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Central Excise - Order passed beyond six months from SCN - Section 73(4B)(a) of Finance Act, 1994 - Appellant manufactured food processing equipment and rendered erection and allied services. CENVAT credit of service tax paid on a lease premium for factory land was disallowed and recovered with interest and equal penalty by an order passed about eleven months after the SCN. The Appellant contended that the order is void for breach of the six month period - Whether the order is void for having been passed beyond six months from the date of the notice - HELD - Section 73(4B)(a) requires the officer to determine the tax withi... [Read more]

Central Excise - Order passed beyond six months from SCN - Section 73(4B)(a) of Finance Act, 1994 - Appellant manufactured food processing equipment and rendered erection and allied services. CENVAT credit of service tax paid on a lease premium for factory land was disallowed and recovered with interest and equal penalty by an order passed about eleven months after the SCN. The Appellant contended that the order is void for breach of the six month period - Whether the order is void for having been passed beyond six months from the date of the notice - HELD - Section 73(4B)(a) requires the officer to determine the tax within six months from the date of notice where it is possible to do so. The qualifying words make the time limit elastic, but proceedings must be concluded within a reasonable time. Delay beyond the period does not by itself vitiate the order. Whether the delay was reasonable is a question of fact, and the reasons for delay raised for the first time before the Tribunal must be called for unless the timeline narrated in the order satisfies the Tribunal. The contention that the order is void merely because it was passed after six months fails in law. The reasonableness of the delay need not be decided as the appeal succeeds on merits - The objection is rejected - CENVAT Credit - Service tax on lease premium for factory land - Rule 2(l) of CENVAT Credit Rules, 2004 - Appellant took a long term lease of land for setting up a factory and took credit of service tax paid on the premium under renting of immovable property service. The Department alleged that the words setting up were omitted from Rule 2(l) with effect from 01.04.2011, that the land had no connection with the existing factory or office, and that no manufacture had begun - Whether the service tax paid on the lease premium for the factory land is on an input service within Rule 2(l) as it stood after 01.04.2011 - HELD - The main part of Rule 2(l) covers any service used by a manufacturer, directly or indirectly, in or in relation to the manufacture of final products. The amendment narrowed only the inclusive part and added no exclusion for setting up. Renting of immovable property is not among the excluded services, and a lease of land is not construction. Without land no factory can be set up nor can any manufacture take place, so a lease of the very land on which the factory stands is used in or in relation to manufacture. That the land was vacant when leased and manufacture began later is inherent in every new factory. Rule 4(7) allows credit on receipt of the invoice and makes no reference to commencement of production. Registration of the factory is not a condition for credit - The service tax on the lease premium was paid on an input service of the Appellant as a manufacturer and the ground in the SCN fails - CENVAT Credit - Credit taken in the service tax registration instead of the factory - Rules 3 and 14 of CENVAT Credit Rules, 2004 - Appellant took the credit in the books of its service tax registration at the office, as the invoice was addressed to that office and the factory had no registration at the time. The credit was later reversed there and taken in the return of the new factory. The Department sought recovery on the ground that the land had no nexus with the services rendered from the office - Whether the credit is recoverable because it was taken in the service tax registration and not in the account of the factory - HELD - The lease was not used for providing the output services rendered from the office, so the first limb of Rule 2(l) is not satisfied. Entitlement, however, flows from the definition to the person. Rule 3(1) allows credit to a manufacturer or a provider of output service, and the Appellant is one legal person that is both. A registration identifies the registrant and the place where the credit is accounted for, and is not the source of the entitlement. The proper course was to pass the credit to the factory through an input service distributor, but the departure was procedural. Want of input service distributor registration is a curable irregularity which does not defeat an admissible credit. The returns show that the credit remained untouched and was never used for payment of excise duty. A credit admissible to the person who took it is not taken wrongly under Rule 14 merely because it was first entered in the account of another registration of the same person - The demand is unsustainable. The fresh availment of the credit at the factory is not the subject of the SCN and is left open, and the Appellant shall not take the reversed credit again in the earlier registration or seek its refund - CENVAT Credit - Interest and penalty - Rules 14 and 15(3) of CENVAT Credit Rules, 2004 read with Section 78 of Finance Act, 1994 - Interest and equal penalty were imposed on the allegation that the credit was utilised in the manufacturing registration and that the Appellant's submission that it was only taken and not utilised was a misstatement. The SCN was issued under Section 73(1) alone, and the credit had been shown in a revised return - Whether interest and penalty are sustainable - HELD - Rule 14, as it stood when the credit was taken and the SCN was issued, provides for interest only where credit is taken and utilised wrongly. No interest arises on a credit that was admissible and was not utilised. Penalty falls with the demand and also fails independently. Penalty under Section 78 and Rule 15(3) requires fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade payment of tax. The Appellant did not conceal the credit and declared it in the statutory return under a description naming the lease land. Suppression means a deliberate withholding of information with intent to evade, and the burden lies on the Revenue. Taking a legal opinion before claiming credit is evidence of bona fides. The finding that the credit was utilised was contrary to the returns, and a ground of penalty not proposed in the SCN was added in the order - The demand, interest and penalty are set aside and the appeal is allowed. [Read less]

Service Tax - Foreign bank charges deducted from export proceeds - Reverse charge on Banking and Other Financial Services - Appellants were exporters of knitted garments who received export proceeds through their Indian banks. The foreign banks deducted their charges while transmitting the proceeds, and only the net amount was credited to the Appellants. The Department treated the deducted charges as consideration for Banking and Other Financial Services received by the Appellants and confirmed Service Tax demands under reverse charge with interest and penalties, which the FAA upheld - Whether the charges deducted by forei... [Read more]

Service Tax - Foreign bank charges deducted from export proceeds - Reverse charge on Banking and Other Financial Services - Appellants were exporters of knitted garments who received export proceeds through their Indian banks. The foreign banks deducted their charges while transmitting the proceeds, and only the net amount was credited to the Appellants. The Department treated the deducted charges as consideration for Banking and Other Financial Services received by the Appellants and confirmed Service Tax demands under reverse charge with interest and penalties, which the FAA upheld - Whether the charges deducted by foreign banks from export proceeds constitute consideration for taxable Banking and Other Financial Services received by the Appellants so as to attract Service Tax under reverse charge - HELD - The mere deduction of charges from export proceeds cannot by itself establish that the exporter was the recipient of banking service. The Appellants had neither engaged the foreign banks nor issued any instructions, entered into any agreement or received any invoice from them. The Department produced no material to establish a direct contractual or service relationship between them. The foreign banks acted in the course of the banking arrangement of the overseas buyers and transmitted the proceeds to the Indian banks. Charges deducted in such bank to bank transactions cannot be taxed in the hands of the exporters in the absence of a service provider and service recipient relationship. Reverse charge liability arises only when the Department establishes that the taxable service was rendered to the person sought to be taxed. Once the demand is unsustainable, the consequential interest and penalties also cannot survive. The contentions on limitation need not be examined - The demands of Service Tax, interest and penalties are set aside and the appeals are allowed [Read less]

GST - Confirmation of demand based on provisions not in statute during relevant period – Violation of Section 75(7) of CGST Act, 2017 - The SCN proposed to deny Input Tax Credit availed on invoices of suppliers who had not filed their GSTR-3B returns, alleging violation of Section 16(2)(aa). That provision came into effect only from 01.01.2022, whereas the demand pertained to financial year 2018-19 - The adjudicating authority confirmed the demand for contravention of Section 16(2)(c) on the ground that the underlying tax was not paid by the supplier. The FAA upheld it, holding that a wrong reference to the statutory pro... [Read more]

GST - Confirmation of demand based on provisions not in statute during relevant period – Violation of Section 75(7) of CGST Act, 2017 - The SCN proposed to deny Input Tax Credit availed on invoices of suppliers who had not filed their GSTR-3B returns, alleging violation of Section 16(2)(aa). That provision came into effect only from 01.01.2022, whereas the demand pertained to financial year 2018-19 - The adjudicating authority confirmed the demand for contravention of Section 16(2)(c) on the ground that the underlying tax was not paid by the supplier. The FAA upheld it, holding that a wrong reference to the statutory provision does not invalidate the demand - Whether the demand can be confirmed for contravention of Section 16(2)(c) when the SCN was issued only for contravention of Section 16(2)(aa) - HELD - The SCN was issued only on the ground of non-compliance with Section 16(2)(aa), and the Appellant was nowhere put to notice regarding any infraction of Section 16(2)(c). The adjudication order did not deal with the contention on the effective date of Section 16(2)(aa). It converted the charge of availing credit on invoices of suppliers who had not filed returns into a charge of non-payment of tax by the suppliers. This finding required detailed verification of the supplier's records, and those facts were never put to the Appellant - There was no indication that the new charge was even broached at the personal hearing, and the Appellant was caught unawares on a charge which was not put to it at any stage. The present case is one of wrong reference to a provision, and not of omission to mention a sub-clause in an otherwise clear notice - An SCN which extracts the provisions without showing how a particular provision was contravened cannot be the basis of an order finding contravention of a different provision. The grounds of the SCN and the grounds on which the demand was confirmed are far different from one another - Section 75(7) provides that no demand shall be confirmed on grounds other than the grounds specified in the notice. An SCN delineates the scope of the proceedings, and any ground which does not figure in it cannot be permitted to adversely affect the noticee. The proceedings are vitiated by a breach of Section 75(7) - Once the demand of tax is not sustainable, the interest and penalty associated with it are also not sustainable - The portions of the order in appeal confirming the demand, interest and penalty are set aside. The appeal is allowed [Read less]

GST - Maintainability of departmental appeal before the Tribunal - Monetary limit in the CBIC Circular on litigation policy and the exclusion where the Board has taken a view to contest - Department filed an appeal before the Tribunal involving an amount below the monetary limit in the Circular N0. 207/1/2024-GST – Dept contended that the case falls under the exclusion in paragraph 4(vi) of the Circular, as the Department had filed a petition before the Supreme Court against a decision of the High Court on an identical issue in a different case - Whether the departmental appeal falls within the exclusion category of the ... [Read more]

GST - Maintainability of departmental appeal before the Tribunal - Monetary limit in the CBIC Circular on litigation policy and the exclusion where the Board has taken a view to contest - Department filed an appeal before the Tribunal involving an amount below the monetary limit in the Circular N0. 207/1/2024-GST – Dept contended that the case falls under the exclusion in paragraph 4(vi) of the Circular, as the Department had filed a petition before the Supreme Court against a decision of the High Court on an identical issue in a different case - Whether the departmental appeal falls within the exclusion category of the Circular so as to be maintainable despite the monetary limit - HELD - Merely filing an appeal or petition before the Supreme Court in a different case cannot be construed as a uniform opinion of the Board. The Board needs to issue a specific Circular guiding the field formation about its opinion on an issue on merits and to contest the matter before the higher forums. There is also no record of any stay granted by the Supreme Court from the operation of the decision in that case - The present case therefore does not fall under the exclusion category provided in the Circular. The departmental appeal is dismissed on the monetary limit [Read less]

Central Excise - Denial of Cenvat Credit - Section 2(f) of Central Excise Act, 1944 - Appellant manufactured plastic films and printed plastic pouches and availed Cenvat credit of duty paid on raw material procured from three suppliers. The Department held that the suppliers' processes did not amount to manufacture, so no duty was payable on their final product and the Appellant was ineligible to avail Cenvat credit. The Commissioner denied the credit, ordered its recovery with interest and imposed equivalent penalty - Whether the processes undertaken by the suppliers in converting laminated or metallised sheets into packa... [Read more]

Central Excise - Denial of Cenvat Credit - Section 2(f) of Central Excise Act, 1944 - Appellant manufactured plastic films and printed plastic pouches and availed Cenvat credit of duty paid on raw material procured from three suppliers. The Department held that the suppliers' processes did not amount to manufacture, so no duty was payable on their final product and the Appellant was ineligible to avail Cenvat credit. The Commissioner denied the credit, ordered its recovery with interest and imposed equivalent penalty - Whether the processes undertaken by the suppliers in converting laminated or metallised sheets into packaging material amount to manufacture, and whether the Cenvat credit availed by the Appellant was liable to be denied - HELD - The issue stands settled in favour of the Appellant by the Tribunal's earlier Final Order in the suppliers' own case, which held that their processes amount to manufacture. The processes involved are not that of mere lamination. Two or more layers are glued together and left in a hot room to bond better, one layer bears the details of the product and the manufacturer, and the laminated sheet becomes a roll of packaging material which is slit and cut to desired sizes. A definite, distinct new product emerges, with a distinct name, character and use in comparison with the raw material. It ceases to be a laminate for general use and can be used only by the particular customer who ordered it. In the worst scenario, the activity is a process incidental or ancillary to the completion of a manufactured product, which is included in manufacture under Section 2(f) of the Central Excise Act, 1944. The Department had also taken opposite stands on the same issue in different cases, and had accepted an order of the FAA deciding the issue in favour of the Appellant for the same period. Since the processes amount to manufacture, the suppliers correctly paid duty on their final product and the Cenvat credit was correctly availed - The impugned order is set aside and the appeal is allowed [Read less]

Customs - Undervaluation of imported second hand knitting machines - Violation of principles of natural justice - Appellant imported second hand knitting machines. On intelligence of misdeclaration and undervaluation, DRI searched the premises and issued SCN proposing rejection of declared value, demand of differential duty with interest, confiscation and penalties. The Adjudicating Authority rejected the declared value, confirmed the demand, confiscated the machines with option of redemption fine and imposed penalties. The FAA upheld the order. The Appellant contended that it was denied inspection of the original import f... [Read more]

Customs - Undervaluation of imported second hand knitting machines - Violation of principles of natural justice - Appellant imported second hand knitting machines. On intelligence of misdeclaration and undervaluation, DRI searched the premises and issued SCN proposing rejection of declared value, demand of differential duty with interest, confiscation and penalties. The Adjudicating Authority rejected the declared value, confirmed the demand, confiscated the machines with option of redemption fine and imposed penalties. The FAA upheld the order. The Appellant contended that it was denied inspection of the original import file and cross-examination of the Chartered Engineer and other persons whose opinion was relied upon, and that the Chartered Engineer certificate supporting the declared value was not considered - Whether the order is vitiated for violation of principles of natural justice on account of denial of copy of the original import file and of cross-examination of the department's witnesses - HELD - Where a request for cross-examination is rejected without giving proper reasoning, the order is treated as passed in violation of the principles of natural justice. The Adjudicating Authority did not deal with the request on merits. It brushed aside the request for the import file by stating that original documents are never supplied by the importer to the department. It rejected cross-examination on the footing that the statements of the Appellant's proprietor admitted the position and that cross-examination would only delay adjudication. The FAA also turned down the request without any discussion. The Appellant was thereby deprived of an effective opportunity to defend the case. Without going into the merits, the impugned order cannot be sustained - The order is set aside, the Adjudicating Authority is directed to provide the copy of the original import file and afford the opportunity to cross-examine the Chartered Engineer, and to decide the case afresh keeping in mind the CBIC Circulars on valuation of second hand machinery - The appeal is allowed by way of remand [Read less]

Service Tax - Demand on third party data - Absence of investigation - Appellant was engaged in weaving of unfinished carpets and durries on job work basis and was not registered with the Service Tax Department. On the basis of third party data supplied by the Income Tax Department, SCN was issued to demand Service Tax on the gross receipts declared in the ITR. The demand was confirmed with interest and penalties, and the FAA upheld the order - Whether the demand can be sustained when the SCN is issued solely on third party data without any investigation or verification - HELD - The Department had not carried out any invest... [Read more]

Service Tax - Demand on third party data - Absence of investigation - Appellant was engaged in weaving of unfinished carpets and durries on job work basis and was not registered with the Service Tax Department. On the basis of third party data supplied by the Income Tax Department, SCN was issued to demand Service Tax on the gross receipts declared in the ITR. The demand was confirmed with interest and penalties, and the FAA upheld the order - Whether the demand can be sustained when the SCN is issued solely on third party data without any investigation or verification - HELD - The Department had not carried out any investigation to verify the correctness of the data provided by the Income Tax Department. It was necessary to check the veracity of the data, and only if found otherwise, the SCN should have been issued. The Department had the power to summon the Appellant and to visit his premises to collect information. Instead, it presumed that the third party data was correct and that no further verification was needed. The SCN was thus based purely on presumption and assumption, and the Adjudicating Authority confirmed the demand on the same basis. The demand is not sustainable - The impugned order is set aside and the appeal is allowed - Extended period of limitation - Proviso to Section 73(1) of Finance Act, 1994 - SCN invoking the longer period of limitation was issued on the basis of figures picked up from the ITR, Balance Sheet and Profit and Loss Account maintained by the Appellant - Whether the extended period of limitation can be invoked when the income is reflected in these documents - HELD - The ITR, Balance Sheet and Profit and Loss Account are public documents. When the income stands reflected in them, it cannot be said that there was any suppression or misstatement on the part of the assessee so as to invoke the longer period of limitation. The SCN itself shows that every detail was maintained by the Appellant in the usual course of business. The ingredients of the proviso to Section 73(1) of the Finance Act, 1994 are therefore not present, and the demand is barred by limitation - The impugned order is set aside and the appeal is allowed. [Read less]

GST - Rejection of first appeal as time barred - Mode of payment of pre-deposit under Notification No. 53/2023-Central Tax dated 02.11.2023 - Appellant filed appeal within the extended window allowed by the Notification, with a pre-deposit of 12.5% of the tax in dispute paid wholly through the Electronic Credit Ledger, though at least 20% of it was to be paid through the Electronic Cash Ledger - Appellate Authority rejected the appeal as time barred and held that the delay could not be condoned whereas the Appellant contended that the defect in the mode of payment was curable - Whether a first appeal filed within limitatio... [Read more]

GST - Rejection of first appeal as time barred - Mode of payment of pre-deposit under Notification No. 53/2023-Central Tax dated 02.11.2023 - Appellant filed appeal within the extended window allowed by the Notification, with a pre-deposit of 12.5% of the tax in dispute paid wholly through the Electronic Credit Ledger, though at least 20% of it was to be paid through the Electronic Cash Ledger - Appellate Authority rejected the appeal as time barred and held that the delay could not be condoned whereas the Appellant contended that the defect in the mode of payment was curable - Whether a first appeal filed within limitation under the notification becomes time barred because 20% of the 12.5% was paid through the Electronic Credit Ledger - HELD - The Notification is an amnesty for appeals beyond the period under Section 107, so delay is the very premise on which it operates - The decisions relied on by the Appellate Authority concerned appeals filed beyond Section 107 and did not deal with the notification or the mode of payment of pre-deposit. Paragraph 3 of the notification regulates the quantum and mode of pre-deposit and does not prescribe limitation, which is provided in paragraph 2. Nothing in the notification treats a shortfall or use of the wrong ledger as making the appeal out of time, and reading such a consequence into it would add words to it - A curable deficiency in a payment accompanying a proceeding filed in time can be made good later. The condition is one of deposit and not of limitation. The payment of the cash component through the wrong ledger was a deviation in the mode of payment, not a defect of limitation - The Appellate Authority ought to have specified the deficiency and allowed an opportunity to make it good - The appeal was filed within the timeline of the notification and the rejection of the first appeal is set aside - Requirement of further payment of the cash component of the pre-deposit under the special procedure Notification No. 53/2023-Central Tax - Whether the Appellant is now required to pay 20% of the 12.5% through the Electronic Cash Ledger to avail the benefit of the notification - HELD - The notification fixes the deposit at 12.5% of the tax in dispute, which was paid in full within the window. The amount debited to the Electronic Credit Ledger is not a mere book entry, as Section 49(4) permits tax payable as a result of proceedings to be paid from that ledger, which is a valid mode of pre-deposit under Section 107(6). Neither the Act nor the Rules prescribe payment of pre-deposit only through the Electronic Cash Ledger, and the condition arises only from the notification - A further cash deposit would raise the total pre-deposit beyond what the notification prescribes. Strict construction requires conditions to be read as written and forbids adding to them. No prejudice was caused to the Revenue, as it had also received an amount in cash at the stage of the second appeal, so the objective of the cash component stands secured - With reference to Notification No. 53/2023-Central Tax, the deposit of 12.5% of the tax in dispute made through the Electronic Credit Ledger before the first appeal was filed, was a sufficient compliance of the requirement of 12.5% of disputed tax towards the pre deposit for the first appeal to be entertained, and that no further payment in cash is required, at this stage – Ordered accordingly - ITC of IGST paid on imported goods - Denial on mismatch with GSTR-2A or Table 8A of GSTR-9 and on supplier's failure to file GSTR-1 - Section 16(2) of the CGST Act, 2017 - The ex parte order confirmed the demand on the ground that the supplier neither paid the tax nor disclosed the supply in GSTR-1 - Whether ITC of IGST paid on imported goods, supported by bills of entry and reflected in GSTR-2A, can be denied on a mismatch with GSTR-2A or Table 8A of GSTR-9 or on the supplier's failure to file GSTR-1 - HELD - Rule 36(1)(d) of the CGST Rules, 2017 recognises the bill of entry as a document on the basis of which credit may be availed - The goods having been cleared for home consumption, indicates the payment of IGST. The tax on which credit is claimed has thus reached the Government in full. Even on the Respondent’s own test in section 16(2)(c), that the tax charged has been actually paid to the Government, the condition is satisfied - The credit was reported correctly, so there was no mismatch even on the method of the Respondent. The denial of ITC of IGST paid on imports is unsustainable and set aside. The demand of tax, interest and penalty is quashed and the appeal is allowed - Reporting of import credit under the head All other ITC instead of Import of goods in GSTR-3B - Effect on entitlement to ITC - For two months the IGST paid on imports was reported in row 4(A)(5) of GSTR-3B instead of row 4(A)(1), which the Appellant stated was a clerical error - Whether reporting of credit in row 4(A)(5) instead of row 4(A)(1) of GSTR-3B disentitles the availment of such credit - HELD - Where import credit is reported under All other ITC instead of Import of goods, it will necessarily appear as credit in excess of Table 8A of GSTR-9, though it is supported by bills of entry. The Circulars contemplate that IGST on imports is to be reported in row 4(A)(1) and that differences for the year 2018-19 are to be verified on facts. Such misreporting affects only the classification of the credit in the return and does not convert an eligible import credit into excess or ineligible credit. 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GST - Refund of tax on deemed exports under Section 2(39) of the CGST Act, 2017 - Second proviso to Rule 89(1) of CGST Rules - Appellant, a supplier to an EoU, filed a refund claim of tax paid on deemed export supplies – Rejection of refund on the ground that both the recipient and the supplier filed the refund applications. The Appellant relied on the undertakings of the recipient that it had not availed input tax credit and would not claim refund. Whether the refund of tax on deemed export supplies can be rejected on the ground that both the recipient and the supplier claimed refund of the same supplies - HELD - The re... [Read more]

GST - Refund of tax on deemed exports under Section 2(39) of the CGST Act, 2017 - Second proviso to Rule 89(1) of CGST Rules - Appellant, a supplier to an EoU, filed a refund claim of tax paid on deemed export supplies – Rejection of refund on the ground that both the recipient and the supplier filed the refund applications. The Appellant relied on the undertakings of the recipient that it had not availed input tax credit and would not claim refund. Whether the refund of tax on deemed export supplies can be rejected on the ground that both the recipient and the supplier claimed refund of the same supplies - HELD - The refund on a deemed export supply may be claimed by the recipient or by the supplier, but not by both. The supplier may claim it only if the recipient does not avail input tax credit on such supplies and furnishes an undertaking that the supplier may claim the refund. The Appellant produced the monthly returns of the recipient in Form B with the undertaking for all five invoices, as well as the declaration that the recipient had not claimed any refund for these transactions. The Respondent did not dispute these documents, and both conditions of the second proviso to Rule 89(1) were met - The finding of the FAA did not identify any application by the recipient, its period or the invoices it covered, and did not deal with the undertakings and declaration. A finding that the recipient claimed refund of the same supplies, reached without any material, cannot be sustained - The refund is held admissible and the proper officer shall grant it together with interest, if any, admissible under Section 56 – The appeal is allowed - Time limit and clubbing of periods in refund claim of deemed exports - Section 54(1) of CGST Act - The refund application covered a period spanning three financial years but related only to five supplies made between December 2023 and May 2024. The proper officer rejected the application as beyond the period of two years - Whether the refund claim is barred by limitation and whether tax periods across financial years can be clubbed - HELD - The restriction on bunching of refund claims across financial years does not apply, as the same was withdrawn by the Circular No. 135/05/2020-GST dated 31.03.2020, and the Respondent also acknowledged that tax periods in different financial years may be clubbed. For deemed exports, the relevant date is the date on which the return relating to such supply is furnished, and it is thus fixed for each supply by reference to the return relating to it. No return relating to these supplies could have been furnished before the first day of January 2024, and the application was therefore within two years. The contention that limitation must be tested on the entire period entered in the application finds no support in Section 54 - The grounds of multiple financial years and limitation do not survive - Non-submission of Form A in refund claim of deemed exports - Circular dated 06.11.2017 - The proper officer rejected the refund on the ground that the Appellant had not submitted Form A of the recipient. Whether the refund can be rejected for non-submission of Form A - HELD - The Circular requires the recipient unit to give prior intimation in Form A, before the supplies are made, to the supplier, to the jurisdictional GST officer of the supplier and to its own jurisdictional GST officer. The Appellant produced the Form A of the recipient addressed to the jurisdictional officers of both the recipient and the supplier, and its e-mail forwarding the same to the Deputy Commissioner. Both precede the first supply. The Respondent did not dispute that the FAA had accepted that the pre-intimation was filed with the proper officer - The ground of non-submission of Form A does not survive, and the refund cannot be rejected on this ground. [Read less]

Customs - Refund of deposit - Limitation under Section 27(1A) of Customs Act, 1962 - Appellant imported goods which were alleged to be misdeclared and were warehoused in a public bonded warehouse. The case was decided in favour of the Appellant, but it was asked to file an ex-bond bill of entry for clearance and challenged this through a writ petition. The High Court directed the Appellant to deposit a sum in cash and furnish a bank guarantee for release of the goods. The writ petition was later dismissed for want of prosecution, with liberty to seek appropriate remedy for refund as permitted by law. The refund claim was r... [Read more]

Customs - Refund of deposit - Limitation under Section 27(1A) of Customs Act, 1962 - Appellant imported goods which were alleged to be misdeclared and were warehoused in a public bonded warehouse. The case was decided in favour of the Appellant, but it was asked to file an ex-bond bill of entry for clearance and challenged this through a writ petition. The High Court directed the Appellant to deposit a sum in cash and furnish a bank guarantee for release of the goods. The writ petition was later dismissed for want of prosecution, with liberty to seek appropriate remedy for refund as permitted by law. The refund claim was rejected under Section 27(1A), and the FAA treated the deposit as payment of customs duty and held the claim time-barred - Whether the refund of the amount deposited as per the direction of the High Court is barred by the time limit under Section 27(1A) - HELD - The deposits were made as directed by the High Court to secure release of the goods. There was no assessment by the proper officer when the payments were made, and customs duty is not paid in the form of a bank guarantee. The duty liability was never finally determined, and the finding of the FAA that it stood final was only an inference. The amount deposited cannot be considered as payment of customs duty and is only a deposit towards prospective customs duty liability, if any. The time limit under Section 27(1A) is therefore not applicable. The refund was rejected only for non fulfilment of the conditions of Section 27(1A) and not on merits. When the amount deposited is not duty, the Department cannot retain it, and the bar of limitation cannot be pressed into service - The rejection of the refund is not sustainable, the impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Remand for verification of fresh documentary evidence claiming exemption for road construction services under Sl. No. 13(a) of Notification No. 25/2012-ST, where demand was confirmed ex parte on the basis of Income Tax Department third-party data - Demand of Service Tax was confirmed on gross receipts reflected in CBDT data, with extended period invoked, interest and penalties imposed, as the Appellant neither furnished documents during investigation nor replied to the SCN nor appeared before the adjudicating authority. Before the Tribunal, the Appellant contended that its receipts pertained to construction a... [Read more]

Service Tax - Remand for verification of fresh documentary evidence claiming exemption for road construction services under Sl. No. 13(a) of Notification No. 25/2012-ST, where demand was confirmed ex parte on the basis of Income Tax Department third-party data - Demand of Service Tax was confirmed on gross receipts reflected in CBDT data, with extended period invoked, interest and penalties imposed, as the Appellant neither furnished documents during investigation nor replied to the SCN nor appeared before the adjudicating authority. Before the Tribunal, the Appellant contended that its receipts pertained to construction and repair of roads for Government departments and local authorities, and produced work orders, lists signed by the Governmental bodies, Form 26AS particulars and a reconciliation statement. The Respondent objected that these documents had not been produced before or verified by the adjudicating authority - Whether the matter should be remanded for verification of the documents produced for the first time before the Tribunal, to determine whether the receipts pertain to road construction works exempt under Sl. No. 13(a) - HELD - The adjudicating authority had no occasion to examine the documents now produced, as the Appellant furnished no material or defence before it. The Respondent's contention that the documents were not available for scrutiny at the original stage has substance. However, the mere circumstance that the documents were not produced earlier cannot by itself be a sufficient basis for rejecting them outright, as the Appellant relies on them to demonstrate the nature of the transactions forming the foundation of the demand. Whether the receipts pertain to exempt road construction works requires examination of the underlying contractual and contemporaneous documentary evidence. Verification is necessary to ascertain genuineness and to correlate individual receipts in the Income Tax and Form 26AS records with the work orders, contracting entities, nature of work and consideration received. No final opinion is expressed on the merits - The impugned order is set aside and the matter is remanded for fresh adjudication after due verification, with a reasonable opportunity of personal hearing, leaving all issues open - The appeal is disposed of by way of remand [Read less]

Service Tax - Exemption for construction of Pakka Ghat on river bank - Entry 12(d) of Notification No. 25/2012-ST - Appellant constructed a Pakka Ghat on the bank of a river for the Flood Work Division of the Irrigation Department and claimed exemption under Entry 12(d). The Commissioner denied the exemption holding that construction of a Pakka Ghat does not fall in the category of canal, dam or other irrigation work, and confirmed the demand - Whether the construction of Pakka Ghat at the bank of a river is exempt under Entry 12(d) of Notification No. 25/2012-ST - HELD - Entry 12(d) exempts services provided to the Govern... [Read more]

Service Tax - Exemption for construction of Pakka Ghat on river bank - Entry 12(d) of Notification No. 25/2012-ST - Appellant constructed a Pakka Ghat on the bank of a river for the Flood Work Division of the Irrigation Department and claimed exemption under Entry 12(d). The Commissioner denied the exemption holding that construction of a Pakka Ghat does not fall in the category of canal, dam or other irrigation work, and confirmed the demand - Whether the construction of Pakka Ghat at the bank of a river is exempt under Entry 12(d) of Notification No. 25/2012-ST - HELD - Entry 12(d) exempts services provided to the Government by way of construction, repair etc. of canal, dam or other irrigation work. A certificate from the Superintending Engineer of the Flood Work Division certified that the work was carried out at the river bank to avoid erosion of the dam. Construction of a Pakka Ghat at the bank of a river to avoid erosion of the dam is an activity in relation to construction or repair of a dam - The Appellant was eligible for exemption under Entry 12(d) and the demand is set aside - Construction of medical college as sub-contractor - Entry 12(a) of Notification No. 25/2012-ST and extended period - Appellant constructed a medical college as sub-contractor on back to back basis under the main contractor, believing the work to be exempt under Entry 12(a), and did not charge Service Tax. The main contractor had paid Service Tax on the same service. The Commissioner denied the exemption and confirmed the demand - Whether the Appellant is eligible for exemption under Entry 12(a), whether it is liable to pay Service Tax when the main contractor has already paid it, and whether the extended period could be invoked - HELD - The exemption under Entry 12(a) had been withdrawn with effect from 01.03.2015 and was not available to the Appellant. Although there were several decisions that Service Tax paid by the main contractor need not be paid by the sub-contractor, the issue has finally been decided against the Appellant by the Larger Bench, which held that in the absence of an exemption the sub-contractor is liable to pay Service Tax even if the main contractor has discharged the liability. In view of the conflicting decisions on the issue, the extended period of limitation could not have been invoked - The demand is set aside on the ground of limitation - Civil work for flood security and restriction of river diversion - Entry 12(d) of Notification No. 25/2012-ST - Appellant executed flood protection work for the Irrigation Drainage Division and claimed exemption under Entry 12(d). The Adjudicating Authority denied the exemption as the agreement was not submitted and the letter on record was of an earlier year, so that there was no co-relation with the amounts received in the later years - Whether the exemption under Entry 12(d) is available for civil work relating to flood security - HELD - The letter and the work schedule show that the Irrigation Department assigned the job of flood security, and the contract period was later extended by a subsequent letter. The payments received are therefore fully co-related with the contract. The services were admittedly provided to the Government in relation to flood security, and are covered under Entry 12(d), which exempts construction services relating to canal, dam and other irrigation work - The Appellant was eligible for exemption and the demand is set aside - Construction of concrete pathway and parking at river front - Entry 13(a) of Notification No. 25/2012-ST - Appellant constructed a concrete pathway and parking at the bank of a river and claimed exemption under Entry 13(a). The Commissioner denied the exemption holding that a pathway and parking cannot be considered a public road - Whether the construction of concrete pathway and parking is exempt under Entry 13(a) - HELD - A certificate of the Superintending Engineer of the Irrigation Department certified that the pathway is in the nature of a public road used by tourists and the general public. Construction of a concrete pathway is nothing but a public road, and Entry 13(a) grants exemption for construction or repair of a road for use by the general public - The Appellant was eligible for exemption and the demand is set aside - Interior decoration of office building of a development authority - Entry 12A(a) of Notification No. 25/2012-ST - Appellant carried out interior decoration of the office building of a development authority and claimed exemption under Entry 12A(a). The Commissioner denied the exemption since the work was not an original work - Whether the interior decoration of the office building is exempt under Entry 12A(a) - HELD - Entry 12A(a) exempts services provided to the Government, a local authority or a governmental authority by way of construction, erection, fitting out, repair, maintenance, renovation or alteration of a civil structure meant predominantly for use other than for commerce, industry or any other business or profession. There was no dispute that the development authority is a governmental authority. The activity of interior decoration is in the nature of repairing of a civil structure - The Appellant was exempted under Entry 12A(a) and the demand is set aside - Laying of cobble stone on road - Entry 13(a) of Notification No. 25/2012-ST - Appellant laid cobble stone on roads and claimed exemption under Entry 13(a). The Commissioner denied the exemption since the contract was unsigned and the ledger was in the name of the PWD Electric Division whereas the contract mentioned another circle - Whether the work is exempt under Entry 13(a) - HELD - The bond and work schedule were duly signed by the PWD officers. The contract involved shifting of electric poles, handled by the electric division, and laying of cobble stone on the road, and the amount was therefore received from the electric division and accounted for in that name. The entire work is related to construction or repair of a public road - The Appellant was eligible for exemption and the demand is set aside - Beautification of road in a residential scheme - Entry 13(a) of Notification No. 25/2012-ST - Appellant carried out upgradation and beautification of a road in a housing scheme developed by the Avas Vikas Parishad and claimed exemption under Entry 13(a). The Commissioner denied the exemption holding that the road is not meant for the general public - Whether the road is a road for use by the general public under Entry 13(a) - HELD - There was no basis for the Commissioner to opine that the road is not meant for the general public. The scheme is developed in a huge area with thousands of houses, and the map shows that the road is a part of it. These are not roads in a factory or residential complex which are taxable. The road cannot be considered a private road - Exemption under Entry 13(a) is allowable and the demand is set aside - Widening and strengthening of road as sub-contractor - Entry 13(a) of Notification No. 25/2012-ST - Appellant was sub-contracted part of the widening and strengthening of a road contract awarded by the PWD and claimed exemption under Entry 13(a). The Commissioner denied the exemption as the contract was unsigned and the ledger and voucher described the work differently - Whether the exemption under Entry 13(a) is available - HELD - The invoice, the ledger account and the certificate of the main contractor show that the amount was paid towards construction of a public road. The area mentioned in the voucher lies on the road mentioned in the contract, and there is no contradiction - The Appellant was eligible for exemption and the demand is set aside - Construction of approach road to godown as sub-contractor - Entry 13(a) of Notification No. 25/2012-ST - Appellant was sub-contracted on back to back basis the construction of approach roads to the godowns of a State Warehousing Corporation and claimed exemption under Entry 13(a). The Com [Read less]

GST - Power to conduct audit under Section 65 of the CGST Act, 2017 for a period after the date from which registration was subsequently cancelled with retrospective effect - Petitioner was registered in 2017 and applied for cancellation of registration on closure of business with effect from 31.12.2019, but the application remained pending. While it was pending, the Respondent issued notice in Form GST ADT-01 under Section 65 proposing audit for the period from 01.07.2017 to 31.03.2021 - The registration was later cancelled with effect from 31.12.2019 - Whether the subsequent retrospective cancellation of registration pre... [Read more]

GST - Power to conduct audit under Section 65 of the CGST Act, 2017 for a period after the date from which registration was subsequently cancelled with retrospective effect - Petitioner was registered in 2017 and applied for cancellation of registration on closure of business with effect from 31.12.2019, but the application remained pending. While it was pending, the Respondent issued notice in Form GST ADT-01 under Section 65 proposing audit for the period from 01.07.2017 to 31.03.2021 - The registration was later cancelled with effect from 31.12.2019 - Whether the subsequent retrospective cancellation of registration prevents the Respondent from proceeding with the audit notice, either altogether or for the period after the effective date of cancellation - HELD - An application for cancellation does not bring the registration to an end, as under Rule 21A the registration is deemed to be suspended pending completion of the proceedings, and the person continues to be described as a registered person. The expression registered person in Section 65 must be read in the context of Section 2(13), since an audit looks backwards and examines records maintained, returns furnished, credits availed and refunds claimed under a registration. It cannot be confined to a person whose registration continues to be effective when the examination takes place - A period covered by a registration which had been granted and was not cancelled when the audit was proposed is distinct from a period in which no registration existed, and cancellation determines the legal effectiveness of the registration but does not erase the historical fact that it was granted or the acts undertaken under it - Where registration had been granted and not yet cancelled during the period proposed for audit, that factual nexus satisfies Section 65 even if the registration is later cancelled retrospectively - The treatment of the returns as void and non-est does not place the underlying records beyond examination. The audit does not itself determine liability, and nothing permits the Respondent to treat the returns after the effective date of cancellation as valid or to assume that taxable supplies were made - The contention that retrospective cancellation renders the notice without jurisdiction, wholly or for the later portion of the period, is rejected - The Writ Petition is dismissed - Denial of discretionary relief in a writ petition for non-disclosure of a pending audit notice in the earlier writ petition under which cancellation of registration was obtained - The Petitioner had filed an earlier writ petition seeking directions for cancellation of registration with effect from 31.12.2019 without disclosing the audit notice, although it had replied to the notice a day before the order in the earlier petition and was aware of it. The Petitioner then relied on the directions obtained to seek quashing of the very notice. The Respondent contended that the Petitioner did not approach the Court with clean hands - Whether the Petitioner is entitled to discretionary relief - HELD - The Petitioner's general denial did not specifically state that the notice was disclosed, and the reliance on the delay of the Department in processing the application does not answer the allegation of non-disclosure. The pending audit was material to the relief sought in the earlier petition, and the delay of the Department did not absolve the Petitioner of its obligation to disclose the notice. Having failed to do so, the Petitioner cannot rely on the directions obtained in those proceedings to seek quashing of that very notice. [Read less]

GST - Imposition of penalty under a provision different from the one proposed in the SCN - Invocation of Section 74 along with Section 122(2)(a) - The SCN invoked Section 74(1) to propose recovery of transitional credit and proposed penalty under Section 122(2)(a). The Adjudicating Authority and the FAA imposed and confirmed a penalty under Section 74 read with Section 122(2)(b) - Appellant contended that the SCN was internally inconsistent and that the orders travelled beyond the proposals in the SCN - Whether the FAA was correct in imposing penalty under Section 122(2)(b) when the SCN proposed it under Section 122(2)(a) ... [Read more]

GST - Imposition of penalty under a provision different from the one proposed in the SCN - Invocation of Section 74 along with Section 122(2)(a) - The SCN invoked Section 74(1) to propose recovery of transitional credit and proposed penalty under Section 122(2)(a). The Adjudicating Authority and the FAA imposed and confirmed a penalty under Section 74 read with Section 122(2)(b) - Appellant contended that the SCN was internally inconsistent and that the orders travelled beyond the proposals in the SCN - Whether the FAA was correct in imposing penalty under Section 122(2)(b) when the SCN proposed it under Section 122(2)(a) - HELD - Section 122(2)(a) applies to cases other than fraud, wilful misstatement or suppression of facts, whereas Section 122(2)(b) and Section 74 apply to cases involving those ingredients, so the two cannot go together and the proposal in the SCN is itself self-contradictory. Both the Order-in-Original and the Order-in-Appeal travelled beyond the specific proposal in the SCN, which is contrary to Section 75(7) – Further, even in SCN, there is an inherent contradiction. While the SCN has invoked Sec.74(1), which is invoked when ingredients such as fraud, misstatement etc. are alleged, Sec 122(2)(a) is for situations which do not contain these ingredients. Thus, both Sec 74(1) and Sec 122(2)(a) do not go together. Hence, the proposal in SCN itself is self-contradictory and bad in law - The imposition of penalty under Section 74 read with Section 122(2)(b) cannot be sustained and set aside – The ground of appeal is allowed - Disallowance of transitional credit under the proviso to Section 140(1) of the CGST Act, 2017 for non-filing of one return under the existing law due to technical glitches in the departmental portal - The Appellant did not file the ER-1 return for April 2017 due to technical glitches in the ACES portal, although it had written to the Department, lodged tickets with the helpdesk and filed the returns for the subsequent months in which the closing balance was carried forward. The return was ultimately filed at the first available opportunity. The Department disallowed the credit under clause (ii) of the first proviso to Section 140(1) - Whether undisputed CENVAT credit can be disallowed solely for the failure to file ER-1 return before the appointed date due to technical glitches - HELD - The legislative intent behind clause (ii) is to deny transitional credit to negligent taxpayers who abandon their filing obligation for a continuous period of six months and not a diligent taxpayer who faced systemic blockages and informed the Department - The maxim that law does not compel a person to do what is impossible applies, and the technical glitch of the Government's own portal cannot be used to disallow vested transitional credit. When substantial compliance was done, though belatedly, at the first opportunity, insistence on an absolute and literal timeline is misdirected - The transitional credit is to be allowed - Invocation of Section 74 of the CGST Act, 2017 for wrong availment of transitional credit without foundational facts of fraud, wilful misstatement or suppression - The SCN invoked Section 74(1), and the FAA perceived an element of wilfulness merely because the Appellant availed the credit despite knowing that one return was not filed - Whether the Department was legally correct in invoking Section 74(1) - HELD - Section 74 requires fraud, wilful misstatement or suppression of facts to evade tax, and the SCN did not set out any foundational facts for the same. Mechanical use of these words without discussion indicates non-application of mind. Suppression cannot be alleged when the facts are within the knowledge of the Department - Section 74(1) can be invoked only where there is material evidence of fraud, wilful misstatement or suppression made part of the SCN. Wilfulness to take ineligible credit cannot be equated with failure to file a single return due to circumstances beyond control, and no mens rea can be attributed to the Appellant - The elements of Section 74 are not established and the order of the FAA is set aside. [Read less]

Central Excise - Clandestine removal of TMT rods/bars alleged on the basis of private records - Demand of duty and penalties on the Appellant company and its Managing Director - Appellant manufactured sponge iron, MS ingots and TMT rods, and the demand was confirmed on the basis of an Executive Diary, a made-up file and a duplicate book seized from the factory, along with statements of employees and the Managing Director, alleging that short accounted MS ingots were used to manufacture TMT rods that were cleared without payment of duty - Whether clandestine removal is established, and the demand and penalties sustainable, ... [Read more]

Central Excise - Clandestine removal of TMT rods/bars alleged on the basis of private records - Demand of duty and penalties on the Appellant company and its Managing Director - Appellant manufactured sponge iron, MS ingots and TMT rods, and the demand was confirmed on the basis of an Executive Diary, a made-up file and a duplicate book seized from the factory, along with statements of employees and the Managing Director, alleging that short accounted MS ingots were used to manufacture TMT rods that were cleared without payment of duty - Whether clandestine removal is established, and the demand and penalties sustainable, on the basis of private records and statements without corroborative evidence - HELD - The Executive Diary showed entries without customer name, date or invoice number, which the Revenue treated as clandestine removal, but there was no evidence on record regarding electricity consumption, transport details, dispatch details or the customers to whom the goods were sold. The short accountal related to MS ingots, which are not final products and were admittedly consumed captively, and the allegation that these were used to manufacture TMT rods was imaginary without corroborative evidence. Neither the Executive Diary nor the made-up file nor the statements of the employees and the Managing Director were corroborated with other evidence to prove clandestine removal. The burden to prove clandestine manufacture and removal lies heavily on the Revenue, and conjectures and surmises cannot be the basis of proof as positive evidence is required - The Revenue has not discharged the burden, and the impugned order is set aside along with the penalties imposed on the Appellant company and the Managing Director, and the appeals are allowed [Read less]

GST - Demand on mismatch between GSTR-1 and GSTR-3B - Section 73 of CGST Act - SCN proposed demand on the basis that the tax liability shown in GSTR-1 for the financial year was higher than the tax discharged through GSTR-3B - Appellant explained that B2B supplies were inadvertently reported as B2C supplies in the monthly GSTR-1 returns. As the portal gave no option to correct them, the Appellant reported the same supplies again as B2B supplies in GSTR-1 for the last month of the financial year - Whether the discrepancy arose because B2B supplies were inadvertently reported as B2C supplies and reported again in GSTR-1, cau... [Read more]

GST - Demand on mismatch between GSTR-1 and GSTR-3B - Section 73 of CGST Act - SCN proposed demand on the basis that the tax liability shown in GSTR-1 for the financial year was higher than the tax discharged through GSTR-3B - Appellant explained that B2B supplies were inadvertently reported as B2C supplies in the monthly GSTR-1 returns. As the portal gave no option to correct them, the Appellant reported the same supplies again as B2B supplies in GSTR-1 for the last month of the financial year - Whether the discrepancy arose because B2B supplies were inadvertently reported as B2C supplies and reported again in GSTR-1, causing duplication and inflation of turnover and tax liability - HELD - It is not in dispute that the tax on the supplies of the earlier months was discharged through GSTR-3B of the respective months. GSTR-3B for the last month declared only the liability of the supplies of that month, whereas GSTR-1 for that month reported the supplies of the preceding months again along with the supplies of that month. The turnover and tax liability reflected in GSTR-1 were therefore inflated by duplication - The statement furnished by the Appellant contained the names of the recipients and their GSTINs, and the tax invoices showed that the recipients were registered persons. The State Representative also acknowledged this position during the verification. No doubt remains that the supplies were B2B supplies erroneously reported as B2C supplies. The Appellant is directed to furnish GSTR-1 for the entire financial year, a tabulated statement of the supplies erroneously reported as B2C, the tax invoices and GSTR-3B for the last month - The issue is decided in favour of the Appellant and the appeal is allowed - Rectification of errors in return in a subsequent month of the same financial year - Section 39(9) of CGST Act - The authorities below held that the Appellant ought to have rectified the errors in the returns of the subsequent financial year - Whether the Appellant was legally permitted to rectify the errors relating to the nature of outward supplies reported in earlier returns through GSTR-1 of a later month of the same financial year - HELD - Section 39(9), as it then stood, prescribes only two conditions for rectification. First, the rectification should not be on account of any scrutiny, audit, inspection or enforcement activity by the tax authorities. Second, it should be carried out on or before the last date of filing the return for the month of September of the subsequent financial year. There is no stipulation that the rectification can be carried out only in the returns of the subsequent financial year - An error noticed during the same financial year may also be rectified in the returns of the succeeding months of that year. The rectification by the Appellant was not occasioned by any scrutiny, audit, inspection or enforcement activity and was made within the outer time limit. The authorities below adopted an erroneous interpretation of the provision - Certain errors in carrying out the rectification do not go to the root of the actual tax liability and are merely procedural errors arising out of a lack of proper understanding of the procedure. The case is revenue-neutral, as the tax on the actual outward supplies had already been discharged - The Revenue ought not to penalise a bona fide taxpayer and should adopt a sympathetic and pragmatic approach - The Order-in-Original and the Order-in-Appeal are set aside and the demand is quashed. The appeal is allowed [Read less]

GST - Reversal of ITC under Section 17(2) of the CGST Act, 2017 read with Rules 42 and 43 of the CGST Rules, 2017 where exempt supplies pertain to trading of goods procured at nil rate on which no ITC was availed - The Appellant, a cooperative society, traded in cattle feed which is exempt - Demand for reversal of ITC on common inputs based on the exempt turnover declared in GSTR-9 without reversal - Appellant contended that no input tax was paid or availed on the purchases and that no common credit existed for reversal - Whether reversal of ITC is required under Section 17(2) - HELD - ITC is required to be reversed under ... [Read more]

GST - Reversal of ITC under Section 17(2) of the CGST Act, 2017 read with Rules 42 and 43 of the CGST Rules, 2017 where exempt supplies pertain to trading of goods procured at nil rate on which no ITC was availed - The Appellant, a cooperative society, traded in cattle feed which is exempt - Demand for reversal of ITC on common inputs based on the exempt turnover declared in GSTR-9 without reversal - Appellant contended that no input tax was paid or availed on the purchases and that no common credit existed for reversal - Whether reversal of ITC is required under Section 17(2) - HELD - ITC is required to be reversed under Section 17(2) only if the goods or services on which credit is taken are used partly for taxable supplies and partly for exempt supplies. If no ITC is taken on the purchase of wholly exempt traded goods, reversal is not required unless some credit, such as on common input services, is taken and used partly for exempt supplies and partly for taxable supplies, and the reversal is required only to that extent. The matter requires verification of the documents relating to ITC by the original authority - The impugned order is quashed and the matter is remanded for fresh adjudication to verify the ITC availed and to calculate the amount to be reversed, if any, after taking additional evidence and affording a personal hearing – The appeal is disposed of - Demand of differential tax on the basis of reconciliation between GSTR-1 and GSTR-9 for the same financial year - Right to correct figures in the annual return under Section 44 of the CGST Act, 2017 - The Adjudicating Authority demanded the differential tax as the tax liability declared in GSTR-1 was higher than that in GSTR-9. The Appellant stated that the difference was due to clerical errors and that the tax paid in the annual return far exceeded the difference - Whether the demand on the basis of the difference between GSTR-1 and GSTR-9 is sustainable - HELD - GSTR-9 is an annual return under Section 44, and the taxpayer has the right to correct in it the figures declared in the monthly or quarterly returns. As the Appellant claimed that the difference is due to clerical errors and the matter is being remanded on the other issue, the Appellant is to be allowed the opportunity to explain the reasons for the difference to the original authority, which will consider the explanation and decide whether any tax is payable - The matter is remanded to the Adjudicating Authority for fresh adjudication. [Read less]

GST - Proceedings against a deceased proprietor, Requirement of notice to the legal heir under Section 93(1)(b) of the CGST Act, 2017 where the business is discontinued - Show cause proceedings on alleged excess ITC based on a mismatch between GSTR-3B and GSTR-2A – The proprietor had died, the business was discontinued and the registration was cancelled. The appeal was filed before the Tribunal by the legal heir - Whether the Respondent followed the procedure under Section 93(1)(b) by issuing notice to the legal heir for the estate of the deceased - HELD - On the death of the proprietor, the proprietorship comes to an en... [Read more]

GST - Proceedings against a deceased proprietor, Requirement of notice to the legal heir under Section 93(1)(b) of the CGST Act, 2017 where the business is discontinued - Show cause proceedings on alleged excess ITC based on a mismatch between GSTR-3B and GSTR-2A – The proprietor had died, the business was discontinued and the registration was cancelled. The appeal was filed before the Tribunal by the legal heir - Whether the Respondent followed the procedure under Section 93(1)(b) by issuing notice to the legal heir for the estate of the deceased - HELD - On the death of the proprietor, the proprietorship comes to an end. Section 93(1)(b) makes the legal representative liable only out of the estate of the deceased, to the extent the estate is capable of meeting the charge, where the business is discontinued. It authorises post-death proceedings only against the legal representative after notice and hearing, and does not authorise determination of liability against a dead person - No effort was made to find whether any estate existed, and no notice was issued to the legal heir even after more than three years from the date of death. Various High Courts have held that proceedings against a deceased person are non est and void, and the earlier decision of the Tribunal taking the same view applies - The entire proceedings against the deceased taxpayer are illegal, without jurisdiction and null and void - The order of the FAA is quashed and the entire proceedings are set aside - On merits of the case, the deceased appellant was eligible for ITC having filed all the certificates issued by the suppliers, who have certified that they have paid the GST on the invoices and only due to mistake in filing GST Return GSTR1 they have shown such invoices in B2C instead of B2B. It is not at all disputed that the suppliers have paid the tax and the appellant was always eligible for ITC, even during his lifetime - The impugned order is quashed and set aside. The appeal is allowed [Read less]

GST - Transitional credit under Section 140 of the CGST Act, 2017 - Credit claimed in TRAN-1 as balance carried forward from the last return under the existing law - Appellant claimed credit in TRAN-1 as a balance of VAT credit carried forward, while the return filed under the existing law for the last month showed the balance of tax at credit as nil - Whether credit claimed in TRAN-1 as a carried forward balance is admissible when the last return under the existing law showed no balance - HELD - The return for the last month under the existing law showed the balance of tax at credit as nil, so the Appellant had no credit ... [Read more]

GST - Transitional credit under Section 140 of the CGST Act, 2017 - Credit claimed in TRAN-1 as balance carried forward from the last return under the existing law - Appellant claimed credit in TRAN-1 as a balance of VAT credit carried forward, while the return filed under the existing law for the last month showed the balance of tax at credit as nil - Whether credit claimed in TRAN-1 as a carried forward balance is admissible when the last return under the existing law showed no balance - HELD - The return for the last month under the existing law showed the balance of tax at credit as nil, so the Appellant had no credit at hand as on the appointed date to claim in TRAN-1. The contention of the Respondent was therefore correct - The claim is rightly rejected and the appeal is dismissed to that extent - Transitional credit on VAT paid on capital goods purchased before the appointed date - Non-filing of the application for credit within thirty days under the existing law - Appellant purchased a truck chassis with engine before the appointed date for body building, and declared the purchase as eligible for credit in the return for the last month under the existing law. The credit claimed in TRAN-1 was rejected because it was not reflected in the relevant part of the return and the application in the prescribed form was not filed within thirty days - Whether the Appellant is eligible for transitional credit under Section 140 on the VAT paid on the truck purchased before the appointed date and put to use after it, though the credit was not reflected in the returns - HELD - The Appellant had declared the purchase in the return as a local purchase eligible for credit. The truck, being a goods vehicle, could be put to use only after the body building was completed, by which time the GST regime had been introduced and the only method prescribed for availing the credit was TRAN-1. No other condition is attached to TRAN-1 under Section 140 - The High Court in PK Joseph Vs Commercial Tax Officer has held that the thirty days run from the date on which the capital goods are put to commercial use and not from the date of purchase, so failure to obtain sanction before the appointed date cannot be equated with absence of substantive entitlement – Further, during the initial period of GST implementation there were many hurdles, and procedural infractions are to be viewed with a judicial eye. The Appellant was made a victim of procedure although it was eligible for credit under both regimes - The order of the FAA is quashed and set aside, and the appeal is allowed [Read less]

GST - Applicability of Section 76 of the CGST Act, 2017 to a registered person who collected tax under valid invoices but did not remit it to the Government – Respondent-assessee supplied taxable services to the Railways, collected GST under valid invoices, short-declared turnover in GSTR-3B and failed to file returns thereafter, thereby withholding the tax collected - Adjudicating Authority confirmed the tax, interest and penalty under Section 76. The FAA upheld the tax and interest but set aside the penalty on the premise that Section 76 applies only to collections made without authority of law - Whether Section 76 app... [Read more]

GST - Applicability of Section 76 of the CGST Act, 2017 to a registered person who collected tax under valid invoices but did not remit it to the Government – Respondent-assessee supplied taxable services to the Railways, collected GST under valid invoices, short-declared turnover in GSTR-3B and failed to file returns thereafter, thereby withholding the tax collected - Adjudicating Authority confirmed the tax, interest and penalty under Section 76. The FAA upheld the tax and interest but set aside the penalty on the premise that Section 76 applies only to collections made without authority of law - Whether Section 76 applies to a registered person who collected tax under valid invoices and withheld it - HELD - Section 76(1) mandates that every person who has collected any amount as representing the tax and has not paid it to the Government shall forthwith pay it, irrespective of whether the supplies in respect of which the amount was collected are taxable or not. The expression ‘any amount’ and ‘every person’ is of the widest amplitude and draws no distinction between registered and unregistered persons. The provision does not condition its operation on the collection being unauthorised, and a contrary view would create an anomalous immunity for registered defaulters - The foundational contention of the Respondent that Section 76 applies only to unauthorized collections by unregistered persons or amounts collected without legal authority, is fundamentally flawed - A person collecting tax holds it in a fiduciary capacity for the Government, and retaining it while filing suppressed or nil returns is a breach of that trust - The finding of the FAA that Section 76 excludes registered suppliers is unsustainable and the penalty under Section 76 is restored - The appeal by the Department is allowed [Read less]

GST - Initiation of proceedings under Section 130 of the CGST Act, 2017 for confiscation of goods found unaccounted on survey of business premises, as against proceedings under Sections 73 or 74 - Proper officer seized raw material and tobacco products found unaccounted in the books at the business premises of the Respondents and imposed penalty and fine in lieu of confiscation under Section 130(2). The FAA set aside the orders on the view that proceedings under Sections 73 or 74 should have been initiated - Department contended that the tax officer is empowered to inspect the records and to initiate proceedings under Sect... [Read more]

GST - Initiation of proceedings under Section 130 of the CGST Act, 2017 for confiscation of goods found unaccounted on survey of business premises, as against proceedings under Sections 73 or 74 - Proper officer seized raw material and tobacco products found unaccounted in the books at the business premises of the Respondents and imposed penalty and fine in lieu of confiscation under Section 130(2). The FAA set aside the orders on the view that proceedings under Sections 73 or 74 should have been initiated - Department contended that the tax officer is empowered to inspect the records and to initiate proceedings under Section 130 - Whether the FAA rightly set aside the penalty and fine imposed under Section 130(2) for goods found unaccounted - HELD - Section 35(1) requires registered persons to maintain true and correct accounts of goods, and Section 35(6) empowers the proper officer, where a person fails to keep account of goods, to determine the tax payable on such goods as if they had been supplied by that person under Section 73 or 74, which apply mutatis mutandis. The High Court has consistently held that where excess stock is found during survey, proceedings must be initiated under Section 73 or 74 and not under Section 130 read with Rule 120, and that proceedings under Section 130 are liable to be quashed. Where unaccounted goods are found at the time of survey, the proper officer is empowered only to initiate proceedings under Section 73 or 74 and is not authorised to initiate proceedings under Section 130 and levy penalty in lieu of confiscation - The FAA rightly set aside the orders - The appeals of the Department are dismissed [Read less]

GST - Excess ITC alleged on a mismatch between GSTR-3B and GSTR-2A for the year 2017-18 - Remand in terms of the CBIC Circular on the difference in ITC - On scrutiny of returns, an SCN was issued alleging that credit availed in GSTR-3B exceeded that reflected in GSTR-2A - The Appellant stated that it could not produce documentary evidence earlier but could now produce the supplier's returns and the portal comparison establishing payment of tax - HELD - The dispute pertaining to the year 2017-18 is squarely covered by the Circular No. 183/15/2022-GST, issued as an advisory to resolve the difference in ITC availed in GSTR-3B... [Read more]

GST - Excess ITC alleged on a mismatch between GSTR-3B and GSTR-2A for the year 2017-18 - Remand in terms of the CBIC Circular on the difference in ITC - On scrutiny of returns, an SCN was issued alleging that credit availed in GSTR-3B exceeded that reflected in GSTR-2A - The Appellant stated that it could not produce documentary evidence earlier but could now produce the supplier's returns and the portal comparison establishing payment of tax - HELD - The dispute pertaining to the year 2017-18 is squarely covered by the Circular No. 183/15/2022-GST, issued as an advisory to resolve the difference in ITC availed in GSTR-3B as compared to GSTR-2A for the years 2017-18 and 2018-19. The Circular applies to ongoing proceedings and also to cases where adjudication or appeal proceedings are still pending - The order of the FAA is set aside and the appeal is allowed by way of remand, with a direction to consider the matter afresh [Read less]

GST - Penal jurisdiction of the transit State - Invocation of Section 129 of the CGST Act, 2017 - The Appellant, registered in two States, supplied goods to a recipient in a third State, and the vehicle was intercepted in the transit State. The goods were moving under tax invoices and e-way bills with no discrepancy in description or quantity - Whether the tax authorities of a transit State have penal jurisdiction under Section 129 in a transaction originating in another State and destined for a third State, when no tax liability or tax evasion arises within the transit State - HELD - It was not in dispute that the transac... [Read more]

GST - Penal jurisdiction of the transit State - Invocation of Section 129 of the CGST Act, 2017 - The Appellant, registered in two States, supplied goods to a recipient in a third State, and the vehicle was intercepted in the transit State. The goods were moving under tax invoices and e-way bills with no discrepancy in description or quantity - Whether the tax authorities of a transit State have penal jurisdiction under Section 129 in a transaction originating in another State and destined for a third State, when no tax liability or tax evasion arises within the transit State - HELD - It was not in dispute that the transaction originated outside the transit State and was destined outside it. The transit State was a transit State simpliciter, where no tax event was about to happen - A decision of the Allahabad High Court in M/s Maruti enterprises holds that a transit State has only a limited power of inspection and verification of goods and cannot exercise penal jurisdiction under Section 129. No tax incidence under CGST, SGST or IGST accrues to or is payable in the transit State on an interstate consignment. Verification of goods in transit and imposition of tax or penalty are two distinct powers - If the transit State officer notices a document deficiency or anomaly, the officer may point it out and intimate the jurisdictional authorities of the origin or destination State. Where goods are merely passing through a state with no tax implication arising therein, authorities of such State cannot invoke powers conferred on them by virtue of Section 129 - The question is answered against the department. The appeal is allowed - Timeline mismatch in inter-unit stock transfer invoice - Contravention of Section 129 - The goods were moving under valid tax invoices and e-way bills issued for the supply to the recipient. The invoice for the inter-State stock transfer between the two registrations of the Appellant was issued a day after the dispatch of goods - Whether a minor timeline mismatch in inter-unit stock transfer invoices amounts to a contravention of Section 129 justifying penalty - HELD - The date difference between the outward dispatch documents and the internal stock transfer invoice is a revenue neutral inter-branch accounting sequence mismatch. Section 129 is intended to tackle deliberate tax evasion during transit, that is, untaxed or unaccounted goods and fake bills. It is not meant for technical invoice dating irregularities between two distinct registrations of the same business entity - The order of the FAA and the order in original are set aside, the penalty is quashed. [Read less]

GST - Maintainability of the departmental appeal before the Tribunal, Imposition of penalty under Section 129(3) for non-updation of Part-B of the e-way bill - Monetary limit prescribed in the Circular of the Commissioner - The Respondent contended that the amount in dispute was below the monetary limit prescribed in the circular for filing an appeal before the Tribunal, and that the departmental appeal against the order of the FAA setting aside the penalty under Section 129(3) was therefore not maintainable - Whether the departmental appeal is barred by the monetary limit in the Departmental Circular - HELD - The Circular... [Read more]

GST - Maintainability of the departmental appeal before the Tribunal, Imposition of penalty under Section 129(3) for non-updation of Part-B of the e-way bill - Monetary limit prescribed in the Circular of the Commissioner - The Respondent contended that the amount in dispute was below the monetary limit prescribed in the circular for filing an appeal before the Tribunal, and that the departmental appeal against the order of the FAA setting aside the penalty under Section 129(3) was therefore not maintainable - Whether the departmental appeal is barred by the monetary limit in the Departmental Circular - HELD - The Circular dated 05.07.2024 itself lists exclusions in which the decision to file an appeal is to be taken on merits irrespective of the monetary limit. One such exclusion permits an appeal in any case where, in the opinion of the Commissioner, it is necessary to contest in the interest of justice or revenue. Where the appeal is filed on the basis of such opinion, the opinion of the Commissioner cannot be challenged and the Commissioner is not required to state the grounds or reasons for it - The objection to the maintainability of the appeal is not sustainable and is rejected - Imposition of penalty under Section 129(3) for non-updation of Part-B of the e-way bill - Requirement of intention to evade tax - The vehicle and goods were detained under Section 129(1) and penalty was imposed under Section 129(3) as Part-B of the e-way bill was not updated - The FAA set aside the penalty; Department appeal, contending that furnishing of Part-B is a mandatory and substantive requirement under Rule 138 - Whether penalty under Section 129(3) can be imposed merely on technical errors, or whether intention to evade tax is a sine qua non for invoking Section 129 - HELD - The penalty was imposed solely for violation of the provisions, with no finding of intention to evade tax in the order. The Department had not taken a stand in the grounds of appeal that there was any underlying intention to evade tax. The High Court has repeatedly held that mens rea or intention to evade tax is an essential requirement for imposing penalty under Section 129, particularly where the violation is technical and the transaction is genuine - The transaction was between two bona fide registered traders, and the e-invoice was generated on the portal before the movement of goods, which made all transaction information available and auto-populated the return. No intention to evade tax is therefore established - The order of the FAA quashing the penalty is affirmed and the departmental appeal is dismissed. [Read less]

GST - Penalty for transport without e-way bill - Section 129 of CGST Act - Appellant received rubber latex from a supplier who was an agriculturist under a delivery challan prepared by the Appellant on behalf of the supplier. The delivery challan wrongly carried the GSTIN of another dealer. The vehicle was intercepted for non-possession of e-way bill, the goods were detained, penalty was imposed and paid - Whether transport of rubber latex from the premises of an agriculturist under a delivery challan was exempt from the requirement of e-way bill and whether the penalty is sustainable - HELD - The Notification No. 3/2018-S... [Read more]

GST - Penalty for transport without e-way bill - Section 129 of CGST Act - Appellant received rubber latex from a supplier who was an agriculturist under a delivery challan prepared by the Appellant on behalf of the supplier. The delivery challan wrongly carried the GSTIN of another dealer. The vehicle was intercepted for non-possession of e-way bill, the goods were detained, penalty was imposed and paid - Whether transport of rubber latex from the premises of an agriculturist under a delivery challan was exempt from the requirement of e-way bill and whether the penalty is sustainable - HELD - The Notification No. 3/2018-State Tax dated 14-5-2018 exempts from the requirement of e-way bill the movement of rubber latex within the State from the premises of the agriculturist to the registered business place of the taxable person, irrespective of value, if the person causing the movement is in possession of a delivery challan prescribed under Rule 55. The supplier filed an affidavit that he is an agriculturist and the goods were supplied from his rubber estate to the Appellant's premises. The transporter was carrying a proper delivery challan, and therefore the conditions of the Notification were satisfied - The mention of the GSTIN of another person appears to be a genuine mistake, as there is no evidence to show that the Appellant, the supplier or the transporter was in any way related to such GSTIN holder. Such mistakes are condonable. There is no reason to penalise the Appellant for a clerical error when all other details in the delivery challan are not disputed - The detention and the penalty are unsustainable, the penalty is set aside and the appeal is allowed [Read less]

GST - Penalty under Section 129(3) for transportation of goods on an expired e-way bill - Rule 138 of the CGST Rules, 2017 - The vehicle carrying the goods was intercepted and the e-way bill was found to have expired, although the invoice and consignment note were in order and the quantity matched. The goods were detained and penalty was imposed under Section 129(3) - Whether expiry of the e-way bill in transit amounts to a violation of Section 129(1) read with Rule 138 - HELD - The repair slips relied on for the breakdown were produced only before the adjudicating officer and not at the time of interception. The driver al... [Read more]

GST - Penalty under Section 129(3) for transportation of goods on an expired e-way bill - Rule 138 of the CGST Rules, 2017 - The vehicle carrying the goods was intercepted and the e-way bill was found to have expired, although the invoice and consignment note were in order and the quantity matched. The goods were detained and penalty was imposed under Section 129(3) - Whether expiry of the e-way bill in transit amounts to a violation of Section 129(1) read with Rule 138 - HELD - The repair slips relied on for the breakdown were produced only before the adjudicating officer and not at the time of interception. The driver also did not narrate the breakdown at interception, and no evidence of movement of the vehicle during transit was shown, so the plea of breakdown is not acceptable. The decisions relied on by the Appellant concerned a technical lapse supported by evidence of breakdown, or Part-B left blank inadvertently, whereas Part-B here carried an entirely different vehicle number - Movement of goods with an incomplete e-way bill raises a rebuttable presumption of intention to evade tax, and the onus shifts to the consignor to rebut it. Intention to evade tax is required, but it may be gathered from the facts and surrounding circumstances of the case. Goods transported on an expired e-way bill are tantamount to goods transported without an e-way bill, which is a violation of Section 129(1) read with Rule 138 and attracts penalty under Section 129(3) - The appeal is dismissed [Read less]

Central Excise - Clubbing of clearances of separately constituted units for SSI exemption under Notification No. 8/2003-CE - Appellant, a proprietorship manufacturing HDPE pipes and hoses, claimed SSI exemption, and the Department alleged that three other concerns of family members were dummy units and demanded duty on the combined clearances - Whether the clearances of the other concerns are liable to be clubbed with those of the Appellant - HELD - The concerns had different legal forms and ownership compositions, and family relationship or common ownership by themselves do not justify clubbing. Common layout and access, ... [Read more]

Central Excise - Clubbing of clearances of separately constituted units for SSI exemption under Notification No. 8/2003-CE - Appellant, a proprietorship manufacturing HDPE pipes and hoses, claimed SSI exemption, and the Department alleged that three other concerns of family members were dummy units and demanded duty on the combined clearances - Whether the clearances of the other concerns are liable to be clubbed with those of the Appellant - HELD - The concerns had different legal forms and ownership compositions, and family relationship or common ownership by themselves do not justify clubbing. Common layout and access, sharing of computers, accounting facilities and office staff, common marketing through dealers, reciprocal use of available vehicle capacity and the common hoarding do not by themselves establish that the units lacked independent existence. The invoices showed distinct brand names and logos, and no connection in the course of trade was established with the Appellant's brand. Trial balance entries do not disclose the nature of the transactions, and the Department did not establish by payment records that one concern discharged the electricity liability of another. Though financial flow-back is not an indispensable condition, the evidence as a whole is insufficient to establish that the concerns were dummy units - Clubbing is not sustainable and the demand attributable to it is set aside - Clandestine manufacture and removal on the basis of data in pen drives - Demand was confirmed on the basis of sales ledgers, purchase ledgers and financial records recovered from pen drives seized from the accounts officer of the concerns, with printouts signed by the proprietor - Whether clandestine manufacture and removal is established - HELD - The record does not establish that the devices were sealed at the time of seizure or explain their custody in the intervening period. The proprietor's signature shows only that the printouts were taken in his presence and does not establish that the data remained unchanged. The Department did not identify the source computer, the manner of extraction or produce the certificate under Section 36B(4) of the Central Excise Act, 1944, and electronic printouts cannot be relied upon without compliance with Section 36B. The statements were relied upon without addressing the safeguards under Section 9D, and the demand cannot be sustained solely on disputed statements where the electronic record is not independently corroborated. Parallel accounts without corroboration by evidence such as unaccounted raw-material procurement, production capacity, identified purchasers and receipt of sale proceeds are insufficient - The demand for clandestine removal and the consequential appropriation are set aside - Interest and penalties on the manufacturer under Section 11AC read with Rule 25 and on the proprietor and another person under Rule 26 of Central Excise Rules, 2002 - Penalties were imposed on the proprietorship concern, its proprietor and the then proprietrix of a related concern, who was alleged to have actively assisted the proprietor - Whether interest and penalties can be sustained - HELD - Penalty on the manufacturer and interest are founded on the demands confirmed, and as those demands are unsustainable they cannot survive. The notice and the impugned order do not identify the specific conduct satisfying the ingredients of Rule 26, and the finding that she actively assisted the proprietor does not specify the acts attributable to her. Relationship or association with the concerns without proof of the requisite conduct is insufficient - The interest and penalties on all the Appellants are set aside and all the three appeals are allowed. [Read less]

Central Excise - Disregard of remand directions by adjudicating authority on proportionate CENVAT Credit reversal under Rule 6(3) of CENVAT Credit Rules, 2004 - Tribunal in the earlier round remanded the demand on common inputs and input services with a direction to verify the reversal of proportionate credit and extend the benefit - Adjudicating authority in de novo proceedings did not verify the quantum of credit reversed and re-confirmed the demand as the procedure under Rule 6 was not followed - Whether an order passed in de novo proceedings contrary to the directions of the Tribunal can be upheld - HELD - Rule 6 only ... [Read more]

Central Excise - Disregard of remand directions by adjudicating authority on proportionate CENVAT Credit reversal under Rule 6(3) of CENVAT Credit Rules, 2004 - Tribunal in the earlier round remanded the demand on common inputs and input services with a direction to verify the reversal of proportionate credit and extend the benefit - Adjudicating authority in de novo proceedings did not verify the quantum of credit reversed and re-confirmed the demand as the procedure under Rule 6 was not followed - Whether an order passed in de novo proceedings contrary to the directions of the Tribunal can be upheld - HELD - Rule 6 only gives an option to the Appellant and does not confer any right on the Department to recover duty, and reversal of CENVAT Credit tantamount to non-availment of CENVAT Credit. The Appellant had reversed proportionate credit and the adjudicating authority did not dispute the reversal. Instead of verifying the quantum reversed, the adjudicating authority again invoked Rule 6 and decided the issue in terms of the SCN disregarding the directions of the Bench. Such an approach is not acceptable following the principles of judicial discipline, and an order contrary to the directions of the Bench cannot be upheld - The order is set aside to that extent and the appeal is allowed - Extended period of limitation and cum-duty benefit on demand of duty on printed goods cleared at concessional rate and on goods allegedly misclassified - Demand was raised on diaries, letter pads and printed carry bags cleared under a different tariff heading, and on printed calendars, cards, envelopes and notebooks cleared at concessional rate while availing CENVAT Credit, by invoking the extended period - Whether the extended period can be invoked and whether cum-duty benefit is available on the duty confirmed - HELD - The Appellant had been regularly giving declarations, filing returns and was audited from time to time. The Bench in the earlier round had held that classification was a bona fide issue, so the extended period cannot be invoked. The same logic applies to the demand on printed calendars, cards, envelopes and notebooks, which must be confined to the normal period. The Appellant is also entitled to cum-duty benefit on the duty confirmed - All the demands are restricted to the normal period and cum-duty benefit is to be extended - Imposition of penalty on the manufacturer and on its Director in de novo proceedings - Penalties were imposed on the Appellant company and its Director on the demands of duty and under Rule 6(3) of CENVAT Credit Rules, 2004 - Whether penalties are imposable in the absence of suppression or mens rea - HELD - The Tribunal in the earlier round had set aside the penalty on the Appellant as there was no mala fide. There is no allegation or evidence of mens rea in respect of the remaining demands. For the same reasons, penalty cannot be imposed on the Director - All the penalties are set aside, the appeal of the company is partly allowed and the appeal of the Director is allowed. [Read less]

Customs - Penalty under Section 114 of Customs Act, 1962 on Customs House Agent and its partner for aiding and abetting attempted export of mis-declared old and used leather goods for undue duty drawback - Containers of leather garments and footwear were intercepted and found to contain old and used goods, the freight forwarder without a CHA licence used the licence of the Appellant No. 1 for customs clearance, and the Appellant No. 2, its partner, had not verified the credentials of the exporters, the signatures and the authorisation letters - Penalties were imposed on both Appellants, and separate proceedings under the C... [Read more]

Customs - Penalty under Section 114 of Customs Act, 1962 on Customs House Agent and its partner for aiding and abetting attempted export of mis-declared old and used leather goods for undue duty drawback - Containers of leather garments and footwear were intercepted and found to contain old and used goods, the freight forwarder without a CHA licence used the licence of the Appellant No. 1 for customs clearance, and the Appellant No. 2, its partner, had not verified the credentials of the exporters, the signatures and the authorisation letters - Penalties were imposed on both Appellants, and separate proceedings under the Customs House Agents Licensing Regulations, 2004 on the same goods had resulted in revocation of the licence and forfeiture of the security deposit - Whether penalties under Section 114 can be sustained on the Appellants - HELD - The competent authority had already inflicted the highest administrative penalty on the Appellant No. 1 under the Regulations for the very same goods and investigation, and penalties under the Customs Act for the same allegations are not sustainable. The failure to verify the credentials of the exporters, signatures and authorisation letters may be a breach of obligations under the Regulations but cannot without more invite penalty under Section 114. There was no cogent evidence that the Appellants knew that the goods were old and used, participated in the preparation of false documents, knew of the fraudulent drawback, arranged the goods, received any part of the drawback or conspired with others. Liability under Section 114 cannot be founded merely on association with the consignments as a CHA or on use of the CHA licence - The procedural lapses are not connected to the attempted fraudulent export, the penalties on both Appellants are set aside and the appeals are allowed [Read less]

Customs - Confiscation of legitimate goods under Section 119 of Customs Act, 1962 on allegation that the goods were used as camouflage for concealing contraband elephant tusks - Appellant No. 1, a tea manufacturer and exporter, entrusted its tea consignment to Appellant No. 2, a transporter, and elephant tusks were recovered from the driver's cabin of the intercepted vehicle while the tea was in the rear carrier - Adjudicating authority ordered confiscation of the tea with an option to redeem on payment of redemption fine, which was upheld by the First Appellate Authority - Whether the tea can be confiscated under Section ... [Read more]

Customs - Confiscation of legitimate goods under Section 119 of Customs Act, 1962 on allegation that the goods were used as camouflage for concealing contraband elephant tusks - Appellant No. 1, a tea manufacturer and exporter, entrusted its tea consignment to Appellant No. 2, a transporter, and elephant tusks were recovered from the driver's cabin of the intercepted vehicle while the tea was in the rear carrier - Adjudicating authority ordered confiscation of the tea with an option to redeem on payment of redemption fine, which was upheld by the First Appellate Authority - Whether the tea can be confiscated under Section 119 and redemption fine imposed - HELD - The driver, in his statement recorded immediately after the seizure, disclosed the despatcher and the intended recipient without implicating either Appellant. The call records showed communication only between the despatcher, the driver and the intended recipient, with none linking the Appellants to the driver. The Appellants immediately sought provisional release of the tea and furnished the Bank Guarantee, which shows their bona fides. Defects in the E-way Bills and error in the address of the receiver do not form cogent evidence against the Appellants. The Revenue has not brought cogent evidence linking the Appellants with the identified perpetrators, and no case is made out that the tea was dispatched as a guise for movement of the contraband - The confiscation and the redemption fine are set aside, the redemption fine already recovered is to be refunded with interest and the appeals are allowed - Penalty under Section 114 of Customs Act, 1962 on the consignor and the transporter of legitimate goods found in a vehicle carrying contraband elephant tusks - Penalty was imposed on Appellant No. 1, the consignor of tea, and Appellant No. 2, the transporter who arranged the vehicle through a broker, on the allegation that they were involved in the transportation of the tusks recovered from the driver's cabin - Whether penalty under Section 114 can be imposed in the absence of evidence linking the Appellants with the contraband - HELD - The driver was engaged by the owner of the vehicle and not by the Appellants, and no link was established between the Appellants and the driver, the despatcher or the intended recipient of the tusks. No person implicated in the proceedings gave any statement against the Appellants, and the call records did not show any communication of the Appellants with the driver. The Revenue failed to provide cogent evidence linking the Appellants with the alleged perpetrators. Mere discrepancies in the E-way Bills do not constitute evidence of participation in the illicit transportation - The penalties imposed on the Appellants are set aside and the impugned order is set aside in respect of both the Appellants. [Read less]

Customs - Rejection of drawback claim on shipping bills for failure to seek conversion from Advance Authorisation Scheme to Drawback Scheme within three months under Circular No. 36/2010-Cus. - Appellant sought conversion of shipping bills including three air export shipping bills, which was approved after verification, the brand rate of drawback was fixed, and the drawback claim on the three shipping bills was rejected as the request was not filed with the proper officer within three months of the Let Export Order - Whether drawback can be rejected on the ground of the time limit prescribed in the Circular - HELD - The re... [Read more]

Customs - Rejection of drawback claim on shipping bills for failure to seek conversion from Advance Authorisation Scheme to Drawback Scheme within three months under Circular No. 36/2010-Cus. - Appellant sought conversion of shipping bills including three air export shipping bills, which was approved after verification, the brand rate of drawback was fixed, and the drawback claim on the three shipping bills was rejected as the request was not filed with the proper officer within three months of the Let Export Order - Whether drawback can be rejected on the ground of the time limit prescribed in the Circular - HELD - The request for conversion covering the disputed shipping bills was filed later with supporting documents, whereas the earlier request related to other shipping bills, and the impugned order wrongly treated the earlier request as the relevant application. Section 149 of the Customs Act, 1962, as applicable at the relevant time, allowed amendment after export on documentary evidence existing at the time of export and did not prescribe the three-month limitation. A circular issued by the Board cannot by itself introduce a statutory bar not contained in the governing provision, and circulars and guidelines are administrative directions that cannot be regarded as law - The rejection on the ground of time limit is unsustainable - Rejection of drawback claim on the ground that conversion of shipping bills was allowed by a non-jurisdictional Commissioner - Conversion of air export shipping bills from Advance Authorisation to Drawback Scheme was approved by the Commissioner of Customs (Sea) although the exports fell within the jurisdiction of the Air Commissionerate, and the drawback claim was rejected on this ground - Whether the unchallenged conversion order can be reopened at the stage of sanction of drawback - HELD - Conversion of the shipping bills was approved after verification, and neither that approval nor the subsequent brand-rate fixation has been shown to have been set aside or withdrawn. The conversion order remains unchallenged and the drawback claim cannot be rejected by reopening that order at the sanction stage without first dealing with it in accordance with law. The subsequent brand-rate fixation supports the claim - The impugned order is set aside, the jurisdictional authority is directed to process the drawback claim in accordance with law and the appellant is entitled to consequential relief. [Read less]

Customs - Suspension of licence - Regulation 16(1) of Customs Broker Licensing Regulations, 2018 - On intelligence of misdeclaration of country of origin to claim SAFTA benefit, an offence report was received by the Commissioner recommending action against the Appellant Customs Broker, which had filed Bills of Entry for the importer. The relied upon documents were received later. The Principal Commissioner suspended the licence of the Appellant about four months after the receipt of the offence report, and a SCN was issued a few days thereafter - Whether the immediate suspension of the Customs Broker licence pending enquir... [Read more]

Customs - Suspension of licence - Regulation 16(1) of Customs Broker Licensing Regulations, 2018 - On intelligence of misdeclaration of country of origin to claim SAFTA benefit, an offence report was received by the Commissioner recommending action against the Appellant Customs Broker, which had filed Bills of Entry for the importer. The relied upon documents were received later. The Principal Commissioner suspended the licence of the Appellant about four months after the receipt of the offence report, and a SCN was issued a few days thereafter - Whether the immediate suspension of the Customs Broker licence pending enquiry, ordered after a delay of about four months from the offence report, is sustainable - HELD - The offence report contained the information regarding the omissions and commissions alleged against the Appellant. The suspension order did not disclose any additional information obtained through the relied upon documents which necessitated the suspension. No sense of urgency was shown or substantiated by the authorities. If they had reason to believe that the threat to Government revenue would be warded off by suspension, they were free to act within a reasonable period. Suspension after three to four months of the offence report, a few days before the SCN, is neither explained nor warranted by the facts of the case. The very fact of such delay negates the emergent condition required for taking precipitative action against the Customs Broker. This does not prevent the authorities from taking action in time under the procedure laid down by law - The impugned order is set aside, the suspension of the licence is revoked and the appeal is allowed [Read less]

GST - Demand of tax and interest on ITC availed on invoices of suppliers who had not filed GSTR-3B, where the Revenue conceded the claim after verification of documents - Adjudicating Authority confirmed a demand of ineligible ITC with interest and penalty under Section 73(9), and the FAA granted partial relief and confirmed the balance demand - Appellant contended that the disputed IGST pertained to invoices reflected in GSTR-2A for FY 2017-18 but the goods were received and the credit availed in FY 2018-19 - On verification, the jurisdictional authorities confirmed that the invoices and the Chartered Accountant certifica... [Read more]

GST - Demand of tax and interest on ITC availed on invoices of suppliers who had not filed GSTR-3B, where the Revenue conceded the claim after verification of documents - Adjudicating Authority confirmed a demand of ineligible ITC with interest and penalty under Section 73(9), and the FAA granted partial relief and confirmed the balance demand - Appellant contended that the disputed IGST pertained to invoices reflected in GSTR-2A for FY 2017-18 but the goods were received and the credit availed in FY 2018-19 - On verification, the jurisdictional authorities confirmed that the invoices and the Chartered Accountant certificate supported the disputed ITC and that the amount paid exceeded the amount appropriated - Whether the demand of tax and interest confirmed by the FAA is sustainable - HELD - The Revenue itself conceded, on verification of documents, that the demand of IGST is not sustainable. The balance demand of CGST and SGST arose purely from incomplete appropriation of the amounts already paid, and the remaining amount is appropriated from the sum already paid. As no tax is due from the Appellant, the demand of interest is also not sustainable - The demand of tax and interest confirmed by the FAA is set aside and the appeal is allowed - Penalty under Section 73(9) of the CGST Act, 2017 where tax and interest were paid within thirty days of the notice under Section 73(8) - The Appellant contended that the tax and interest attributable to the demand were paid within thirty days of the notice, and the Revenue accepted that the penalties under CGST and SGST are not sustainable, while remaining silent on the penalty under IGST - Whether the penalty is sustainable - HELD - Under Section 73(8), no penalty is leviable where tax with interest is paid within the prescribed period. Accordingly, the penalties under CGST and SGST are not sustainable. On the same logic the penalty under IGST is also not sustainable - The penalties imposed are set aside. [Read less]

GST - Determination of suppressed outward supplies on the basis of entries in diaries seized during inspection by the Special Investigation Branch - Adjudicating Authority treated transactions recorded in seized diaries as unaccounted outward supplies and imposed tax with equal penalty - FAA reduced the suppressed turnover and sustained a smaller tax and penalty after accepting the explanation in respect of 85 B2B invoices produced at the appellate stage and part of the hand pumps - Revenue contended that the invoices were an afterthought and that the explanation of the Respondent-taxpayer was accepted without verification... [Read more]

GST - Determination of suppressed outward supplies on the basis of entries in diaries seized during inspection by the Special Investigation Branch - Adjudicating Authority treated transactions recorded in seized diaries as unaccounted outward supplies and imposed tax with equal penalty - FAA reduced the suppressed turnover and sustained a smaller tax and penalty after accepting the explanation in respect of 85 B2B invoices produced at the appellate stage and part of the hand pumps - Revenue contended that the invoices were an afterthought and that the explanation of the Respondent-taxpayer was accepted without verification - Whether the entries in the seized diaries establish suppressed outward supplies and whether the orders contain adequate findings and reasoned analysis - HELD - A finding of suppressed turnover must be founded on clear identification and examination of the relevant transactions and supporting material. An inference of suppression cannot be sustained merely on an aggregate figure without a demonstrable factual basis for its computation - The Adjudicating Authority did not identify the entries relied upon, the basis on which the alleged sale of hand pumps was quantified or the reasons for rejecting the explanation, and the absence of regular books at the premises does not dispense with the requirement of establishing the suppressed turnover. The mere non-production of invoices during investigation does not conclusively establish suppression, nor can the subsequent production of invoices and the assertion of disclosure in GSTR-1 be accepted without verification - The FAA also did not identify the entries found unverifiable or provide a computation of the reduced turnover. A quasi-judicial order must disclose the material considered, the reasoning adopted and the basis of the conclusions - The orders of the Adjudicating Authority and the FAA are set aside, the appeal of the Revenue is partly allowed and the matter is remanded for fresh adjudication with entry-wise examination, reconciliation with the books and returns, verification of the invoices - The Revenue appeal is partly allowed [Read less]

GST - Violation of principles of natural justice by passing an adjudication order without personal hearing under Section 75(4) of the CGST Act, 2017 - The Adjudicating Authority confirmed a demand of excess ITC availed in GSTR-3B as compared to GSTR-9 for FY 2018-19, with interest and penalty, without a personal hearing - Whether the order passed without a personal hearing is in breach of Section 75(4) - HELD - Section 75(4) makes it mandatory to grant an opportunity of hearing where any adverse decision is contemplated, and an order confirming the demand in the SCN is an adverse order. The hearing is a separate right, and... [Read more]

GST - Violation of principles of natural justice by passing an adjudication order without personal hearing under Section 75(4) of the CGST Act, 2017 - The Adjudicating Authority confirmed a demand of excess ITC availed in GSTR-3B as compared to GSTR-9 for FY 2018-19, with interest and penalty, without a personal hearing - Whether the order passed without a personal hearing is in breach of Section 75(4) - HELD - Section 75(4) makes it mandatory to grant an opportunity of hearing where any adverse decision is contemplated, and an order confirming the demand in the SCN is an adverse order. The hearing is a separate right, and a written reply does not take its place – Further, the defect was not cured in the first appeal, as the FAA did not examine the GSTR-9C, the books or the reconciliation of the Appellant but adopted the figures of the Department - The adjudication order and the order of the FAA cannot be sustained on this ground - Excess availment of ITC on the basis of mismatch between GSTR-3B and GSTR-9 for FY 2018-19 - Burden of proof under Section 155 of the CGST Act, 2017 - Department computed the excess ITC by comparing GSTR-3B, after deducting reverse charge credit said to be reported in Table 4(A)(5), with GSTR-9 - Appellant denied the excess claim, contended that the figures in GSTR-9 were a bona fide mistake and offered its books of account to prove the credit - Whether the finding that the Appellant availed excess ITC is sustainable on the material on record - HELD - The adjudication order suffers from three infirmities, namely that it assumed the reverse charge credit was included in Table 4(A)(5) without verifying the returns, that it recorded an admission of excess credit which the record does not show, and that it rejected the plea of mistake in GSTR-9 without examining the books - A mismatch between two returns is a reason to examine the records and is not by itself proof that credit was availed in excess. Neither Section 44 nor Rule 80 provides for rectification of GSTR-9 once filed, and a genuine and inadvertent error in a return must be recognised as such - The burden of proving the claim to credit lies on the Appellant under Section 155, and it must discharge the burden with its books and invoices, for which the authority should give an opportunity - The orders are set aside and the matter is remanded to the Adjudicating Authority for fresh adjudication confined to the SCN, with the Appellant to produce its books and returns - the demand of tax, interest and penalty stands set aside - The matter is remanded to the Adjudicating Authority for fresh adjudication. [Read less]

GST - Applicable rate of tax on general construction services provided to Indian Railways, Eligibility to the concessional rate for composite supply of works contract under Sr. No. 3(v)(a) of Notification No. 11/2017-Central Tax (Rate) - The Respondent-taxpayer, a joint venture, provided construction services to Indian Railways and paid GST at the concessional rate. The SCN under Section 74 alleged short payment as the services were general construction services taxable at the standard rate - The FAA set aside the demand on the view that the services were works contract services to Railways - Whether the general constructi... [Read more]

GST - Applicable rate of tax on general construction services provided to Indian Railways, Eligibility to the concessional rate for composite supply of works contract under Sr. No. 3(v)(a) of Notification No. 11/2017-Central Tax (Rate) - The Respondent-taxpayer, a joint venture, provided construction services to Indian Railways and paid GST at the concessional rate. The SCN under Section 74 alleged short payment as the services were general construction services taxable at the standard rate - The FAA set aside the demand on the view that the services were works contract services to Railways - Whether the general construction services provided to Indian Railways are covered as composite supply of works contract to Railways attracting the concessional rate - HELD - The concessional rate under Sr. No. 3(v)(a) is available only for a composite supply of works contract provided to Railways, and any other composite supply of works contract attracts the standard rate. The invoices raised by the taxpayer described the services as general construction services - The taxpayer did not demonstrate, with structural proofs and billing breakups, that the services were construction services in relation to immovable property forming a composite supply of works contract. The finding of the FAA that all railway construction services fall under works contract services at the concessional rate is legally untenable - The order of the FAA is set aside, the Order-in-Original is restored and the appeal of the Department is allowed [Read less]

GST - Imposition of penalty under Section 122(1) of the CGST Act, 2017 for issuing and availing invoices without actual supply of goods, where the declared place of business was found vacant and stockless - Respondent-taxpayer was found on inspection to have closed premises with a notice of vacancy and no stock - Proper Officer passed the order ex parte, held that the Respondent had merely obtained and issued invoices without actual purchases and sales and imposed penalty - The FAA set aside the penalty - Whether the Respondent carried on genuine trading activities or the transactions were mere paper entries - HELD - The c... [Read more]

GST - Imposition of penalty under Section 122(1) of the CGST Act, 2017 for issuing and availing invoices without actual supply of goods, where the declared place of business was found vacant and stockless - Respondent-taxpayer was found on inspection to have closed premises with a notice of vacancy and no stock - Proper Officer passed the order ex parte, held that the Respondent had merely obtained and issued invoices without actual purchases and sales and imposed penalty - The FAA set aside the penalty - Whether the Respondent carried on genuine trading activities or the transactions were mere paper entries - HELD - The closed premises, the notice of vacancy and the absence of stock on the date of inspection cannot by themselves conclusively establish that no genuine business was carried on earlier. The mere assertion that business was conducted and stock disposed of is also insufficient. The genuineness of the transactions requires examination of contemporaneous records collectively, such as invoices, registers, transport documents, weighment slips, freight payments, records of machinery and operational expenses, bank statements and e-way bills, and the absence of one document is not conclusive proof of fictitious transactions - The subsequent cancellation of a supplier's registration does not by itself establish that earlier supplies were fictitious, and the alleged discrepancies in e-way bills must be examined on the material - The FAA did not verify these records, and the Proper Officer passed the original order ex parte without an effective opportunity of hearing - The orders of the Proper Officer and the FAA are set aside, the appeal of the Department is partly allowed and the matter is remanded for fresh adjudication after affording a personal hearing - The departmental appeal stands disposed of [Read less]

GST - Dismissal of appeal by the FAA on the ground of multiplicity of litigation - Adjudicating Authority confirmed a demand of tax, interest and penalty on account of non-reversal of ITC on exempt supplies and difference between GSTR-1 and GSTR-9, rejected the rectification application of the Appellant under Section 161. The Appellant filed an appeal against the demand and another against the rejection of rectification, and the FAA took up both together but dismissed the appeal against the rectification order only on the ground that it was multiplicity of litigation on the same issue - Whether the FAA was justified in dis... [Read more]

GST - Dismissal of appeal by the FAA on the ground of multiplicity of litigation - Adjudicating Authority confirmed a demand of tax, interest and penalty on account of non-reversal of ITC on exempt supplies and difference between GSTR-1 and GSTR-9, rejected the rectification application of the Appellant under Section 161. The Appellant filed an appeal against the demand and another against the rejection of rectification, and the FAA took up both together but dismissed the appeal against the rectification order only on the ground that it was multiplicity of litigation on the same issue - Whether the FAA was justified in dismissing the appeal on that ground without deciding the appeals on merits - HELD - An appeal under Section 107 has to be disposed of by an order under Section 107(11) confirming, modifying or annulling the order appealed against. Having decided to take up both appeals together, the FAA should have disposed of both by suitable orders - The impugned order contains no finding on the appeal against the demand of tax, interest and penalty, and the FAA did not deal with the principal grounds against the rejection of the rectification application. In the absence of such findings, the Tribunal cannot decide the merits of the demand in the present appeal - The impugned order is quashed and the matter is referred back to the FAA to pass fresh orders on both appeals, dealing with the principal grounds and affording a reasonable opportunity including personal hearing – The appeal is disposed of [Read less]

GST - Remand for fresh consideration of the dispute on Input Tax Credit claimed in excess of the amount available in GSTR-2A for FY 2017-18 in light of Circular No. 183/15/2022-GST - Appellant contended that the supplier had wrongly mentioned another taxpayer's GSTIN while filing GSTR-1, which resulted in the absence of the invoices from GSTR-2A - HELD - The dispute pertaining to FY 2017-18 is squarely covered by the Circular, which applies to cases for FY 2017-18 and 2018-19 where adjudication or appeal proceedings are still pending. However, the Circular was issued after the conclusion of the adjudication and first appea... [Read more]

GST - Remand for fresh consideration of the dispute on Input Tax Credit claimed in excess of the amount available in GSTR-2A for FY 2017-18 in light of Circular No. 183/15/2022-GST - Appellant contended that the supplier had wrongly mentioned another taxpayer's GSTIN while filing GSTR-1, which resulted in the absence of the invoices from GSTR-2A - HELD - The dispute pertaining to FY 2017-18 is squarely covered by the Circular, which applies to cases for FY 2017-18 and 2018-19 where adjudication or appeal proceedings are still pending. However, the Circular was issued after the conclusion of the adjudication and first appeal proceedings, so its benefit could not be extended in those proceedings. As both parties consented to the matter being examined de novo, it is fit to remand the matter to the FAA with a limited remit - The order of the FAA is set aside and the appeal is allowed by way of remand with a direction to consider the matter afresh in terms of the Circular and the documentary evidence and pass suitable orders after following the principles of natural justice - the appeal is allowed by way of remand [Read less]

Service Tax - Rebate claim on export of services - Limitation under Section 11B of Central Excise Act, 1944 - Appellant provided Information Technology and Business Support Services and raised an export invoice, paying service tax through its CENVAT account. The export consideration was fully realised on a later date. Rebate claim under Rule 5 of the Export of Services Rules, 2005 was filed more than one year after the invoice date but within one year of full realisation. The Adjudicating Authority accepted that the conditions for export were satisfied but rejected the claim as time-barred by reckoning limitation from the ... [Read more]

Service Tax - Rebate claim on export of services - Limitation under Section 11B of Central Excise Act, 1944 - Appellant provided Information Technology and Business Support Services and raised an export invoice, paying service tax through its CENVAT account. The export consideration was fully realised on a later date. Rebate claim under Rule 5 of the Export of Services Rules, 2005 was filed more than one year after the invoice date but within one year of full realisation. The Adjudicating Authority accepted that the conditions for export were satisfied but rejected the claim as time-barred by reckoning limitation from the invoice date, and the FAA upheld the rejection - Whether limitation for the rebate claim is to be reckoned from the date of the export invoice or from the date of realisation of export proceeds - HELD - Under Rule 3(2)(b) of the Export of Services Rules, 2005, receipt of consideration in convertible foreign exchange was a condition for treating the service as exported. The rebate notification likewise required receipt of payment in convertible foreign exchange and documentary proof thereof. The date of realisation is therefore material in determining the relevant date for limitation. The decision concerning exported goods cannot, without further analysis, be applied to export of services, for which the statutory framework is different. The limitation of one year under Section 11B is to be reckoned from the date of receipt of export consideration, and not invariably from the invoice date. Since the claim was received within one year of full realisation, it was filed within time - The rejection of the rebate claim as time-barred is unsustainable, the impugned order is set aside and the appeal is allowed [Read less]

Customs - Penalty under Section 112(b) of the Customs Act, 1962 on local purchaser of imported machinery - Alleged misdeclaration and wrongful availment of exemption by the importer - Appellant, a local purchaser of computerized embroidery machine imported by another person claiming exemption, was issued SCN proposing penalty on the ground that the machine appeared liable to confiscation under Section 111(m) - Whether penalty under Section 112(b) can be imposed on a domestic purchaser merely on the basis of the purchase when there is no evidence of knowledge, reason to believe or participation in the importer's misdeclarat... [Read more]

Customs - Penalty under Section 112(b) of the Customs Act, 1962 on local purchaser of imported machinery - Alleged misdeclaration and wrongful availment of exemption by the importer - Appellant, a local purchaser of computerized embroidery machine imported by another person claiming exemption, was issued SCN proposing penalty on the ground that the machine appeared liable to confiscation under Section 111(m) - Whether penalty under Section 112(b) can be imposed on a domestic purchaser merely on the basis of the purchase when there is no evidence of knowledge, reason to believe or participation in the importer's misdeclaration - HELD - The Appellant purchased the machinery under domestic invoices, which described the goods merely as computerized embroidery machines without representing any customs exemption, and paid the invoiced price including applicable taxes without claiming the exemption. The misdeclaration related to the import transaction, and no material was shown to establish the Appellant's participation or knowledge. The Appellant is not responsible for independently proving every aspect of the upstream seller's tax compliance, when there is no allegation of collusion with the importer. Section 112(b) requires knowledge or reason to believe that the goods are liable to confiscation, and knowledge that goods are imported cannot by itself be equated with such knowledge. The principle of caveat emptor does not dispense with the Department's burden to establish the statutory ingredients of the contravention - Revenue has not discharged its burden, and the penalty imposed on the Appellant is set aside - The appeal is disposed of [Read less]

Customs - Penalty on exporter company and its Director for attempted export of prohibited red sanders concealed in export container - Substitution of declared goods during transit - Appellant exported steel wire in a container loaded and sealed in the presence of Central Excise Officers, which was intercepted by DRI and found to contain red sanders wood logs in place of a part of the declared goods - Whether penalty under Section 114(i) of the Customs Act, 1962 can be imposed on the Appellant company and its Director when their connivance or involvement in the attempted export of red sanders is not established - HELD - The... [Read more]

Customs - Penalty on exporter company and its Director for attempted export of prohibited red sanders concealed in export container - Substitution of declared goods during transit - Appellant exported steel wire in a container loaded and sealed in the presence of Central Excise Officers, which was intercepted by DRI and found to contain red sanders wood logs in place of a part of the declared goods - Whether penalty under Section 114(i) of the Customs Act, 1962 can be imposed on the Appellant company and its Director when their connivance or involvement in the attempted export of red sanders is not established - HELD - The goods were loaded and the container was sealed in the presence of the officers, and the substitution of steel wire by red sanders wooden logs happened during transport from the factory to the port, with the connivance of the driver, after the seal was broken in between. No evidence was brought on record to show that the Appellant company or its Director was involved in the offence in any manner, and the investigation did not establish their connivance. The findings of the Adjudicating Authority themselves recorded that the container was sealed by officers, that the perpetrators replaced the goods at some point, that the export order was procured by false assurance from the middleman, and that the Appellants filed a complaint against the fraudsters. These findings established the bona fides of the Appellant company, which as a bonafide exporter believed the person who cheated it - The penalty imposed on the Appellant company and its Director is not legally sustainable and set aside - Confiscation of export goods and redemption fine - Goods exported under supervision of Central Excise Officers - Declared steel wire was recovered along with red sanders wood logs from the sealed export container and was confiscated, with redemption fine imposed in lieu of confiscation - Whether the declared export goods are liable to confiscation and redemption fine is sustainable when the Appellant company is not held responsible for the attempted export of red sanders - HELD - The steel wire manufactured by the Appellant company was exported under proper supervision in the presence of the Central Excise Officer, and the Appellant company was not responsible for the attempted export of red sanders - The goods are not liable for confiscation and the redemption fine imposed in lieu of confiscation is not sustainable and is set aside - Penalty under Section 114(i) of the Customs Act, 1962 on Customs Broker's Manager and Business Developer who acted as middlemen in export consignment - Alleged facilitation of attempted smuggling of red sanders - Adjudicating Authority held the Appellants to have acted as middlemen in collusion with the main perpetrator and imposed penalty, whereas the Appellants contended that their role was limited to clearance work and introducing the concerned persons to each other - Whether penalty under Section 114(i) can be imposed on the Appellants when there is no evidence to show that they were knowingly involved in the attempted smuggling - HELD - The role played by the Appellants as recorded in the impugned order reveals only that they were middlemen who acted in connection with the export of steel wire. There is no evidence on record to show that they were knowingly involved in the attempted smuggling of red sanders, were part of the smuggling syndicate or facilitated the attempted smuggling - The penalties imposed on the Appellants under Section 114(i) are not sustainable and are set aside. [Read less]

Customs - Rejection of appeal by First Appellate Authority as time-barred - Limitation computed from the date of Order-in-Original instead of the date of service - Appellant's appeal against rejection of refund claim was dismissed by FAA as filed belatedly with a delay of 05 days - Whether FAA was justified in rejecting the appeal as time-barred when limitation was reckoned from the date of the Order-in-Original and not from the date of service - HELD - FAA decided without sufficient reasons that the appeal was filed with a delay of 05 days, yet held it to be time-barred. Limitation was calculated from the date of Order-in... [Read more]

Customs - Rejection of appeal by First Appellate Authority as time-barred - Limitation computed from the date of Order-in-Original instead of the date of service - Appellant's appeal against rejection of refund claim was dismissed by FAA as filed belatedly with a delay of 05 days - Whether FAA was justified in rejecting the appeal as time-barred when limitation was reckoned from the date of the Order-in-Original and not from the date of service - HELD - FAA decided without sufficient reasons that the appeal was filed with a delay of 05 days, yet held it to be time-barred. Limitation was calculated from the date of Order-in-Original and not from the date of service. Even otherwise, the delay was within the condonable period of 60 + 30 days. If there was any delay, FAA ought to have called for an explanation as to the date of service, which was not done. The track consignment issued by the postal authorities demonstrated the actual date of receipt, and reckoned from the date of service, the appeal was filed within the prescribed period - The rejection of the appeal as time-barred is unsustainable. The impugned order is set aside. The matter is remitted to the file of Commissioner (Appeals) who shall pass a de-novo order on merits without going into the limitation – The appeal is disposed of [Read less]

Central Excise - Exemption to waste and scrap arising in manufacture of railway coaches cleared at concessional rate - Meaning of exempted goods in Sl.No.17 of Notification No.62/95-CE - Appellant, a factory belonging to the Central Government under the Ministry of Railways, cleared coaches at 1% under Notification No.1/2011-CE and cleared waste and scrap without payment of duty, treating it as covered by Notification No.27/2011-CE, and on audit objection paid duty on the scrap and claimed refund - Whether waste and scrap arising in the manufacture of coaches cleared at 1% under Notification No.1/2011-CE is exempt under Sl... [Read more]

Central Excise - Exemption to waste and scrap arising in manufacture of railway coaches cleared at concessional rate - Meaning of exempted goods in Sl.No.17 of Notification No.62/95-CE - Appellant, a factory belonging to the Central Government under the Ministry of Railways, cleared coaches at 1% under Notification No.1/2011-CE and cleared waste and scrap without payment of duty, treating it as covered by Notification No.27/2011-CE, and on audit objection paid duty on the scrap and claimed refund - Whether waste and scrap arising in the manufacture of coaches cleared at 1% under Notification No.1/2011-CE is exempt under Sl.No.17 of Notification No.62/95-CE - HELD - Sl.No.17 exempts waste and scrap arising in the course of manufacture of exempted goods in a factory belonging to the Indian Railways. Section 5A(1) empowers the Central Government to exempt goods from the whole or any part of the duty, and Notification No.1/2011-CE itself exempts the coaches from so much of the duty as is in excess of 1%, so that they are exempted goods though not exempted from the whole of the duty. Sl.No.17 does not qualify the expression, whereas an earlier notification expressly defined exempted goods as goods chargeable to nil rate or exempted from the whole of the duty, and the restriction cannot be supplied by interpretation. Strict construction means fidelity to the words used and does not permit addition of words. The amendment to Rule 2(d) of the CENVAT Credit Rules, 2004 shows that the Central Government itself treated goods under Notification No.1/2011-CE as exempted goods. Citation of an inapplicable notification at the time of clearance cannot extinguish an exemption conferred by law - Waste and scrap was exempt under Sl.No.17, the rejection of refund cannot stand, and the demand fails on merits - Extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 - Show cause notice issued after the Department had itself unearthed and collected the duty on audit - Appellant paid the duty on audit objection and claimed refund, which was adjudicated by the Assistant Commissioner, whereafter SCN was issued alleging suppression of facts - Whether the extended period under Section 11A(4) could be invoked against the Appellant - HELD - Section 11A(4) is attracted only where duty is not paid by reason of fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade payment of duty, and mere failure to declare is not wilful suppression. The facts alleged to be suppressed were ascertained by the Department's own audit, collected, and made the subject of the refund claim adjudicated earlier, and facts known to the authorities cannot be treated as suppressed in a later notice. The SCN merely echoed the statutory words without particulars of any positive act. The Appellant, a factory of the Union of India, whose liability was ascertained and paid at the instance of the Department in a dispute of pure construction, cannot be attributed with intent to evade - The extended period was not invokable, and the demand is barred by limitation in its entirety - Interest under Section 11AA and penalty under Section 11AC of the Central Excise Act, 1944 - Consequential to demand of duty on waste and scrap - Whether interest and penalty are tenable when the demand fails on merits and on limitation - HELD - Interest under Section 11AA is consequential and cannot survive when the demand fails. Penalty under Section 11AC presupposes fraud, suppression or intent to evade, which were found to be absent - Interest and penalty are set aside, both appeals are allowed, the refund of the duty paid on waste and scrap is held admissible with interest as admissible in law, the amount appropriated shall be refunded only once, and the original authority shall process the refund after verification within ninety days from the date of receipt of the order. [Read less]

Central Excise - Compounded Levy Scheme - Survival of duty demand after omission of Section 3A of the Central Excise Act, 1944 without saving clause - Appellant, an independent processor of man-made fabrics, was issued SCNs demanding duty under the Compounded Levy Scheme on the basis of the number of hot air stenter chambers, and the Commissioner confirmed the demand in remand proceedings - Whether proceedings for recovery of duty can continue after omission of Section 3A by the Finance Act, 2001 without any saving clause - HELD - The Supreme Court held that omission is nothing but a particular form of words evincing an in... [Read more]

Central Excise - Compounded Levy Scheme - Survival of duty demand after omission of Section 3A of the Central Excise Act, 1944 without saving clause - Appellant, an independent processor of man-made fabrics, was issued SCNs demanding duty under the Compounded Levy Scheme on the basis of the number of hot air stenter chambers, and the Commissioner confirmed the demand in remand proceedings - Whether proceedings for recovery of duty can continue after omission of Section 3A by the Finance Act, 2001 without any saving clause - HELD - The Supreme Court held that omission is nothing but a particular form of words evincing an intention to abrogate an enactment or portion thereof, that omission and deletion are used interchangeably, and that omission is a form of repeal to which Section 6 of the General Clauses Act, 1897 applies, since repeal under Section 6 refers also to any provision contained in any Act. The earlier view that omission does not amount to repeal was clarified by the Supreme Court as not the correct legal position. The Bombay High Court and the Rajasthan High Court, following this decision, upheld the duty demand while quashing interest. The contrary view of the Gujarat High Court was rendered without the benefit of this principle - Following the Supreme Court, the duty demand confirmed by the Commissioner after omission of Section 3A survives, and the order is upheld to the extent of confirmation of central excise duty - Interest and penalty under Rule 96ZQ(5) of the Central Excise Rules, 1944 - Compounded Levy Scheme - Commissioner confirmed duty demand with interest and imposed penalty under Rule 96ZQ(5) - Whether interest and penalty under Rule 96ZQ can be sustained - HELD - The Supreme Court declared that the interest and penalty provisions under Rules 96ZO, 96ZP and 96ZQ are invalid, as Section 3A, which provides a separate scheme for the compounded levy, does not itself provide for levy of interest, and the Rules cannot do so - The demand of interest and penalty is set aside, and the appeal is partly allowed. [Read less]

Service Tax - Invocability of extended period of limitation and imposition of penalty where short-payment was pointed out during audit under the proviso to Section 73(1) of the Finance Act, 1994 - Works Contract Service - During audit, the Department alleged short-payment of service tax on the ground that tax was payable upon credit or debit of consideration in the books of account of an associated enterprise under the Explanation to the third proviso to Rule 6(1) of the Service Tax Rules, 1994. The SCN invoked the extended period of limitation - The Respondent contended that the extended period was invocable due to non-di... [Read more]

Service Tax - Invocability of extended period of limitation and imposition of penalty where short-payment was pointed out during audit under the proviso to Section 73(1) of the Finance Act, 1994 - Works Contract Service - During audit, the Department alleged short-payment of service tax on the ground that tax was payable upon credit or debit of consideration in the books of account of an associated enterprise under the Explanation to the third proviso to Rule 6(1) of the Service Tax Rules, 1994. The SCN invoked the extended period of limitation - The Respondent contended that the extended period was invocable due to non-disclosure of relevant facts and failure to file ST-3 returns until detection by audit - Whether the extended period of limitation was invocable and the penalties sustainable - HELD - Mere non-payment of duty or failure to obtain registration, in the absence of fraud, suppression or wilful misstatement, is insufficient to attract the extended period of limitation, and invocation of the extended period requires a positive act indicative of wilful default - Apart from the fact that the short-payment was pointed out during audit, there was nothing to establish a deliberate attempt to evade payment of service tax. The extended period of limitation is therefore not invocable. The penalties imposed on the basis of the alleged suppression or wilful default cannot be sustained - The penalties are set aside. The amounts of service tax already paid shall be appropriated towards the corresponding liability, and no further recovery of the tax so paid shall be made. Any remaining demand that is barred by limitation is set aside. The penalties imposed are also set aside - The appeal is disposed of - Confirmation of demand for want of proof of payment despite audit annexure recording payment under Rule 6(1) of the Service Tax Rules, 1994 - The Adjudicating Authority accepted that the Explanation to the third proviso to Rule 6(1) was inapplicable where consideration was actually received. It nevertheless confirmed the demand on the ground that the Appellant had not produced evidence of receipt of consideration and payment of tax - Whether the demand could be confirmed when the record showed that the tax had been paid after the short-payment was pointed out by audit - HELD - Once the Adjudicating Authority held that the Explanation to Rule 6(1) did not apply where consideration was actually received, the decisive question was whether the Appellant had received the consideration and discharged the tax. The annexure to the audit report, enclosed with the appeal memorandum, recorded the service tax as paid before issuance of the SCN, and the Order-in-Original also recorded a further payment appropriated towards the demand. The record therefore supported the claim of the Appellant that the amounts had been paid before issuance of the SCN - The amounts are required to be treated as accepted and paid to the extent established by the records. With no evidence of fraud, no SCN should have been issued and the payments should have been accepted as settling the matter - The service tax and interest already paid are appropriated towards the corresponding liability and no further recovery of the amounts so paid shall be made - Effect of limitation on enforcement of remaining tax demand and voluntary payment of time-barred liability - The entire demand pertained to the extended period, which was held not invocable. The Appellant had paid amounts towards the liability after audit objections - Whether a demand falling beyond the normal period of limitation can be sustained - HELD - Limitation ordinarily bars the remedy for enforcing a liability but does not necessarily extinguish the underlying tax liability - A debt does not cease to exist merely because the remedy for its enforcement is barred by limitation. An assessee may voluntarily pay an amount towards an outstanding liability even where the remedy for compulsory recovery is barred. Such payment may discharge the liability to the extent paid but does not by itself revive a time-barred remedy for recovery of the unpaid balance, unless provided for in law. The sustainability of any remaining demand, including the normal period, must be independently examined, and since the extended period is not invocable, any demand falling beyond the normal period is unsustainable - The impugned order is modified, the remaining demand barred by limitation is set aside. [Read less]

Service Tax - Classification of tool management services under Business Support Service for April and May 2009 - Under a Tool Management Agreement the Appellant undertook procurement, stocking, regrinding, coating, handling and management of production tools along with provision of manpower for the client. From April 2009 the Appellant split its invoices into tool hire charges, on which VAT was paid, and tool service charges, on which service tax was paid. The SCN proposed service tax on the tool hire charges under Business Support Service - Whether the services rendered during April and May 2009 are classifiable under Bus... [Read more]

Service Tax - Classification of tool management services under Business Support Service for April and May 2009 - Under a Tool Management Agreement the Appellant undertook procurement, stocking, regrinding, coating, handling and management of production tools along with provision of manpower for the client. From April 2009 the Appellant split its invoices into tool hire charges, on which VAT was paid, and tool service charges, on which service tax was paid. The SCN proposed service tax on the tool hire charges under Business Support Service - Whether the services rendered during April and May 2009 are classifiable under Business Support Service - HELD - Classification of a taxable service must be determined with reference to the terms of the contract, the actual activities undertaken and the statutory definition applicable during the relevant period. The manner in which invoices are raised cannot by itself determine classification, and the existence of a composite contractual arrangement does not justify classification of the entire consideration under BAS without establishing that the activities satisfy the statutory definition. The expression "operational or administrative assistance in any manner" was substituted only with effect from 01.05.2011, and an amendment enlarging the scope of a taxable entry cannot be applied retrospectively in the absence of express statutory authority - An activity does not become Business Support Service merely because it supports the business operations of the recipient. The activities under the agreement relate to tool management and manufacturing operations and have no apparent nexus with marketing. The Revenue cannot rely on the composite nature of the agreement or on a subsequent enlargement of the definition - The classification of the entire consideration under Business Support Service cannot be sustained and the demand is set aside – The appeal is allowed - Remand for fresh classification under an alternative taxable service where the SCN proposed classification only under BAS - The SCN proposed classification of the services under Business Support Service and did not propose any alternative classification. The Appellant contended that a remand for fresh classification would enlarge the scope of the SCN and prejudice the Appellant - HELD - Adjudication must remain within the allegations and grounds set out in the SCN. In the absence of an alternative classification proposed in the SCN, the proceedings cannot be used to introduce a new classification at the appellate stage to sustain the demand - No remand for fresh classification under an alternative taxable service is warranted - CENVAT Credit - Reversal of credit on capital goods removed as such, including capital goods exported under bond/LUT, under Rule 3(5) of the CENVAT Credit Rules, 2004 - During audit it was noticed that the Appellant had removed CENVAT credit availed capital goods, in one month and also for export in two other months, without reversing the credit availed thereon - Whether CENVAT credit availed on capital goods removed as such, including those exported under bond/LUT, is liable to be reversed under Rule 3(5) - HELD - The issue is not whether export under bond is permitted but whether it triggers reversal of credit taken under Rule 3(5). Credit is a statutory benefit subject to the conditions and restrictions prescribed by the Act and Rules, and is not an absolute right - The Apex Court held that the proviso to Rule 3(5) providing for reduction of credit on removal of used capital goods is clarificatory and retrospective, which entitles the assessee to make the adjustment as per the proviso and later claim rebate. The judgment supporting reversal also recognises the eligibility of the goods for rebate, and since export under bond without payment of duty is also permissible, the matter is revenue neutral. Although statutory procedures must ordinarily be followed, considering the small tax amount involved, the export incentives intended to ensure that taxes are not exported and the long lapse of time, remand would serve no useful purpose - The demand relating to capital goods removed as such is set aside on revenue neutrality and considering the facts of the case - Invocation of extended period of limitation - Whether the extended period of limitation and the penalty under Section 78 are sustainable - HELD - Invocation of the extended period requires satisfaction of the statutory conditions applicable to the relevant provision. A dispute involving interpretation of law does not by itself establish suppression, just as the discovery of a discrepancy during audit does not by itself exclude suppression. The penalty under Section 78 must be considered in accordance with its statutory requirements and cannot be imposed mechanically merely because a demand has been confirmed. The burden of proving suppression has not been discharged by the Revenue - The impugned order is set aside. [Read less]

GST - Waiver of interest and penalty under Section 128A of the CGST Act, 2017 - Effect of adjustment through Form GST DRC-03A of a payment made earlier through Form GST DRC-03 - Petitioner paid an amount through Form GST DRC-03 towards reversal of ITC for the relevant year, but inadvertently mentioned the following financial year in the form. The Order-in-Original under Section 73 declined to give credit for it - After Rule 142(2B) was inserted, the Petitioner filed applications in Form GST DRC-03A, which were accepted on the portal and reduced the outstanding principal tax liability to nil, and then applied in Form GST SP... [Read more]

GST - Waiver of interest and penalty under Section 128A of the CGST Act, 2017 - Effect of adjustment through Form GST DRC-03A of a payment made earlier through Form GST DRC-03 - Petitioner paid an amount through Form GST DRC-03 towards reversal of ITC for the relevant year, but inadvertently mentioned the following financial year in the form. The Order-in-Original under Section 73 declined to give credit for it - After Rule 142(2B) was inserted, the Petitioner filed applications in Form GST DRC-03A, which were accepted on the portal and reduced the outstanding principal tax liability to nil, and then applied in Form GST SPL-02 under Section 128A. The competent authority rejected the application on the ground that the payment could not be treated as payment towards the tax liability of the relevant year - Whether the competent authority, while considering the application under Section 128A, could disregard the adjustment effected through Form GST DRC-03A that was accepted on the portal and reduced the principal tax liability to nil - HELD - The material precondition for the waiver of interest and penalty under Section 128A is payment of the entire principal amount of tax covered by the demand. Under Rule 142(2B), an amount paid through Form GST DRC-03 is credited in the Electronic Liability Register against the demand as if it was paid on the date of the original intimation - The second proviso to Rule 164 and the Circular on Section 128A contemplate that such payment is adjusted through Form GST DRC-03A before filing the application in Form GST SPL-02. Under Section 49(7) and Rule 85, the Electronic Liability Register records the liabilities and is credited on payment towards a demand - The Respondents did not dispute that the payment was made and received. The Petitioner had consistently explained the mention of the wrong financial year as an inadvertent error and had furnished annual returns showing no outstanding liability for that year. The authority rejected the application without verifying these facts and without considering the legal effect of the adjustment reflected as nil in the Electronic Liability Register – The impugned order was passed without proper application of mind and set aside. The Respondent is directed to accept and process the application in Form GST SPL-02 and pass the consequential order in accordance with law – The petition is allowed [Read less]

GST - Arrest under Section 69(1) of CGST Act, 2017 - Petitioner, a Chartered Accountant, was arrested for an offence under Section 132 for allegedly creating and operating a network of shell firms to avail and pass on fake Input Tax Credit - The authorisation for arrest carried a single line that the Commissioner had reasons to believe that the offence was committed. The detailed reasons to believe and the grounds of arrest were recorded and signed by the Inspector - Whether the arrest is valid when the reasons to believe were not recorded by the Commissioner - HELD - Arrest under Section 69 must be preceded by reasons to ... [Read more]

GST - Arrest under Section 69(1) of CGST Act, 2017 - Petitioner, a Chartered Accountant, was arrested for an offence under Section 132 for allegedly creating and operating a network of shell firms to avail and pass on fake Input Tax Credit - The authorisation for arrest carried a single line that the Commissioner had reasons to believe that the offence was committed. The detailed reasons to believe and the grounds of arrest were recorded and signed by the Inspector - Whether the arrest is valid when the reasons to believe were not recorded by the Commissioner - HELD - Arrest under Section 69 must be preceded by reasons to believe based on tangible material, on the basis of which the Commissioner forms an opinion that the ingredients of the offence are made out, the person has the requisite mens rea and there is justification for arrest. It is the Commissioner alone who is required to form such opinion, and reasons to believe recorded by an authority not empowered under the Act are non-est and per-se illegal - A solitary line in the authorisation that the Commissioner has reasons to believe does not amount to reasons to believe within the meaning of Section 69. The reasons must refer to the material and evidence underlying the opinion and reflect due application of mind. The reasons in the present case, though detailed, were recorded by the Inspector and not by the Commissioner. An order of the Commissioner under Section 69 recording reasons to believe is a sine qua non for arrest, and such reasons have to be conveyed to the person arrested. The arrest not preceded by reasons to believe recorded by the Commissioner is illegal - The arrest, remand and continued custody are held illegal. The petitioner is ordered to be released forthwith. The prosecution is at liberty to move for remand or custody after supply of reasons to believe and grounds of arrest in writing, in accordance with law – The petition is allowed - Absence of Document Identification Number in arrest documents - Circular dated 05.11.2019 - The reasons to believe and the grounds of arrest furnished to the Petitioner did not bear any electronically generated DIN. Whether the arrest documents issued without DIN are valid - HELD - The Circular No.122/41/2019-GST dated 05.11.2019 directs that no search authorisation, summons, arrest memo or inspection notice shall be issued without a computer generated DIN quoted in the body of the communication. A communication without DIN is treated as invalid and deemed never to have been issued, except in the exceptional circumstances specified in the Circular. Even in such cases, the reasons must be recorded in writing, and the communication has to be regularised within fifteen working days. The Respondent was unable to explain why the documents did not bear DIN or the exigency in which they were issued. It was not the stand of the Respondent that the documents were regularised within fifteen working days. The claim that both documents are part of the arrest memo is not acceptable - The reasons to believe and the grounds of arrest issued without DIN do not pass the test of judicial scrutiny on this ground also. [Read less]

GST - Application for Regular bail - Section 483 of BNSS read with Section 132 of CGST Act - Petitioner was arrested for allegedly availing fake Input Tax Credit through two firms without any actual transaction and sought regular bail after the chargesheet was filed. The Respondent opposed the bail on the grounds that further investigation was going on, the electronic data was volatile and liable to be tampered with, and the Petitioner may not stand trial. Whether the Petitioner is entitled to regular bail in an offence under Section 132 of the CGST Act when further investigation is still going on - HELD - The jurisdiction... [Read more]

GST - Application for Regular bail - Section 483 of BNSS read with Section 132 of CGST Act - Petitioner was arrested for allegedly availing fake Input Tax Credit through two firms without any actual transaction and sought regular bail after the chargesheet was filed. The Respondent opposed the bail on the grounds that further investigation was going on, the electronic data was volatile and liable to be tampered with, and the Petitioner may not stand trial. Whether the Petitioner is entitled to regular bail in an offence under Section 132 of the CGST Act when further investigation is still going on - HELD - The jurisdiction to grant bail has to be exercised on well settled principles, having regard to the nature of accusation, the severity of punishment, the apprehension of tampering with witnesses, the likelihood of securing presence at trial and the larger interest of the public. Further investigation and the proposed recording of statements of other witnesses are not grounds to refuse bail, since investigation cannot go on endlessly - In economic offences carrying limited sentences, bail should normally be granted unless extraordinary circumstances exist. The apprehension of tampering with evidence can be taken care of by imposing suitable conditions. The maximum punishment under Section 132 of the CGST Act is five years and the offence is triable by the Court of the learned JMFC. Nothing is required to be discovered or recovered from the Petitioner, and the conclusion of trial will take its own time. Keeping the accused behind bars in such circumstances amounts to pre-trial conviction, as bail is the rule and jail is the exception in view of the personal liberty guaranteed under Article 21 of the Constitution - The Petitioner is released on regular bail subject to conditions. The application is allowed [Read less]

GST - Refund of accumulated ITC on export of goods without payment of tax under Rule 89(4) of the CGST Rules, 2017 where invoices were issued in the relevant period but goods were exported after the relevant period - Department appeal against sanction of refund in respect of three shipping bills dated after the end of the period 01.04.2022 to 31.10.2022, contending that the goods were not exported during the relevant period and that their value should not be included in the turnover of zero-rated supply - Whether the value of invoices issued during the relevant period for goods exported subsequently can be included in the ... [Read more]

GST - Refund of accumulated ITC on export of goods without payment of tax under Rule 89(4) of the CGST Rules, 2017 where invoices were issued in the relevant period but goods were exported after the relevant period - Department appeal against sanction of refund in respect of three shipping bills dated after the end of the period 01.04.2022 to 31.10.2022, contending that the goods were not exported during the relevant period and that their value should not be included in the turnover of zero-rated supply - Whether the value of invoices issued during the relevant period for goods exported subsequently can be included in the turnover of zero-rated supply - HELD - The issue involved in the present case has been decided by this bench in an earlier case. The three amounts for computing the refund, namely Net ITC, turnover of zero-rated supply of goods and Adjusted Total Turnover, must relate to the same relevant period - Under Sections 12 and 31 of the CGST Act, tax invoice has to be issued before or at the time of removal of goods, and supply of export goods takes place at the time of removal and preparation of the invoice, even though the goods are treated as exported only when they leave India. If the invoices for goods cleared for export under bond or LUT are issued during the relevant period, they are included in the turnover of zero-rated supply regardless of whether the goods were actually exported during that period, though refund can be given only after the exporter establishes actual export. There was no dispute that the invoices were issued during the relevant period and that the goods were exported - There is no reason to deny refund - The order of the FAA is upheld and the appeal by the Department is rejected [Read less]

Customs - Confiscation and redemption fine - Section 111(m) of Customs Act, 1962 - Appellant imported LED strips and classified them under different tariff items at different ports. On DRI intelligence, SCN was issued proposing reclassification under CTI 8512 2010 or 8512 2020, demand of differential duty for the extended period, confiscation and penalties. The Commissioner confirmed the demand, held the goods liable to confiscation and imposed redemption fine although the goods had been cleared. The Appellant did not contest the classification - Whether the goods were liable to confiscation under Section 111(m) and whethe... [Read more]

Customs - Confiscation and redemption fine - Section 111(m) of Customs Act, 1962 - Appellant imported LED strips and classified them under different tariff items at different ports. On DRI intelligence, SCN was issued proposing reclassification under CTI 8512 2010 or 8512 2020, demand of differential duty for the extended period, confiscation and penalties. The Commissioner confirmed the demand, held the goods liable to confiscation and imposed redemption fine although the goods had been cleared. The Appellant did not contest the classification - Whether the goods were liable to confiscation under Section 111(m) and whether the redemption fine is sustainable - HELD - Section 111(m) applies to goods which do not correspond in respect of value or in any other particular with the entry made under the Act. The Commissioner did not find that any Bill of Entry misdescribed the goods or misstated their value, quantity or origin. The Revenue's case was only that the Appellant claimed the wrong tariff item. A classification adopted on the importer's understanding, with the goods correctly described, is a claim and not a misdeclaration. Self assessment does not convert the choice of a tariff item into a particular of the goods merely because the proper officer later reaches a different conclusion. The goods were not liable to confiscation, so the redemption fine under Section 125, which presupposes goods liable to confiscation, cannot survive. The fine was also imposed on goods cleared years earlier, without reasoning on its quantum and without determining the market price which fixes the ceiling under the proviso to Section 125(1) - The confiscation and redemption fine are set aside - Interest and penalty on IGST component - Section 3(12) of Customs Tariff Act, 1975 - The demand for imports made between October 2017 and January 2021 included integrated tax, with interest and penalty levied on that component - Whether interest and penalty can be levied on the IGST component for the period in dispute - HELD - Integrated tax on imported goods is levied under Section 3(7) of the Customs Tariff Act, 1975 and not under Section 12 of the Customs Act, 1962. During the period in dispute, Section 3(12) applied the provisions of the Customs Act relating to drawbacks, refunds and exemption from duties to the tax chargeable under that section. It did not borrow the provisions relating to interest, penalty or confiscation, which were added only with effect from 16.08.2024 and prospectively. Interest and penalty are substantive liabilities which can be levied only if the statute that charges the tax makes a substantive provision for them - The interest on the IGST component cannot be sustained, the amount paid is refundable subject to verification, and any penalty referable to IGST also fails - Clearances from Special Economic Zone to Domestic Tariff Area - Section 30 of SEZ Act, 2005 and Rule 47(5) of SEZ Rules, 2006 - In two later appeals, the Appellant cleared goods from a Free Trade and Warehousing Zone into the Domestic Tariff Area. Audit took the view that the goods were parts under CTI 8512 9000 to which the preferential notification did not extend. Demands under Section 28(1) with interest, confiscation, redemption fine and penalty were confirmed and upheld by the FAA - Whether duty, interest, confiscation, redemption fine and penalty can be demanded under the Customs Act on goods cleared from a Special Economic Zone to the Domestic Tariff Area - HELD - Section 30 of the SEZ Act makes goods removed to the Domestic Tariff Area chargeable to duties of customs, but it provides no mechanism for collection since the SEZ Act does not borrow the relevant provisions of the Customs Act. Rule 47(5) is limited to refund, demand, adjudication, review and appeal in matters relating to authorised operations. It confers no power to recover duty short levied in the manner set out in Section 28. The SEZ Act does not provide for interest, penalty or confiscation. This rests on the absence of machinery in the statute, so it applies equally to the importer in the Domestic Tariff Area. As the proceedings fail for want of authority of law, the contentions on classification are left open - The demands, interest, confiscation, redemption fines and penalties cannot be sustained, and the appeals are allowed - Extended period of limitation - Section 28(4) of Customs Act, 1962 - The Commissioner held that the Appellant had deliberately suppressed the true classification and invoked the extended period. The Appellant had furnished documents when asked by DRI and paid differential duty with interest more than two and a half years before the SCN - Whether the extended period of limitation under Section 28(4) was validly invoked - HELD - Section 28(4) permits a demand within five years only where the short levy is by reason of collusion, wilful misstatement or suppression of facts. Misstatement or suppression must be wilful, that is, with intent to evade duty, and mere non payment of duty is not equivalent to it. The burden of proving mala fides lies on the Revenue. The findings of the Commissioner were mere conclusions, as the foundational facts must be evident from the notice itself. No fact that was concealed was identified, since the Bills of Entry disclosed the goods by part number, description, value and origin. The classification was reached by applying GRI 2(a) and the test of essential character, which is an exercise of interpretation on which reasonable minds differ. Use of different tariff items at different times and ports does not, without more, establish intent to evade. The Revenue's own authorities later held identical goods to be parts under CTI 8512 9000, which is the Appellant's position, and such a view cannot be a wilful misstatement. Payment of differential duty with interest on being asked is the antithesis of intent to evade - The extended period was not validly invoked. Under Section 28(10B), the notice is deemed to be issued under Section 28(1), and the demand is sustainable only for Bills of Entry whose relevant date falls within two years preceding the SCN, with interest under Section 28AA excluding the IGST component. The matter is remanded for quantification - Penalty - Section 114A of Customs Act, 1962 - Penalty equal to the differential duty with interest was imposed on the Appellant, who paid twenty five per cent of it within thirty days - Whether the penalty under Section 114A is sustainable - HELD - Penalty under Section 114A is attracted only where the short levy is by reason of collusion, wilful misstatement or suppression of facts. Since the extended period was not validly invoked, the foundation of the penalty is removed. Penalty is not to be imposed on conduct that flows from a bona fide belief. The alternative submissions on the extent of penalty and waiver of the balance do not arise - The penalty under Section 114A, including the amount paid, cannot survive. The appeal is partly allowed, the demand within the normal period is upheld, and the matter is remanded for quantification and consequential refund in accordance with law. [Read less]

Customs - Penalty on person found with seized foreign origin cigarettes in rented godown on the basis of retracted statement - Cigarettes and other goods were seized from a godown taken on rent by the Appellant, who in his statement claimed only some cartons as his own and stated that the remaining goods belonged to two other persons, whose details he furnished, and he retracted the statement within a short time - Whether penalty can be sustained on the Appellant - HELD - The Appellant gave the details and mobile numbers of the two persons and of the landlord, but the Department took no follow up action to verify the state... [Read more]

Customs - Penalty on person found with seized foreign origin cigarettes in rented godown on the basis of retracted statement - Cigarettes and other goods were seized from a godown taken on rent by the Appellant, who in his statement claimed only some cartons as his own and stated that the remaining goods belonged to two other persons, whose details he furnished, and he retracted the statement within a short time - Whether penalty can be sustained on the Appellant - HELD - The Appellant gave the details and mobile numbers of the two persons and of the landlord, but the Department took no follow up action to verify the statements of these persons. A statement once retracted, where the Department did not reject the retraction with cogent reasons or record a counter statement, cannot be accepted as evidence. The Appellant produced an invoice showing that only the cartons claimed by him were purchased by him, and the other foreign origin cigarettes belonged to other persons. The condition that the Appellant was knowingly dealing with goods liable to confiscation under Section 111 of the Customs Act, 1962 is not fulfilled, as penalty requires dealing with goods liable to confiscation and knowledge or belief about such goods being liable to confiscation - The penalty is set aside - Confiscation of foreign origin electric rice cookers and ceramic stoves and redemption fine - Goods were confiscated with an option to redeem on payment of redemption fine, and neither side made out a proper case for confiscation or for release of the goods - Whether the redemption fine is to be reduced - HELD - Considering that the value of the goods was determined only on assumption, the goods should be released on payment of a lower redemption fine - The goods are to be released on payment of the reduced redemption fine and the appeal is disposed of. [Read less]

GST - Detention of goods in transit - Validity of documents produced after interception under Section 68 of the CGST Act, 2017 read with Rule 138 of the CGST Rules, 2017 - The conveyance of the Appellant transporter was intercepted - Driver produced transport documents relating to different suppliers and different commodities, none of which was physically found in the vehicle. The vehicle was found loaded with a large quantity of textile materials and readymade apparel for which no tax invoice, delivery challan or e-way bill was available. The Appellant contended that the booking clerk had handed over a wrong bundle of doc... [Read more]

GST - Detention of goods in transit - Validity of documents produced after interception under Section 68 of the CGST Act, 2017 read with Rule 138 of the CGST Rules, 2017 - The conveyance of the Appellant transporter was intercepted - Driver produced transport documents relating to different suppliers and different commodities, none of which was physically found in the vehicle. The vehicle was found loaded with a large quantity of textile materials and readymade apparel for which no tax invoice, delivery challan or e-way bill was available. The Appellant contended that the booking clerk had handed over a wrong bundle of documents and subsequently produced tax invoices of registered suppliers matching the goods - Whether transport of goods accompanied by mismatched tax documents, followed by submission of invoices after detention without e-way bills, satisfies the requirements of Section 68 read with Rule 138 - HELD - Section 68 mandates that the person in charge of a conveyance must carry the prescribed documents, and the presence of valid documentation during actual transit is a strict requirement. The explanation of an accidental exchange of documents was an unsubstantiated oral statement, as the Appellant, a professional logistics firm, produced no transport manifest, dispatch logs, tracking data or registration details of the alleged second vehicle - The invoices submitted by email after the seizure cannot cure the illegal nature of the transit, since the law does not permit retrospective validation. The invoices were issued only to unregistered buyers with Aadhaar numbers and no e-way bill was generated for any of them. The documents were therefore artificially structured after detention - The requirements of Section 68 and Rule 138 were not satisfied - The penalty under Section 129(3) is upheld and the appeal is dismissed - Proceedings against transporter as a ‘person other than the owner’ under Section 129(1)(b) of the CGST Act, 2017 where the suppliers claimed ownership after detention - Whether the proper officer was justified in treating the Appellant as a person other than the owner and imposing penalty under Section 129(3) - HELD - The rejection of ownership by the Revenue was based on verifiable facts, namely that the cargo was completely unmanifested, the documents carried related to goods not found in the vehicle, and the invoices produced later had no e-way bills - At the time of interception no owner was identifiable for the recovered cargo. ‘Coming forward’ under Section 129(1)(b) means stepping forward with valid, pre-existing and compliant documents at the threshold of interception, and the contrary view would render Section 68 and Rule 138 a dead letter - The valuation adopted on objective parameters such as quality and prevalent wholesale market averages was a fair and sound mechanism - The proper officer committed no error in treating the Appellant under Section 129(1)(b). [Read less]

Service Tax - Show cause notice proposing rejection of rebate under Notification No. 41/2012-ST without disclosing the arithmetical working - Show cause notices proposed rejection of rebate claims on the ground of clause (c) of the proviso to the notification, and the Appellant contended that the notices and orders are vitiated as they disclose no basis or working for the amounts proposed to be rejected - Whether the proceedings are vitiated for want of disclosure of the arithmetical basis - HELD - A show cause notice must state the grounds which necessitate action and the action proposed, but it is not void because it doe... [Read more]

Service Tax - Show cause notice proposing rejection of rebate under Notification No. 41/2012-ST without disclosing the arithmetical working - Show cause notices proposed rejection of rebate claims on the ground of clause (c) of the proviso to the notification, and the Appellant contended that the notices and orders are vitiated as they disclose no basis or working for the amounts proposed to be rejected - Whether the proceedings are vitiated for want of disclosure of the arithmetical basis - HELD - A show cause notice must state the grounds which necessitate action and the action proposed, but it is not void because it does not set out arithmetic that follows mechanically from the claimant's own figures. The ground was clause (c) of the proviso, and the orders record the method of comparing the documented rebate on each shipping bill with the prescribed threshold, using figures furnished by the Appellant. The Appellant contested the rejection on merits at every stage, did not identify any shipping bill on which the comparison went wrong and did not show prejudice. A grievance unaccompanied by demonstrable prejudice does not vitiate the proceedings - The contention fails - Rejection of rebate claims on documents under paragraph 3 of Notification No. 41/2012-ST in view of clause (c) of the proviso - Appellant, a manufacturer exporter, claimed rebate of service tax paid on specified services on the basis of documents, did not seek rebate under paragraph 2 on any shipping bill, and the claims were rejected to the extent the documented rebate on a shipping bill did not exceed the rebate admissible under the Schedule of rates by at least twenty per cent - Whether the claims under paragraph 3 were rightly rejected - HELD - Clause (b) of the proviso employs the correlative either-or, so the two procedures are distinct routes and not stages of one claim, and the election is made for each shipping bill when it is presented. Clause (c) is a condition of eligibility for the paragraph 3 route, couched in prohibitory terms, which opens the document based route only where the actual incidence materially exceeds the average. The comparison is necessarily shipping bill wise, as the Schedule rebate is computed on the FOB value of each shipping bill, and the Appellant did not dispute the arithmetic. Clause (c) does not deny rebate to anyone but channels the exporter to the Schedule route, and the later amendment left the proviso untouched - The claims were rightly rejected to the extent the documented rebate fell below the prescribed threshold of the FOB value - Alternative claim for rebate at Schedule rates under paragraph 2 of Notification No. 41/2012-ST after failure of claim under paragraph 3 - Appellant contended that it is entitled to rebate under paragraph 2 on the shipping bills on which its documentary claim failed, but the shipping bills were presented and self assessed without the declaration required for the paragraph 2 route - Whether the Appellant can fall back on paragraph 2 and whether such a claim can be entertained in these proceedings - HELD - The declarations in paragraph 2 are the means by which that route is taken, in the shipping bill at the time of presentation, whereas the paragraph 3 claim is filed after export, so the choice of route for each shipping bill is a single election made at the time of export and final once made. If the Schedule rate could be granted in substitution after a documentary claim fails, clause (c) would cease to have any operation. Section 149 of the Customs Act, 1962 permits amendment after export only on documentary evidence existing at the time of export, and cannot be used to make retrospectively an election not made. Ignorance of the notification does not enlarge the rights under it, and the order of the Revisionary Authority turned on the impossibility of election owing to non-functional EDI facility. A paragraph 2 rebate is founded on the electronic shipping bill, and refund cannot be entertained unless the self assessment is modified in accordance with law - The alternative prayer for rebate under paragraph 2 cannot be granted - Beneficial construction of rebate notification and strict construction of conditions - Appellant urged that the notification, being a beneficial measure promoting exports, must be construed liberally - Whether the principle of beneficial construction alters the answer on the claims under paragraphs 2 and 3 - HELD - A beneficial exemption granted to further an identified public purpose is construed liberally in accordance with its object, and the notification is taken to belong to this class as it promotes exports. Liberal construction is a tool for discerning the reach of the words in the light of their object and is not a licence to disregard a condition expressly imposed, as a party not fulfilling the conditions is not entitled to the benefit. Ambiguity is resolved in favour of the claimant, but there is no ambiguity in clauses (b) and (c). The object of the notification is to refund the tax through a scheme in which the Schedule route is the rule and the documentary route the exception, and allowing an exporter to try the exception and then claim the rule overrides the means chosen. Clause (c) is a substantive condition of eligibility built in with a specific policy objective - Beneficial construction does not alter the result, the appeals are dismissed and the impugned orders are upheld. [Read less]

Service Tax - Exemption under Notification No. 25/2012-ST for receipts from Government authorities on supply of equipment on rent - Appellant, not registered with the Department, received consideration for construction and repair of roads and drains, which the First Appellate Authority held exempt, but confirmed the demand on receipts for supply of hot mix plant, paver machine and accessories on rent, allowing cum-tax benefit under Section 67(2) - Whether the receipts for supply of equipment on rent are exempt as services for construction or maintenance of roads - HELD - The agreements are in respect of supply of tangible ... [Read more]

Service Tax - Exemption under Notification No. 25/2012-ST for receipts from Government authorities on supply of equipment on rent - Appellant, not registered with the Department, received consideration for construction and repair of roads and drains, which the First Appellate Authority held exempt, but confirmed the demand on receipts for supply of hot mix plant, paver machine and accessories on rent, allowing cum-tax benefit under Section 67(2) - Whether the receipts for supply of equipment on rent are exempt as services for construction or maintenance of roads - HELD - The agreements are in respect of supply of tangible goods against a mutually agreed consideration, and the contention that these receipts also related to provision of services for construction or maintenance of roads is contrary to the agreements. These services do not fall under any clause of the exemption notification - The finding of the First Appellate Authority cannot be faulted and the demand is upheld - Threshold exemption under Notification No. 33/2012-ST on supply of tangible goods service - Appellant claimed the benefit of the threshold exemption for the year in which the demand survived - Whether the benefit of threshold exemption is available - HELD - The Appellant's own submissions showed that the aggregate value of taxable services in the preceding financial year was much more than the prescribed limit, and the benefit of the exemption cannot be extended for the following financial year - The contention is rejected - Extended period of limitation where the service provider was neither registered nor filing returns - Demand was confirmed by invoking the proviso to Section 73(1) of Finance Act, 1994 on receipts identified from Income Tax Department data, and the Appellant contended that it had not suppressed any information and relied on decisions of the Tribunal - Whether the extended period can be invoked - HELD - The Appellant was not registered with the Department and was not filing any returns, and no plausible explanation was given for not registering and complying with the provisions when it provided taxable services of value much exceeding the threshold exemption limit. Intention to evade payment is obvious, as non-registration and non-disclosure resulted in non-payment of Service Tax. The decisions relied on concerned persons who were duly registered with the Department or who showed a bona fide belief that they were not required to pay tax, whereas the Appellant did not plead or conclusively show any bona fide belief. The finding of fact that the Appellant suppressed the relevant facts with intent to evade payment of tax is not disturbed - The extended period was rightly invoked and the demand is sustained - Penalty under Section 78 of Finance Act, 1994 where extended period is invoked - Penalty equal to the Service Tax confirmed was imposed on the Appellant along with the demand - Whether the penalty under Section 78 is sustainable - HELD - As the demand made by invoking the extended period of limitation under the proviso to Section 73(1) cannot be faulted, the penalty under Section 78 follows naturally, as held by the Supreme Court - The penalty is sustained and the appeal is dismissed. [Read less]

Service Tax - Rejection of declaration under Voluntary Compliance Encouragement Scheme, 2013 as substantially false under Section 111 of Finance Act, 2013 - Appellant, a civil contractor and subcontractor, filed a declaration for the period up to 31.12.2012 and paid the declared dues, the investigation commenced after 01.03.2013, and the Department computed a higher liability from the books, Form 26AS, work orders and invoices on the view that the declaration was substantially false - Whether the rejection of the declaration is sustainable and whether the amount paid is refundable - HELD - No investigation was pending agai... [Read more]

Service Tax - Rejection of declaration under Voluntary Compliance Encouragement Scheme, 2013 as substantially false under Section 111 of Finance Act, 2013 - Appellant, a civil contractor and subcontractor, filed a declaration for the period up to 31.12.2012 and paid the declared dues, the investigation commenced after 01.03.2013, and the Department computed a higher liability from the books, Form 26AS, work orders and invoices on the view that the declaration was substantially false - Whether the rejection of the declaration is sustainable and whether the amount paid is refundable - HELD - No investigation was pending against the Appellant as on 01.03.2013, the relevant date for eligibility, and the subsequent investigation could not retrospectively make the Appellant ineligible. Section 111 requires reason to believe that the declaration was substantially false, which cannot be established merely by comparing the amount declared with a higher amount worked out by the Department. The difference arose from particular transactions ascertainable from contemporaneous records, the Appellant did not deny the contracts or receipts, and it explained the treatment adopted with reference to the tax paid by the principal contractors, Form 26AS entries, classification, the composition scheme and free supplies. Payment of Service Tax by a principal contractor does not automatically discharge the independent liability of a sub-contractor, but a difference of opinion on taxability, classification or valuation does not by itself establish substantial falsity - The rejection of the declaration is unsustainable, but in view of Section 109 the amount paid under the Scheme is not refundable merely because the demand is set aside - Limitation and extended period under Section 73(1) of Finance Act, 1994 where SCN was issued under Section 111 of Finance Act, 2013 after a VCES declaration - SCN was issued in December 2014 for the period from April 2008 to December 2012, and the Department contended that the true liability was not disclosed in the declaration and was detected during investigation - Whether the demand is barred by limitation, whether the VCES declaration restarts limitation and whether the extended period, interest and penalty are sustainable - HELD - Limitation must be determined return-period-wise with reference to the relevant date under Section 73(6), and for the last return period the normal period of eighteen months expired before the SCN. Section 111(3) merely attracts the machinery of Section 73 and does not substitute the date of the VCES declaration for the relevant date, so the declaration cannot be a fresh starting point of limitation. Mere non-payment cannot amount to suppression, and the burden of establishing suppression rests on the Revenue. The demand was reconstructed from the Appellant's books of account, ST-3 returns, Form 26AS, work orders and invoices, and the disputes arose from differing legal characterisation of the receipts, which do not establish deliberate withholding of information with intent to evade tax - The extended period is not invocable, the entire demand is barred by limitation, the demand, interest and penalty are set aside without examination of the merits and the appeal is allowed. [Read less]

GST - Limitation for issuance of SCN under Section 73(2) of CGST Act - The SCN was made available on the common portal only after the last date permitted under the extended time limit - Respondents contended that SCN was generated within time on an internal system and was re-uploaded due to a technical glitch during migration - Whether an SCN made available on the portal after the statutory deadline is time-barred when the Respondents claim that it was generated within time - HELD - The limit for passing the order under Section 73(10) is the outer boundary and the SCN has to be issued at least three months before it as per... [Read more]

GST - Limitation for issuance of SCN under Section 73(2) of CGST Act - The SCN was made available on the common portal only after the last date permitted under the extended time limit - Respondents contended that SCN was generated within time on an internal system and was re-uploaded due to a technical glitch during migration - Whether an SCN made available on the portal after the statutory deadline is time-barred when the Respondents claim that it was generated within time - HELD - The limit for passing the order under Section 73(10) is the outer boundary and the SCN has to be issued at least three months before it as per Section 73(2). The period of three months is a minimum statutory limitation intended to afford a meaningful opportunity to reply and be heard, and it is not merely a directory timeline. The time limit for passing the order was extended by the Notification No. 56/2023-central tax dated 28.12.2023 and the SCN was required to be issued on or before the end of May 2024 - A notice that remains on an internal system, awaiting confirmation and without a Common Reference Number, was never communicated to the Petitioner and cannot be said to have been issued in the eyes of law, as issuance under Section 73(2) must be read together with the mode of service under Section 169 - The re-issuance of the SCN is an acknowledgment that the earlier notice had not become effective, and the remark on the re-uploaded notice cannot confer retrospective effect on it. No provision empowers the proper officer to extend the limit - The Respondents made no endeavour to serve the SCN by any other mode provided under Section 169(1), and they cannot take shelter behind a technical glitch of their own system. The consequences of administrative lapses cannot be visited upon the taxpayer nor can they enlarge a limitation fixed in mandatory terms - The SCN is barred by limitation, the consequential Order-in-Original does not sustain, both are quashed. The writ petition is allowed - Effect of scrutiny communication and personal hearings on limitation for SCN - The Respondents contended that the Petitioner was issued Form ASMT-10 and granted personal hearings but failed to respond - Whether the issuance of ASMT-10 and the grant of personal hearings can substitute the SCN or cure the delay in its issuance - HELD - Scrutiny of returns under Section 61 and the communications in Form ASMT-10 are preliminary steps, and the personal hearings are procedural formalities. They are not a substitute for the SCN, which is the foundational document triggering adjudication under Section 73 and must set out the specific charge and the quantum of demand. These steps cannot act as a bypass to the mandatory requirement of issuing the SCN within the prescribed time. The alleged non-response of the Petitioner is irrelevant to the question of limitation, which goes to the root of jurisdiction. It cannot be construed as a waiver, and a breach of the time limit cannot be cured by subsequent participation or by equitable considerations - The contention of the Respondents is rejected. [Read less]

Tamil Nadu VAT Act, 2006 - Limitation for reassessment of deemed assessment - Section 27 of the TNVAT Act - Petitioner, a works contractor and registered dealer, filed monthly returns for the assessment years 2011-12 to 2014-15, and the assessments stood deemed to have been completed under Section 22(2) of the TNVAT Act - Respondent issued notices alleging discrepancies after the Petitioner wrote a letter seeking copies of the assessment orders, and passed assessment orders under Section 27 of the TNVAT Act in 2022. Petitioner challenged the orders on the ground that the proceedings were initiated beyond the period of six ... [Read more]

Tamil Nadu VAT Act, 2006 - Limitation for reassessment of deemed assessment - Section 27 of the TNVAT Act - Petitioner, a works contractor and registered dealer, filed monthly returns for the assessment years 2011-12 to 2014-15, and the assessments stood deemed to have been completed under Section 22(2) of the TNVAT Act - Respondent issued notices alleging discrepancies after the Petitioner wrote a letter seeking copies of the assessment orders, and passed assessment orders under Section 27 of the TNVAT Act in 2022. Petitioner challenged the orders on the ground that the proceedings were initiated beyond the period of six years prescribed under Section 27(1). Respondent contended that the proceedings were initiated on examining the records after the Petitioner's letter - Whether the proceedings initiated by the Respondent under Section 27 of the TNVAT Act were barred by limitation - HELD - The Petitioner had filed the returns in the prescribed manner along with the requisite documents and proof of payment of tax, and the assessments therefore stood deemed to have been completed in terms of Section 22(2). The power to reopen such assessments under Section 27 is subject to the period of limitation prescribed therein. The impugned orders were passed beyond the period of six years and were barred by limitation. The Petitioner's letter was only a communication seeking the assessment records and could not extend or revive the statutory period of limitation. The jurisdiction under Section 27 must be exercised within the prescribed period and cannot be enlarged by consent, correspondence or conduct of the dealer. The Respondent therefore lacked jurisdiction to pass the impugned orders - The impugned orders are set aside and the writ petitions are allowed [Read less]

Central Excise - Availment of proportionate CENVAT credit on common inputs used in the manufacture of dutiable final products and exempted by-products - Liability to pay an amount under Rule 6(3)(b) of the CENVAT Credit Rules, 2004 - The Respondent-assessee manufactured dutiable and non-dutiable products and used common inputs in the manufacture, but availed CENVAT credit only in proportion to the dutiable products on the basis of a chartered accountant certificate - The Adjudicating Authority held that the methodology was not compatible with Rule 6 and confirmed the demand of ten per cent of the price of the exempted by-p... [Read more]

Central Excise - Availment of proportionate CENVAT credit on common inputs used in the manufacture of dutiable final products and exempted by-products - Liability to pay an amount under Rule 6(3)(b) of the CENVAT Credit Rules, 2004 - The Respondent-assessee manufactured dutiable and non-dutiable products and used common inputs in the manufacture, but availed CENVAT credit only in proportion to the dutiable products on the basis of a chartered accountant certificate - The Adjudicating Authority held that the methodology was not compatible with Rule 6 and confirmed the demand of ten per cent of the price of the exempted by-products under Rule 6(3)(b) read with Rule 14 - The CESTAT allowed the appeal, holding that taking credit proportionate to the dutiable products amounts to not taking credit - Whether an Respondent-assessee is entitled to follow a system different from the system provided under the Rules - HELD - The issue is squarely covered in favour of the assessee by the decision of the Apex Court, which held that the requirement of separate records does not apply where the by-product emerges as a technological necessity and no part of the input can be traced in the by-product - Under Rule 6(1), CENVAT credit is admissible on inputs used in the manufacture of dutiable goods and inadmissible on the quantity used in the manufacture of exempted goods. Where the entire quantity of input is used in the manufacture of the final product, the mere fact that a by-product emerges does not bring the by-product within Rule 6 so as to call for separate accounts or payment of an amount on the exempted goods - Where the assessee has taken credit only on the quantity of input intended for use in the manufacture of dutiable goods, the question of invoking Rule 6 does not arise. It is immaterial whether the Rules of 2002 and 2004 contain provisions akin to the earlier rules. Although the CESTAT has not given elaborate reasons, it has arrived at a conclusion as per the settled legal position - The questions are answered in favour of the assessee and the Revenue appeal is dismissed [Read less]

GST - Service of notice through the portal - Section 169 of CGST Act, 2017 - Petitioner did not file a reply to the SCN or appear for personal hearing despite reminder notices, and an assessment order was passed ex-parte. The SCN, reminders and the order were only uploaded in the Additional Notices and Orders tab on the portal - The Petitioner contended that it was unaware of the notices and orders and that principles of natural justice were violated. Whether the assessment order passed on the basis of notices only uploaded on the portal is sustainable when the petitioner did not respond - HELD - Sending notice by uploadin... [Read more]

GST - Service of notice through the portal - Section 169 of CGST Act, 2017 - Petitioner did not file a reply to the SCN or appear for personal hearing despite reminder notices, and an assessment order was passed ex-parte. The SCN, reminders and the order were only uploaded in the Additional Notices and Orders tab on the portal - The Petitioner contended that it was unaware of the notices and orders and that principles of natural justice were violated. Whether the assessment order passed on the basis of notices only uploaded on the portal is sustainable when the petitioner did not respond - HELD - Sending notice by uploading it on the portal is sufficient service. However, an officer who sends repeated reminders despite no response from the taxpayer should apply his mind and explore the possibility of sending notices by other modes prescribed in Section 169(1), preferably by RPAD. Otherwise the service of notice will not be an effective service and it would only amount to fulfilling empty formalities - Passing an ex-parte order by fulfilling empty formalities serves no useful purpose and only paves the way for multiplicity of litigations. There was a lack of effort in applying the available opportunities to serve the notices and orders effectively on the Petitioner, and the assessment order suffers from a violation of the principles of natural justice - The assessment order is quashed and the matter is remanded for fresh consideration. The writ petition is disposed of [Read less]

GST - Jurisdiction of the State Bench of the Tribunal to examine the validity of an Advance Ruling under Section 95 of the CGST Act, 2017 which was never challenged before Appellate Authority for Advance Ruling - The Respondent obtained an advance ruling holding that the licensing service for the right to use minerals attracted tax at the same rate as on supply of like goods for the period 01.07.2017 to 31.12.2018, and the ruling was not challenged by the Revenue under Section 100 - Whether the Tribunal, that too a State Bench, can go into the jurisdiction of the Authority when the ruling has not been challenged at any sta... [Read more]

GST - Jurisdiction of the State Bench of the Tribunal to examine the validity of an Advance Ruling under Section 95 of the CGST Act, 2017 which was never challenged before Appellate Authority for Advance Ruling - The Respondent obtained an advance ruling holding that the licensing service for the right to use minerals attracted tax at the same rate as on supply of like goods for the period 01.07.2017 to 31.12.2018, and the ruling was not challenged by the Revenue under Section 100 - Whether the Tribunal, that too a State Bench, can go into the jurisdiction of the Authority when the ruling has not been challenged at any stage - HELD – The Revenue has challenged the maintainability of the advance ruling itself on the ground that the said ruling was without jurisdiction for the reason it could only be given on matters having prospective application and not on completed past transactions - The scheme of Chapter XVII governing the landscape of Advance Ruling, provides a hierarchy of appeal against the ruling before the Appellate Authority and the National Appellate Authority, and the Ruling was neither rectified under Section 102 nor alleged to be void under Section 104. In view of Section 109(4), the State Bench does not have jurisdiction to decide the validity of the order of the Authority - The Tribunal cannot decide the jurisdiction of the Authority in rendering the ruling - The appeals filed by the revenue against the impugned orders-in-appeal lack merit and dismissed - Binding nature of an Advance Ruling under Section 103 of the CGST Act, 2017 - Whether a Board circular constitutes a change in law, facts or circumstances under Section 103(2) - The Revenue contended that the Advance Ruling ceased to bind it on issuance of a Board circular nearly two years later, which clarified that the service attracted the higher rate from 01.07.2017 - Whether the advance ruling is binding on the Department vis-a-vis the Respondent or the Department can resile from it under Section 103(2) - HELD - Under Section 103(1), the Ruling is binding on the applicant and on the concerned or jurisdictional officer in respect of that applicant, and as it was not appealed against, it attained finality. A Circular is an executive instruction under Section 168 and is binding on the Departmental officers but not on the assessee or the courts, whereas the Ruling is a quasi-judicial order. The expression change in law under Section 103(2) means a change in the Act, Rules or rate notification and not a Circular. A Circular adverse to the assessee cannot be applied retrospectively to nullify a quasi-judicial order in his favour. As there was no change in facts, circumstances or law, the Revenue cannot resile from the ruling - The Revenue was bound by the Ruling and the refund sanctioned in accordance with it was in accordance with law - Determination of the rate of tax on licensing service for the right to use minerals for the period 01.07.2017 to 31.12.2018 on the basis of a Board circular - Whether the rate of tax can be determined on the basis of Circular No.164/20/2021-GST - HELD - Under Section 9(1), the rate of tax is to be notified by the Government on the recommendation of the Council through a notification, and a circular issued under Section 168 can only clarify the law and can never create a levy. In terms of Article 265 of the Constitution, no tax can be levied or collected except by authority of law, which means the Act, notifications and Rules and not a Circular - The Revenue could not point out any notification or entry prescribing the higher rate for the period, and the demand resting solely on the Circular is without the authority of law - The Revenue is not justified in relying on the Circular to hold that the rate during the period was the higher rate - Recovery of erroneous refund under Section 73 of the CGST Act, 2017 where the refund of excess tax paid was sanctioned in accordance with an advance ruling, and grounds raised beyond the SCN - The refund of the difference between the tax paid and the tax payable under the ruling was sanctioned under Section 54 with a Chartered Accountant certificate and reversal of the corresponding credit in the electronic credit ledger - Revenue contended in the second appeal that the refund could be claimed only by the service provider and that the Respondent was unjustly enriched - Whether the refund can be said to be erroneous and whether the new grounds can be agitated - HELD - The Ruling held the field when the refund was sanctioned and was neither challenged, rectified nor alleged to be obtained by fraud. A subsequent Circular holding a contrary view cannot make the refund erroneous. The proceedings under Section 73 on the basis of the Circular are void ab initio - The grounds of refund being available only to the service provider and of unjust enrichment were not taken in the SCN or the Order-in-Original, and under Section 75(7) they cannot be raised at the stage of the second appeal - In any case, the recipient who has borne the incidence of tax is entitled to claim refund, and the Respondent discharged the onus under Section 54(8)(e) and Rule 89(2)(m) by the CA certificate and the reversal of credit, which the Revenue did not dispute. The question whether Section 73 can be invoked independently without challenging the refund order in appeal or revision need not be decided - The orders of the FAA setting aside the demand, penalty and interest are confirmed. [Read less]

Service Tax - Refund of Swachh Bharat Cess and Krishi Kalyan Cess paid on input services used for export of goods under Notification No. 41/2012-ST - Whether the Appellants are entitled to refund of SBC and KKC paid on input services used for export of goods - HELD - Notification No. 41/2012-ST grants refund of service tax paid on services used for export of goods, and Section 119(2) of the Finance Act, 2015 and Section 161(2) of the Finance Act, 2016 stipulate SBC and KKC as service tax. Sub-section (5) of Section 119 of the Finance Act, 2015 and sub-section (5) of Section 161 of the Finance Act, 2016 provide that all pro... [Read more]

Service Tax - Refund of Swachh Bharat Cess and Krishi Kalyan Cess paid on input services used for export of goods under Notification No. 41/2012-ST - Whether the Appellants are entitled to refund of SBC and KKC paid on input services used for export of goods - HELD - Notification No. 41/2012-ST grants refund of service tax paid on services used for export of goods, and Section 119(2) of the Finance Act, 2015 and Section 161(2) of the Finance Act, 2016 stipulate SBC and KKC as service tax. Sub-section (5) of Section 119 of the Finance Act, 2015 and sub-section (5) of Section 161 of the Finance Act, 2016 provide that all provisions relating to refund of service tax under the Finance Act, 1994 shall apply to refund of SBC and KKC. SBC and KKC, though called cess, have been given the status of service tax, and the rebate of SBC and KKC is therefore allowable under Notification No. 41/2012-ST - Following the ratio of the earlier decision of the Bench, which stands conceded by the Revenue, the issue is squarely covered in favour of the Appellants - The impugned orders are set aside and the appeals are allowed [Read less]

Customs - Confiscation of export goods and imposition of penalties on alleged diversion of rice declared for export to one country to a different country - Respondent exported rice under shipping bills declared for Iran, and the Department alleged on investigation that the consignments had been delivered to the UAE in violation of Paras 2.40 and 2.53 of the Foreign Trade Policy - Adjudicating Authority held the goods liable to confiscation under Sections 113(i) and 113(d) and imposed penalties under Sections 114 and 114AA - CESTAT set aside the orders after noting that the documents were in the name of the buyers in Iran, ... [Read more]

Customs - Confiscation of export goods and imposition of penalties on alleged diversion of rice declared for export to one country to a different country - Respondent exported rice under shipping bills declared for Iran, and the Department alleged on investigation that the consignments had been delivered to the UAE in violation of Paras 2.40 and 2.53 of the Foreign Trade Policy - Adjudicating Authority held the goods liable to confiscation under Sections 113(i) and 113(d) and imposed penalties under Sections 114 and 114AA - CESTAT set aside the orders after noting that the documents were in the name of the buyers in Iran, that re-export documents, phytosanitary certificates and bank remittances were produced, and that no evidence showed that the documents were amended or fabricated - Whether the CESTAT was justified in setting aside the confiscation and penalties - HELD - At first blush the diversion of goods intended for export to Iran appeared to be a grave offence. The CESTAT, however, recorded a categorical finding of fact that the goods were intended for export to Iran, as the phytosanitary certificates placed on record contained the registration number, the name of the exporter, the name of the consignee in Iran, the number of bags and the quantities, and the Adjudicating Authority and the FAA neither pointed out any discrepancy nor made any allegation supported by evidence that the certificates were amended to facilitate clearance in another country - Once the goods are permitted to be exported by the issuance of a Let Export Order, ownership is transferred to the buyer as soon as the ship carrying the goods crosses the territorial waters of India, as per the CBEC Circular and the decision of the Apex Court. None of the buyers in Iran claimed short shipment or non-receipt, the remittance receipts were not objected to by the banks or alleged to be non-genuine, and under the RBI regulations payment can be received only from the consignee named in the export documents, so the contention of third-party payment had no basis. The conclusion that the goods were exported to the UAE was based merely on assumptions and presumptions - in the absence of evidence the CESTAT was justified in setting aside the confiscation and penalties - The Revenue appeal is dismissed - Jurisdiction of Customs authorities to confiscate goods and impose penalties for alleged violation of the Foreign Trade Policy relating to receipt of export proceeds in freely convertible foreign exchange - The entire basis of the decision of the Adjudicating Authority was the alleged violation of Para 2.53 of the Foreign Trade Policy, on the ground that goods actually exported to the UAE required payment in freely convertible foreign exchange, and the SCN invoked Sections 113(d) and 113(i) of the Customs Act. - Whether the Customs authorities could confiscate the goods and impose penalties on the allegation of violation relating to receipt of foreign exchange for the exported goods - HELD - No proceedings had been initiated against the Respondents for any violation relating to the receipt of foreign exchange for the exported goods, and no allegation was made or SCN issued under the Foreign Exchange Management Act or the Customs Act in this regard. The CESTAT rightly arrived at the finding that there was no violation of the Customs Act in any manner, as there was no dispute regarding the description, quantity or value of the goods, and the export of rice was neither prohibited nor restricted at the relevant time - The appeals of the Revenue are dismissed [Read less]

Central Excise - Eligibility to CENVAT Credit on input services of maintenance and repair of wind farm situated away from the factory under Rule 2(l) of the CENVAT Credit Rules, 2004 - Appellant established a wind farm about 225 kilometres from its factory for captive generation, and the electricity generated was supplied to the electricity board, which supplied electricity to the factory after adjustment and deduction of wheeling charges - Appellant availed CENVAT credit of service tax paid on maintenance and repair services received at the wind farm - Whether the Tribunal was justified in holding that the Appellant is no... [Read more]

Central Excise - Eligibility to CENVAT Credit on input services of maintenance and repair of wind farm situated away from the factory under Rule 2(l) of the CENVAT Credit Rules, 2004 - Appellant established a wind farm about 225 kilometres from its factory for captive generation, and the electricity generated was supplied to the electricity board, which supplied electricity to the factory after adjustment and deduction of wheeling charges - Appellant availed CENVAT credit of service tax paid on maintenance and repair services received at the wind farm - Whether the Tribunal was justified in holding that the Appellant is not entitled to avail and utilize CENVAT credit on service tax paid on manufacture and repair of the wind farm/mills - HELD - The definition of input service in Rule 2(l) covers any service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products, and has to be widely construed. The words "within the factory of production" are absent in Rule 2(l), and the only stipulation is that the input service should be received by the manufacturer of the final product. There is no provision in the Rules which requires that input services received by the manufacturer must be received at the factory premises - The Appellant utilised the electricity supplied by the electricity board against the electricity generated by the wind mills, and the maintenance and repair services of the wind mills were therefore used in relation to the manufacturing activity and fall within input service. The Tribunal was not justified in denying the credit - The question of law is answered in favour of the Appellant and against the Respondent and the appeal is allowed [Read less]

GST - Chhattisgarh AAR - Taxability of amounts received by an incubator agency from a State society for technical support services - Availability of exemption under Sr. Nos. 3, 3A and 72 of Notification No. 12/2017-Central Tax (Rate) - The Applicant was appointed under a service contract by an apex society of the Department of Rural Development of the State Government, funded by the Central Government under a livelihoods mission, as a Technical Support Services Agency to establish and execute an incubator programme across the State - Whether the amounts received are liable to GST and whether the services are exempt under S... [Read more]

GST - Chhattisgarh AAR - Taxability of amounts received by an incubator agency from a State society for technical support services - Availability of exemption under Sr. Nos. 3, 3A and 72 of Notification No. 12/2017-Central Tax (Rate) - The Applicant was appointed under a service contract by an apex society of the Department of Rural Development of the State Government, funded by the Central Government under a livelihoods mission, as a Technical Support Services Agency to establish and execute an incubator programme across the State - Whether the amounts received are liable to GST and whether the services are exempt under Sr. Nos. 3, 3A and 72 - HELD - The Applicant was engaged as a consultant to render consultancy services and was not rendering services mandated under Article 243G of the Constitution, and the view that its service targeted at rural poverty alleviation should be wholly exempt is misplaced - The exemptions under Sr. Nos. 3, 3A and 72 require the services to be provided to the Central Government, State Government or Union territory administration or local authority themselves, whereas the recipient is a society which is a government entity and not the Government, so the entries are inapplicable. The consideration for the composite supply is taxable at the rate applicable to the principal supply of incubation and enterprise development services - The amounts received for the consultancy services attract GST at the standard rate and the exemption under Sr. No. 72 is not available for the training and capacity-building services or for the incubation support, mentoring and related services – Ordered accordingly - Taxability of amounts received towards dedicated project human resources, salary and personnel costs as part of the consideration for a composite supply of consultancy services - The Applicant sought a ruling on whether amounts received towards dedicated project personnel under the incubator cost component are liable to GST, without furnishing specific details - Whether such amounts are liable to GST - HELD - In the absence of specific details furnished by the Applicant, a conclusive decision is difficult. Amounts received strictly towards salary and direct personnel costs for dedicated project human resources generally do not attract GST, since services by an employee to the employer in relation to employment are outside the scope of supply under Schedule III. However, the salaries of the project staff of the Applicant form part of the supplier's own cost and are not separately excludable from the consideration for a composite supply. The pure agent exclusion under Rule 33 is unavailable where the supplier is the employer, so reimbursement of employee costs is taxable consideration - No conclusive ruling is possible for want of details - Inclusion of challenge fund grants, soft loans and other enterprise-support funds passed on under a project in the taxable value of services, and exclusion as pure agent expenditure under Rule 33 of the CGST Rules, 2017 - Applicant administered a challenge fund of grants and soft loans, and equity investments, which were transferred to selected rural enterprises, and contended that it acted as a pure agent and that the sums were pass-through grants not forming part of the value under Section 15 - Whether the challenge fund and other enterprise-support funds form part of the taxable value of the services supplied - HELD - On the basis of the contract, the Applicant functions as a technical consultant, and the services are a composite supply of goods and services. The grants, soft loans and other enterprise-support funds administered, facilitated or passed on under the project form part of the taxable value of the services supplied by the Applicant - The exclusion of challenge fund disbursements under Rule 33 is possible only if the Applicant acts strictly as a pure agent of the recipient, with written authorisation, recovery at actual cost, separate invoicing and no ownership or benefit, and without proper documentation the entire receipt may be treated as consideration - The funds form part of the taxable value of the services - Exemption under Sr. No. 48 of Notification No. 12/2017-Central Tax (Rate) for taxable services by a Technology Business Incubator recognised by the National Science and Technology Entrepreneurship Development Board - Whether, upon its recognition as a Technology Business Incubator by the Board, the taxable services under the project would be exempt from the date of recognition - HELD - Sr. No. 48 provides nil rate for taxable services under Heading 9983 or any other Heading of Chapter 99 only if provided by a Technology Business Incubator or a Science and Technology Entrepreneurship Park recognised by the Board, or a bio-incubator recognised by the Biotechnology Industry Research Assistance Council. There is nothing on record to hold that the Applicant is a recognised incubator as on date. Upon such recognition the taxable services rendered under the project would qualify for nil rate from the date of recognition, subject to adherence to the conditions. The exemption operates only prospectively from the effective date of recognition and supplies before recognition remain unaffected - The taxable services rendered after recognition qualify for nil rate under Sr. No. 48, subject to the conditions [Read less]