payment of tax under Letter of Undertaking - Show Cause Notice alleged inadmissibility of refund on the ground that manual shipping bill records were not found in ICEGATE tracking - Adjudicating Authority rejected the refund application and the appellate authority affirmed the rejection, taking additional grounds relating to Rule 96A, Rule 96B and Rule 89(4)(c) of the CGST Rules, 2017 which never formed part of the Show Cause Notice - Whether the appellate authority can rely on grounds beyond the Show Cause Notice to sustain rejection of the refund claim - HELD - The SCN forms the foundational basis of the entire proceeding, and if any allegation is made beyond the Show Cause Notice, it renders the entire procedure otiose and unsustainable in law - The appellate authority had expanded the scope of the Show Cause Notice by taking additional grounds under Rule 96A, Rule 96B and Rule 89(4)(c) and the Petitioner, having already replied to the Show Cause Notice, did not get an opportunity to rebut such allegations - The orders of the Adjudicating Authority and the appellate authority suffer from arbitrariness, illegality and perversity and are not sustainable in law - The orders are set aside and the Petitioner is directed to file a comprehensive reply to the Show Cause Notice along with submissions on the additional grounds and the Respondent is to pass a reasoned and speaking order after affording personal hearing, and if the Petitioner is found eligible, the refund shall be disbursed along with interest in terms - The writ petition is disposed of [Read less]

GST - Writ challenge to inspection and search proceedings under Sections 67 and 70 of the CGST Act and refund of amount allegedly deposited under coercion - Whether the High Court should interfere under writ jurisdiction with the pending proceedings arising from the inspection or search - HELD - The proceedings pursuant to the inspection or search were still pending before the competent authority and no adjudication determining liability had been made, nor had a show cause notice been issued - The allegation of coercion in payment was a disputed question of fact, as the mere furnishing of Form GST DRC-03 by itself may not ... [Read more]

GST - Writ challenge to inspection and search proceedings under Sections 67 and 70 of the CGST Act and refund of amount allegedly deposited under coercion - Whether the High Court should interfere under writ jurisdiction with the pending proceedings arising from the inspection or search - HELD - The proceedings pursuant to the inspection or search were still pending before the competent authority and no adjudication determining liability had been made, nor had a show cause notice been issued - The allegation of coercion in payment was a disputed question of fact, as the mere furnishing of Form GST DRC-03 by itself may not conclusively determine whether a payment was voluntary, which requires consideration of the contemporaneous material and the proceedings before the competent authority - Writ jurisdiction under Articles 226 and 227 is discretionary and the Court would ordinarily be slow to interdict statutory proceedings at an interlocutory or nascent stage, particularly where the reliefs require examination of disputed questions of fact - It is not an appropriate stage for interference and no ground for interference is made out - The writ petition is dismissed [Read less]

Service Tax - Amounts deposited pursuant to interim orders of the High Court in a patent dispute - Respondent had a dispute with a foreign entity concerning use of patents and technologies - High Court in the suit directed the Respondent by interim orders to deposit an amount, which the Department treated as payment of royalty for service received from a foreign entity and proposed service tax, interest and penalties, whereas the parties later settled out of court, a sum was paid towards royalty, the suit was withdrawn, the deposited amount was released and IGST was paid on the settlement amount - Whether the amount deposi... [Read more]

Service Tax - Amounts deposited pursuant to interim orders of the High Court in a patent dispute - Respondent had a dispute with a foreign entity concerning use of patents and technologies - High Court in the suit directed the Respondent by interim orders to deposit an amount, which the Department treated as payment of royalty for service received from a foreign entity and proposed service tax, interest and penalties, whereas the parties later settled out of court, a sum was paid towards royalty, the suit was withdrawn, the deposited amount was released and IGST was paid on the settlement amount - Whether the amount deposited pursuant to interim orders of the Court is payment towards royalty exigible to service tax - HELD - The adjudicating authority held that the deposited amount was subject matter of decision by the Court in the suit, the question of taxability would have arisen only after the issue was decided, and upon withdrawal of the suit the interim orders directing deposit stood vacated, which findings were affirmed by the Tribunal - There was no vested right created in favour of the foreign entity to receive the deposited amount, which remained subject to the outcome of the suit, and at the stage of directing deposit the Court had not determined that the Respondent used the patents - The contention that the deposit was payment towards royalty is misconceived - The decision relied upon by the Appellant-Dept, that the true nature of payment and not its description determines taxability and that wrongly remitted sales tax would not absolve service tax liability, is not applicable as the nature of the payment was yet to be determined and it was not adjudicated that the payment related to taxable service - The royalty paid pursuant to the settlement was subjected to IGT under the regime applicable at the relevant time and the tax due was deposited on payment - The findings suffer from no factual or legal error or perversity, no substantial question of law arises – The Revenue appeal is dismissed [Read less]

GST - Rejection of application for revocation of cancellation of registration - Direction to pay tax, interest and penalty through Form GST DRC-03 - Application for revocation was rejected on the ground that the Petitioners had purchased goods from three dealers who had suo motu cancelled their registration - Petitioners were asked to pay tax, interest and penalty through Form GST DRC-03, without any show cause notice on such purchases - HELD - No show cause notice was issued on the purchases from the three dealers. The order did not reflect when those dealers sought cancellation, whether at the time of issuance of registr... [Read more]

GST - Rejection of application for revocation of cancellation of registration - Direction to pay tax, interest and penalty through Form GST DRC-03 - Application for revocation was rejected on the ground that the Petitioners had purchased goods from three dealers who had suo motu cancelled their registration - Petitioners were asked to pay tax, interest and penalty through Form GST DRC-03, without any show cause notice on such purchases - HELD - No show cause notice was issued on the purchases from the three dealers. The order did not reflect when those dealers sought cancellation, whether at the time of issuance of registration to the Petitioners or thereafter, which required examination after hearing - Proceedings for revocation of cancellation fall in a different domain and cannot be interjected with proceedings under Sections 73 and 74 of the GST Act dealing with fraudulent availment of input tax credit and suppression of facts - The Petitioners cannot be asked to deposit tax and penalty through Form GST DRC-03, which is voluntary, without a show cause notice for disallowing input tax credit, and the order suffers from non-application of mind - The entire action amalgamated different statutory provisions governing cancellation of registration and disallowing input tax credit, and simultaneously cancelled the registration retrospectively, resulting in closure of business - The order rejecting the revocation application is quashed and set aside – The petition is disposed of - GST - Cancellation of registration - Violation of principles of natural justice - SCN proposed cancellation on the ground that registration was obtained by fraud, wilful misstatement or suppression of facts - Petitioners sought 15 to 20 days to produce documentary evidence on input tax credit, but the registration was cancelled retrospectively within 12 days of the notice - HELD - The cancellation order neither dealt with the request made by the Petitioners nor took any decision to extend time or give an opportunity to produce documentary evidence, and was passed bereft of the evidence which the Petitioners sought to produce - The appellate authority tried to improve upon the original defect. The appellate authority could not have considered the facts beyond the scope of the original show cause notice - The show cause notice and the appellate order are quashed and set aside, liberty is reserved to the Respondent to initiate fresh proceedings by an appropriate notice. [Read less]

GST - Provisional attachment of bank account under Section 83 of CGST Act, 2017 read with Rule 159(1) - Lapse of order of provisional attachment after one year - More than four and a half years had elapsed since the orders of provisional attachment were passed, and no interim order was granted in the appeals - Whether the writ appeals by Revenue survive when an order of provisional attachment under Section 83 remains in force only for a period of one year - HELD - The Apex Court has categorically held that any order of provisional attachment passed by the GST Authority in exercise of power under Section 83 can remain in fo... [Read more]

GST - Provisional attachment of bank account under Section 83 of CGST Act, 2017 read with Rule 159(1) - Lapse of order of provisional attachment after one year - More than four and a half years had elapsed since the orders of provisional attachment were passed, and no interim order was granted in the appeals - Whether the writ appeals by Revenue survive when an order of provisional attachment under Section 83 remains in force only for a period of one year - HELD - The Apex Court has categorically held that any order of provisional attachment passed by the GST Authority in exercise of power under Section 83 can remain in force only for a period of one year, and upon the expiry of the said period the order of provisional attachment will automatically lapse - A statutory authority can do only such acts which are permissible under the statute, and there is a clear absence of any enabling provision in Section 83 permitting the authorities to re-issue the order of attachment which ceases to have life beyond one year - In the absence of any interim order, the Appellant-Revenue should have put the order of the learned single Judge into operation, and otherwise the order of provisional attachment would have statutorily lapsed. There is no scope to continue with the provisional attachment made in the year 2022 in the year 2026 - The writ appeals have become infructuous and nothing survives for further adjudication. The writ appeals fail and are dismissed [Read less]

GST - Telangana AAR - Applicable rate of tax on leasing of Digital Cinema Equipment comprising Projector, Server, UPS and VSAT - Applicant, engaged in leasing Digital Cinema Equipment to theatres, provided four different equipment's, namely Projector, Server, UPS and VSAT, each bearing a different HSN, and charged lease rental for the entire set in a single invoice - Applicant contended that the supply is a mixed supply under Section 8, and that the HSN attracting the highest rate of tax would apply to the entire supply - Whether the supply constitutes a composite supply or a mixed supply under Section 8 of the CGST Act, 2... [Read more]

GST - Telangana AAR - Applicable rate of tax on leasing of Digital Cinema Equipment comprising Projector, Server, UPS and VSAT - Applicant, engaged in leasing Digital Cinema Equipment to theatres, provided four different equipment's, namely Projector, Server, UPS and VSAT, each bearing a different HSN, and charged lease rental for the entire set in a single invoice - Applicant contended that the supply is a mixed supply under Section 8, and that the HSN attracting the highest rate of tax would apply to the entire supply - Whether the supply constitutes a composite supply or a mixed supply under Section 8 of the CGST Act, 2017 - HELD - As per Section 2(30) of the CGST Act, a composite supply requires two or more taxable supplies that are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply - Applying the indicators for ascertaining natural bundling, none of the indicators are satisfied. The supply of Digital Cinema Equipment does not constitute a composite supply - As per Section 2(74) of the CGST Act, a mixed supply requires that the bundled supply not be a composite supply, have a single price, and that each item be capable of being supplied separately though not actually supplied separately. The equipment is leased together for a single lease rental and is not supplied separately, and is not naturally bundled. The supply of Digital Cinema Equipment therefore falls under the ambit of mixed supply - As per Section 8(b) of the CGST Act, a mixed supply comprising two or more supplies is treated as a supply of that particular supply which attracts the highest rate of tax - Among the equipment's comprising the Digital Cinema Equipment, the Projector bearing HSN 8528 attracts the highest rate of tax, and therefore the GST rate applicable to the Projector applies to the entire mixed supply - The applicable rate of GST on the mixed supply of Digital Cinema Equipment is held to be 28% upto 21.09.2025 and 18% thereafter – Ordered accordingly [Read less]

GST - Requirement of a quasi-judicial and speaking order in rejecting a delayed appeal - Whether an appeal filed under Section 107 of the CGST Act, whether time-barred or otherwise, can be mechanically rejected without being placed before the Appellate Authority for a reasoned, quasi-judicial order after hearing the appellant - HELD - Once an appeal is preferred before the Appellate Authority under Section 107, whether accompanied by an application for condonation of delay or otherwise, it must mandatorily be placed before the Appellate Authority, which must thereafter pass an appropriate order after hearing the aggrieved ... [Read more]

GST - Requirement of a quasi-judicial and speaking order in rejecting a delayed appeal - Whether an appeal filed under Section 107 of the CGST Act, whether time-barred or otherwise, can be mechanically rejected without being placed before the Appellate Authority for a reasoned, quasi-judicial order after hearing the appellant - HELD - Once an appeal is preferred before the Appellate Authority under Section 107, whether accompanied by an application for condonation of delay or otherwise, it must mandatorily be placed before the Appellate Authority, which must thereafter pass an appropriate order after hearing the aggrieved party - A time-barred appeal, or an appeal otherwise not maintainable, cannot be rejected mechanically by the Appellate Authority or its office; rejection can only be by way of a quasi-judicial and speaking order - Recording of reasons is an essential component of every judicial or quasi-judicial order, and even an administrative order deciding the rights of parties must be a speaking and reasoned order - The mere acknowledgment of submission of the appeal, containing an intimation of rejection without any reasons, is not acceptable in law and is not how statutory appeals are to be dealt with - The intimation of rejection is quashed and set aside, and the Appellate Authority is directed to restore the appeals and consider them, along with the applications for condonation of delay - The petitions stand disposed of [Read less]

Customs - Seizure of goods imported by 100% EOU - Effect of clarificatory circular issued during pendency of writ - Petitioner, a 100% EoU, imported steel plates without payment of duty under the exemption notification for such units - The goods were seized and a show cause notice issued alleging violation of the basic permission by using the plates for manufacture of jigs, dies and tools - During pendency of the writ the Government issued Circular No.22/2009-CUS dated 19.08.2009 on duty free import and domestic procurement of raw materials common for manufacture of finished goods and capital goods for use within the unit,... [Read more]

Customs - Seizure of goods imported by 100% EOU - Effect of clarificatory circular issued during pendency of writ - Petitioner, a 100% EoU, imported steel plates without payment of duty under the exemption notification for such units - The goods were seized and a show cause notice issued alleging violation of the basic permission by using the plates for manufacture of jigs, dies and tools - During pendency of the writ the Government issued Circular No.22/2009-CUS dated 19.08.2009 on duty free import and domestic procurement of raw materials common for manufacture of finished goods and capital goods for use within the unit, and the Court had directed deposit and bank guarantee as interim measures - Whether the seizure and show cause notice survive in light of the clarificatory circular - HELD - The circular, which is applicable to the Petitioner and operates retrospectively, was not controverted by the Respondent, who could not dispute its applicability - The show cause notice pales into insignificance. The seizure memos and show cause notice are quashed and set aside - The amount deposited and the bank guarantee furnished pursuant to the Court's orders stand cancelled and the deposit is to be refunded - The Petitioner is at liberty to file an application before the Respondent authorities claiming interest, which shall be decided in accordance with law – The petition is disposed of [Read less]

GST - Cancellation of registration - Second show cause notice on identical grounds after earlier proceedings dropped - Petitioner's registration was sought to be cancelled under Section 29(2)(e) of the CGST Act on the ground that it was obtained by fraud, wilful misstatement or suppression of facts, based on a letter of the intelligence directorate that no business was conducted at the premises - The proceedings were dropped on the Petitioner's reply, but a second show cause notice by the same officer on identical grounds and a similar letter led to cancellation with retrospective effect - Whether the show cause notice and... [Read more]

GST - Cancellation of registration - Second show cause notice on identical grounds after earlier proceedings dropped - Petitioner's registration was sought to be cancelled under Section 29(2)(e) of the CGST Act on the ground that it was obtained by fraud, wilful misstatement or suppression of facts, based on a letter of the intelligence directorate that no business was conducted at the premises - The proceedings were dropped on the Petitioner's reply, but a second show cause notice by the same officer on identical grounds and a similar letter led to cancellation with retrospective effect - Whether the show cause notice and the cancellation order sustain - HELD - Both show cause notices were premised on identical reasons and identical letters, the proceedings were dropped earlier by the same officer, and hence the impugned notice and order suffer from non-application of mind - The Petitioner was never called upon to explain the alleged fraudulent availment and passing of ineligible input tax credit to various firms, which is referred to in the impugned order - The show cause notice and the order are quashed and set aside and the writ petition is allowed - It is open to the Respondent to issue a fresh show cause notice and proceed in accordance with law after affording opportunity of hearing – The writ petition is allowed [Read less]

GST - Applicability of blocked credit under Section 17(5)(d) of CGST Act, 2017 to input tax credit availed on GST paid on acquisition of leasehold rights in an industrial plot allotted by GIDC - Petitioner availed input tax credit in its return, and reversed the entire credit along with interest through Form DRC-03 during inspection proceedings. The Department issued show cause notice under Section 74(1) alleging that the credit was blocked under Section 17(5)(d) - demand along with interest and penalty was confirmed - Whether Section 17(5)(d) is applicable to input tax credit availed on GST paid on assignment of leasehold... [Read more]

GST - Applicability of blocked credit under Section 17(5)(d) of CGST Act, 2017 to input tax credit availed on GST paid on acquisition of leasehold rights in an industrial plot allotted by GIDC - Petitioner availed input tax credit in its return, and reversed the entire credit along with interest through Form DRC-03 during inspection proceedings. The Department issued show cause notice under Section 74(1) alleging that the credit was blocked under Section 17(5)(d) - demand along with interest and penalty was confirmed - Whether Section 17(5)(d) is applicable to input tax credit availed on GST paid on assignment of leasehold rights of a GIDC plot, where no construction activity is undertaken - HELD - The High Court in an earlier decision has held that assignment by sale or transfer of leasehold rights of a plot allotted by GIDC to the lessee, in favour of a third party-assignee for consideration, is an assignment or transfer of benefits arising out of immovable property. Section 7(1)(a) read with clause 5(b) of Schedule II and clause 5 of Schedule III is not applicable to such a transaction, and the same is not subject to levy of GST under Section 9. The GST charged by the supplier and paid by the petitioner was therefore contrary to law - When the charging provision itself does not apply, any amount collected or retained by the Department, whether directly as tax or indirectly by way of ITC reversal and interest, has no legal sanctity - Section 17(5)(d) presupposes the existence of a taxable inward supply on which tax is lawfully leviable and paid. Where the transaction neither qualifies as supply under Section 7 nor is chargeable to tax under Section 9, the question of applying the blocking provision under Section 17(5) does not arise at all - The allegation of availing blocked credit is misconceived, and the demand determined on the basis of Section 17(5)(d) is unsustainable in the eyes of law - The demand raised under Section 17(5)(d) is held unsustainable and the writ petition is allowed - Invocation of Section 74(1) of CGST Act, 2017 for alleged wrongful availment of input tax credit treated as blocked credit under Section 17(5)(d) - Whether Section 74(1) could be invoked on the allegation that the credit constituted blocked credit under Section 17(5)(d), where there was no fraud, wilful misstatement or suppression of facts - HELD - Section 74 applies where tax has not been paid or short paid, or input tax credit has been wrongly availed or utilised, by reason of fraud, wilful misstatement or suppression of facts to evade tax. The credit was availed under a bonafide belief, the transaction was disclosed in the returns and reflected in the books of account, and the credit was reversed along with interest. Section 17(5)(d) is held to be inapplicable and the allegation of blocked credit misconceived - In light of the settled legal position, the question of fraud, wilful misstatement or suppression of facts does not arise to invoke Section 74(1) on the allegation that the credit constituted blocked credit under Section 17(5)(d) - The action of the Department is contrary to the statutory provisions and the settled legal position - Invocation of Section 74(1) is held unsustainable, and the order-in-original, the summary order in Form DRC-07, the rectification order and the order-in-appeal are quashed and set aside - Refund of tax and interest paid through Form DRC-03 on reversal of input tax credit availed on GST paid on assignment of leasehold rights of GIDC plot - Whether the Petitioner is entitled to refund of the input tax credit reversed and interest paid through Form DRC-03 - HELD - When the charging provision itself does not apply, any amount collected or retained by the Department, whether directly as tax or indirectly by way of ITC reversal and interest, has no legal sanctity. The reversal of ITC and payment of interest, which were premised solely on the assumption that GST was leviable on the transaction, would not survive - The Respondents are directed to refund the tax and interest paid through Form DRC-03. [Read less]

Bihar VAT Act, 2005 - Validity of tax demand raised for failure to file VAT return where the assessee was never registered under the VAT Act - Petitioner, registered under service tax prior to the GST regime and never registered under the VAT Act, was assessed and directed to file a final return (RT-3) under the VAT Act - Whether an assessee who was never registered under the VAT Act can be assessed and directed to comply with the requirement of filing a return under the VAT Act - HELD - It is an admitted position that the petitioner was never registered under the VAT Act, and that the petitioner had filed its service tax ... [Read more]

Bihar VAT Act, 2005 - Validity of tax demand raised for failure to file VAT return where the assessee was never registered under the VAT Act - Petitioner, registered under service tax prior to the GST regime and never registered under the VAT Act, was assessed and directed to file a final return (RT-3) under the VAT Act - Whether an assessee who was never registered under the VAT Act can be assessed and directed to comply with the requirement of filing a return under the VAT Act - HELD - It is an admitted position that the petitioner was never registered under the VAT Act, and that the petitioner had filed its service tax return, which fact was itself taken note of by the Assessing Officer - Since the petitioner cannot be assessed against the liability of the VAT Act when it was never registered under the VAT regime, it was impossible for the petitioner to file a final return under the VAT Act - The orders passed by the Assessing Authority and the Appellate Authority are set aside - The writ application is allowed [Read less]

GST – Rajasthan AAR - Royalty paid by Short-Term Permit holder to State Government for mining rights - Liability under Reverse Charge Mechanism - Applicant intended to obtain a Short-Term Permit under Rule 51 of the Rajasthan Minor Mineral Concession Rules, 2017 for quarrying and extraction of minor minerals and would be obliged to pay royalty to the State Government, which does not levy GST on such royalty - Whether royalty paid or payable by the Applicant as a Short-Term Permit holder to the State Government is consideration for a service of granting the right to use minerals or mineral resources, taxable under SAC 997... [Read more]

GST – Rajasthan AAR - Royalty paid by Short-Term Permit holder to State Government for mining rights - Liability under Reverse Charge Mechanism - Applicant intended to obtain a Short-Term Permit under Rule 51 of the Rajasthan Minor Mineral Concession Rules, 2017 for quarrying and extraction of minor minerals and would be obliged to pay royalty to the State Government, which does not levy GST on such royalty - Whether royalty paid or payable by the Applicant as a Short-Term Permit holder to the State Government is consideration for a service of granting the right to use minerals or mineral resources, taxable under SAC 997337, and liable to GST under the Reverse Charge Mechanism - HELD - The grant by the State Government of a right to use minerals or mineral resources to a permit or lease holder against payment of royalty constitutes a supply of service under Section 7(1) read with Section 2(102) of the CGST Act, classifiable as licensing services for the right to use minerals including its exploration and evaluation under SAC 997337, and taxable under Sl. No. 17, item (viii) of Notification No. 11/2017-Central Tax (Rate) - Services supplied by the State Government to a business entity are taxable under Reverse Charge Mechanism under Sl. No. 5 of Notification No. 13/2017-Central Tax (Rate). The grant of the right to extract minerals is neither renting of immovable property nor falls within the specified exclusions - The character of royalty as contractual consideration rather than tax stands reinforced by the Supreme Court decision in Mineral Area Development Authority. The ruling is given on the statutory framework as it stands, without prejudice to the outcome of pending proceedings - The Applicant, as recipient, is liable to discharge GST on the royalty under RCM – Ordered accordingly - Applicability to Short-Term Permit holder of the GST on royalty applicable to Quarry Lease or Mining Lease holder - Applicant intended to obtain a Short-Term Permit under Rule 51 of the Rajasthan Minor Mineral Concession Rules, 2017, with royalty payable at the same rates as apply to a Quarry Lease - Whether the GST position applicable to a Quarry Lease or Mining Lease holder under the Rajasthan Minor Mineral Concession Rules, 2017 and the MMDR Act, 1957 for payment of GST on royalty under Reverse Charge Mechanism also applies to the Applicant as a Short-Term Permit holder - HELD - Rule 51(5) mandates that royalty on minerals extracted under a Short-Term Permit is payable at the rate specified in Schedule II, the same Schedule that governs royalty payable by a Quarry Lease or Mining Lease holder under Rule 28 - The grantor of the right, the nature of the right conferred, being entry upon a designated area to extract and remove minor minerals against payment of royalty, and the statutory basis of the payment are identical - The only material distinction lies in the duration and areal extent of the concession, which goes to the tenure of the concession and does not alter the essential character of the transaction as licensing services for the right to use minerals under SAC 997337 - The ratio of ruling in the case of a Quarry Lease holder, that royalty paid to the State Government for the right to extract minerals is consideration for a taxable supply of service payable under RCM by the recipient, applies with equal force to a Short-Term Permit holder - The legal position applicable to a Quarry Lease or Mining Lease holder is equally applicable to the Applicant as a Short-Term Permit holder. [Read less]