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Customs - Exemption under Sr. No. 528 and 528A of Notification No. 50/2017-Cus - Condition No. 9 - Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 - Manufacture through job worker - Appellant, engaged in manufacture of electric buses, imported components at concessional/nil rate of duty, filed intimations, furnished continuity bond with security and filed returns under the Rules - Appellant entered into an MOU with its sister concern for fabrication of the buses from the imported components at the premises shared by both, and the imported goods were shown as sold to the sister concern under tax invoices ... [Read more]

Customs - Exemption under Sr. No. 528 and 528A of Notification No. 50/2017-Cus - Condition No. 9 - Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 - Manufacture through job worker - Appellant, engaged in manufacture of electric buses, imported components at concessional/nil rate of duty, filed intimations, furnished continuity bond with security and filed returns under the Rules - Appellant entered into an MOU with its sister concern for fabrication of the buses from the imported components at the premises shared by both, and the imported goods were shown as sold to the sister concern under tax invoices - Department alleged that the imported goods were sold and cleared as such without permission, in violation of Rule 7(2) - Whether the Appellant violated the provisions of the IGCR Rules, 2017 so as to lose the benefit of the exemption - HELD - The IGCR Rules operationalise verification of the end-use condition through intimation, bond, records and returns. Rule 7 places a primary obligation on the importer to use the goods within six months and provides an option of re-export or home clearance for unutilised or defective goods - It is admitted that the Appellant followed the procedure of intimation, bond and returns, that the imported components were used in the manufacture of electric buses supplied to the transport corporation, and that both entities shared the same manufacturing premises. The only lapse is that the Appellant entered into a business arrangement with the sister concern for fabrication and the imported goods were shown as sold to the job worker. There is no allegation that the imported goods were not used for the purpose for which they were imported - The Tribunal has repeatedly treated obligations under such Rules as procedural or facilitative where the importer's substantive entitlement is not in doubt, and held that the end-use condition is satisfied where goods are used on behalf of the importer in a job worker's factory. The subsequent amendment of the Rules expressly provides for sending goods to a job worker, recognising the business practice. Procedural lapses can be condoned if substantial compliance is met. Even though the buses were manufactured on job work, the imported components did not leave the Appellant's factory premises - There is substantial compliance with the Notification and duty cannot be demanded - The impugned order is set aside and the appeal is allowed [Read less]

GST - Demand based on mismatch between GSTR-3B and GSTR-2A - Demand of input tax credit on the ground that credit in GSTR-3B exceeded credit in GSTR-2A for 2017-18 - Appellant issued credit notes for goods returned by customers and added the tax on them to ITC in GSTR-3B instead of reducing its output tax, and the annual return showed the credit notes in the relevant table - Proper officer treated the entire difference between GSTR-3B and GSTR-2A as wrongly availed credit and confirmed the demand - Whether the demand can be sustained on the ground stated in the show cause notice - HELD - The difference was the tax on the c... [Read more]

GST - Demand based on mismatch between GSTR-3B and GSTR-2A - Demand of input tax credit on the ground that credit in GSTR-3B exceeded credit in GSTR-2A for 2017-18 - Appellant issued credit notes for goods returned by customers and added the tax on them to ITC in GSTR-3B instead of reducing its output tax, and the annual return showed the credit notes in the relevant table - Proper officer treated the entire difference between GSTR-3B and GSTR-2A as wrongly availed credit and confirmed the demand - Whether the demand can be sustained on the ground stated in the show cause notice - HELD - The difference was the tax on the credit notes declared in the annual return and not credit on purchases, since the credit on purchases from registered suppliers was within the credit shown in GSTR-2A - The Appellant had paid output tax on the full value of its sales and took the deduction only once. Clause (aa) of Section 16(2) came into force only on 01.01.2022, and the Circular recognises that for 2017-18 a difference between GSTR-3B and GSTR-2A calls for verification of facts and is not proof of excess credit - GSTR-2A shows only inward supplies reported by suppliers, and the tax on a credit note issued by the Appellant to its own customer can never appear in it. The proper officer compared totals across the taxes together and split the difference equally between central tax and State tax without tracing it to any head, did not examine the annual return and ignored the explanation, despite Sections 73(9) and 75(6) requiring consideration of the representation and the basis of decision - The records on the common portal, such as the annual return, the statements of outward supplies and the monthly returns, could have been verified, and specific records could have been called for - The FAA went beyond the record by holding that suppliers had not filed returns, which the notice never alleged, did not deal with the main ground, and failed to record reasons as required by Section 107(12). The Appellant also shares the blame for not filing its reply in the prescribed form on the portal and for not appearing before the appellate authority, but the appeal was decided on merits - The demand cannot be sustained on a difference that the Revenue never examined. No interest under Section 50(3) or penalty under Section 73(9) where no tax is due; amount paid under protest to release frozen bank account is refundable - The Order-in-Appeal is set aside and the appeal is allowed - Reporting tax on credit notes as input tax credit - Effect of reporting tax on credit notes issued for goods returned as input tax credit instead of reduction of output tax - Appellant showed the tax on credit notes issued to its own customers as input tax credit in GSTR-3B, while the credit notes were declared in the annual return for the same year - Whether the amount becomes payable because it was reported in the wrong table of the return - HELD - A credit note issued by the Appellant records a reduction in the value of its own outward supply and is not a supply made to the Appellant. The tax on it is not input tax under Sections 2(62) and 16(1), and the Appellant erred in reporting it as such in the self-assessed return - However, Section 34 allows a supplier who issues a credit note for goods returned to reduce its tax liability if it declares the credit note in its return within the time fixed, and the credit notes were declared in the year in which they were issued. The Appellant did not also use the credit notes to reduce its output tax, and the tax paid to the Government would have been the same had the output tax been reduced in the correct table - A substantive condition must be met, but failure to observe a procedural condition does not defeat the benefit where the substance is satisfied. The mistake of table is a matter of form, and the amount placed in its correct table is a reduction of output tax under Section 34 and not credit wrongly availed. Section 155 governs a claim to input tax credit and does not apply, and a self-assessed return stands unless questioned in the manner provided by the Act. The genuineness of the credit notes was never questioned by any authority - The error in reporting does not make the amount payable - Conditions of Section 34 urged at the appellate stage - Reliance by the Revenue at the appellate stage on conditions of Section 34 of the CGST Act, 2017 not raised in the show cause notice - The Revenue contended that the Appellant had not shown that the goods came back, that the incidence of tax was not passed on or that its customers reversed their credit - Whether the demand can be sustained on these grounds - HELD - None of these grounds is in the notice. Under Section 75(7), no demand shall be confirmed on grounds other than those specified in the notice, and the Department cannot travel beyond the show cause notice - The Appellant cannot be faulted for not proving what it was never asked to prove. The plea also fails on its own terms, as the proviso to Section 34(2) as it stood for 2017-18 barred the reduction only where the incidence of tax had been passed on to another person, and the credit notes show the value and tax credited to the purchasers. The reversal of credit by the customer was not a condition for the supplier's reduction for 2017-18 - The plea of the Revenue is rejected - Limitation for filing appeal before the Appellate Tribunal under Section 112(1) of the CGST Act, 2017 - The order of the first appellate authority was communicated on the date it was passed, and the appeal was filed before the Tribunal with the pre-deposit under Section 112(8) after the normal period of three months - Whether the appeal is within time - HELD - Section 112(1) provides for appeal within three months from the date of communication of the order or the date notified by the Government on the recommendations of the Council, whichever is later. By notification, the Government notified a later date for filing appeals against orders communicated before 01.04.2026. The Appellant filed the appeal before that date along with the pre-deposit - The appeal is within time. [Read less]

GST - Input tax credit on invoices issued by a supplier whose registration was cancelled retrospectively - Section 16(2)(a) and 16(2)(c) of CGST Act, 2017 - SCN under Section 73 alleged that the credit was received from a supplier whose registration was cancelled retrospectively, and the demand with interest and penalty was confirmed relying on Section 16(2)(a) and an Instruction of the Board - FAA set aside the demand - Department filed appeal contending that retrospective cancellation shows the transactions were not genuine and that payment of tax to the Government was not verified - Whether input tax credit availed on i... [Read more]

GST - Input tax credit on invoices issued by a supplier whose registration was cancelled retrospectively - Section 16(2)(a) and 16(2)(c) of CGST Act, 2017 - SCN under Section 73 alleged that the credit was received from a supplier whose registration was cancelled retrospectively, and the demand with interest and penalty was confirmed relying on Section 16(2)(a) and an Instruction of the Board - FAA set aside the demand - Department filed appeal contending that retrospective cancellation shows the transactions were not genuine and that payment of tax to the Government was not verified - Whether input tax credit availed on invoices issued by a supplier who was registered on the dates of the invoices becomes inadmissible for the sole reason that the registration is afterwards cancelled with effect from a prior date - HELD - Section 16(2)(a) requires an invoice issued by a supplier registered under the Act, and an invoice is issued on a day, so the supplier must be registered on that day. On the dates of the invoices the supplier held a registration and the common portal showed a registered taxable person - Section 29(2) empowers cancellation from a retrospective date, but it only fixes the date from which the registration is treated as at an end between the Department and the registrant. Section 29(3) keeps the supplier answerable for tax on its supplies and contains no provision withdrawing the credit of those who bought from it - A buyer who has done everything the law asks on the day of purchase cannot hold his credit at the mercy of a later cancellation of which he had no notice. The Instruction of the Board only guides officers in scrutiny, cannot add to Section 16 a disqualification the Section does not contain, and does not bind an authority deciding an appeal - As regards Section 16(2)(c), the invoices appear in FORM GSTR-2A and the supplier filed its returns in FORM GSTR-3B, which cannot be filed without discharging the liability declared. Neither the notice nor the order alleged that the supplier failed to pay the tax - Retrospective cancellation of a supplier's registration does not by itself render the credit inadmissible, though it may be a reason for the Department to enquire and issue a notice if it has material that goods were not received, tax was not paid or the recipient was party to a fraud - The order of the First Appellate Authority is confirmed and the appeal of the Department is dismissed [Read less]

GST - Failure of First Appellate Authority to record reasons under Section 107(12) of CGST Act, 2017 - Cryptic and non-speaking order - Appellant was served with a demand notice under Section 74(1) for suppressing the value of outward supply of goods pertaining to FY 2017-18 - Appellant contended that the amounts identified by the Revenue were advances received from customers, no tax invoice was raised as no delivery was made, and there was no fraud, wilful misstatement or suppression of facts for invoking Section 74(1) - Whether the order of the First Appellate Authority, which recorded no points for determination and no ... [Read more]

GST - Failure of First Appellate Authority to record reasons under Section 107(12) of CGST Act, 2017 - Cryptic and non-speaking order - Appellant was served with a demand notice under Section 74(1) for suppressing the value of outward supply of goods pertaining to FY 2017-18 - Appellant contended that the amounts identified by the Revenue were advances received from customers, no tax invoice was raised as no delivery was made, and there was no fraud, wilful misstatement or suppression of facts for invoking Section 74(1) - Whether the order of the First Appellate Authority, which recorded no points for determination and no reasons for its decision, can be sustained under Section 107(12) of CGST Act, 2017 - HELD - Under sub-section (12) of Section 107, the order of the Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for such decision. The impugned order neither stated the points for determination nor recorded any reason as to how the First Appellate Authority arrived at its decision. The Appellate Authority should have passed a reasoned and speaking order after evaluating the facts independently, and the grounds raised by the Appellant in his defence should also have been addressed - Rejection of an appeal by a cryptic and non-speaking order without recording justifiable reasons violates the principles of natural justice. As no reason touching the merits was recorded, the Appellant could not know why his appeal was dismissed - The impugned order is set aside and the matter is remanded to the FAA to hear the appeal afresh and pass a reasoned order after providing adequate opportunity to the Appellant to adduce evidence - The appeal is disposed of [Read less]

Bihar Value Added Tax Act, 2005 – Taxability of Mobile charger sold as part of composite pack with cellular phone under single MRP - Appellant sold cellular phones and chargers in composite packs under a single label and single MRP and discharged tax at the rate applicable to cellular phones - Assessing Authority treated the charger as an independent accessory taxable at the residual rate and created a differential tax liability on a notional value ascribed to the charger by best judgment - Tribunal following the Supreme Court decision in Nokia India case on mobile chargers - Appellant contended that the decision is dist... [Read more]

Bihar Value Added Tax Act, 2005 – Taxability of Mobile charger sold as part of composite pack with cellular phone under single MRP - Appellant sold cellular phones and chargers in composite packs under a single label and single MRP and discharged tax at the rate applicable to cellular phones - Assessing Authority treated the charger as an independent accessory taxable at the residual rate and created a differential tax liability on a notional value ascribed to the charger by best judgment - Tribunal following the Supreme Court decision in Nokia India case on mobile chargers - Appellant contended that the decision is distinguishable as the dealer there itself treated the charger as an accessory - Whether the Tribunal was justified in applying the Supreme Court decision to levy differential tax on chargers sold in a composite pack - HELD - The Supreme Court held that a mobile charger is an accessory and not a part of the cellphone, that it is an independent product which can be sold separately, and that merely making a composite package of cellphone and charger does not make it a composite good for the purpose of interpreting the Schedule entry - The Supreme Court was fully conscious that the charger was sold in a composite pack and nevertheless held that it retained its character as an independent accessory. Exclusive compatibility, warranty conditions and a single declared MRP are commercial attributes which do not alter the basic nature of the goods. The sale of standalone chargers by the Appellant at the residual rate reinforces that the charger is a distinct commercial commodity. Once the charger is held to be a separate taxable commodity, the residual entry is attracted and the absence of a separate machinery provision for splitting does not nullify the classification. Valuation by best judgment is a question of fact, and no material showed that the notional value was arbitrary or perverse - The decisions of other High Courts turned on differently worded Schedule entries and cannot be pressed into service against binding precedent - The mobile charger sold as part of a composite pack remains an accessory taxable at the residual rate - The finding of the Tribunal upholding the levy of differential tax on mobile chargers sold as part of composite packs with cellular phones, by applying the decision of the Hon’ble Supreme Court in, and the coordinate Bench decision of this Court, is affirmed - The challenge to this finding is rejected - The appeals are dismissed - Classification of toner and cartridges - Entries 3 and 4 of Part II of Schedule III - Entry 97 excluding toner and cartridge from printing ink - Residual entry - Assessing Authority treated toner and cartridges as unspecified goods taxable at the residual rate, which was affirmed by the First Appellate Authority and the Tribunal - Whether toner and cartridges are classifiable under Entries 3 and 4 as computer peripherals and their parts and accessories, or fall under the residual entry - HELD - Entry 97 specifically deals with printing ink excluding toner and cartridge. The express exclusion is a clear legislative pointer, since if the legislature had intended these goods to fall under the IT-products entries it would have been unnecessary to carve them out of the printing-ink entry and leave them to the residual entry. The exclusion is not otiose and shows that toner and cartridges were deliberately kept outside the lower-rate entries. By the functional test and common parlance, toner and cartridges are consumables which are periodically exhausted and replaced and do not form a permanent or integral component of the printer. The analogy with paper, without which a printer cannot produce output, and with fuel, without which a vehicle cannot run, is apposite, as neither is treated as a part or accessory of the machine - A taxing statute is construed strictly, and where the Schedule itself contains an express exclusion and the goods answer the description of consumables, the residual entry is rightly attracted - Toner and cartridges do not fall under Entries 3 and 4 of Part II of Schedule III and are liable to tax at the residual rate. The finding of the Tribunal is affirmed - Remand by Tribunal of issues of trade discount, entry-tax set-off, D-IX reconciliation and interest - Vague show cause notice - Appellant sought clarification of the governing principles on the remanded issues and contended that the show cause notice was vague and reflected a premeditated mindset, and that the orders were non-speaking and ignored the written submissions and authorities cited - Whether any substantial question of law survives on the remanded issues and whether the procedural complaints warrant interference - HELD - The Tribunal correctly observed that a genuine post-sale discount is not a taxable event but that its factual foundation must be verified. It gave a clear exposition that entry-tax set-off is available only when VAT liability is actually incurred on the sale of the imported scheduled goods, with the credit for closing stock to be examined in the succeeding year against the opening stock. It rightly deprecated the use of pure presumptions on D-IX declarations and directed verification against the books of account, tax being imposable only if actual suppression or misuse is established. Interest under Section 39(4) is fastened when any of the specified conditions is satisfied and does not require a separate finding of wilful default. The Tribunal's rejection of the contention that the amount collected is tax-inclusive discloses no error. Since all these issues stand remanded with adequate guidance, no substantial question of law survives at this stage - As regards the procedural complaints, the Appellant fully participated in the assessment and appellate proceedings, filed replies and produced documents, no prejudice was demonstrated, and participation without protest weakens the challenge to the show cause notice - The challenge based on natural justice and non-speaking orders is rejected, the Assessing Authority shall re-examine the remanded issues after giving the Appellant a reasonable opportunity of hearing and recompute the liability. [Read less]

Central Excise - Admissibility of CENVAT credit on capital goods (moulds) sent to job-workers under job work challans - Appellant, a manufacturer of batteries, availed CENVAT credit on moulds and supplied them to job-workers under job work challans, while the polypropylene granules were sold to the job-workers after reversing the credit, and the job-workers returned the finished containers and lids to the Appellant on payment of duty, the duty being availed as credit - The Department alleged that the moulds were not used in the factory of the manufacturer, that they were sent to independent manufacturers instead of job-wor... [Read more]

Central Excise - Admissibility of CENVAT credit on capital goods (moulds) sent to job-workers under job work challans - Appellant, a manufacturer of batteries, availed CENVAT credit on moulds and supplied them to job-workers under job work challans, while the polypropylene granules were sold to the job-workers after reversing the credit, and the job-workers returned the finished containers and lids to the Appellant on payment of duty, the duty being availed as credit - The Department alleged that the moulds were not used in the factory of the manufacturer, that they were sent to independent manufacturers instead of job-workers, and that this amounted to double credit - Whether the Appellant was entitled to the CENVAT credit on the moulds - HELD - How material is sent to the job-worker is the outlook of the manufacturer. Reversing credit on the granules avoided the hassle of reconciling consumption, scrap and quantities at the end of the job-worker - The moulds are capital goods of the Appellant and the intellectual property connected to them belongs to the Appellant, who therefore preferred to send them on job work basis and account for them properly in its books. There is no contravention of the Cenvat Credit Rules, 2004 in the procedure adopted. The transaction does not result in double credit benefit. Had the Appellant reversed the credit on the moulds, the job-worker could have taken the credit and reversed it again while sending the goods back, and the Appellant would claim it back on return of the moulds, resulting in a revenue neutral situation - The job work procedure under Notification No.214/86 was devised to avoid such multiple reversals. An order of the Commissioner (Appeals) on the identical issue in favour of the Appellant's other unit was not appealed by the Revenue and attained finality - No case is made out by the Revenue, the impugned order is set aside and the appeal is allowed - Central Excise - Invocation of extended period of limitation for demand of CENVAT credit in a revenue neutral situation - Show cause notice was issued by invoking the extended period for recovery of credit availed on moulds sent to job-workers - Whether the demand for the extended period is sustainable - HELD - The facts of availing CENVAT credit on the granules, reversing it, availing credit on the moulds and removing them under job work challans were well within the knowledge of the Range and Divisional officials. The allegation of suppression with intent to evade duty cannot be sustained. The transaction would also result in a revenue neutral situation if the Appellant were made to reverse the credit on the moulds. It has been held that where the exercise is revenue neutral, as the job-worker would be entitled to take the credit of the same, there cannot be any intention to evade payment of duty - The confirmed demand for the extended period is not sustainable on account of time bar. [Read less]

Service Tax - Exemption under Sl. No. 14(a) of Notification No. 25/2012-S.T. - Original works pertaining to railways - Explanation 1(a) to Rule 2A of Service Tax (Determination of Value) Rules, 2006 - Appellant, engaged in works contract services exclusively for the Indian Railways, did not obtain registration or file returns, believing that the services were exempt, and the demand was raised on the basis of Form 26AS and TDS data - Exemption was extended by the lower authorities for four of the seven contracts, and the demand in respect of the remaining three contracts, comprising the making of base arrangement for erecti... [Read more]

Service Tax - Exemption under Sl. No. 14(a) of Notification No. 25/2012-S.T. - Original works pertaining to railways - Explanation 1(a) to Rule 2A of Service Tax (Determination of Value) Rules, 2006 - Appellant, engaged in works contract services exclusively for the Indian Railways, did not obtain registration or file returns, believing that the services were exempt, and the demand was raised on the basis of Form 26AS and TDS data - Exemption was extended by the lower authorities for four of the seven contracts, and the demand in respect of the remaining three contracts, comprising the making of base arrangement for erection of OHE masts on piers of bridges, a composite programme of works at a railway station, and repair of goods wharf, was confirmed - Whether the three surviving contracts qualify as original works eligible for exemption under Sl. No. 14(a) - HELD - Original works include all new constructions, additions and alterations to abandoned or damaged structures to make them workable, and erection, commissioning or installation of structures. The making of a base arrangement for erection of OHE masts directly facilitates the creation of a new structural component of the electrification system and is not repair or maintenance. The identical earlier contract had been granted exemption by the adjudicating authority, and the Commissioner (Appeals) gave no contract-linked or evidence-based reasoning for denying it for this contract. A composite contract comprising construction of a catwalk, new roads, a new drain and replacement of a pipe has to be read as a whole, and the isolated words 'repairs of floor' cannot alter its essential character, which is consistent with the principle of bundled services in Section 66F. The observation that there is no concurrence between 'new construction' and 'original work' is without any basis. The nomenclature 'repair of goods wharf' is not conclusive, and the schedule of work comprising foundations, footings, earthwork, centering and shuttering and brickwork shows substantial reconstruction/new construction, which is fortified by the certificate of the Railway authority. The Revenue cannot adopt shifting positions on similar facts without disclosing the distinguishing basis - All three contracts qualify as original works eligible for exemption under Sl. No. 14(a), and the demand is set aside – The appeal is allowed - Service Tax - Extended period of limitation under proviso to Section 73(1) of Finance Act, 1994 - Information received through inter-departmental sharing - Penalties under Sections 77, 78 and 70 - Show cause notice invoked the extended period for the Financial Years 2015-16 and 2016-17 on the allegation of suppression, based on Form 26AS data received through the Income Tax Department - Appellant contended that the demand was barred by limitation and that penalties could not be imposed - Whether the extended period was validly invoked and whether penalties are sustainable - HELD - The foundation of the proceedings was information received through inter-departmental sharing and scrutiny of the Form 26AS data, and the receipts were not transactions which remained wholly beyond the knowledge of the Department. Any delay within the Department in processing or acting upon information already available with a governmental agency cannot constitute suppression or wilful withholding by the Appellant. The contracts, work orders, payment certificates and certificates of the competent railway authorities show the bona fide nature of the Appellant's claims. The ingredients of suppression of facts or wilful misstatement with intent to evade payment of tax are not established, and the entire demand raised beyond the normal period fails on limitation as well. Once the demand itself is set aside, the foundation for penalties under Sections 77, 78(1) and 70 read with Rule 7C also ceases to exist - The demand with interest and the penalties are set aside and the appeal is allowed [Read less]

Service Tax - Corporate guarantee given for loan to foreign sister concern - Department treated this arrangement of being a guarantor for the bank for the loan extended to the foreign sister concern as Banking and Financial Services for the period prior to the negative list, and as intermediary services for the later period, in which certain consideration was received by way of debit note from the entity abroad - Whether standing as a guarantor amounts to Banking and Financial Services or intermediary services chargeable to service tax - HELD - Merely standing as a guarantor, which is an independent contract under the Indi... [Read more]

Service Tax - Corporate guarantee given for loan to foreign sister concern - Department treated this arrangement of being a guarantor for the bank for the loan extended to the foreign sister concern as Banking and Financial Services for the period prior to the negative list, and as intermediary services for the later period, in which certain consideration was received by way of debit note from the entity abroad - Whether standing as a guarantor amounts to Banking and Financial Services or intermediary services chargeable to service tax - HELD - Merely standing as a guarantor, which is an independent contract under the Indian Contract Act, 1872, is a tripartite contract on a principal-to-principal basis. It cannot be considered as a service of the nature provided by a banking and financial institution, as the Appellant is a corporate entity having its own memorandum and object clause indicating activities which are primarily in the nature of research. There is no element of Banking and Financial Services in providing a corporate guarantee by an entity which has nothing to do with financial and banking services. For the later period, though certain consideration was received by way of debit note, the contract of guarantee per se cannot be construed as provision of any service - The demand for both periods cannot be sustained and the appeal is allowed [Read less]

Service Tax - Supply of ready mix concrete produced at a batching plant - Abatement under Rule 2A of Service Tax (Determination of Value) Rules, 2006 - Appellant supplied ready mix concrete produced at a batching plant to a contractor for its project site and paid service tax after availing abatement of 60% of the gross contract value - Revenue issued a show cause notice for differential service tax under the extended period, which was confirmed by the Assistant Commissioner and upheld by the Commissioner (Appeals) - Appellant contended that the activity of producing ready mix concrete amounts to manufacture covered under ... [Read more]

Service Tax - Supply of ready mix concrete produced at a batching plant - Abatement under Rule 2A of Service Tax (Determination of Value) Rules, 2006 - Appellant supplied ready mix concrete produced at a batching plant to a contractor for its project site and paid service tax after availing abatement of 60% of the gross contract value - Revenue issued a show cause notice for differential service tax under the extended period, which was confirmed by the Assistant Commissioner and upheld by the Commissioner (Appeals) - Appellant contended that the activity of producing ready mix concrete amounts to manufacture covered under Section 66D(f) of Finance Act, 1994, that the contract was in the nature of a works contract as cement was supplied by the service recipient, and that the service tax already paid has to be allowed - Whether the Appellant is liable to pay differential service tax on the activity of supplying ready mix concrete - HELD - The Supreme Court in Larsen & Toubro Ltd. held that concrete produced at batching plants using cement, aggregates and water with admixtures and delivered by transit mixer is a manufactured, marketable commodity - The Appellants are therefore manufacturing an excisable product and were required to pay Central Excise duty. However, they paid service tax after availing abatement, and the amount of service tax paid is much higher than the amount that would have been paid as Central Excise duty. The interest of Revenue is therefore more than taken care of. Even from the perspective of service tax, the service being in terms of a works contract, the abatement has been correctly availed. Once it is held that the services provided are works contract services, Rule 2A comes into picture and the taxable value is determined after allowing abatement as provided - The impugned order is not legally sustainable and is set aside, and the appeal is allowed - Service Tax - Demand based on Form 26AS data - Verification of consideration received for taxable service - Appellant contended that the entire differential receipts reflected in Form 26AS cannot be treated as the value of taxable services without establishing that the same represent consideration received for a service rendered - Whether the demand adopting figures in Form 26AS without verification can be sustained - HELD - The SCN was issued by adopting the figures reflected in the Form 26AS statement. Revenue has not made any effort to verify whether the amount related to any consideration received by the Appellant towards rendering of any taxable service - The impugned order is not legally sustainable and is set aside, and the appeal is allowed. [Read less]

Central Excise - Cenvat credit on capital goods supplied by contractors for a plant set up within the factory - Splitting of a works contract into supply and erection orders - Passing of property in goods - Appellant took credit of the excise duty on the manufacturers' and dealers' invoices naming the contractor as buyer and the Appellant as consignee at its factory - Revenue contended that the contracts were composite works contracts for a plant which is immovable, that the Appellant had taken credit on non-excisable inputs in the guise of capital goods, and that the contracts were deliberately split to facilitate credit ... [Read more]

Central Excise - Cenvat credit on capital goods supplied by contractors for a plant set up within the factory - Splitting of a works contract into supply and erection orders - Passing of property in goods - Appellant took credit of the excise duty on the manufacturers' and dealers' invoices naming the contractor as buyer and the Appellant as consignee at its factory - Revenue contended that the contracts were composite works contracts for a plant which is immovable, that the Appellant had taken credit on non-excisable inputs in the guise of capital goods, and that the contracts were deliberately split to facilitate credit - Whether the contracts are in substance a single works contract and whether the split was artificial and when property in the goods passed - HELD - A split into two instruments is recognised only where the agreements are in truth separate. The letter of intent accepted a single price for supply, installation, testing and commissioning, and both purchase orders incorporated the same letter, bill of quantities and tender document. They fixed a common completion schedule, took security on the combined value, withheld part of the supply price until erection and commissioning, and ran the defects liability period from commissioning - The contract with each contractor is in substance a single works contract for the design, supply, erection and commissioning of a system, falling within the Explanation to Section 65(105)(zzzza). Recording the price of goods and of erection in separate instruments reproduces the division which Article 366(29A)(b) effects by legal fiction, and nothing on record shows that the documents were not acted upon as written, so the split is not shown to be a sham or colourable device - In a works contract, the property in the goods passes when the goods are incorporated in the works, and the completion certificate is not the point at which it passes. The contractors held the goods at site for the purpose of executing their own work, and property vested in the Appellant, at the latest, on incorporation into the systems in its factory. The case of bailment fails as there was no delivery of goods by the Appellant to the contractors, and the Revenue's proposition that the Appellant received only a plant is also untenable as it acquired the very duty-paid goods as components of its plant – The appeal is allowed - Rules 2(a)(A), 3(1) and 4(2) of Cenvat Credit Rules, 2004 - Credit on capital goods received and used in the factory - Appellant took credit of duty paid on goods supplied through contractors and installed as part of systems of a new plant within its factory, and the lower authorities held that the goods were consumed by the contractors in bringing into existence an immovable, non-excisable plant and were therefore inputs of a non-excisable product on which no credit can be taken - Whether the goods are capital goods received and used in the factory of the Appellant so as to entitle it to credit under Rules 2(a) and 3(1) - HELD - The conditions of entitlement are the description of the goods, payment of duty evidenced by a prescribed document, receipt in the factory and use in the factory. None of them speaks of ownership at the point of receipt, of the person from whom the goods were bought or of the person who installs them. The requirement of receipt in the factory is one of place and not of person, and the duty-paying invoices named the Appellant's factory as the consignee. The definition of capital goods speaks of goods used in the factory and not of goods used by the manufacturer, and handling by the contractor in the course of installation is the ordinary prelude to the use of capital goods - Excisability of the product into which goods are worked is decisive for inputs claimed by the person who makes that product, and any disability on that account lay with the contractors who erected the plant as their output. The plant is not the Appellant's final product but the means by which its excisable final products are made. The Board's Order treats an erected plant as immovable and not excisable but states that its components remain dutiable and says nothing about credit. If credit were denied, the duty would stay embedded in the cost of the final goods and be borne again, causing the cascading which the credit scheme exists to remove, and since most heavy machinery is installed on foundations, a construction denying credit on that basis would empty the definition of capital goods of most of its content. The Rules exclude only civil and structural items and not machinery integrated into a plant - The goods satisfy the definition of capital goods in the Appellant's hands and the Appellant is entitled to the credit - Explanation to Rule 3 of Cenvat Credit Rules, 2004 - Rule 2A of Service Tax (Determination of Value) Rules, 2006 - Whether credit is barred where the works contractor's services are treated as works contract - Revenue contended that the value of the goods stood exempted or excluded from service tax under Notification No. 12/2003-ST or Rule 2A, that the bar on credit to the works contractor prevails over the Cenvat Credit Rules by the Explanation to Rule 3, and that the Appellant would otherwise enjoy a double benefit - Whether the credit of the Appellant is barred by the Explanation to Rule 3 - HELD - The Explanation is attracted only if there is a rule or notification granting exemption on condition of non-availability of credit, a claim to that exemption in respect of these very goods, and a condition capable of operating against the person claiming credit. The principle that classification at the supplier's end cannot be altered at the recipient's end does not prevent an authority from construing the recipient's own contracts to determine what it received, but it forbids the Revenue from attributing to a service provider a classification or valuation that it did not adopt - The value of the goods transferred in a works contract was never within the levy, and Rule 2A is a valuation provision framed under Section 94(2)(aa) and not an exemption under Section 93. Therefore, neither an exemption under Notification No. 12/2003-ST nor the deduction under Rule 2A on the value of goods can attract the Explanation. From 01.07.2012, Explanation 2 to Rule 2A is addressed only to the provider of the taxable service. For the earlier period, Rule 2A contained no restriction on credit, and a circular addressed to the provider is not a rule or notification granting exemption - The coordinate Bench decision relied upon by the Revenue is distinguishable on facts and was rendered before the Supreme Court decision holding that no question of exemption arises where there is no levy. There is no double benefit, as the duty was paid once by the manufacturers and credited once by the Appellant. An adjudicating authority which declines to follow decisions cited before it owes the assessee the reason, and the Commissioner (Appeals) wrongly inverted the burden by faulting the Appellant for not showing a valid reason for placing two sets of orders - The Explanation to Rule 3 does not bar the credit for either period - Extended period of limitation under proviso to Section 11A(1) and Section 11A(4) of Central Excise Act, 1944 - Interest and penalty under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC - Appellant contended that separate orders are an industry practice, that the credit was reflected in the returns, that the burden of proving suppression lies on the Revenue - Whether the extended period was validly invoked and whether interest and penalty are sustainable - HELD - Suppression means that correct information was not disclosed deliberately to evade payment of duty, and there must be some positive act on the part of the assessee. Non-disclosure of information which the law does not require to be disclosed is not suppression, and the requirements for a valid notice must be found in the notice [Read less]

Central Excise - Refund of service tax paid under Reverse Charge on royalty after introduction of GST under Section 142(3) of CGST Act, 2017 – Appellant deposited service tax on royalty paid in foreign currency under RCM on the conduct of an audit - Refund claim was rejected by the Dept - Appellant contended that the audit was conducted and the payment was made after the introduction of GST and therefore the claim should be dealt with in terms of Section 142(3) - Whether the refund in cash of service tax paid by the Appellant is admissible - HELD - There were conflicting decisions of various Benches of the Tribunal and a... [Read more]

Central Excise - Refund of service tax paid under Reverse Charge on royalty after introduction of GST under Section 142(3) of CGST Act, 2017 – Appellant deposited service tax on royalty paid in foreign currency under RCM on the conduct of an audit - Refund claim was rejected by the Dept - Appellant contended that the audit was conducted and the payment was made after the introduction of GST and therefore the claim should be dealt with in terms of Section 142(3) - Whether the refund in cash of service tax paid by the Appellant is admissible - HELD - There were conflicting decisions of various Benches of the Tribunal and a High Court on this issue. The Larger Bench of the Tribunal in M/s Bosch Electrical Drive India Private Limited decided the issue in favour of the Appellant. The Larger Bench held that where service tax was paid under Chapter V of the Finance Act and refund was claimed under Section 142(3) of the CGST Act, the claim is required to be disposed of in accordance with the provisions of the existing law. Therefore, even if the service tax was deposited after the CGST Act came into force, the refund of any amount of CENVAT credit could be claimed only under sub-section (3) of Section 142 - The refund in cash of service tax paid is admissible to the Appellant, the impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Exemption to Ready Mix Concrete manufactured at the site of construction - Amendment of Entry No. 144 of Notification No. 12/2012-CE by way of substitution - Appellant, engaged in providing construction of complex service, manufactured Ready Mix Concrete (RMC) at the site of construction and captively used it in its own residential projects - Following the judgment of the Supreme Court holding that RMC and concrete mix are different and that the exemption for concrete mix is not available to RMC, duty was demanded on RMC for the period October 2014 to February 2016 and penalty was imposed under Section 11A... [Read more]

Central Excise - Exemption to Ready Mix Concrete manufactured at the site of construction - Amendment of Entry No. 144 of Notification No. 12/2012-CE by way of substitution - Appellant, engaged in providing construction of complex service, manufactured Ready Mix Concrete (RMC) at the site of construction and captively used it in its own residential projects - Following the judgment of the Supreme Court holding that RMC and concrete mix are different and that the exemption for concrete mix is not available to RMC, duty was demanded on RMC for the period October 2014 to February 2016 and penalty was imposed under Section 11AC, which was upheld by the Commissioner (Appeals) - Appellant contended that Entry No. 144, which exempted concrete mix, was substituted by a later notification to cover concrete mix or ready mix concrete manufactured at the site of construction, and that a substitution has retrospective effect - Whether the substitution of Entry No. 144 has retrospective effect from the date of the original notification so as to exempt RMC manufactured at site during the disputed period - HELD – The amendment of Entry No.144 of Notification No.12/2012 dated 17-03-2012 vide Central Excise Notification No.12/2016 dated 01-03-2016 by way of “substitution? has a retrospective effect from 17-03-2012 - The Hon’ble Karnataka High Court has held that an amendment by substitution has retrospective effect and the provision has to be read and construed as if the altered words had been written into the Act or Rules from their inception - A substituted provision is deemed to have been part of the Act from the very inception. In the case of an exemption notification issued by way of substitution, no substantive right is taken away nor is any penal consequence imposed, and a person eligible for the benefit of an exemption notification should be given the same liberally. In view of the binding decisions of the High Court and the Supreme Court, the later notification had a retrospective effect from the date of the original notification - The Appellant was eligible for exemption from payment of Central Excise Duty on manufacture and clearance of RMC during the disputed period - The entire demand is set aside on merits, the demand of interest and penalty also falls, and the appeal is allowed - Central Excise - Extended period of limitation - Demand on Ready Mix Concrete manufactured at the site of construction for the period October 2014 to February 2016 was raised by invoking the extended period of limitation - Whether the extended period of limitation could be invoked - HELD - The Tribunal agreed with the submission of the Appellant that, in the facts of the case, the extended period of limitation could not have been invoked - The extended period is held to be not invocable and the appeal is allowed. [Read less]

GST - Validity of order in Form GST MOV-09 passed without considering objections and without personal hearing - Appellant despatched transformer oil drums with a delivery challan and e-way bill, the conveyance was intercepted - Copies of tax e-invoices and e-way bills were furnished to the proper officer before issue of notice in Form GST MOV 07 - The notice granted seven days to submit objections and fixed a personal hearing, but the order in Form GST MOV 09 was passed on the same date as the notice - Whether the order in Form GST MOV 09 violates the principles of natural justice - HELD - The reasons given for rejecting t... [Read more]

GST - Validity of order in Form GST MOV-09 passed without considering objections and without personal hearing - Appellant despatched transformer oil drums with a delivery challan and e-way bill, the conveyance was intercepted - Copies of tax e-invoices and e-way bills were furnished to the proper officer before issue of notice in Form GST MOV 07 - The notice granted seven days to submit objections and fixed a personal hearing, but the order in Form GST MOV 09 was passed on the same date as the notice - Whether the order in Form GST MOV 09 violates the principles of natural justice - HELD - The reasons given for rejecting the explanation were identical to those in the show cause notice and the objections filed by the Appellant were not referred to. The order does not disclose application of mind to the objections. The proper officer had a statutory duty to refer to and consider the taxpayer's explanations before resorting to Section 129 - The order was passed without granting a personal hearing as required by the statute. No reason was furnished for passing the order on the same date as the notice. The Appellate Authority did not consider this plea although it was raised before it - The principles of natural justice were violated and the order in Form GST MOV 09 cannot be sustained - Order in Form GST MOV 09 beyond the scope of the notice - Section 75(7) of the CGST Act - The notice in Form GST MOV 07 proposed a penalty lower than the penalty demanded in the order in Form GST MOV 09. The Respondent contended that the penalty leviable was the higher amount and that the notice showed the lower amount due to a clerical error - Whether the order is beyond the scope of the show cause notice and violates Section 75(7) of the Act - HELD - Section 75(7) provides that the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice, and no demand will be confirmed on grounds other than those specified in the notice - The statute is very clear and the quantum of penalty demanded in the order shall not exceed the amount specified in the notice. The provision does not make any exception for clerical errors. Nothing prevented the officer from issuing an erratum to the notice disclosing the exact penalty amount, especially when the notice granted seven days to submit objections and a personal hearing was also fixed. The Appellate Authority did not consider this plea although it was raised before it - The order in Form GST MOV 09 is beyond the scope of the notice in Form GST MOV 07 and violates Section 75(7) of the Act - Non-compliance with procedure in Circular No. 41/15/2018-GST - Effect on validity of order - Clause (h) of the Circular requires the proper officer to upload the order in Form GST MOV 09 on the common portal and to add the demand to the electronic liability register - Whether violation of the procedure laid down by the Board in the Circular affects the validity of the order of the proper officer - HELD - the lapse, if any, was a technical lapse only and the order cannot be set-aside on that ground. The procedural lapse of not following the Board's circular does not warrant setting aside the order on that ground alone - Invocation of Section 129 of the CGST Act for goods transported in batches - Rule 55(5) of the CGST Rules - Transformer oil forming part of the remaining material of transformers already supplied was transported under a delivery challan referring to seven earlier tax invoices, and an e-way bill. Penalty was imposed on the ground that item-wise invoices showed that goods were not supplied in batches, that the description in the delivery challan and the e-way bill was mismatched, and that the original invoice was not produced - Whether invocation of Section 129 is just and proper in the facts and circumstances of the case - HELD - The supplier had issued the complete invoices before dispatch of the first consignment, as the delivery challan referred to seven invoices issued earlier, and the invoices reflected charging of integrated tax from the recipient. The Purchase Order established that the recipient ordered transformers along with spare transformer oil whose price was included in the contractual price, and these facts remained undisputed. Item-wise tax invoices cannot be a ground for holding that goods were not supplied in batches, as no provision in the Act supports such reasoning - The fact that a commercial transaction contains separately described items does not establish that each item must be transported in the same consignment or that subsequent consignments are impermissible. The delivery challan could have been worded differently to avoid confusion, but the statement therein that the ‘price of all material was already included in the referred invoices’ comes to the aid of the Appellant. Rule 55(5) does not require submission of the original invoice to the proper officer - So long as the delivery challan contains all details required under Rule 55, a minor omission cannot be treated as a violation. No intention to evade tax and no violation of the Act or the Rules was established - Imposition of penalty under Section 129 is invalid and unjustified, the order-in-appeal is set aside and the appeal is allowed. [Read less]

GST - Parallel proceedings under Section 129 and adjudication for the same cause of action - The Appellant was found unloading goods from a vehicle during a search without any legal documents. Proceedings under Section 129 of the CGST Act were initiated for release of the goods and tax and penalty were collected, while a show cause notice was also issued and tax and penalty were imposed in adjudication - While FAA reduced the liability by the amount levied and collected in the Section 129 proceedings, the Revenue neither filed an appeal nor a memorandum of cross objection against that finding - Whether the First Appellate ... [Read more]

GST - Parallel proceedings under Section 129 and adjudication for the same cause of action - The Appellant was found unloading goods from a vehicle during a search without any legal documents. Proceedings under Section 129 of the CGST Act were initiated for release of the goods and tax and penalty were collected, while a show cause notice was also issued and tax and penalty were imposed in adjudication - While FAA reduced the liability by the amount levied and collected in the Section 129 proceedings, the Revenue neither filed an appeal nor a memorandum of cross objection against that finding - Whether the First Appellate Authority legally reduced the liability on account of the parallel proceedings - HELD - On allegation of the goods which were being unloaded from tempo, parallel proceedings u/s 129 of was initiated against taxpayer and for releasing the goods tax and as penalty were levied and collected from taxpayer. That amount was reduced by FAA from the total amount levied by ld. adjudicating officer. Revenue has not challenged that finding recorded either by filling appeal or memorandum of cross objection. Therefore, the Tribunal of the view that ld. FAA has legally reduced the tax liability on taxpayer as for the same cause of action and two parallel proceedings cannot be allowed to be initiated against taxpayer under the same legislation – Ordered accordingly - Rejection of belatedly produced manual invoices for goods found without documents in transit - The Appellant failed to produce the invoice, e-way bill and transporter's bilty at the time of search, and explained that the transporter had mistakenly left the papers at its office. No valid paper was submitted even with the reply to the show cause notice. Two manual invoices were produced before the adjudicating officer after more than three months - Whether the authorities rightly discarded the tax invoices, bilty, bank statement and e-way bill filed by the Appellant in respect of the goods unloaded at the time of search - HELD - Section 68 read with Rules 138 and 138A mandates that the person in charge of a vehicle carrying goods above the prescribed value must carry the prescribed documents including the tax invoice and a valid e-way bill - Generation of an e-way bill prior to commencement of movement is a strict statutory requirement. A manual invoice produced three months after interception, without electronic upload on the GST portal, has no evidentiary credibility. Post-interception generation or manual creation of transit documents is a procedural afterthought which cannot retrospectively validate illegal transportation or cure a substantive breach - The goods were sensitive and high value commodities susceptible to tax evasion through unrecorded parallel trade, which creates a strong presumption of intention to evade tax that the taxpayer failed to rebut by relevant and reliable evidence - The concurrent findings discarding the manual invoices are well reasoned and upheld - The second appeal is dismissed [Read less]

GST - Power of Police to register FIR and investigate offences under CGST Act, 2017 along with offences under Bharatiya Nyaya Sanhita, 2023 - FIR was registered at the instance of a State Tax Officer alleging offences under Section 132(1) of the CGST Act and Sections 318(4), 336(3) and 340(2) of BNS, on the allegation that false and fabricated documents were submitted for obtaining registration and bogus invoices were generated without actual business transactions solely for availing fraudulent input tax credit - Whether the police can register an FIR and carry out investigation when offences under the CGST/SGST Act are al... [Read more]

GST - Power of Police to register FIR and investigate offences under CGST Act, 2017 along with offences under Bharatiya Nyaya Sanhita, 2023 - FIR was registered at the instance of a State Tax Officer alleging offences under Section 132(1) of the CGST Act and Sections 318(4), 336(3) and 340(2) of BNS, on the allegation that false and fabricated documents were submitted for obtaining registration and bogus invoices were generated without actual business transactions solely for availing fraudulent input tax credit - Whether the police can register an FIR and carry out investigation when offences under the CGST/SGST Act are alleged, and whether the investigation is liable to be declared illegal and quashed - HELD - Under Section 4(2) of the Code, offences under any other law are to be investigated, inquired into and tried according to the provisions of the Code, subject to any enactment regulating the manner or place of investigating such offences. The Supreme Court has held that offences under the Indian Penal Code committed while committing an offence under a special statute are not displaced, and that it is open to the specialised agency to get the assistance of any other legally constituted investigating agency. If offences falling under the Penal Code or any other enactment are also detected during the investigation, there is no inhibition to pass over the investigation to the regular police. Section 72 of the CGST Act specifically provides that all officers of Police shall assist the proper officers in the implementation of the Act - In the present case, the accused are also charged for offences under Sections 318(4), 336(3) and 340(2) of BNS, which are not common with any of the offences under the CGST Act. There is no bar to a trial or conviction of an offender under two different enactments, and the bar is only to the punishment of the offender twice for the same offence. The police are therefore not debarred from carrying out the investigation - An FIR is not an encyclopedia of the entire case and only sets the investigation machinery into motion, the Petitioner is not the accused therein and the matter is still at the stage of investigation, and the FIR need not be quashed even if the investigation was to be conducted by a different agency - The contention of the Petitioner is not sustainable, the prayers to declare the initiation of investigation illegal and to quash it are rejected - The Writ Petition is dismissed [Read less]

Service Tax – Validity of demand founded on comparison of returns with payment challans without independent verification – Show Cause Notice alleged short-payment of Service Tax for April 2015 to March 2017 on the basis of discrepancies between the ST-3 Returns, the GAR-7 challans and the Statement of Accounts. The demand was confirmed in de novo adjudication after the Tribunal remanded the matter to examine the revised ST-3 Returns. The adjudicating authority held that the revised Returns were already considered in the Show Cause Notice – Whether a demand formulated on a mere comparison of figures, without independe... [Read more]

Service Tax – Validity of demand founded on comparison of returns with payment challans without independent verification – Show Cause Notice alleged short-payment of Service Tax for April 2015 to March 2017 on the basis of discrepancies between the ST-3 Returns, the GAR-7 challans and the Statement of Accounts. The demand was confirmed in de novo adjudication after the Tribunal remanded the matter to examine the revised ST-3 Returns. The adjudicating authority held that the revised Returns were already considered in the Show Cause Notice – Whether a demand formulated on a mere comparison of figures, without independent investigation and without examining the revised Returns as directed in remand, is sustainable – HELD – A comparison of figures in the Returns with the challans may be a starting point but cannot by itself constitute the investigation. The Department was required to ascertain the underlying transactions, the nature of the services, the status of the recipients and the governing statutory provisions. The Show Cause Notice gave no service-wise quantification and no computation showing how the distinct allegations culminated in the aggregate demand. The observation that the revised Returns were considered in the notice is factually incorrect, as they were filed about one year after its issuance. Once a matter is remanded for examination of a particular aspect, it must be addressed with a reasoned finding, and mechanical reiteration of the demand is impermissible. An allegation based on identical taxable values in two categories is a clerical error and is untenable without further investigation. The deficiencies strike at the foundation of the liability and the demand is set aside – Appeal allowed - Service Tax – Manpower recruitment or supply agency service – Reverse charge under Notification No. 07/2015-S.T. dated 01.03.2015 – Appellant, a proprietorship concern registered for manpower supply, contended that the services were rendered to body corporates, so the liability stood shifted to the recipients. The Respondent proceeded on gross figures in the Returns without examining individual transactions – Whether the Appellant is liable to pay Service Tax on manpower supply services rendered to body corporates – HELD – The sample invoices describe the service as charges for providing manpower towards dismantling and mechanical erection work. This establishes that the services are manpower supply services rendered to body corporates. The Respondent produced no contrary evidence, and the benefit cannot be rejected merely on gross figures in the Returns. The liability stands shifted to the service recipient under Notification No. 07/2015-S.T. – Demand on this count is not sustainable - Service Tax – Classification of erection, commissioning or installation service as works contract service – Partial reverse charge and valuation under Rule 2A of the Service Tax (Determination of Value) Rules, 2006 – Appellant contended that the services declared as erection, commissioning or installation service were works contract services, the classification in the Returns being a clerical error. The Respondent relied on an earlier Show Cause Notice to hold otherwise – Whether the services are works contract services eligible for partial reverse charge and valuation for original works – HELD – The sample invoices and work orders show that materials were involved, and consideration was linked to placement of material on the foundation. The Respondent brought no independent material to show why the contracts necessarily fell within erection, commissioning or installation service. The services including materials are classifiable as works contract service, so the partial reverse charge under Notification No. 07/2015-S.T. is available and the entire liability cannot be fastened on the Appellant. The nature of the work reflects substantive structural modification, so the claim of valuation for original works carries weight. The CENVAT Credit availed is to be reversed as undertaken by the Appellant. The adjudicatory process cannot commence with a conclusion – Demand on this count is not sustainable - Service Tax – Services rendered in relation to Special Economic Zone unit – Exemption – Procedural lapse – Appellant rendered services at the premises of an SEZ unit through a contractor and produced certificates from the Assistant Development Commissioner and the contractor with the list of invoices, but not Forms A1 and A2. The Respondent denied the exemption for want of documents – Whether the exemption can be denied for want of Forms A1 and A2 – HELD – The certificates substantially support the claim that the services were rendered in connection with the authorised operations of the SEZ unit. The Respondent produced no evidence that the services were outside authorised operations or were diverted to the Domestic Tariff Area. A substantive benefit cannot be denied for procedural infractions when the other requirements are fulfilled. The Tribunal had also set aside the demand on services in the same SEZ area in the Appellant's own case. The services are exempt – Demand on this count is not sustainable - Service Tax – Reconciliation statement supported by Chartered Accountant's Certificate – Evidentiary value – Appellant furnished a reconciliation statement giving effect to the revised Returns, the reverse charge, the works contract classification, the valuation provisions and the SEZ exemption, supported by a Chartered Accountant's Certificate – Whether the reconciliation can be accepted to hold that no further liability remains – HELD – A reconciliation statement is not conclusive proof by itself. The Certificate, however, represents a professional's considered certification after verification of books and records, and cannot be rejected without cogent reasons or verified factual errors. The reconciliation proceeds from the very records on which the Respondent founded the demand and is not a bald denial of liability. The reconciled computation merits acceptance, and the demand is unsustainable on the substantive merits as well - Service Tax – Pre-Show Cause Notice consultation – Mandatory requirement under Board's Instruction dated 21.12.2015 and clarification dated 10.03.2017 – Show Cause Notice was issued on 10.04.2018 without pre-consultation. The adjudicating authority found force in the objection but declined to decide it, as the Department had appealed against the judgment of the Delhi High Court in Amadeus India – Whether the Show Cause Notice issued without mandatory pre-consultation is vitiated – HELD – Pre-consultation was mandatory during the relevant period and was made non-mandatory in cases involving suppression only by the Circular dated 11.11.2021. The mere pendency of an appeal, without any stay or contrary binding decision, does not efface the legal position in Jay Mahakali Industrial Service and SIS Ltd. The Appellant had responded to the initial communication and furnished the documents called for, and the discrepancies were later shown to be capable of explanation. The denial of consultation caused manifest prejudice and is not a mere procedural irregularity. The failure goes to the root of the proceedings and vitiates the Show Cause Notice. The demand along with interest and penalties is set aside and the appeal is allowed with consequential relief, if any. [Read less]

Service Tax – Taxability of manufacture of liquor on behalf of the brand owner – Appellant, engaged in manufacturing of liquor, entered into an agreement with the brand owner to manufacture and sell liquor under the brand name on revenue sharing basis. The raw material was procured as per the instructions of the brand owner. Show cause notices were issued alleging that the Appellant provided business auxiliary service of bottling and packing on job work basis for the period April 2010 to June 2017. The demand of service tax and penalties were confirmed and upheld by the Commissioner (Appeals). The Appellant contended t... [Read more]

Service Tax – Taxability of manufacture of liquor on behalf of the brand owner – Appellant, engaged in manufacturing of liquor, entered into an agreement with the brand owner to manufacture and sell liquor under the brand name on revenue sharing basis. The raw material was procured as per the instructions of the brand owner. Show cause notices were issued alleging that the Appellant provided business auxiliary service of bottling and packing on job work basis for the period April 2010 to June 2017. The demand of service tax and penalties were confirmed and upheld by the Commissioner (Appeals). The Appellant contended that being a manufacturer it was excluded from business auxiliary service and that, under the negative list regime, processes amounting to manufacture are exempt – Whether the activity of manufacturing of liquor by the Appellant on behalf of the brand owner is liable to service tax – HELD – Section 66D of the Finance Act, 1994 contains the negative list of services, and with effect from 01.06.2015 it covers services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption. Manufacture of alcoholic liquor for human consumption is therefore outside the ambit of the exemption. The Delhi High Court in Carlsberg India Pvt. Ltd. held that manufacturing by an entity for itself is not a service, whereas manufacture of alcoholic liquor by one entity for another by way of job work is a service within the meaning of Section 65B(44) and is amenable to service tax. As the Delhi High Court is the jurisdictional High Court, the Tribunal is bound to follow the same. The decision of the Madhya Pradesh High Court in Maa Sharda Wine Traders is not applicable, as the High Court had no occasion to examine the negative list regime. The Tribunal decisions relied upon by the Appellant merely followed that decision and are also not applicable. The activity of manufacturing of liquor on behalf of others is a taxable service and the Appellant is liable to pay service tax – The appeals are dismissed [Read less]

Customs – Binding effect of High Court decision during pendency of Larger Bench reference before Tribunal - Appellant, engaged in manufacture, claimed refund under Section 27(1)(a) of the Customs Act, 1962 of interest paid on surrendering the IGST exemption benefit availed under Advance Authorisation Scheme - Matter was referred to Larger Bench due to conflicting Tribunal views on whether delayed payment of IGST attracts interest, without the referring bench having the benefit of the later decision of the Bombay High Court on the same issue - Whether the Tribunal should await the decision of Larger Bench or follow the de... [Read more]

Customs – Binding effect of High Court decision during pendency of Larger Bench reference before Tribunal - Appellant, engaged in manufacture, claimed refund under Section 27(1)(a) of the Customs Act, 1962 of interest paid on surrendering the IGST exemption benefit availed under Advance Authorisation Scheme - Matter was referred to Larger Bench due to conflicting Tribunal views on whether delayed payment of IGST attracts interest, without the referring bench having the benefit of the later decision of the Bombay High Court on the same issue - Whether the Tribunal should await the decision of Larger Bench or follow the decision of the High Court, which became available after the reference was made - HELD - The decision of the High Court touches upon and covers the same issue which was referred to the Larger Bench, though it was not available when the reference was made. The Larger Bench decision is still awaited. The ruling of the higher authority being available, the same shall prevail over any decision of the Tribunal. The reference has therefore lost its relevance in view of the later ruling of the High Court, and it is proper to follow the same as per judicial discipline - The Tribunal follows the decision of the High Court and does not await the Larger Bench decision - Customs – Interest on delayed payment of IGST on surrender of Advance Authorisation benefit - Appellant surrendered the benefit of IGST exemption availed under Notification No. 79/2017-Cus and paid the IGST along with interest for the period from July 2017 to March 2020, then claimed refund of the interest paid - Whether interest is leviable on delayed payment of IGST for the period prior to the legislative amendment, when there was no specific provision in the statute for such interest - HELD - The Tribunal is concerned with the period prior to the date of amendment, when no specific provision existed in the statute regarding interest on delayed payment of IGST. The High Court, on the same issue, has taken the view that no interest could be levied. The said decision clearly applies to the matter in hand and is followed as per judicial discipline. The impugned order is not sustainable in relation to the legal proposition - The appeals are allowed with consequential relief - Customs – Limitation for refund of interest under Section 27 of the Customs Act, 1962 - Appellant claimed refund of interest paid on delayed payment of IGST on surrender of Advance Authorisation benefit - Whether the limitation period of two years applies to the refund claim - HELD - The limitation of two years will not apply, as it is not a case of refund of duty but of deposit. The ruling of the High Court of Gujarat holding that the limitation under Section 27 does not apply to such deposits, which view has also been upheld subsequently, is applicable. The impugned order cannot be sustained on the point of limitation as well - The appeals are allowed with consequential relief. [Read less]

Customs – Suspension of Customs Broker licence – Regulation 10(d), (e), (m) and (n) of Customs Brokers Licensing Regulations, 2018 – Bills of Entry filed by the Appellant, a Customs Broker, for an importer appeared to involve mis-declaration of classification and value. The officers told the Appellant not to proceed with the Bills of Entry, and the Appellant neither proceeded with them nor issued a NOC to the importer. The Commissioner suspended the Appellant's licence and continued the suspension. The Appellant contended that it had obtained the KYC, IEC, GST and other documents, that there was no evidence of collus... [Read more]

Customs – Suspension of Customs Broker licence – Regulation 10(d), (e), (m) and (n) of Customs Brokers Licensing Regulations, 2018 – Bills of Entry filed by the Appellant, a Customs Broker, for an importer appeared to involve mis-declaration of classification and value. The officers told the Appellant not to proceed with the Bills of Entry, and the Appellant neither proceeded with them nor issued a NOC to the importer. The Commissioner suspended the Appellant's licence and continued the suspension. The Appellant contended that it had obtained the KYC, IEC, GST and other documents, that there was no evidence of collusion or mens rea, and that its reply and the decisions relied upon were not considered – Whether the suspension of the Customs Broker licence for alleged violation of Regulation 10(d), (e), (m) and (n) is sustainable – HELD – The Commissioner did not record the Appellant's submissions relying on various decisions. He reproduced Regulation 10(d), (e), (m) and (n) and held the Customs Broker guilty in a very cursory manner, without discussing any evidence showing how the provisions were violated. The allegations and findings were of a general nature and were not substantiated. Suspension entails loss of livelihood of the Customs Broker and the dependent employees, and must be done with utmost precaution and for valid reasons supported by evidence. It is enough if the Customs Broker satisfies himself of the genuineness of the importer, which the Appellant did by obtaining statutory documents. He is not expected to physically verify the premises of the importer, and has no role in deciding the transaction value – The impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law - Customs – Suspension of Customs Broker licence – Mandatory timelines under Customs Brokers Licensing Regulations, 2018 – The Appellant's licence was suspended, and the suspension was continued by a subsequent order. More than eight months had elapsed without any show cause notice being issued or the suspension being revoked, contrary to Regulation 17 of the Regulations – Whether the suspension of the licence can continue when the timelines prescribed under the Regulations have not been adhered to – HELD – Courts have consistently held that the timelines prescribed under the Regulations are mandatory, and each timeline is sacrosanct. The Revenue cannot overlook the timelines by citing reasons on merits. The order suspending the licence cannot continue indefinitely, and must yield to the procedure prescribed under the Regulations. Strict timelines have been specified so that the work of the Customs Broker is not suspended indefinitely. It is not prudent for the Revenue to accuse the Customs Broker of violation of the Regulations when it does not itself adhere to them. Where a statute provides for a thing to be done in a particular manner, it has to be done in that manner and in no other manner. The Appellant had also suffered enough due to the suspension, and no penalty was imposed – The impugned order cannot be sustained, it is set aside, and the appeal is allowed with consequential relief, if any, as per law. [Read less]

GST - Confirmation of tax demand under Section 74(1) of the CGST Act, 2017 by the FAA after holding Section 74 to be inapplicable - Show cause notice proposed disallowance of input tax credit on the ground that the invoices were not reflected in GSTR-2A, and the demand was confirmed under Section 74 - The FAA held that there was no fraud, willful misstatement, collusion or suppression, but upheld the demand of tax and interest - Whether the demand of tax confirmed under Section 74(1) can be sustained when the appellate authority itself found Section 74 to be inapplicable - HELD - The appellate authority made a clear-cut an... [Read more]

GST - Confirmation of tax demand under Section 74(1) of the CGST Act, 2017 by the FAA after holding Section 74 to be inapplicable - Show cause notice proposed disallowance of input tax credit on the ground that the invoices were not reflected in GSTR-2A, and the demand was confirmed under Section 74 - The FAA held that there was no fraud, willful misstatement, collusion or suppression, but upheld the demand of tax and interest - Whether the demand of tax confirmed under Section 74(1) can be sustained when the appellate authority itself found Section 74 to be inapplicable - HELD - The appellate authority made a clear-cut and well-reasoned finding on non-applicability of Section 74, which was not challenged by the Revenue either by way of appeal or cross-objections. Upholding the demand under Section 74(1) is in contradiction to its own findings and is a classic case of non-application of mind - The Revenue contended that no prejudice was caused as the demand would have sustained even if re-determined under Section 73 within limitation. The Revenue having issued a show cause notice under Section 74 cannot be permitted to plead at the second appellate stage that the demand can still be confirmed under Section 73 on a ground or section which was not invoked in the notice. The demand remains unsustainable notwithstanding that it would have been within limitation under Section 73 - The demand of tax is set aside and the appeal is allowed - Penalty under Section 73(9) beyond the SCN - Penalty imposed by the appellate authority under Section 73(9) of the CGST Act, 2017 when the show cause notice proposed penalty under Section 74(1) - Whether the appellate authority could impose penalty under a section different from the one invoked in the show cause notice - HELD - The appellate authority, having found the penalty under Section 74(1) not sustainable, ought to have stopped right there. The show cause notice contained no charge with regard to the imposition of penalty under Section 73(9). The act of the appellate authority is dehors the charges laid out in the notice and travels beyond its scope. The Appellant was never asked to show cause why penalty should not be levied under Section 73(9). Once the penalty in the appellate order has been passed under a different section than that with which the Appellant was charged, it is null and void, and the Revenue cannot plead that the penalty is much less and therefore in order. On these jurisdictional grounds alone the Appellant is entitled to succeed and the other grounds need not be discussed - The penalty is set aside, the order in appeal is set aside and the appeal is allowed. [Read less]

GST - Penalty under Section 74 of the CGST Act, 2017 on a vague show cause notice - Appellant paid the tax and part of the interest for non-payment of value of supply to suppliers within the stipulated period, and contested only the penalty under Section 74, which the notice sought to impose on the ground that the Appellant had wilfully suppressed material facts and contravened Section 16(2) - Whether penalty under Section 74 is leviable on the basis of the show cause notice - HELD - The show cause notice has not specified what are the material facts wilfully suppressed and is vague and lacking in specificity. The notice s... [Read more]

GST - Penalty under Section 74 of the CGST Act, 2017 on a vague show cause notice - Appellant paid the tax and part of the interest for non-payment of value of supply to suppliers within the stipulated period, and contested only the penalty under Section 74, which the notice sought to impose on the ground that the Appellant had wilfully suppressed material facts and contravened Section 16(2) - Whether penalty under Section 74 is leviable on the basis of the show cause notice - HELD - The show cause notice has not specified what are the material facts wilfully suppressed and is vague and lacking in specificity. The notice suggests that mere contravention of Section 16(2) would render the taxpayer liable for penalty under Section 74. This is not backed by any statutory provision, and the notice itself states elsewhere that contravention of Section 16(2) renders the taxpayer liable for penalty under Section 73 - The applicability of Section 74 was not established either in fact or in law at the notice stage, and the proceedings in respect of penalty are void ab initio. If the allegations are not specific and are vague, lack details or are unintelligible, that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations. The proceedings are vitiated by breach of the basic principles of natural justice - The penalty under Section 74 is not sustainable and set aside – The appeal is allowed - Finding of suppression for invoking Section 74 of the CGST Act, 2017 on the basis of detection by audit and absence of evidence disproving wilfulness - The FAA held that the violation was unearthed only during audit, that there was no evidence to disprove the allegation of wilful contravention, and that the ingredients of Section 74 existed - Whether suppression is established so as to attract penalty under Section 74 - HELD - The ground that the violation was unearthed only during audit is not found in the show cause notice. The order in appeal cannot introduce fresh grounds. Non-payment discovered by audit does not give rise to an automatic presumption of wilful suppression, since otherwise every case of detection by audit would result in proceedings under Section 74. By holding that there is no evidence to disprove wilful contravention, the appellate authority reversed the burden of proof - Unless there is a clear-cut statutory provision to the contrary, the burden of proof is always on the Revenue and cannot be shifted to the Appellant - The finding of suppression is not established and is not legally sustainable - Introduction of new contentions by the Revenue at the second appellate stage to support penalty under Section 74 - The Authorised Representative of the Revenue argued before the Tribunal that the Appellant failed to report the ineligible input tax credit in the returns for non-payment to suppliers, which amounted to suppression under Explanation 2 to Section 74 - Whether the Revenue can rely at the Tribunal stage on grounds not found in the show cause notice, order in original or order in appeal - HELD - Though the arguments have considerable force, they are not part of the show cause notice, order in original or order in appeal. A show cause notice or adjudication order has to stand on its own merit and cannot be improved upon or embellished through submissions made by the Revenue at the second appellate stage. The Supreme Court has held that when an authority has issued a notice or order, the requirements to make it valid should be contained in the notice or order itself and cannot be supplanted by a counter affidavit in court - The submissions cannot help the Revenue when no case is made out for invocation of penalty under Section 74 in the SCN, and the appeal is allowed as regards penalty. [Read less]

GST - Section 73 of CGST Act, 2017 - Order confirming demand on a ground not alleged in the show cause notice and without answering the contentions of the taxpayer - SCN alleged short payment of IGST on the basis of a comparison of GSTR-1 and GSTR-3B, and stated that no amendment was made in the details furnished within the statutory deadline - Appellant contended that IGST was paid by mistake under CGST/SGST and the excess remittances were available under those heads - Adjudicating Authority confirmed the demand by invoking Section 16(2)(a) of the SGST/CGST Act, stating that there would be revenue loss to the exchequer - ... [Read more]

GST - Section 73 of CGST Act, 2017 - Order confirming demand on a ground not alleged in the show cause notice and without answering the contentions of the taxpayer - SCN alleged short payment of IGST on the basis of a comparison of GSTR-1 and GSTR-3B, and stated that no amendment was made in the details furnished within the statutory deadline - Appellant contended that IGST was paid by mistake under CGST/SGST and the excess remittances were available under those heads - Adjudicating Authority confirmed the demand by invoking Section 16(2)(a) of the SGST/CGST Act, stating that there would be revenue loss to the exchequer - Whether the order can be sustained when the demand is confirmed on a ground which was not alleged in the show cause notice - HELD - There is no reference to Section 16(2)(a) anywhere in the show cause notice. While the show cause notice was issued on the ground of short payment of tax on account of non-filing of a rectification, the order confirmed the demand under Section 16(2)(a), which is on an entirely different footing and was not alleged anywhere in the show cause notice. The order also did not analyse or answer the contentions raised by the Appellant - For this reason alone the order of the Adjudicating Authority is liable to be set aside in its entirety – The appeal is allowed - GST - Payment of tax under CGST/SGST head instead of IGST - Short payment of tax under Section 73 of KGST Act / CGST Act - Sections 77 of CGST Act and 19 of IGST Act - Appellant was issued a SCN for short payment of IGST based on the comparison of GSTR-1 and GSTR-3B, and the demand was confirmed - Appellant contended that the shortfall was only due to a clerical mistake at the time of submitting GSTR-3B as IGST payments were made under CGST/SGST, and that there was no non-payment of tax in substance - Whether payment of tax under the head CGST/SGST instead of IGST amounts to non-payment/short payment of tax actionable under Section 73 - HELD - The jurisdictional High Court has approved the principles that tax paid wrongly under CGST and SGST should rightly be adjusted, that the electronic credit ledger is a pool of funds for IGST, CGST and SGST, and that proceedings under Section 73 are attracted only where tax has not been paid or short paid or erroneously refunded. The law as laid down by the jurisdictional High Court is applicable and the Tribunal is duty bound to follow it - The excess credit available in the CGST/SGST account, arising out of a clerical mistake of paying in the CGST/SGST account instead of the IGST account, is eligible to be set off against the shortfall in IGST due. The contention of Revenue that the excess under CGST and SGST together is lower than the IGST shortfall was not disputed by the Appellant despite ample opportunities, and any amount still due after set off is liable to be recovered along with interest as per applicable legal provisions - Payment of tax under the head CGST/SGST instead of IGST does not amount to non-payment/short payment of tax and no action lies under Section 73. The order in appeal is set aside and the appeal is allowed with the excess credit to be set off against the IGST shortfall through the electronic credit ledger, and any balance amount recovered in cash with interest – The appeal is allowed [Read less]

GST - Cancellation of registration - Jurisdiction of FAA to impose a condition of cash deposit of disputed ITC and an automatic-void clause while restoring registration - Appellant's registration was cancelled pursuant to a show cause notice issued under Rule 21(a) for non-existence at the declared place of business - FAA set aside the cancellation and directed restoration of registration subject to deposit of the disputed ITC in cash within seven days, failing which the order was to become void - Appellant contended that the Appellate Authority travelled beyond its statutory jurisdiction - Whether the FAA had jurisdiction... [Read more]

GST - Cancellation of registration - Jurisdiction of FAA to impose a condition of cash deposit of disputed ITC and an automatic-void clause while restoring registration - Appellant's registration was cancelled pursuant to a show cause notice issued under Rule 21(a) for non-existence at the declared place of business - FAA set aside the cancellation and directed restoration of registration subject to deposit of the disputed ITC in cash within seven days, failing which the order was to become void - Appellant contended that the Appellate Authority travelled beyond its statutory jurisdiction - Whether the FAA had jurisdiction under Section 107 to impose such a condition - HELD - The SCN was issued for cancellation of registration for non-existence on verification and not for wrong availment of ITC. The FAA has jurisdiction to modify, annul and confirm the impugned order but cannot travel beyond it without following the procedure established by law - The determination of ITC entitlement is a distinct and substantive adjudicatory proceeding governed by Sections 73 and 74, which contemplate issuance of notice in Form DRC-01, adjudication by the proper officer and a meaningful opportunity to the taxpayer to contest the allegations. None of these safeguards were followed - The finding directing reversal of ITC could not have been rendered in proceedings concerning cancellation of registration. The provisos to Section 107(11) bar an order requiring the appellant to pay tax or ITC wrongly availed unless a notice to show cause is given and the order is passed within the time limit specified under Section 73 or 74. An admission must be conclusive in nature, and a conditional admission or simple averment in an affidavit cannot substitute the law without proper examination. The order must be justified within the four corners of the Act - The direction to deposit the amount within seven days is not sustainable in law - The appeal is allowed - Imposition of cash deposit or ITC demand by First Appellate Authority without notice - Principles of natural justice - Audi alteram partem - Appellant contended that the question of cash deposit was never put to it and no opportunity was afforded to address the quantum, mode or feasibility of payment - Whether the impugned condition violates the principles of natural justice - HELD - Though the Appellant submitted an affidavit for repayment of wrongly availed ITC, that is another issue to be determined by the proper officer by issuing a separate show cause notice with proper investigation and detailed inquiry. The FAA should not impose a condition which was not in the show cause notice or the order in original unless the appellant is given notice to show cause against the proposed amount. The impugned order does not show that any notice was given before imposing the condition of cash or tax. An effective and meaningful opportunity must be given before imposing any tax or penalty, and imposing tax without affording opportunity is a clear violation of the principles of natural justice. If there is wrong availment of ITC, interest and penalty would also follow under law - The ITC demand is void and violative of the provisions of the GST Act and the principles of natural justice - Cancellation of registration - Section 75(7) of CGST Act, 2017 - Order passed on a ground different from the show cause notice - Show cause notice was issued for cancellation of registration on the ground of non-existence of the registered firm at the place of business - Proper Officer passed the order in original on the ground that ITC was wrongly availed from four suppliers whose registrations had been cancelled, and cancelled the registration with retrospective effect - Whether the order of the Adjudicating Authority is sustainable on the grounds of the show cause notice - HELD - Under Section 75(7), no demand shall be confirmed on grounds other than the grounds specified in the notice. The Proper Officer neither raised any demand in the show cause notice nor discussed any allegation regarding wrongful availment of ITC, but proceeded to pass the order on an entirely new and different ground. The ground of no place of work in the show cause notice and the ground of wrong availment of ITC in the order are apparently different and contradictory, and are not cohesive to each other, since if ITC was wrongly availed it cannot be said that there was no place of work. An order passed beyond the scope and allegations contained in the show cause notice is legally unsustainable and bad in law - The orders of the First Appellate Authority and the Adjudicating Authority are null and void, the appeal is allowed and the cancellation of registration is revoked, with liberty to the Respondent to initiate proceedings de novo to protect the revenue. [Read less]

Service Tax - Adjustment of demand of service tax and recovery of CENVAT credit against balance lying in CENVAT credit account - Appellant, a provider of construction of residential complex service, was demanded service tax for short payment under the Point of Taxation Rules, 2011, for wrongly availed CENVAT credit and for non-reflection of value of services in the ST-3 return for April 2017 to June 2017 - Appellant contended that it had sufficient balance in its CENVAT credit account on 30.06.2017 against which the entire demand could be adjusted - Whether the demand of service tax and recovery of CENVAT credit could be a... [Read more]

Service Tax - Adjustment of demand of service tax and recovery of CENVAT credit against balance lying in CENVAT credit account - Appellant, a provider of construction of residential complex service, was demanded service tax for short payment under the Point of Taxation Rules, 2011, for wrongly availed CENVAT credit and for non-reflection of value of services in the ST-3 return for April 2017 to June 2017 - Appellant contended that it had sufficient balance in its CENVAT credit account on 30.06.2017 against which the entire demand could be adjusted - Whether the demand of service tax and recovery of CENVAT credit could be adjusted against the credit balance available in the CENVAT credit account - HELD - Admittedly the Appellant had not filed the service tax return for the period April 2017 to June 2017 and had not paid the service tax although it had sufficient CENVAT credit balance in its CENVAT account on 30.06.2017. This does not mean that the Appellant is not required to file the service tax return. Since the Appellant had sufficient balance to meet the demands in both the show cause notices, the demands are to be adjusted against the CENVAT credit balance in the CENVAT credit account, as held by this Tribunal in the case of Uttaranchal Cable Networks. Consequently no demand of service tax is sustainable and no interest is payable - Adjustment is allowed and the appeals are disposed of - Imposition of penalty under Section 78 of the Finance Act, 1994 where demand is adjusted against CENVAT credit balance - Appellant had not filed the ST-3 returns for the period April 2017 to June 2017 and had not declared its taxable service although the demand of service tax stood adjusted against the balance in the CENVAT credit account - Whether penalty is imposable on the Appellant when no demand of service tax survives - HELD - As the Appellant had not filed the ST-3 returns in time and had not declared its taxable service, penalty under Section 78 is imposable. The penalty is reduced to 25% of the service tax payable by the Appellant - Penalty under Section 78 is imposed at the reduced rate and the appeals are disposed of accordingly. [Read less]

Central Excise - Invocation of extended period of limitation for demand of duty on cement allegedly sold below cost of production - Appellant, working under the Area Based Exemption scheme, was demanded duty by invoking the extended period on the basis of Board Circular issued after the Supreme Court judgment in Fiat India, on the allegation that cement was sold below the cost of production shown in CAS-4 - Whether the extended period of limitation could be invoked to demand central excise duty - HELD - Duty paid under the Area Based Exemption scheme is refundable, and the Department grants the refund after being satisfied... [Read more]

Central Excise - Invocation of extended period of limitation for demand of duty on cement allegedly sold below cost of production - Appellant, working under the Area Based Exemption scheme, was demanded duty by invoking the extended period on the basis of Board Circular issued after the Supreme Court judgment in Fiat India, on the allegation that cement was sold below the cost of production shown in CAS-4 - Whether the extended period of limitation could be invoked to demand central excise duty - HELD - Duty paid under the Area Based Exemption scheme is refundable, and the Department grants the refund after being satisfied with the duty payment upon proper assessment. Suppression of valuation therefore never arose - The Department failed to adduce any evidence that the Appellant received any money as flow back. The Board Circular does not mean that the extended period is invocable in all cases. It applies to situations involving valuation of goods where the sale has taken place below the approved price, as in Fiat India, and the cost of production arrived at by CAS-4 cannot be considered as approved price. The circumstances mentioned in the Circular are non-existent in this case. The Circular also stipulates that the extended period should not be invoked where an alternate interpretation was taken by the assessee before the Supreme Court judgment - All records maintained by the Appellant were verified by the officers before sanctioning the refund claims, and the allegation of suppression with intention to evade tax is devoid of merit. Since the demand is not sustained, interest and penalty also do not arise - The demand of duty confirmed by invoking the extended period is set aside along with interest and penalty – The appeal is disposed of - Liability on freight collected in excess of actual freight incurred - Appellant, a manufacturer registered for payment of service tax under GTA service, charged freight from buyers for delivery of goods at the buyer's end, and in some cases the freight charged was more than the actual freight incurred - Whether service tax is payable on the excess amount realised for the period up to 30.06.2012 - HELD - The excess amount charged is the profit on the transportation activity rendered by the Appellant. Under Rule 2(1)(d)(i)(B) of the Service Tax Rules, 1994, the Appellant was required to pay service tax on the freight charges paid by it and not on the amount realised in excess of the freight incurred. The question of payment of service tax on such excess amount is not supported by any provision of law. The first appellate authority itself admitted that no service tax is payable from 01.07.2012, when the Rule came into effect, and there is no change in the Rule for the period prior to 01.07.2012. Upholding the service tax up to 30.06.2012 is not supported by any provision of the Act or Rules. As the demand cannot be sustained, interest and penalty under Section 78 do not arise - The demand of service tax for the period prior to 01.07.2012 is set aside along with interest and penalty - Demand of erroneously sanctioned refund by invoking extended period of limitation - Show cause notice was served by invoking the extended period for recovery of refund pertaining to an earlier year, and the Appellant operated under area based exemption - Whether the demand of erroneous refund with interest and penalty could be confirmed by invoking the extended period - HELD - The Appellant operates under area based exemption and all the records maintained by it are verified by the officers before sanctioning the refund claim. Considering these facts, the allegation of suppression of facts with intention to evade tax does not exist in this case - The demand confirmed along with interest and penalty by invoking the extended period is not sustainable and is set aside - The penalty imposed under Section 77 is upheld - All penalties imposed under Section 78 are set aside, the penalty under Section 77 is upheld, and the appeal is disposed of. [Read less]

GST - Adjustment of excess IGST paid against CGST and SGST liability - Sections 39, 49 and 54 of CGST Act, 2017 and Rule 92 of CGST Rules, 2017 - Respondent initially added the tax on credit notes received to the output tax liability instead of reversing input tax credit, then in a later month reversed the credit and adjusted the excess IGST paid against its CGST and SGST liability on its own in GSTR-3B, without claiming refund - Audit alleged short payment, and the adjudicating authority confirmed the demand with interest and penalty under Section 73 - FAA set aside the demand, and the Department appealed - Whether the Re... [Read more]

GST - Adjustment of excess IGST paid against CGST and SGST liability - Sections 39, 49 and 54 of CGST Act, 2017 and Rule 92 of CGST Rules, 2017 - Respondent initially added the tax on credit notes received to the output tax liability instead of reversing input tax credit, then in a later month reversed the credit and adjusted the excess IGST paid against its CGST and SGST liability on its own in GSTR-3B, without claiming refund - Audit alleged short payment, and the adjudicating authority confirmed the demand with interest and penalty under Section 73 - FAA set aside the demand, and the Department appealed - Whether the Respondent was right in utilising the excess IGST of one tax period against the liability of CGST and SGST of the following tax period - HELD - During July 2017 to March 2018 there was no provision under the Act or Rules requiring the recipient to reduce input tax credit on account of credit notes. The Respondent reported only the net figures in GSTR-3B for the month in which the error was noticed, which is the manner clarified in Para 4 of the Circular No. 26/26/2017-GST - The Respondent had not claimed refund of the excess IGST or retained it for adjustment against IGST liability of subsequent months. Had refund been claimed, the amount would have been restored to the electronic credit ledger under Rule 92 as IGST credit, and such credit could be utilised towards CGST and SGST under Section 49(5) - The only issue was that the procedure for refund and re-credit was not followed. The decisions relied upon by the Respondent, which dealt with tax paid under a wrong head, were found not to apply directly, as this was a case of utilisation of excess IGST against CGST and SGST. The principle that an assessee should not suffer for technical errors where there is no loss of revenue, however, supports the Respondent. The initial payment and subsequent reversal showed a bona fide act, and the adjustment was done suo motu after noticing the excess payment. The adjustment led to no revenue loss and was only a procedural infraction - A bona fide and inadvertent errors deserve a lenient view, particularly in the first year of GST implementation, a lenient view is taken - No interference is called for in the order of the First Appellate Authority. The demand of tax, interest and penalty confirmed by the adjudicating authority is set aside - The appeal of the Department is dismissed [Read less]

GST - Interest under Section 50 of CGST Act, 2017 on differential tax paid through debit notes issued under Section 142(2)(a) on upward price revision of pre-GST clearances - Respondent cleared goods under the erstwhile regime and, pursuant to contractual price escalation, issued debit notes and supplementary invoices after the GST regime came into effect and voluntarily discharged the differential tax. The adjudicating authority demanded interest under Section 50 - FAA set aside the demand holding that the due date for discharging tax on supplementary invoices is the 20th of the month following their issuance - Whether in... [Read more]

GST - Interest under Section 50 of CGST Act, 2017 on differential tax paid through debit notes issued under Section 142(2)(a) on upward price revision of pre-GST clearances - Respondent cleared goods under the erstwhile regime and, pursuant to contractual price escalation, issued debit notes and supplementary invoices after the GST regime came into effect and voluntarily discharged the differential tax. The adjudicating authority demanded interest under Section 50 - FAA set aside the demand holding that the due date for discharging tax on supplementary invoices is the 20th of the month following their issuance - Whether interest under Section 50 is payable on differential tax paid through debit notes issued under Section 142(2)(a) for a retrospective upward price revision - HELD - The Supreme Court in Steel Authority case held that where a price escalation has retrospective operation, the later finalised price becomes the true value of the goods even at the time of original removal - The deeming fiction in Section 142(2)(a) serves a purely procedural and administrative purpose and provides the gateway for the taxpayer to report the differential transaction, issue a GST-compliant debit note and discharge tax through the portal. It is merely a transitional bridge and not a fresh charging event or a legal time-machine that erases the time-value of money enjoyed by the assessee in the interim period, so the enhanced value relates back to the original clearance period and mandatory interest under Section 50 attaches automatically - Just as Rule 8 of Central Excise could not shift the accrual date, Section 39(7) and Section 34(4) are purely procedural and administrative reporting mechanisms for the electronic portal. They provide the gateway to report transactions and file GSTR-3B, but they do not rewrite economic history or alter the original time when the value accrued - Whether a price is subject to a contractual escalation clause or formal provisional assessment, an upward price revision is retrospective, and the tax was legally due from inception - The findings of the FAA on non-sustainability of interest are set aside and the demand of interest under Section 50 is restored and upheld – The appeal is partly allowed - Penalty under Section 122 of CGST Act, 2017 - Bona fide belief in transitional provisions - Differential tax voluntarily paid on price revision - The adjudicating authority imposed penalty under Section 122 on the Respondent in respect of differential tax paid through debit notes issued under Section 142(2)(a), and the first Appellate Authority dropped the penalty. The Revenue contended that the penalty was dropped solely because no tax was deemed due, which is flawed as tax was due from the date of actual supplies - Whether penalty under Section 122 is imposable on the Respondent - HELD - The differential tax liability did not arise from any suppression of facts, fraud, wilful misstatement or evasion of tax, but purely out of a contractual price escalation clause during the legislative transition from the Central Excise regime to GST. The applicability of Section 142(2)(a) and the effect of supplementary invoices on pre-existing contracts involved intricate questions of statutory interpretation, and the Respondent acted under a bona fide belief regarding the transitional mechanism. Penalties under fiscal statutes are designed to punish deliberate infractions or contumacious conduct, and in the absence of suppression or deliberate non-compliance, and given that the differential tax was voluntarily discharged upon finalisation of prices, imposition of penalty under Section 122 is unwarranted - The quashing of penalty by the first Appellate Authority is upheld and the appeal of the Revenue is partly allowed only to the extent of restoring the interest demand [Read less]

GST - Refund of accumulated ITC on zero-rated supplies - Credit notes under Section 34 in computation of adjusted total turnover under Rule 89(4) of CGST Rules, 2017 - Respondent, a supplier of tea exporting without payment of tax, claimed refund of accumulated ITC under Section 54(3)(i) of the CGST Act, 2017 - Revenue appeal on the ground that the first Appellate Authority wrongly excluded the credit notes issued during the refund period from the adjusted total turnover - Whether credit notes issued under Section 34 are to be excluded from the adjusted total turnover for computing refund under Rule 89(4) and whether credi... [Read more]

GST - Refund of accumulated ITC on zero-rated supplies - Credit notes under Section 34 in computation of adjusted total turnover under Rule 89(4) of CGST Rules, 2017 - Respondent, a supplier of tea exporting without payment of tax, claimed refund of accumulated ITC under Section 54(3)(i) of the CGST Act, 2017 - Revenue appeal on the ground that the first Appellate Authority wrongly excluded the credit notes issued during the refund period from the adjusted total turnover - Whether credit notes issued under Section 34 are to be excluded from the adjusted total turnover for computing refund under Rule 89(4) and whether credit notes issued beyond the time limit in Section 34(2) can be so excluded - HELD - On a plain reading of Section 34(1), a credit note is issued where the taxable value is found to exceed the amount payable, or where the goods supplied are returned or found deficient, and when a credit note is issued the taxable turnover needs to be adjusted since the returned goods are no more part of the supply. Such credit notes are therefore deducted from the turnover for the purpose of refund calculation under Rule 89(4) - The Chartered Accountant's certificate and the GSTR-1 voucher register matched the credit notes declared in the returns for the refund period, and the major credit notes related to invoices raised during the refund period, so the contention of the Revenue that the credit notes could not be related to the period does not inspire confidence - However, three credit notes issued in a later month relating to invoices of an earlier financial year were beyond the time limit prescribed in Section 34(2), and the statute does not permit issuance of credit notes beyond the permissible time limit, so such credit notes are not liable to be excluded and form part of the adjusted total turnover - On recomputing the maximum refund under the formula in Rule 89(4) with the modified adjusted total turnover, the refund amount claimed by the Respondent remains below the maximum permissible refund - The refund already allowed by the FAA is proper and as per law, and the appeal of the Revenue is dismissed [Read less]

GST - Adjustment of sanctioned refund under Section 54 of the CGST Act, 2017 against demand stayed on payment of pre-deposit - Petitioner had made pre-deposit at the time of the first appeal against the demand raised in the assessment order, the first appeal was rejected, and the Petitioner communicated its intention to file appeal before the Appellate Tribunal when it becomes functional - Petitioner later deposited the further pre-deposit through the Electronic Credit Ledger, thereby paying the entire pre-deposit contemplated by the statute, and filed the appeal before the Tribunal - Respondent determined the net eligible... [Read more]

GST - Adjustment of sanctioned refund under Section 54 of the CGST Act, 2017 against demand stayed on payment of pre-deposit - Petitioner had made pre-deposit at the time of the first appeal against the demand raised in the assessment order, the first appeal was rejected, and the Petitioner communicated its intention to file appeal before the Appellate Tribunal when it becomes functional - Petitioner later deposited the further pre-deposit through the Electronic Credit Ledger, thereby paying the entire pre-deposit contemplated by the statute, and filed the appeal before the Tribunal - Respondent determined the net eligible refund and adjusted the entire amount against the outstanding demand of the earlier financial years - Respondent also objected that the Petition was not maintainable as the trade name in the GST records differed from the name of the Petitioner - Whether the refund can be adjusted against the demand in respect of which the entire pre-deposit has been paid and recovery stands stayed - HELD - On payment of the entire pre-deposit, recovery of the balance demand stands deemed to be stayed by operation of Section 112(8) and 112(9) of the CGST Act, 2017 read with the CBIC Circular No. 224/18/2024 dated 11/07/2024 a clarifying that recovery shall remain stayed upon payment of the prescribed pre-deposit. The Petitioner having paid the pre-deposit, there was no question of effecting recovery on the basis of the demand raised in the assessment order and it was not open to the Respondent to adjust the refund towards the alleged outstanding demand - As regards the objection on the trade name, the name of the entity gets auto-populated in the GST system when the registration number is inserted, the registration number being the only unique controlling number which has always been the same, and the Petitioner has always been registered under the same legal as well as trade name. This aspect can be gone into by the Tribunal and does not bar the Petition - The appropriation of the refund against the demand cannot be sustained and shall stand reversed, the refund amount is to be restored to the Petitioner – The writ petition is allowed [Read less]

GST - Non-consideration of manually filed reply to Demand-cum-Show Cause Notice under Section 74 and premature passing of Order-in-Original - Petitioner filed a detailed reply manually during the personal hearing, which was received and acknowledged by signature – Petitioner was allowed time to furnish documents on an adjourned date. The Order-in-Original was passed before that date, recording that the Petitioner did not appear on any scheduled date and did not file the reply on the portal - Whether the Order-in-Original is sustainable when the reply received manually was not considered and the order was passed before th... [Read more]

GST - Non-consideration of manually filed reply to Demand-cum-Show Cause Notice under Section 74 and premature passing of Order-in-Original - Petitioner filed a detailed reply manually during the personal hearing, which was received and acknowledged by signature – Petitioner was allowed time to furnish documents on an adjourned date. The Order-in-Original was passed before that date, recording that the Petitioner did not appear on any scheduled date and did not file the reply on the portal - Whether the Order-in-Original is sustainable when the reply received manually was not considered and the order was passed before the time granted for production of documents - HELD - Section 74(9) read with Rule 142(4) of the CGST Rules, 2017 does not restrict consideration of a reply, explanation, written objection or representation merely because it is submitted manually, as the words uploaded electronically appear only in respect of Form GST DRC-01 and not Form GST DRC-06 - Form GST DRC-06 is a procedural tool to facilitate the Authority in considering the explanation and cannot be used as an absolute bar to deprive a taxpayer of the statutory right to defend. The Proper Officer cannot adopt a hyper-technical approach to treat the matter as if no reply was filed. It is the duty of the adjudicating authority to consider the reply even if the noticee was not present at the hearing - The Proper Officer must demonstrate in writing how each point raised was dealt with, assigning reasons for acceptance or rejection. The acknowledged receipt of the reply creates an undeniable record that the explanation was in possession of the Superintendent before the order - The order was passed prematurely despite time granted for production of documents, and the Superintendent became functus officio after disposing of the proceeding, yet received the documents later. The jurisdictional objection was not dealt with, and non-observance of natural justice is itself prejudice, since the authority cannot presume that a hearing would serve no purpose - The Order-in-Original is set aside for violation of the principles of natural justice and the matter is remitted to the Superintendent for fresh consideration of the objection as to jurisdiction and the reply, with liberty to the Petitioner to raise all pleas and submit documents - the writ petition stands disposed of - Maintainability of writ petition against order under Section 74 despite alternate statutory remedy - Petitioner challenged the Order-in-Original and the Demand-cum-Show Cause Notice issued under Section 74 of the CGST Act, 2017 alleging violation of principles of natural justice - Whether the writ petition is maintainable despite the availability of an alternate remedy under the GST Act - HELD - Where valuable civil rights are taken away by violation of the principles of natural justice, the Court cannot fold its hands and look on as a helpless onlooker asking the party to approach the remedy available in the statute. The rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion, and writ courts may exercise jurisdiction despite an alternative remedy where there is a violation of the principles of natural justice, where the order is wholly without jurisdiction, or where vires of an Act is challenged - Non-consideration of the reply, explanation and objection as to jurisdiction to initiate the proceeding under Section 74 strikes at the root of the matter and deserves the exercise of power under Articles 226 and 227 of the Constitution. Where disputed questions of fact need adjudication, the matter is best left to the competent forum, but no such question arose here as the receipt of the reply was undisputed - The writ petition is maintainable. [Read less]

Service Tax – Construction of residential units for individual buyers prior to 01.07.2010 – Section 65(105)(zzzh) of Finance Act, 1994 – The Appellant, a builder and developer, constructed residential units for individual buyers and for landowners under a development arrangement, with consideration received during construction. The Department confirmed the demand under Works Contract Service on the ground that property in goods was transferred in execution of the contracts – Whether such construction is liable to Service Tax for the period prior to 01.07.2010 – HELD – Transfer of property in goods does not by i... [Read more]

Service Tax – Construction of residential units for individual buyers prior to 01.07.2010 – Section 65(105)(zzzh) of Finance Act, 1994 – The Appellant, a builder and developer, constructed residential units for individual buyers and for landowners under a development arrangement, with consideration received during construction. The Department confirmed the demand under Works Contract Service on the ground that property in goods was transferred in execution of the contracts – Whether such construction is liable to Service Tax for the period prior to 01.07.2010 – HELD – Transfer of property in goods does not by itself determine the taxable entry or the point of taxation, and the provisions applicable during each period must be examined separately. The Explanation deeming construction of a new building intended for sale to be a service provided by the builder to the buyer was inserted with effect from 01.07.2010, and it operates prospectively. Its effect cannot be applied to receipts relating to the earlier period. Construction by a builder for the ultimate owner prior to completion and transfer of the property was in the nature of self-service, as clarified by the Board Circular. The flats transferred to landowners in a project completed before 01.07.2010 also could not be taxed when the applicable entry did not cover such construction – The demand for the period prior to 01.07.2010 on residential construction for individual buyers and on the landowners' share is set aside - Service Tax – Construction for an educational institution – Section 65(105)(zzzza) of Finance Act, 1994 – The Appellant constructed a building for an educational institution, and the adjudicating authority held the activity taxable on the ground that education is an industry – Whether such construction is taxable as construction primarily for the purposes of commerce or industry – HELD – The expression "primarily for the purposes of commerce or industry" must be construed in the context of the Finance Act, 1994 and the predominant purpose and use of the building. The decision holding education to be an industry arose under the Industrial Disputes Act, and it does not determine the meaning of the expression in the Finance Act. Charging of fees by an educational institution cannot establish the statutory requirement. As per the Board Circular, constructions for institutions established solely for educational purposes and not for profit are non-commercial. The adjudicating authority recorded no independent finding on the actual nature or use of the building – The demand relating to construction for the educational institution is set aside - Service Tax – Valuation of works contracts – Composition Scheme and Rule 2A of Service Tax (Determination of Value) Rules, 2006 – Rule 3(3) of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 – The Appellant exercised the composition option during adjudication, and the Department contended that the option had to be exercised before payment of Service Tax and that consideration had been received earlier – Whether the composition option can be rejected on the basis of the date of receipt of consideration, and whether the entire gross receipts can be taxed on such rejection – HELD – The requirement of Rule 3(3) that the option be exercised before payment of Service Tax is binding. Receipt of consideration earlier does not by itself establish that Service Tax had been paid, so the actual payments have to be verified contract-wise. Where Service Tax had been paid before the option, Rule 3(3) precludes the option. Where no such payment was made, the option cannot be rejected merely because consideration was received earlier. Rejection of the composition scheme cannot result in taxation of the entire gross receipts, as composition and Rule 2A are distinct mechanisms. The service portion must be determined under the valuation provision applicable to the period. The proviso to Rule 2A substituted with retrospective effect from 08.05.2013, reducing the taxable service portion from 40% to 25% in qualifying cases, must be given effect to wherever its conditions are satisfied – The matter is remanded for re-quantification of the surviving demand contract-wise and period-wise, with credit for Service Tax already paid - Service Tax – Extended period and penalties – Proviso to Section 73(1), Sections 77 and 78 of Finance Act, 1994 – The show cause notice invoked the extended period on the ground that the Appellant had not filed ST-3 returns after a certain date and had not discharged Service Tax. The Appellant was registered, had filed returns earlier and had disclosed its construction activity – Whether the extended period can be invoked, and whether penalty under Section 78 is sustainable – HELD – Failure to file returns does not by itself establish wilful suppression or misstatement with intent to evade Service Tax. The dispute concerned interpretation of successive statutory provisions, classification of composite construction activities and valuation of works contracts, in respect of a registered assessee whose transactions were reflected in its records. There was no evidence of deliberate concealment or a positive act with intent to evade, and the extended period is not invocable. Penalty under Section 78 is accordingly set aside. Interest under Section 75 shall be recomputed only on the tax finally determined for the normal period. Penalty under Section 77 relates to independent statutory defaults, and shall be reconsidered with reference to Section 80 – The invocation of the extended period and the penalty under Section 78 are set aside - Service Tax – Rejection of application for rectification under Section 74 of Finance Act, 1994 – Appellate jurisdiction under Section 86 – The Appellant's application under Section 74 contended that the value of goods had been taxed, the abatement notification was not considered and the composition option had been exercised. The Department relied on decisions holding that rectification is not a substitute for appeal – Whether rejection of the Section 74 application bars the Tribunal from granting relief on valuation – HELD – Section 74 is not a substitute for appeal. The Tribunal, in exercise of its appellate jurisdiction under Section 86, can independently examine whether the demand as confirmed is legally sustainable and correct the valuation and tax consequences. Rejection of the application does not cure an otherwise incorrect valuation, which is a substantive appellate issue – The Tribunal can grant appropriate relief on valuation, and the appeal is allowed by way of remand. [Read less]

Central Excise – Entitlement to claim Transitional Credit in TRAN-1 after withdrawal of refund claim - Carry forward of CENVAT credit through TRAN-1 after withdrawal of refund claim - Appellant, a 100% EOU, filed a refund claim of unutilised CENVAT credit on input services used for export under Rule 5 of Cenvat Credit Rules, 2004. After show cause notice was issued, the Appellant requested that the claim be treated as withdrawn and carried forward the credit to its GST account by filing TRAN-1. The adjudicating authority rejected the refund and the Commissioner (Appeals) upheld the rejection and directed recovery of the ... [Read more]

Central Excise – Entitlement to claim Transitional Credit in TRAN-1 after withdrawal of refund claim - Carry forward of CENVAT credit through TRAN-1 after withdrawal of refund claim - Appellant, a 100% EOU, filed a refund claim of unutilised CENVAT credit on input services used for export under Rule 5 of Cenvat Credit Rules, 2004. After show cause notice was issued, the Appellant requested that the claim be treated as withdrawn and carried forward the credit to its GST account by filing TRAN-1. The adjudicating authority rejected the refund and the Commissioner (Appeals) upheld the rejection and directed recovery of the TRAN-1 credit with interest - Whether the Appellant who withdrew the refund claim is entitled to retain the CENVAT credit carried forward in TRAN-1 - HELD - Filing a refund claim is a voluntary statutory right and the Appellant possesses the right to withdraw such claim at any stage prior to its final adjudication. Upon opting to withdraw the refund claim, the claim becomes nonest and the Appellant is legally entitled to retain and carry forward the accumulated CENVAT credit into TRAN-1 - There is no allegation in the show cause notice or in the impugned order regarding ineligibility of the CENVAT credit claimed under the refund application. In the absence of any valid reason for denying the credit and of any condition to comply with the conditions of Notification No. 27/2012-CE (NT) to carry forward the credit into TRAN-1, the direction to reverse the transitional credit along with interest is unsustainable - The impugned order directing reversal of transitional credit with interest is set aside and the appeal is allowed [Read less]

Central Excise - Clandestine Manufacture - Goods cleared as traded goods alleged to be manufactured goods - SSI exemption - Appellant-company availed SSI exemption under Notification No. 08/2003-C.E. The Revenue alleged that the goods shown as traded were manufactured by the Appellant and cleared without payment of duty - Whether the allegation of clandestine manufacture and clearance is sustainable - HELD - Out of the vendors on record, summons were issued to only a few, the statements of the vendors who appeared and accepted the sales were not relied upon, and the inability to locate some vendors at an address does not e... [Read more]

Central Excise - Clandestine Manufacture - Goods cleared as traded goods alleged to be manufactured goods - SSI exemption - Appellant-company availed SSI exemption under Notification No. 08/2003-C.E. The Revenue alleged that the goods shown as traded were manufactured by the Appellant and cleared without payment of duty - Whether the allegation of clandestine manufacture and clearance is sustainable - HELD - Out of the vendors on record, summons were issued to only a few, the statements of the vendors who appeared and accepted the sales were not relied upon, and the inability to locate some vendors at an address does not establish that they were non-existent or that the transactions were fictitious, particularly when registration certificates and municipal certificates were produced and payments were made through account-payee cheques. The statement of the transporter was not shown to have been tested as per Section 9D of the Central Excise Act, 1944 and cannot be elevated into substantive evidence - Nothing was brought on record from the purchasers to show that they placed orders requiring the Appellant to manufacture the spare parts. Higher value of spare parts compared to equipment is a mere surmise without any statutory or evidentiary basis. Presence of a logo cannot by itself establish the place, source or manner of manufacture - Clandestine manufacture is a serious allegation requiring cogent, tangible and affirmative evidence such as excess raw materials, electricity consumption, labour, production capacity, transportation and flow back of funds, none of which was brought on record, and the electricity consumption was wholly incongruous with the scale of manufacture alleged. The Chartered Accountant's certificate bifurcating manufacturing and trading clearances, founded on the books and records, was accepted in the absence of any material showing it to be incorrect - For the years in which the manufacturing clearances were below the threshold limit, the Appellant is entitled to SSI exemption, and for the later two years the Appellant is eligible for exemption up to the prescribed limit as the clearances in the preceding year had not exceeded the threshold limit - Demand for the years in which clearances were within the threshold limit is not sustainable, and the matter is remanded to the adjudicating authority only for the limited purpose of verifying the payment of duty by the Appellant for the later two years – The appeal is disposed of - Invocation of extended period where earlier show cause notice was issued on the same allegation - An earlier show cause notice had been issued to the Appellant-company for an earlier period on the self-same allegation of manufacture of spares under the guise of trading, and the Appellant had from time to time intimated the Department about its manufacturing activities and availment of SSI exemption. The extended period of limitation was invoked in the present notice alleging suppression - Whether the extended period of limitation is invocable - HELD - The very nature of the Appellant's activities was within the knowledge of the Department much prior to the initiation of the present proceedings. Where the material facts were already within the knowledge of the Department and an earlier notice had been issued on substantially the same factual foundation, the allegation of deliberate suppression of facts with intent to evade duty cannot be sustained merely by reproducing such allegation in the subsequent notice. Once the relevant facts were within the knowledge of the Department at the time of the earlier notice, the extended period cannot subsequently be invoked on the same set of facts by alleging suppression. This finding does not confer on the Appellant any right to claim refund of duty already paid or otherwise payable on the manufacturing clearances of the later two years - Invocation of the extended period of limitation is not legally sustainable - Penalty under Section 11AC of Central Excise Act, 1944 - Consequence of failure of the demand on clandestine manufacture - Penalty equivalent to the duty was imposed on the Appellant-company under Section 11AC on the allegation of clandestine manufacture and clearance with intent to evade duty - Whether penalty under Section 11AC can be sustained - HELD - There being no sustainable finding of clandestine manufacture and deliberate evasion on the scale alleged in the impugned order, and the demand having been found unsustainable except to the limited extent of the actual manufacturing liability for the later two years, the foundation for imposition of penalty under Section 11AC does not survive - The penalty imposed on the Appellant-company under Section 11AC is set aside - Penalty on Director under Rule 26 of Central Excise Rules, 2002 - Penalty was imposed on the Director of the Appellant-company under Rule 26 on the allegation that he was personally responsible for the affairs of the company and for the unauthorised production and unaccounted clearance of goods - Whether penalty under Rule 26 can be sustained on the Director in the absence of established clandestine manufacture - HELD - The penalty provision necessarily requires a legally established foundation connecting the concerned individual with the acts rendering the goods liable to confiscation or otherwise attracting the statutory ingredients of the provision. In the absence of cogent evidence establishing clandestine manufacture and clearance, the mere designation of the co-appellant as Director cannot furnish a sufficient basis for sustaining the penalty - The penalty imposed on the Director under Rule 26 is set aside - Penalty under Rule 27 of Central Excise Rules, 2002 - Non-maintenance of statutory records at the factory - Penalty was imposed on the Appellant-company under Rule 27 for non-maintenance of statutory records and documents at the factory premises - Whether the penalty under Rule 27 survives when the principal demand on clandestine manufacture fails - HELD - The penalty relates to an independent procedural contravention and is not dependent upon the sustainability of the principal demand on clandestine manufacture. The finding regarding non-maintenance of the prescribed records has not been satisfactorily rebutted - The penalty imposed under Rule 27 is upheld [Read less]

GST - Disallowance of Input Tax Credit on mismatch - Violation of natural justice - Department disallowed the ITC on the ground of mismatch - Adjudicating authority confirmed the demand of ITC proposed in the show cause notice, and the FAA dismissed the appeal by an ex-parte order when the adjournment sought by email for the second date of hearing was not granted - Whether the appellant is entitled to ITC when the lower authorities disallowed it on the ground of mismatch without furnishing the details of mismatch and without sufficient opportunity of hearing - HELD - The SCN did not give the details of mismatch fully so as... [Read more]

GST - Disallowance of Input Tax Credit on mismatch - Violation of natural justice - Department disallowed the ITC on the ground of mismatch - Adjudicating authority confirmed the demand of ITC proposed in the show cause notice, and the FAA dismissed the appeal by an ex-parte order when the adjournment sought by email for the second date of hearing was not granted - Whether the appellant is entitled to ITC when the lower authorities disallowed it on the ground of mismatch without furnishing the details of mismatch and without sufficient opportunity of hearing - HELD - The SCN did not give the details of mismatch fully so as to enable the Appellant to explain its case. The detailed chart of mismatch was submitted by the Authorised Representative of the Respondent only during the hearing before the Tribunal and was not before the adjudicating authority. The FAA also did not give sufficient opportunity of personal hearing to the Appellant. On these undisputed facts, there is gross violation of the principles of natural justice at every stage, that is, at adjudication as well as at the appellate stage. The entire matter therefore needs to be reconsidered on all aspects by the adjudicating authority, which shall grant sufficient opportunities to the Appellant to explain its case after the details of mismatch are provided. Since other issues have not been examined, all the issues are kept open - The impugned order is set aside, the matter is remanded to the adjudicating authority for passing a reasoned order - The appeal is disposed of [Read less]

GST - Leviability of GST on assignment of leasehold rights in a plot allotted by industrial development corporation - Section 7(1)(a) read with Clause 5(b) of Schedule II and Clause 5 of Schedule III of CGST Act, 2017 - Binding effect of jurisdictional High Court judgment - Respondent, a lessee/licensee of the industrial development corporation, entered into an agreement to assign the lease in favour of a third party, and the corporation issued the Final Transfer Order - Whether GST is leviable on the assignment of leasehold rights of the plot of land allotted by the industrial development corporation - HELD - The case is ... [Read more]

GST - Leviability of GST on assignment of leasehold rights in a plot allotted by industrial development corporation - Section 7(1)(a) read with Clause 5(b) of Schedule II and Clause 5 of Schedule III of CGST Act, 2017 - Binding effect of jurisdictional High Court judgment - Respondent, a lessee/licensee of the industrial development corporation, entered into an agreement to assign the lease in favour of a third party, and the corporation issued the Final Transfer Order - Whether GST is leviable on the assignment of leasehold rights of the plot of land allotted by the industrial development corporation - HELD - The case is squarely covered by the judgment of the jurisdictional High Court, which held that assignment by sale and transfer of leasehold rights of a plot of land allotted by the corporation to the lessee in favour of a third party assignee for a consideration is an assignment/sale/transfer of benefits arising out of immovable property - The Special Leave Petitions of the Department against both judgments were dismissed by the Supreme Court. The judgment of the jurisdictional High Court holds the field and binds the Tribunal. The Department's stated intention to seek a review does not dilute its binding effect, there being no order staying or recalling it - The appeal filed by the Department is dismissed and the Order-in-Appeal is upheld [Read less]

GST - Levy of tax on assignment of leasehold rights in plots allotted by Gujarat Industrial Development Corporation - Binding effect of jurisdictional High Court judgment - Department demanded GST under reverse charge mechanism from the Respondents, who were assignees of leasehold rights in plots of land allotted on lease by the industrial development corporation - Department appeal before Tribunal, stating that it had filed a Special Leave Petition against that judgment, which was dismissed, and that it was in the process of filing a review petition - Whether GST is leviable on assignment of leasehold rights in plots of l... [Read more]

GST - Levy of tax on assignment of leasehold rights in plots allotted by Gujarat Industrial Development Corporation - Binding effect of jurisdictional High Court judgment - Department demanded GST under reverse charge mechanism from the Respondents, who were assignees of leasehold rights in plots of land allotted on lease by the industrial development corporation - Department appeal before Tribunal, stating that it had filed a Special Leave Petition against that judgment, which was dismissed, and that it was in the process of filing a review petition - Whether GST is leviable on assignment of leasehold rights in plots of land allotted by the corporation to a third party for consideration - HELD - The case is squarely covered by the judgment of the Gujarat High Court in Gujarat Chamber of Commerce and Industry, which held that assignment by sale and transfer of leasehold rights of the plot of land allotted by the corporation to the lessee in favour of a third-party assignee for a consideration is assignment, sale or transfer of benefits arising out of immovable property, so that Section 7(1)(a) read with clause 5(b) of Schedule II and clause 5 of Schedule III would not be applicable and the transaction is not subject to levy of GST under Section 9. The Bombay High Court agreed with this view, and the Supreme Court dismissed the Special Leave Petitions of the Department against both judgments. The judgment of the jurisdictional High Court holds the field and binds the Tribunal - The stated intention of the Department to seek a review does not dilute its binding effect, there being no order staying or recalling it. In view of this finding, the questions whether Sections 74 and 122(2)(b) were rightly invoked and whether the reverse charge mechanism is applicable do not survive for consideration - GST is not leviable on the transactions in question, the appeals filed by the Department are dismissed and the Orders-in-Appeal are upheld – The appeal is dismissed [Read less]

GST - Maintainability of writ petition against penalty order without exhausting statutory appeal before the Appellate Tribunal - Petitioner sought release of the frozen bank account, without filing the further appeal under Section 112 - Whether the writ petition under Article 226 is maintainable when the efficacious statutory remedy of appeal to the Appellate Tribunal under Section 112 has not been availed - HELD - The statutory appellate structure under the CGST Act is sequential, with an appeal under Section 107 against the adjudication order, a further appeal to the Appellate Tribunal under Section 112, and an appeal to... [Read more]

GST - Maintainability of writ petition against penalty order without exhausting statutory appeal before the Appellate Tribunal - Petitioner sought release of the frozen bank account, without filing the further appeal under Section 112 - Whether the writ petition under Article 226 is maintainable when the efficacious statutory remedy of appeal to the Appellate Tribunal under Section 112 has not been availed - HELD - The statutory appellate structure under the CGST Act is sequential, with an appeal under Section 107 against the adjudication order, a further appeal to the Appellate Tribunal under Section 112, and an appeal to the High Court under Section 117 only against the order of the Appellate Tribunal on a substantial question of law. The Petitioner has not reached the stage contemplated by Section 117, and the remedy presently available is under Section 112 - The existence of an alternative remedy is a rule of judicial discretion and self-restraint and a writ petition can be entertained in exceptional circumstances such as breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction or challenge to the vires of the statute. None of these exceptions is established - The writ petition is dismissed as not maintainable [Read less]

GST - Priority of dues of secured creditor over GST dues - Petitioner, a secured creditor, challenged the letter issued by the Respondent-Dept directing the society not to issue No Objection Certificate in respect of flats which were secured assets - Respondent relied on provisional attachment of the property under Section 83 of the CGST Act, 2017 - Whether the dues of the secured creditor have priority over the dues claimed by the GST authorities when the charge of the authorities is not registered with the Central Registry - HELD - With the amendment of the Securitisation Act with effect from 24.01.2020 and the introduct... [Read more]

GST - Priority of dues of secured creditor over GST dues - Petitioner, a secured creditor, challenged the letter issued by the Respondent-Dept directing the society not to issue No Objection Certificate in respect of flats which were secured assets - Respondent relied on provisional attachment of the property under Section 83 of the CGST Act, 2017 - Whether the dues of the secured creditor have priority over the dues claimed by the GST authorities when the charge of the authorities is not registered with the Central Registry - HELD - With the amendment of the Securitisation Act with effect from 24.01.2020 and the introduction of Section 26E, upon the security interest of the secured creditor being registered with the Central Registry, its dues have first priority. The Full Bench in the case of Jalgaon Janta Sahakari Bank Limited has held that the dues of the secured creditor have priority over all other dues, including all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority. It was also held that attachment orders issued after 24.01.2020, if not filed with the Central Registry, require the department to wait till the secured creditor mops up its secured dues by sale of the immovable property - The security interest of the Petitioner is registered with the Central Registry, and the Respondent has not been able to show that its charge is registered. There is no legal basis for the Respondent to have issued the letter directing that No Objection Certificate could not be issued for the secured assets - The impugned letter is quashed and the writ petition is allowed [Read less]

GST - Order under Section 73 of the CGST Act passed without fixing date of personal hearing - Petitioner challenged the order on the sole ground that the show cause notice did not fix any date of personal hearing, which is a mandatory requirement under Section 75(4) - Whether the order is vitiated for non-compliance with Section 75(4) - HELD - It is not disputed that no date for personal hearing was fixed in the show cause notice and that none was provided to the Petitioner at any stage before passing the impugned order. There is therefore clear violation of the requirement of Section 75(4), which vitiates the order. As th... [Read more]

GST - Order under Section 73 of the CGST Act passed without fixing date of personal hearing - Petitioner challenged the order on the sole ground that the show cause notice did not fix any date of personal hearing, which is a mandatory requirement under Section 75(4) - Whether the order is vitiated for non-compliance with Section 75(4) - HELD - It is not disputed that no date for personal hearing was fixed in the show cause notice and that none was provided to the Petitioner at any stage before passing the impugned order. There is therefore clear violation of the requirement of Section 75(4), which vitiates the order. As the principles of natural justice have been violated, the objection regarding the slight delay on the part of the Petitioner in approaching the Court is overruled - The order is quashed, leaving it open to the Respondent to pass a fresh order after providing opportunity of hearing to the Petitioner strictly in accordance with law - The Writ Petition stands disposed of [Read less]

Service Tax – Taxability of food and beverages served in hotel rooms – Period 01.07.2012 to 31.03.2013 – Audit alleged that the Appellant, a hotel, did not pay Service Tax on income from room service and grand room service, being serving of food and beverages in hotel rooms. The Respondent relied on a Board Circular and contended that it is an indivisible service. The Appellant contended that a hotel room cannot be equated with a restaurant and that food was separately charged and served from a separate service area – Whether serving of food and beverages in hotel rooms is a taxable service – HELD – Restaurant ... [Read more]

Service Tax – Taxability of food and beverages served in hotel rooms – Period 01.07.2012 to 31.03.2013 – Audit alleged that the Appellant, a hotel, did not pay Service Tax on income from room service and grand room service, being serving of food and beverages in hotel rooms. The Respondent relied on a Board Circular and contended that it is an indivisible service. The Appellant contended that a hotel room cannot be equated with a restaurant and that food was separately charged and served from a separate service area – Whether serving of food and beverages in hotel rooms is a taxable service – HELD – Restaurant service under Section 65(105)(zzzzv) is taxable only when food and beverages are served in the premises of an air-conditioned restaurant having a licence to serve alcoholic beverages. A hotel room cannot be called a restaurant, and the Respondent produced no evidence that the food was served from the restaurant. The Circular clarifies that service tax cannot be charged on food served in the room, even under short term accommodation, if the bill is raised separately. There is no evidence that the value of food was included in the value of room service, and the invoices show that food was charged separately. Sale of goods is excluded from the definition of service under Section 65B(44) – Demand not sustainable - Service Tax – Amounts received from liquor manufacturers under branding and promotion contracts – Business auxiliary service and sponsorship service – Period 2010-11 to 2014-15 – Appellant received fixed amounts from liquor companies for displaying branded table accessories and giving exclusivity to their brands. The Appellant contended that the amounts were trade incentives in lieu of purchase discounts – Whether the amounts received are consideration for a taxable service – HELD – The contracts, by their terms, are for branding, promotion and listing exclusively of the brands of the companies, and the Appellant is restrained from tie-ups with other companies. The Appellant is bound to display the branded accessories at all venues. The contracts are therefore not for purchase of liquor but for promotion and branding. For the pre negative list period, the activity is covered by the meaning of sponsorship, which includes displaying the sponsor's logo or trade name and giving exclusive rights. For the post negative list period, the activity is a service under Section 65B(44) and is not in the negative list under Section 66D. The amounts received are consideration for a promotional activity – Demand confirmed for the normal period - Service Tax – Electricity charges recovered from tenants on actual consumption – Renting of immovable property – Appellant let out office spaces and shops after installing a sub-meter in each premises. Electricity charges were collected as per the sub-meter reading and deposited with the electricity supply agencies – Whether electricity charges recovered from tenants form part of the taxable value – HELD – The Appellant merely collected the charges on actual consumption as landlord and paid the same to the electricity supply agencies. The amount cannot be called consideration for a taxable service. Such amounts could be included in the taxable value only under Rule 5(1) of the Service Tax (Determination of Value) Rules, which has been held ultra vires by the Supreme Court in Intercontinental Consultants and Technocrats – Demand not sustainable - Service Tax – Extended period of limitation – Suppression – Show Cause Notice proposed a demand for the period 2010-11 to 2014-15, most of which was beyond the normal period. The Appellant contended that no suppression was alleged – Whether the extended period was rightly invoked – HELD – There is nothing on record to prove any intentional act of suppression of facts by the Appellant, and the Show Cause Notice did not invoke the proviso to Section 73(1). Mere failure to declare does not amount to wilful suppression, as there must be some positive act on the part of the assessee. The demand for the extended period is set aside. The order is set aside except for the demand on sponsorship services for the normal period, and the appeal is partly allowed. [Read less]

Service Tax – Construction of hospital for a society as commercial or industrial construction service – Appellant, registered for construction services, had not filed returns nor paid service tax, and constructed a hospital for a welfare society during April 2012 to June 2012 – Whether construction of the hospital is not commercial or industrial construction service in view of the CBIC Circular dated 17.09.2004 – HELD - The Appellant was engaged in construction of commercial or industrial structures in both periods, and these services were chargeable to service tax. Hospitals can be charitable or commercial. Unless... [Read more]

Service Tax – Construction of hospital for a society as commercial or industrial construction service – Appellant, registered for construction services, had not filed returns nor paid service tax, and constructed a hospital for a welfare society during April 2012 to June 2012 – Whether construction of the hospital is not commercial or industrial construction service in view of the CBIC Circular dated 17.09.2004 – HELD - The Appellant was engaged in construction of commercial or industrial structures in both periods, and these services were chargeable to service tax. Hospitals can be charitable or commercial. Unless there is evidence that the hospital was meant to be a charitable hospital, its construction would qualify as commercial or industrial construction service, as running hospitals is a big source of commerce. The Appellant is not entitled to exemption - The demand is upheld, as abatement was already allowed and liability was reduced where the service recipient was to discharge the tax - Service Tax – Works contract service – Valuation under Rule 2A of the Service Tax (Determination of Value) Rules, 2006 – Appellant provided works contract services during July 2012 to March 2013 and contended that tax is to be determined under Rule 2A by deducting the actual value of goods or on presumptive basis – Whether the demand was correctly determined having regard to abatement and Notification No. 30/2012-ST – HELD - Under Rule 2A, the value of goods is excluded from the gross amount charged if possible, and if not, tax is charged on the prescribed percentage. As per Notification No. 30/2012-ST, 50% of the tax liability is discharged by the service recipient. The Commissioner had calculated the tax after considering the abatement and the recipient's 50% liability wherever applicable. Nothing was shown to prove that the actual value of goods used exceeded the abatement allowed - There is no infirmity in the impugned order and the demand is upheld - Service Tax – Free of cost material supplied by service recipients in works contract – Demand was confirmed on the value of free of cost material supplied by customers while allowing abatement under works contract – Whether such value is includible in the gross amount charged for the works contract – HELD - Following the decision of the Larger Bench of the Tribunal in Bhayana Builders Pvt Ltd vs Commissioner of Service Tax, Delhi, the value of free of cost material supplied by customers cannot be included in the gross amount charged - The demand on such material is set aside and the appeal is allowed to this extent - Service Tax – Classification of services as exclusive service contracts or works contracts – Commissioner treated certain contracts as exclusive service contracts and confirmed demand, whereas Appellant contended that these were works contracts – Whether such services can be treated as works contracts without substantiation – HELD - There is nothing in the appeal to substantiate the assertion that these services were works contracts, and the Commissioner is not shown to have erroneously considered them as services simpliciter - The demand on this part is upheld - Service Tax – Appropriation of amounts deposited during investigation – Appellant contended that amounts deposited through challans during investigation need to be appropriated against the confirmed demand – Whether such amounts are to be appropriated – HELD - This is a matter of verification. If the amounts have indeed been deposited as service tax, they shall be appropriated towards the confirmed demand - Service Tax – Penalty under section 76 of the Finance Act, 1994 – Appellant had not paid the service tax, nor filed returns, nor declared the services provided, and everything came to light only as a result of investigation – Whether penalty under section 76 can be set aside – HELD - Since the Appellant neither paid the tax, filed returns nor declared the services, and the facts came to light only through investigation, there is no reason to set aside the penalty - The penalty is upheld, the impugned order is modified only to set aside the demand on free of cost materials, the rest is upheld and the appeal is allowed to that extent. [Read less]

GST - Maintainability of departmental appeal before GSTAT in view of monetary limit under Section 120 of the UPGST Act, 2017 - Whether a departmental appeal where the disputed amount is below the monetary limit Rs. 20,00,000/- can be admitted and heard on merits when the Revenue has not established any recognised exception - HELD - Admission of an appeal is not a mere formality and the Tribunal must be satisfied that the appeal is maintainable and meets the conditions for admission before considering the merits. The right of appeal is created by statute and may be subject to conditions, provided they are not so onerous tha... [Read more]

GST - Maintainability of departmental appeal before GSTAT in view of monetary limit under Section 120 of the UPGST Act, 2017 - Whether a departmental appeal where the disputed amount is below the monetary limit Rs. 20,00,000/- can be admitted and heard on merits when the Revenue has not established any recognised exception - HELD - Admission of an appeal is not a mere formality and the Tribunal must be satisfied that the appeal is maintainable and meets the conditions for admission before considering the merits. The right of appeal is created by statute and may be subject to conditions, provided they are not so onerous that the right becomes practically illusory. Under the circular, where tax is disputed, with or without interest or penalty, only the aggregate disputed tax is taken into account, and interest and penalty are not added to it - An exception cannot be presumed merely because the Department wishes to pursue the appeal, and the Revenue must identify the exception, state the facts supporting it and show the statutory or administrative basis for invoking it. If the Revenue relies on the Commissioner's residual power to contest a matter in the interest of justice or revenue, it must produce the order or recorded opinion showing that the Commissioner exercised that power in the particular case. A bare statement that the appeal has been filed with the Commissioner's permission is not sufficient - The appeal is dismissed at the threshold on the ground of the prescribed monetary limit and the Revenue's failure to establish an applicable exception – Ordered accordingly [Read less]

U.P. Value Added Tax Act, 2008 - Condonation of delay in filing revision under Section 58 of the UPVAT Act - Revisionist, a private limited company and registered dealer, filed the revision against the order of the Tribunal and the rectified order of the Tribunal after a delay of about five years - Revisionist averred in the affidavit that the counsel engaged to file the revision did not file it, another counsel was engaged who also did not file it, the order of the Tribunal was misplaced in the office of the counsel, and the Revisionist remained under the belief that the revision had been filed - Respondent contended that... [Read more]

U.P. Value Added Tax Act, 2008 - Condonation of delay in filing revision under Section 58 of the UPVAT Act - Revisionist, a private limited company and registered dealer, filed the revision against the order of the Tribunal and the rectified order of the Tribunal after a delay of about five years - Revisionist averred in the affidavit that the counsel engaged to file the revision did not file it, another counsel was engaged who also did not file it, the order of the Tribunal was misplaced in the office of the counsel, and the Revisionist remained under the belief that the revision had been filed - Respondent contended that negligence is not a ground for condonation and that there was nothing on record except bald and vague statements - Whether the delay in filing the revision can be condoned under Section 5 of the Limitation Act on the grounds stated - HELD - The grounds set forth in the affidavit do not inspire the confidence of the Court, particularly when it is only stated that the counsel engaged to file the revision did not file it, another counsel engaged also did not file it, and then the earlier counsel was assigned the task again. A litigant is not required to be in deep slumber but is to be vigilant and diligent towards his rights. Merely on asking, delay cannot be condoned, and there have to be specific grounds explaining the day to day delay - The delay is of an enormous period of approximately five years and the paragraph in the application does not portray any ground to condone it. It is not a case where the Revisionist is rustic, uneducated or unaware of its rights, since a private limited company in common parlance engages a legal assistant as well as a lawyer to give it legal advice. It is also not the case of the Revisionist that it was not aware of the order passed by the Tribunal - The case is not a fit for condoning the delay - The delay condonation application is rejected [Read less]

Central Excise - CENVAT Credit of concessional additional duty of customs paid on imported steam coal under Customs Notification No. 12/2012-Cus - Rule 3(1)(i) and Rule 3(1)(vii) of CENVAT Credit Rules, 2004 - Respondent-assessee, a manufacturer of zinc and lead concentrates, paid additional duty of customs at the concessional rate on imported steam coal used in generation of electricity at its captive thermal power plant and availed CENVAT credit of the same under Rule 3(1)(vii). Dept denied the credit on the ground that it contravened Rule 3 of the CCR, 2004 - Tribunal set aside the demand - Whether additional duty of c... [Read more]

Central Excise - CENVAT Credit of concessional additional duty of customs paid on imported steam coal under Customs Notification No. 12/2012-Cus - Rule 3(1)(i) and Rule 3(1)(vii) of CENVAT Credit Rules, 2004 - Respondent-assessee, a manufacturer of zinc and lead concentrates, paid additional duty of customs at the concessional rate on imported steam coal used in generation of electricity at its captive thermal power plant and availed CENVAT credit of the same under Rule 3(1)(vii). Dept denied the credit on the ground that it contravened Rule 3 of the CCR, 2004 - Tribunal set aside the demand - Whether additional duty of customs paid at the concessional rate under the Customs Notification is not the duty of excise specified under the Central Excise Tariff Act and whether CENVAT credit of such duty is admissible to the assessee - HELD - Rule 3(1)(i) allows credit of the duty of excise specified in the First Schedule to the Excise Tariff Act subject to the conditions in its provisos, whereas Rule 3(1)(vii) independently allows credit of the additional duty leviable under Section 3 of the Customs Tariff Act. The Commissioner mixed up Rule 3(1)(i) and Rule 3(1)(vii) and imported the conditions of Rule 3(1)(i) into Rule 3(1)(vii) - The assessee had not paid duty of excise specified in the First Schedule, nor availed the benefit of the Central Excise notifications referred to in the provisos, but had paid additional duty of customs by availing the benefit under the Customs Notification. The finding of the Tribunal could not be substantially questioned by the Revenue and is supported by the minutes of the Regional Advisory Committee which clarified that credit of CVD paid on imported coal under the Customs Notification is eligible, and by the view of the High Court which dismissed the appeal of the Revenue on the same question - The assessee is entitled to CENVAT credit of the additional duty of customs paid on the imported coal – The question of law is answered in favour of the assessee and against the Revenue, the appeals are dismissed [Read less]

Customs – Refund of duty paid twice against one Bill of Entry – Section 27 and Section 27A of Customs Act, 1962 – Public Notice No. 62/2012 – Appellant paid Customs duty through a bank, but no challan was generated in the ICEGATE system. Appellant had to pay the duty again for clearance of goods. Appellant filed a refund application for the first payment with a bank certificate and other documents. The refund was rejected, and the Commissioner (Appeals) upheld the rejection as self-attested photocopies of both challans were not submitted – Whether refund of duty paid twice can be rejected for non-production of th... [Read more]

Customs – Refund of duty paid twice against one Bill of Entry – Section 27 and Section 27A of Customs Act, 1962 – Public Notice No. 62/2012 – Appellant paid Customs duty through a bank, but no challan was generated in the ICEGATE system. Appellant had to pay the duty again for clearance of goods. Appellant filed a refund application for the first payment with a bank certificate and other documents. The refund was rejected, and the Commissioner (Appeals) upheld the rejection as self-attested photocopies of both challans were not submitted – Whether refund of duty paid twice can be rejected for non-production of the challan for the first payment, when the challan was never generated in the ICEGATE system of the Department, and whether interest is payable – HELD – There was no dispute regarding the eligibility of the Appellant to get refund of one of the double payments. It was improbable to ask the Appellant to produce the challan for the first payment when its entire claim was that the challan could not be generated. Rejecting the refund on that ground was improper, since the failure was in the ICEGATE system of the Department, and the Appellant could not be made to suffer for it. Under Public Notice No. 62/2012, the Appellant was required to produce a bank letter, a copy of the cyber receipt and the bank-attested scroll. The verification from the PAO and the challan enquiry on the ICEGATE website were to be done by the proper officer. Production of copies of both challans was not a requirement under the said Public Notice. The Appellant had complied with all requirements, and the bank had declared that the amount debited was not reversed. Such double payment is a deposit with the Government that is refundable under Section 27. Interest under Section 27A applies automatically when the refund is not made within three months – The order of the Commissioner (Appeals) is set aside, the appeal is allowed, and the Respondent is directed to refund the amount with applicable interest within two months of receipt of the order. [Read less]

Tripura Value Added Tax Act, 2004 - Levy of tax on retail sale of petrol and diesel kept outside VAT – Petitioner contended that the goods listed in Schedule II (d) of the of the Tripura VAT Act, 2004 were kept outside VAT and that tax collected on retail sales through notifications specifying rates for petrol and diesel was without authority - Respondents contended that the goods were kept outside VAT but not outside the Act, and that the Petitioner, whose supplier has no depot in the State, brought the products from outside the State, so that its retail sale of Petrol and Diesel was the first point of sale within the S... [Read more]

Tripura Value Added Tax Act, 2004 - Levy of tax on retail sale of petrol and diesel kept outside VAT – Petitioner contended that the goods listed in Schedule II (d) of the of the Tripura VAT Act, 2004 were kept outside VAT and that tax collected on retail sales through notifications specifying rates for petrol and diesel was without authority - Respondents contended that the goods were kept outside VAT but not outside the Act, and that the Petitioner, whose supplier has no depot in the State, brought the products from outside the State, so that its retail sale of Petrol and Diesel was the first point of sale within the State - Whether the Respondents can collect VAT under Section 3 of the Act on the retail sales of petrol and diesel made by the Petitioner - HELD - The State Government is empowered to keep certain goods outside VAT, and Schedule II (d) lists goods which are kept outside VAT and taxable at the first point of sale within the State at the rates specified. The State Government did not intend to follow the principle of multi stage taxation, which is how a VAT regime normally operates, for goods like petrol and diesel. It wanted to minimise the tax burden on dealers, which would be higher if the VAT regime were applied as in the case of other goods - The imposition of tax on these goods is therefore done through the Act, but by remaining outside the purview of VAT. The interpretation that the words kept outside VAT mean kept outside the purview of the Act cannot be accepted. In other States enactments the wording is different, where petrol and diesel are subjected to levy at the first point of sale at special rates. No error was found in the demand made by the Respondents - The Petitioner is not entitled to refund of the amount collected - The question is answered against the Petitioner and in favour of the Respondents - The Writ Petition is dismissed - Tripura Road Development Cess - Liability to pay cess on turnover of sales of petrol, diesel and natural gas - Section 3 of the Tripura Road Development Cess Act, 2015 levies cess on the turnover of sales of petrol, diesel and natural gas, with turnover of sales defined as sales price including the amount of tax levied under the Tripura VAT Act, 2004 - Petitioner contended that since petroleum products are kept outside the purview of the VAT Act by Schedule II (d), they generate zero turnover, and cess cannot be collected on the basis of VAT when VAT is excluded - Whether the Petitioner is liable to pay cess under Section 3 of the Cess Act on the turnover of sales of petrol, diesel and natural gas - HELD - The Cess Act levies cess on the turnover of sales after deducting turnover on which cess has been paid on earlier sales, and its proviso bars levy of cess at more than one stage. It had already been held that the Respondents can collect VAT under Section 3 of the VAT Act on the retail sales of petrol and diesel by the Petitioner. The same logic applies here, as the products are kept outside VAT but not outside the purview of the VAT Act. Consequently, the levy of cess under the Cess Act on the basis of VAT cannot be held illegal or impermissible. [Read less]

GST – Gujarat AAR - Classification and rate of outdoor playground equipment and its spare parts - Applicant supplies outdoor playground equipment such as slides, swings, see-saws, climbers and multi-activity play stations installed at parks, schools, gardens, municipalities and public spaces, along with spare parts required exclusively for such equipment, and claims classification under Heading 9506 - Whether outdoor playground equipment and its spare parts are classifiable under Heading 9506 and the applicable GST rate under Notification No.09/2025-Central Tax (Rate) dated 17.09.2025 - HELD - The products do not fall un... [Read more]

GST – Gujarat AAR - Classification and rate of outdoor playground equipment and its spare parts - Applicant supplies outdoor playground equipment such as slides, swings, see-saws, climbers and multi-activity play stations installed at parks, schools, gardens, municipalities and public spaces, along with spare parts required exclusively for such equipment, and claims classification under Heading 9506 - Whether outdoor playground equipment and its spare parts are classifiable under Heading 9506 and the applicable GST rate under Notification No.09/2025-Central Tax (Rate) dated 17.09.2025 - HELD - The products do not fall under the excluded list in Chapter Note 1 to Chapter 95 or in the HSN notes to Heading 9506. The HSN notes cover under Sr.No.12 of the requisites for other sports and outdoor games the equipment of a kind used in children's playgrounds, such as swings, slides, see-saws and giant strides - The decision of the Tribunal in the case of M/s. Arihant Industrial Corpn. Ltd.that climbers used in children's playgrounds and gardens are sports goods for children classifiable under Chapter 9506 is squarely applicable. Since there is no specific entry for such equipment in the tariff entries under Heading 9506, it is aptly covered under sub-heading 95069990. As per Chapter Note 3 to Chapter 95, parts and accessories suitable for use solely or principally with articles of the Chapter are classified with those articles, and the spare parts also fall under sub-heading 95069990 - Being sports goods for children, the equipment and its spare parts are covered under Entry No.499 of Schedule-I of the Notification and are liable to GST at 5% - Outdoor playground equipment and its spare parts are classifiable under 95069990 and are liable to GST at 5% - Ordered accordingly - GST - Classification and rate of outdoor gym equipment and its spare parts - Applicant supplies outdoor gym equipment such as twisters, pull-up bars, cross-trainers and leg press installed at public spaces, along with spare parts required exclusively for such equipment - Whether outdoor gym equipment and its spare parts are classifiable under Heading 9506 and the applicable GST rate under Notification No.09/2025-Central Tax (Rate) dated 17.09.2025 - HELD - Heading 9506 not only covers articles and equipment for general physical exercise, gymnastics and athletics but also covers a wide range of sports equipment for indoor and outdoor sports. As per the HSN notes, outdoor gym equipment is covered under the articles and equipment for general physical exercise, gymnastics or athletics. Sub-heading 950691 covers such articles and equipment, and the outdoor gym equipment is appropriately covered under sub-heading 95069190 (others). As per Chapter Note 3 to Chapter 95, the spare parts for the gym equipment are also covered under sub-heading 95069190 - The equipment is covered under Entry No.619 of Schedule-II of the Notification, which relates to articles and equipment for general physical exercise, gymnastics and athletics other than sports goods, and the equipment and its spare parts are liable to GST at 18% - Outdoor gym equipment and its spare parts are classifiable under 95069190 and are liable to GST at 18% - Classification of bearings supplied as spare parts of outdoor gym equipment - Applicant supplies bearings as spare parts for its outdoor gym equipment, and claims classification of all spare parts along with the equipment under Heading 9506 - Whether bearings supplied as spare parts of outdoor gym equipment are classifiable along with the equipment under sub-heading 95069190 - HELD - Bearings are not items that can be specifically used only in outdoor gym equipment but can be used as spare parts in other equipment also - Bearings would be classifiable under sub-heading 95069190 only on account of being spare parts of outdoor gym equipment in view of Chapter Note 3 to Chapter 95. However, there is a specific tariff entry for ball bearings and roller bearings under Heading 8482. Under Rule 3(a) of the General Rules for the Interpretation of the Schedule to the Customs Tariff Act, 1975, the heading which provides the most specific description is to be preferred to headings providing a more general description - Since Heading 8482 gives the more specific description, bearings are appropriately classifiable under Heading 8482 only. Since proper details of the bearings were not provided by the Applicant, the appropriate tariff item cannot be decided and the Applicant is advised to classify them under the appropriate tariff entry under Heading 8482 as per the specifications. Bearings are covered under Entry No.467 of Schedule-II of the Notification and are liable to GST at 18% - Bearings are classifiable under Heading 8482 and not under sub-heading 95069190, and are liable to GST at 18%. [Read less]

GST – Gujarat AAR - Classification of geomembrane pond liner as textile product coated or laminated with plastic used for technical purposes under Heading 5911 - Applicant manufactures geomembrane pond liner for waterproof lining by weaving HDPE tapes or strips of width below 5 mm into woven fabrics, which are then coated and laminated with plastics on both sides by sandwich lamination and used in aquaculture ponds with Biofloc technology - Whether the geomembrane is classifiable under Heading 5911, sub-heading 59111000 or sub-heading 59119090 - HELD - Classification is determined from the ingredients used, the manufactu... [Read more]

GST – Gujarat AAR - Classification of geomembrane pond liner as textile product coated or laminated with plastic used for technical purposes under Heading 5911 - Applicant manufactures geomembrane pond liner for waterproof lining by weaving HDPE tapes or strips of width below 5 mm into woven fabrics, which are then coated and laminated with plastics on both sides by sandwich lamination and used in aquaculture ponds with Biofloc technology - Whether the geomembrane is classifiable under Heading 5911, sub-heading 59111000 or sub-heading 59119090 - HELD - Classification is determined from the ingredients used, the manufacturing process and the technical uses of the goods. Section Note 1(g) to Section XI excludes only strips of plastic with width exceeding 5 mm, and the strips below 5 mm are covered under Section XI. The HDPE tapes or strips less than 5 mm fall under sub-heading 54049020 and the woven fabrics obtained from them fall under sub-heading 540720 - Since the phrase "technical uses" is a criterion for Heading 5911, weightage is to be given to the functional use or end use concept. Geomembrane has purely technical use as it is used in aquaculture ponds with Biofloc technology, for which geomembrane-lined ponds are a must. Chapter Note 8(a) to Chapter 59 covers textile fabrics coated, covered or laminated with other material and used for technical purposes. The phrase "other material" is vast enough to include plastics, and the HSN notes to Heading 5911 specifically mention plastic as other material. The geomembrane is therefore a textile article - Geomembrane is classifiable under sub-heading 59111000 – Ordered accordingly - Rate of GST on geomembrane classified under Heading 5911 - Application was filed during the period when Notification No.01/2017-Central Tax (Rate) was in force, which was later superseded by Notification No.09/2025-Central Tax (Rate) dated 17.09.2025 effective from 22.09.2025 - Whether the geomembrane is covered under Entry No.168 of Schedule-II of Notification No.01/2017-Central Tax (Rate) and what is the applicable rate of GST - HELD - Entry No.168 of Schedule-II of Notification No.01/2017-Central Tax (Rate) covers Tariff Heading 5911, and the geomembrane is liable to GST at 12% for the period up to 21.09.2025. Under Notification No.09/2025-Central Tax (Rate), Entry No.386 of Schedule-I covers Tariff Heading 5911, and the geomembrane is liable to GST at 5% with effect from 22.09.2025. The entries refer to Note 7 to Chapter 59, which was renumbered as Note 8 by the Finance Act, 2021, and the benefit of classification under sub-heading 59111000 accrues on account of Note 8 - The geomembrane is covered under Entry No.168 of Schedule-II and is liable to GST at 12% up to 21.09.2025, and is covered under Entry No.386 of Schedule-I and is liable to GST at 5% with effect from 22.09.2025. [Read less]

Service Tax - Exemption under Clause 12A of Mega Exemption Notification No.25/2012-ST to services provided to a governmental authority - Works contract services of construction of storage godowns were received by the Respondent, a public company established by the State Government with more than 99% equity participation, which procures paddy from farmers and distributes essential commodities through the Public Distribution System at subsidised rates - Appellant contended that the Respondent was not a governmental authority as it did not carry out any function entrusted to a municipality under Article 243W of the Constituti... [Read more]

Service Tax - Exemption under Clause 12A of Mega Exemption Notification No.25/2012-ST to services provided to a governmental authority - Works contract services of construction of storage godowns were received by the Respondent, a public company established by the State Government with more than 99% equity participation, which procures paddy from farmers and distributes essential commodities through the Public Distribution System at subsidised rates - Appellant contended that the Respondent was not a governmental authority as it did not carry out any function entrusted to a municipality under Article 243W of the Constitution - Whether the Respondent qualifies as a governmental authority under Clause 2(s) of the Notification and is eligible for exemption under Clause 12A - HELD - To qualify as a governmental authority, the body should have been set up by an Act of Parliament or a State Legislature or established by the Government, there should be 90% or more participation by way of equity or control, and it should carry out any function entrusted to a municipality under Article 243W. The first two conditions are fully satisfied since the Respondent is established by the State Government with more than 99% participation by way of equity. The Respondent is formed not for profit making but to aid the State in its endeavour to alleviate urban poverty, safeguard the interest of the weaker section of society and provide for social and economic development planning. Its activity of procuring paddy, storing it and distributing it to the general public through Fair Price Shops at very low subsidised rates is certainly towards achieving the object of poverty alleviation and social and economic development planning. It therefore discharges some of the functions vested with a body under Article 243W - The Respondent qualifies as a governmental authority and is eligible for exemption under Clause 12A - The Writ Appeal is dismissed - Exemption under Clause 14(d) of Mega Exemption Notification No.25/2012-ST for post-harvest storage infrastructure for agricultural produce - Godowns were constructed in the major paddy growing districts primarily for storing the paddy procured from farmers, and the Appellant contended that the exemption was not available as the godowns could also be used for storing other commodities including cement - Whether construction of godowns which could later be used for storing other commodities is eligible for exemption under Clause 14(d) - HELD - The possibility of later usage of these godowns for storage of other commodities cannot be the determining factor. The primary test for eligibility is the objective, design and actual immediate use of the infrastructure at the time of its execution. If the godowns are built specifically to house essential commodities or agricultural produce such as paddy or rice for the public distribution system, they fulfil the criteria. The Department cannot deny an exemption based on hypothetical, future alternate uses - As long as the infrastructure fits the definition of post-harvest storage at the time of the service provision, subsequent or auxiliary changes in utilisation do not retroactively dissolve a valid statutory exemption. The Respondent had categorically stated that storage of other commodities happens only in Taluk godowns and that these godowns are used for post-harvest storage of agricultural produce. The Respondent operates under the control of the State Government primarily to execute public welfare functions such as food security and PDS distribution, which supports the non-commercial, public utility nature of the construction and protects it from being classified as a generic commercial warehouse - The Respondent is eligible to claim exemption under Clause 14(d), the order in original is set aside - The Writ Appeal is dismissed. [Read less]

Customs - Classification of imported DHA algae oil - Chapter 15 versus Chapter 29 and Heading 2106 of Customs Tariff - Appellant imported DHA algae oil and classified it as an unsaturated acyclic monocarboxylic acid under Chapter 29, claiming the benefit of exemption notification - Department alleged misdeclaration, reclassified the goods under Heading 1515 as other fixed vegetable oil, confirmed differential duty with interest, ordered confiscation with redemption fine and imposed penalties -- Whether the imported goods are classifiable under Chapter 29 as claimed by the Appellant or under Heading 1515 as held by the Depa... [Read more]

Customs - Classification of imported DHA algae oil - Chapter 15 versus Chapter 29 and Heading 2106 of Customs Tariff - Appellant imported DHA algae oil and classified it as an unsaturated acyclic monocarboxylic acid under Chapter 29, claiming the benefit of exemption notification - Department alleged misdeclaration, reclassified the goods under Heading 1515 as other fixed vegetable oil, confirmed differential duty with interest, ordered confiscation with redemption fine and imposed penalties -- Whether the imported goods are classifiable under Chapter 29 as claimed by the Appellant or under Heading 1515 as held by the Department - HELD - Classification is determined by the terms of the headings and Section or Chapter Notes under GRI 1, with assistance from the Harmonized System of Nomenclature and its Explanatory Notes. Chapter 15 covers animal or vegetable fats and oils, and the imported DHA algae oil is an edible oil derived from plant source, in which fatty acids make up almost the entire structure. Chapter Note 1(e) of Chapter 15 does not exclude fatty acids of edible oil. Heading 2916 applies only to separate chemically defined organic compounds, and excludes oleic acid of purity less than 85% and other fatty acids of purity less than 90% - The test reports show that the goods contain DHA at about half and several other fatty acids, with none of the required purity. The goods are therefore a mixture of fatty acids as constituent of edible oil and not a pure DHA fatty acid. The end use of the product in the food industry is not relevant for classification unless the Tariff entry mentions it, and it is the product at the time of importation, its appearance and composition which matter. Heading 2916 and Heading 2106 are not about oils, and merely because a constituent such as linolenic acid is mentioned, an oil containing it cannot fall under Heading 2916. As per GRI 1 and GRI 2, a reference to a substance includes mixtures, and Heading 1515 is the most specific among the three headings - The goods are classifiable under Chapter 15 and were wrongly classified under Chapter 29, the benefit of the exemption notification was wrongly claimed, and the demand of differential duty with interest, penalty and appropriation of the bank guarantee is upheld - The appeal is dismissed [Read less]

Customs - Limitation for recovery of drawback under Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - Petitioner exported textile garments under seven shipping bills in 2011 and availed drawback - Show cause notice for recovery of drawback with interest was allegedly issued in 2018 on the ground of non-production of proof of realisation of export proceeds and the impugned order was passed in 2023 - Petitioner contended that the notice was never served, that no hearing was given and that the recovery proceedings were barred by limitation - Whether recovery proceedings initiated after a lap... [Read more]

Customs - Limitation for recovery of drawback under Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - Petitioner exported textile garments under seven shipping bills in 2011 and availed drawback - Show cause notice for recovery of drawback with interest was allegedly issued in 2018 on the ground of non-production of proof of realisation of export proceeds and the impugned order was passed in 2023 - Petitioner contended that the notice was never served, that no hearing was given and that the recovery proceedings were barred by limitation - Whether recovery proceedings initiated after a lapse of more than seven years from the payment of drawback were within a reasonable period - HELD - Rule 16 empowers the Customs authorities to recover drawback erroneously or excessively paid but does not prescribe any period of limitation. In the absence of an express period of limitation, such power has to be exercised within a reasonable period, which depends on the facts and circumstances of each case. The decision of the Delhi High Court in Rajbir Singh, which declined to apply a general limitation period of three years where there were strong allegations of fraudulent availment, has no application since there is no allegation that the Petitioner fraudulently availed the drawback or suppressed any material fact. The only allegation is failure to produce proof of realisation of export proceeds. No satisfactory explanation was offered for the delay in initiating the recovery proceedings - The Petitioner had also categorically stated that he had closed his export business in 2011 and was no longer in possession of the documents relating to the exports. Recovery proceedings initiated after an unexplained delay of more than seven years cannot be said to have been commenced within a reasonable period - The recovery proceedings are unsustainable, the impugned order is set aside and the Writ Petition is allowed with a direction to refund the amount within four weeks, failing which the amount shall carry interest at the rate of 8% per annum – The petition is allowed [Read less]

Customs – Limitation for second appeal before CESTAT – Date of service of first appellate order – Section 37C of Customs Act, 1962 – No order was received after the hearing of the first appeals. On enquiry, a copy of the order rejecting the appeals was furnished to the Appellant on 31.03.2025. The Appellant filed second appeals before the CESTAT on 03.06.2025, reckoning the date of service as 31.03.2025. The CESTAT dismissed the appeals as barred by limitation. The Revenue contended that the DIN on the order showed that it was uploaded on the portal – Whether the date of service of the first appellate order is to... [Read more]

Customs – Limitation for second appeal before CESTAT – Date of service of first appellate order – Section 37C of Customs Act, 1962 – No order was received after the hearing of the first appeals. On enquiry, a copy of the order rejecting the appeals was furnished to the Appellant on 31.03.2025. The Appellant filed second appeals before the CESTAT on 03.06.2025, reckoning the date of service as 31.03.2025. The CESTAT dismissed the appeals as barred by limitation. The Revenue contended that the DIN on the order showed that it was uploaded on the portal – Whether the date of service of the first appellate order is to be reckoned from the date of the order or from 31.03.2025, and whether the second appeals were barred by limitation – HELD – The Revenue produced no evidence that the order was served electronically or uploaded on the portal. The DIN is only an authentication of the order, and nothing can be inferred from it about service. Section 37C requires service of an order by registered post or speed post with acknowledgement due. The reply under the Right to Information Act showed that the order was dispatched by speed post, with no mention of any acknowledgement being sought, which is contrary to Section 37C. The date of service is therefore 31.03.2025, and the appeals filed on 03.06.2025 are within time – The dismissal by the CESTAT is incorrect, its orders are quashed, and the appeals are allowed - Customs – Limitation for first appeal – Last day falling on a Sunday – Section 4 of the Limitation Act – The Appellant filed first appeals against the orders-in-original, taking the benefit of the extension of time granted by the Supreme Court. The last day fell on a Sunday, and the appeals were filed on the next working day. The first appellate authority rejected the appeals on the ground that no relaxation in time could be given beyond the period fixed under the statute or by the Supreme Court – Whether the first appeals filed on the first working day after the last day, which fell on a Sunday, are maintainable – HELD – Since the last day fell on a Sunday, Section 4 of the Limitation Act applies. Relying on the decision of the Uttarakhand High Court, the appeals instituted on the first working day thereafter are maintainable. As the Appellant had not been heard on merits at either stage, the matter requires adjudication on merits – The orders of the CESTAT are quashed, the matters are remanded to the first appellate authority for adjudication in accordance with law, and the appeals are allowed. [Read less]

Service Tax - Taxability of CSR contributions as sponsorship service - Appellant made payments to various organizations for activities such as construction of toilets, school buildings and temple towers, claiming them to be donations for charitable purposes - Department treated them as sponsorships and confirmed the demand of service tax under Section 65(99a) of the Finance Act, 1994, which the Tribunal upheld - Whether the payments made by the Appellant are sponsorship services within the meaning of Section 65(99a) and chargeable to service tax - HELD - The Appellant is not seeking exemption from the levy. It is the Reven... [Read more]

Service Tax - Taxability of CSR contributions as sponsorship service - Appellant made payments to various organizations for activities such as construction of toilets, school buildings and temple towers, claiming them to be donations for charitable purposes - Department treated them as sponsorships and confirmed the demand of service tax under Section 65(99a) of the Finance Act, 1994, which the Tribunal upheld - Whether the payments made by the Appellant are sponsorship services within the meaning of Section 65(99a) and chargeable to service tax - HELD - The Appellant is not seeking exemption from the levy. It is the Revenue which seeks to bring the transactions within the service tax net, and therefore the onus is on the Revenue to establish the true character of the transaction - If the appellant takes the stand that there was no agreement with the donee, the Revenue cannot assume that there was one and that it was not being produced. The Revenue is at liberty to address the donee and ask for particulars - Under Section 65(99a), service tax is leviable where the event is named after the sponsor, the sponsor's logo or trading name is displayed, exclusive or priority booking rights are given, or prizes or trophies are sponsored in the sponsor's name. Financial support in the form of donations or gifts does not constitute sponsorship if the donee is under no obligation to provide anything in return. The key word is "obliged", and a transaction is sponsorship only when the payment is subject to a condition that the recipient has to do something in return - Merely because the records of the contributor or the recipient refer to the transaction as sponsorship, or the donee on its own acknowledges the contribution, the transaction does not become taxable. The requirement to display the logo was found in only two transactions, as stipulated in the Board resolution itself, and these alone were sponsorship. The other transactions were brought under the tax net on stereotyped reasons, namely non-production of original documents, absence of documentary proof and display of the logo at the event. These reasons are unsustainable since it was not the case of the Revenue that the Appellant was withholding any material or that the donee was obliged to display the logo. The Revenue has not discharged its onus - The question of law is answered in favour of the Appellant, the order of the Tribunal is set aside and the appeal is allowed - Invocation of extended period of limitation on sponsorship transactions - Proceedings were initiated against the Appellant after the expiry of the normal limitation period, and the Revenue justified the invocation of the extended period by relying on the proviso to Section 73(1) of the Finance Act, 1994 - Whether the extended period of limitation was invokable in respect of the two transactions held to be sponsorship - HELD - The proviso to Section 73(1) could have been invoked only if circumstances such as fraud, collusion, willful misstatement or suppression of facts had been present. The Department had not placed any credible material to show that the Appellant was guilty of such misconduct. Hence, even in respect of the two transactions found to be sponsorship, the proceedings could not have been initiated since they were time-barred - The extended period of limitation was wrongly invoked, the order of the Tribunal is set aside and the appeal is allowed. [Read less]

GST - Power to seize cash under Section 67(2) of the CGST Act, 2017 - Cash was seized from the residential premises during search and the adjudicating authority held it to be sale proceeds of unaccounted goods sold without tax invoices, liable to confiscation under Section 130(1) - Petitioners contended that money is excluded from goods under Section 2(52) and cannot be seized as ‘things’ - Whether Section 67(2) authorises seizure of cash merely because it is suspected or later held to represent the proceeds of unaccounted taxable supplies - HELD – The writ petition challenging seizure of cash is maintainable despite... [Read more]

GST - Power to seize cash under Section 67(2) of the CGST Act, 2017 - Cash was seized from the residential premises during search and the adjudicating authority held it to be sale proceeds of unaccounted goods sold without tax invoices, liable to confiscation under Section 130(1) - Petitioners contended that money is excluded from goods under Section 2(52) and cannot be seized as ‘things’ - Whether Section 67(2) authorises seizure of cash merely because it is suspected or later held to represent the proceeds of unaccounted taxable supplies - HELD – The writ petition challenging seizure of cash is maintainable despite pending statutory appeal and remedy under Section 112 - The power of seizure under Section 67(2) operates in respect of two distinct categories, namely goods liable to confiscation and documents or books or things useful or relevant to proceedings. Section 2(52) expressly excludes money from the definition of goods, and therefore cash cannot be goods liable to confiscation - The word ‘things’ must be read ejusdem generis with the associated words documents and books, which are evidentiary in character, and the second proviso permitting retention only for examination and inquiry confirms the evidentiary purpose - The Income-tax Act and the Customs Act expressly provide for seizure of money or currency, which shows that Parliament knows how to confer such power, and the omission in Section 67 cannot be judicially supplied. Powers of search and seizure are drastic powers and are not to be construed liberally - Even a prima facie case of tax evasion cannot enlarge the power of seizure beyond the limits enacted by Parliament. The reasons to believe must be based on objective material having a rational nexus with the statutory conditions and is not synonymous with mere suspicion - Cash that merely represents unaccounted wealth cannot be seized under Section 67, and retention towards a possible future recovery is not permitted - The seizure and retention of cash cannot be sustained, the Respondents are directed to release the amount to the persons from whose possession it was seized subject to any lawful order under an independently applicable statute, and the Petitioners are entitled to applicable interest – The writ petition is allowed [Read less]

Central Excise – Refund of pre-deposit with interest – Ex-parte order of Commissioner (Appeals) – Service of personal hearing notice – Section 35A(3) of Central Excise Act, 1944 – The Tribunal allowed the Appellant's appeal, and refund of the pre-deposit was sanctioned along with interest, which was later reduced by a corrigendum. The Revenue appealed, and the Commissioner (Appeals) decided the matter ex-parte, recording that none appeared despite personal hearing granted on three dates, and remanded it for re-quantification of interest. The CESTAT dismissed the Appellant's appeal on merits, and also dismissed it... [Read more]

Central Excise – Refund of pre-deposit with interest – Ex-parte order of Commissioner (Appeals) – Service of personal hearing notice – Section 35A(3) of Central Excise Act, 1944 – The Tribunal allowed the Appellant's appeal, and refund of the pre-deposit was sanctioned along with interest, which was later reduced by a corrigendum. The Revenue appealed, and the Commissioner (Appeals) decided the matter ex-parte, recording that none appeared despite personal hearing granted on three dates, and remanded it for re-quantification of interest. The CESTAT dismissed the Appellant's appeal on merits, and also dismissed its rectification application. The Appellant contended that it never received the hearing notices, and that its counsel had appeared on one of the same dates before the same authority in another appeal between the same parties – Whether the Commissioner (Appeals) and the CESTAT were justified in holding that notices of personal hearing were served, when no acknowledgement of service was on record, and whether the Appellant was denied an opportunity of hearing – HELD – Personal hearing notices are a statutory requirement under Section 35A(3). The Respondent placed no document on record demonstrating service of the notices, and it was therefore held that the notices were not served. The orders in the two appeals involving the same parties on the same date showed that counsel for the Appellant appeared in one matter, so it cannot be said that counsel chose not to appear in the other. This further establishes that the notices were not received. The CESTAT did not deal with the specific ground on denial of opportunity of hearing and decided the matter on merits, which also results in denial of opportunity – The Commissioner (Appeals) is directed to consider the Appellant's claim afresh, and the appeal is partly allowed [Read less]