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GST - Classification of Input Tax Credit and allocation between tax heads - ITC available under IGST availed under the CGST and SGST heads - Show cause notice issued alleging excess availment of ITC due to differences in allocation between IGST, CGST and SGST heads - Whether the discrepancy in classification of ITC between different tax heads constitutes excess availment when the aggregate eligible ITC claimed is within the eligible entitlement and no revenue loss is caused - HELD - Department has not established that the Appellant availed ITC in excess of its aggregate eligible entitlement. The discrepancy is essentially ... [Read more]

GST - Classification of Input Tax Credit and allocation between tax heads - ITC available under IGST availed under the CGST and SGST heads - Show cause notice issued alleging excess availment of ITC due to differences in allocation between IGST, CGST and SGST heads - Whether the discrepancy in classification of ITC between different tax heads constitutes excess availment when the aggregate eligible ITC claimed is within the eligible entitlement and no revenue loss is caused - HELD - Department has not established that the Appellant availed ITC in excess of its aggregate eligible entitlement. The discrepancy is essentially attributable to reporting and classification of ITC under different tax heads and the eligibility of underlying credit has not been shown to be disputed on substantive grounds – The ITC available in the electronic credit ledger should be considered as a pool of funds designated for different types of taxes such as IGST, CGST and SGST and while determining interest under Rule 88B of the CGST Rules, the entire wallet has to be taken into consideration and not just individual compartments - If the total balance combining IGST, CGST and SGST does not fall below the amount of wrongly availed credit, there is no interest liability - Once the principal demand of alleged excess ITC is found unsustainable, the consequential levy of interest and penalty cannot independently survive - The authorities shall verify that the appellant had sufficient eligible ITC available under the IGST head and upon such verification, the revenue demand shall be dropped if ITC under IGST head stands unclaimed by the appellant. The appellant shall be entitled to all consequential relief including restoration or adjustment of ITC if any, in accordance with law – The appeal is allowed [Read less]

GST - Return of own machinery from project site, Movement of goods without e-Way Bill – Violation of Rule 138 of CGST Rules, 2017 - The Appellant claimed that an excavator was being returned from a project work site to its registered place of business with a Delivery Challan and that the movement was not a taxable supply as it was return of own machinery used for job work - Department treated the transportation of goods without valid e-Way Bill as a violation of Rule 138 and imposed penalty under Section 129 - Whether movement of machinery without e-Way Bill, when claimed to be return of own goods from job work site with... [Read more]

GST - Return of own machinery from project site, Movement of goods without e-Way Bill – Violation of Rule 138 of CGST Rules, 2017 - The Appellant claimed that an excavator was being returned from a project work site to its registered place of business with a Delivery Challan and that the movement was not a taxable supply as it was return of own machinery used for job work - Department treated the transportation of goods without valid e-Way Bill as a violation of Rule 138 and imposed penalty under Section 129 - Whether movement of machinery without e-Way Bill, when claimed to be return of own goods from job work site with only a Delivery Challan, constitutes a violation of Rule 138 warranting penalty under Section 129(3) of the CGST Act, 2017 - HELD - The machinery belonging to the appellant and being returned from the project site does not by itself exempt the appellant from complying with statutory requirements relating to transportation of goods under Rule 138. Under Section 68 of the CGST Act read with Rule 138 of the CGST Rules, the prescribed documents including e-Way Bill are required for movement of goods including movement for reasons other than supply, subject to specified exemptions - The Appellant has failed to satisfactorily establish the tax treatment of consideration received for use of the machinery at the project site and though stated to be operated on hourly basis, no sufficient evidence regarding hours of operation, consideration charged and corresponding discharge of GST has been produced. The contention regarding alleged 20-kilometre exemption cannot be accepted in the absence of satisfactory evidence establishing that the present movement was specifically covered by applicable statutory exemption under Rule 138(14) or any relevant notification - The absence of e-Way Bill coupled with non-disclosure of tax treatment of consideration gives rise to reasonable inference of intention to evade tax and cannot be treated as a mere technical lapse - The judicial precedents relied upon are distinguishable on facts and circumstances. The appeal is rejected and the orders of both the original adjudicating authority and First Appellate Authority are upheld – The appeal is dismissed [Read less]

GST - Movement of goods with valid e-Way Bill - Presumption of reuse of e-Way Bill - Appellant was transporting goods with valid tax documents including invoice, e-invoice and e-Way Bill. The Department intercepted the goods and presumed that the e-Way Bill was being reused based on earlier verification of the e-Way Bill at one location and subsequent location of the vehicle at another place on the same day, without producing any independent and cogent evidence that the same goods had already completed an earlier journey - Whether goods in compliance with GST provisions can be detained and penalized on the basis of presum... [Read more]

GST - Movement of goods with valid e-Way Bill - Presumption of reuse of e-Way Bill - Appellant was transporting goods with valid tax documents including invoice, e-invoice and e-Way Bill. The Department intercepted the goods and presumed that the e-Way Bill was being reused based on earlier verification of the e-Way Bill at one location and subsequent location of the vehicle at another place on the same day, without producing any independent and cogent evidence that the same goods had already completed an earlier journey - Whether goods in compliance with GST provisions can be detained and penalized on the basis of presumption or inference without producing cogent material evidence that the e-Way Bill was actually being reused - HELD - The material placed on record does not establish any discrepancy in description, quantity, value or ownership of the goods. The goods were accompanied by relevant tax documents including invoice, e-invoice and e-Way Bill - The finding that goods were re-transported is based principally on inference from earlier verification or location of the e-Way Bill and no independent and cogent evidence has been produced to establish that the same goods had already completed an earlier journey and had been delivered - If movement of goods is in compliance with provisions of GST Act, the same cannot be detained on basis of presumptions and assumptions. Presumption cannot take the place of evidence and strong suspicion, strange coincidences and grave doubt cannot take place of legal proof. Intention cannot be presumed merely from suspicion and presumption of tax evasion cannot take place of proof - The appeal is allowed and the appellate order and original order are set aside [Read less]

GST - Procedural Due Process - Notice of Hearing - Petitioner received show-cause notice and filed reply, but last three notices for dates fixed for personal hearing namely 27.01.2026, 16.03.2026 and 25.03.2026 were not uploaded on Common Portal and Petitioner had no knowledge of proceedings; ex-parte order passed without affording opportunity of personal hearing – Whether order can be sustained when petitioner was not intimated about last three dates of hearing in violation of Section 75(4) of CGST Act, 2017 – HELD - The failure to upload notices on Common Portal and absence of intimation to Petitioner about last thre... [Read more]

GST - Procedural Due Process - Notice of Hearing - Petitioner received show-cause notice and filed reply, but last three notices for dates fixed for personal hearing namely 27.01.2026, 16.03.2026 and 25.03.2026 were not uploaded on Common Portal and Petitioner had no knowledge of proceedings; ex-parte order passed without affording opportunity of personal hearing – Whether order can be sustained when petitioner was not intimated about last three dates of hearing in violation of Section 75(4) of CGST Act, 2017 – HELD - The failure to upload notices on Common Portal and absence of intimation to Petitioner about last three dates of proceedings is a violation of principles of natural justice. Every taxpayer has fundamental right to be heard before an order adverse to Petitioner is passed. Where notices of hearing are not uploaded on portal and Petitioner has no knowledge about proceedings, the resulting ex-parte order is vitiated and cannot be sustained – The requirement of Section 75(4) of CGST Act, 2017 has been flouted. The impugned order is set aside; matter remitted to authority concerned to pass fresh order after giving fresh opportunity of hearing to Petitioner with advance notice of at least 15 days – the present writ petitions are disposed of [Read less]

Central Excise - Place of Removal and Assessable Value - FOR Sales versus Ex-Factory Sales - Transportation and Loading Charges - Department alleged that the place of removal in respect of sales made by the respondent is the customer's premises and hence, exclusion of transportation and loading charges from the assessable value was not in conformity with Section 4 of the Central Excise Act, 1944 - Whether the supply should be treated as FOR basis including transportation charges in assessable value or as ex-factory sale excluding such charges - HELD - The classification of sales as FOR basis or ex-factory basis depends on ... [Read more]

Central Excise - Place of Removal and Assessable Value - FOR Sales versus Ex-Factory Sales - Transportation and Loading Charges - Department alleged that the place of removal in respect of sales made by the respondent is the customer's premises and hence, exclusion of transportation and loading charges from the assessable value was not in conformity with Section 4 of the Central Excise Act, 1944 - Whether the supply should be treated as FOR basis including transportation charges in assessable value or as ex-factory sale excluding such charges - HELD - The classification of sales as FOR basis or ex-factory basis depends on examination of purchase orders and terms and conditions of sale applicable to each buyer. The adjudicating authority examined the relied upon purchase orders and appropriately distinguished them into two categories viz. those where sales are on FOR basis and those treated as ex-factory sales based on whether freight charges were integral to the price or separately mentioned - Where purchase orders indicate freight charges separately and material is inspected after receipt at buyer's premises, the sale is treated as ex-factory sale and not on FOR basis - The criteria for FOR sales as decided in CCE Versus Roofit Industries Ltd were met only in respect of certain customers where price was consolidated and inclusive of freight - The Department failed to examine all purchase orders and relied only on sample purchase orders specifically mentioned in the SCN and therefore the adjudicating authority was justified in examining only those relied upon documents – The impugned order is upheld and the appeal filed by the department is dismissed - Invocation of extended period - Regarding invocation of extended period, the department was aware of the fact relating to transportation and inclusion or exclusion of charges from assessable value in view of repeated audit visits. The entire issue of whether transportation cost can be included and whether place of removal can be buyer's premises was subject matter of conflicting judgments and differing interpretations of law - Due to conflicting views and alternative interpretations available before the relevant date, extended period could not have been invoked. The CBIC Circular No. 1065/4/2015-CX dated 08.06.2018 clarified that extended period should not be invoked in cases where an alternative interpretation was taken by the assessee before the date of Supreme Court judgment as the issue is in the nature of interpretation of law. Since extended period could not be invoked, penalty under Section 11AC was also not imposable. [Read less]

GST - Show Cause Notice under Section 74 of CGST Act, 2017 - Requirement of Fraud or Willful Misrepresentation or Suppression - Foundational Facts for Invoking Extended Period - Department sought to invoke extended period of five years under Section 74 by alleging fraud, willful misstatement or suppression of facts - Appellant contended that there was no allegation of fraud, willful misstatement or suppression of facts and SCN was issued as protective measure after Assessing Officer kept matter under call book pending disposal of audit objection before Public Accounts Committee - Whether SCN can be sustained under extended... [Read more]

GST - Show Cause Notice under Section 74 of CGST Act, 2017 - Requirement of Fraud or Willful Misrepresentation or Suppression - Foundational Facts for Invoking Extended Period - Department sought to invoke extended period of five years under Section 74 by alleging fraud, willful misstatement or suppression of facts - Appellant contended that there was no allegation of fraud, willful misstatement or suppression of facts and SCN was issued as protective measure after Assessing Officer kept matter under call book pending disposal of audit objection before Public Accounts Committee - Whether SCN can be sustained under extended period of Section 74 without establishing foundational facts constituting fraud, willful misrepresentation or suppression - HELD – The proceedings under Section 73 and 74 can be initiated only on satisfaction of Assessing Officer. For notice under Section 74, satisfaction of Assessing Officer should be not only that mismatch of input tax credit and short payment of tax has occurred but also that fraud or willful misrepresentation or suppression had led to such mismatch or short payment. Mere employment of words indicating fraud, willful misrepresentation or suppression in notice without establishing foundational facts would not suffice - Foundational facts which led to inference of fraud, willful misrepresentation or suppression should be evident from notice itself. It is not mere lip service to provisions when extended limitation period is provided for recovery of excess benefit availed, short payment or excess refund - In present case, SCN did not contain any foundational facts to validate allegation of suppression except for bland statement of availing ITC without documentary evidence and suppression of facts. Mere statement that proceedings were initiated prior to expiry of limitation under Section 73 would not justify invocation of extended period under Section 74 - The fact that Department took up audit objections with Public Accounts Committee itself indicates absence of satisfaction on part of Department as to mismatch or short fall of payment of tax – Further, the annual returns for financial years 2018-2019 to 2020-2021 were required to be filed respectively on 31.12.2020, 31.03.2021 and 28.02.2022. Due to COVID-19 pandemic, limitation period was extended by excluding period between 15.03.2020 to 28.02.2022. Accordingly, limitation expired on 28.02.2025 for all three financial years and SCN issued on 13.06.2025 was past extended limitation period under Section 73 – The SCN and consequential Order-in-Original are set aside. However, extended period of two years from expiration of normal limitation period is not yet over. The Department may, if thought fit, initiate appropriate proceeding under Section 74 with foundational facts coming out from notice itself and order being passed before 28.02.2027 - The appeal stands allowed [Read less]

Central Excise - Cenvat Credit on the basis of Photocopies of Invoices - Documentary Evidence and Substantive Entitlement - During audit respondent was found to have availed Cenvat Credit on strength of photocopies and xerox copies of invoices and upon objection during audit respondent reversed the entire amount and subsequently filed refund claim - Whether refund of Cenvat Credit earlier reversed can be denied solely on ground that original invoices were not available and credit was supported by photocopies instead of prescribed original documents - HELD - Rule 9 of Cenvat Credit Rules, 2004 prescribes documents on basis ... [Read more]

Central Excise - Cenvat Credit on the basis of Photocopies of Invoices - Documentary Evidence and Substantive Entitlement - During audit respondent was found to have availed Cenvat Credit on strength of photocopies and xerox copies of invoices and upon objection during audit respondent reversed the entire amount and subsequently filed refund claim - Whether refund of Cenvat Credit earlier reversed can be denied solely on ground that original invoices were not available and credit was supported by photocopies instead of prescribed original documents - HELD - Rule 9 of Cenvat Credit Rules, 2004 prescribes documents on basis of which Cenvat Credit can be taken and documentary conditions under Cenvat scheme have important purpose namely to establish payment of duty, receipt of goods or services, identity of recipient and to guard against duplicate or fraudulent availment - Question whether non-production of original document necessarily results in denial of substantive credit cannot be decided in abstract - Nature of defect, reason for non-production, availability of secondary evidence and most importantly whether essential conditions for availment of credit are independently established are relevant considerations - Once duty-paid nature of capital goods, their receipt, use and respondent's eligibility to credit are not in dispute and when there is no allegation of fraud, duplicate credit or manipulation of documents, denial of credit only because original invoices could not be produced would elevate documentary requirement above substantive entitlement itself - Judicial decisions on Cenvat Credit have recognized that credit may, depending upon facts, be allowed on copy of prescribed document when its authenticity and underlying transaction stand satisfactorily verified - Department has not disputed that capital goods covered by invoice were actually received, duty had been paid on such goods, goods were used and respondent was otherwise entitled to Cenvat Credit - No allegation or evidence that credit in respect of same invoices had been availed by any other unit or person and no finding that photocopies were fabricated, manipulated or otherwise unreliable - Competent authority examined respondent's explanation regarding loss and non-availability of invoices and sanctioned refund after holding that respondent was entitled to credit - No sufficient ground to interfere with impugned order – The impugned order is upheld and the Revenue's appeal is dismissed [Read less]

GST - Eligibility to Amnesty scheme under Section 128A of the CGST Act, 2017 - Waiver of interest and penalty on excess ITC claim - Relevant period and timing of availment - Appellant claimed excess Input Tax Credit in GSTR-3B for December 2020 relating to debit notes and transactions of FY 2018-19 and sought waiver of interest and penalty under Section 128A CGST Act applicable to period 1st July 2017 to 31st March 2020 - Appellant contended excess ITC pertained to 2018-19 transactions though declared and paid in December 2020 and that liability should be treated as relating to eligible period - Whether Section 128A benefi... [Read more]

GST - Eligibility to Amnesty scheme under Section 128A of the CGST Act, 2017 - Waiver of interest and penalty on excess ITC claim - Relevant period and timing of availment - Appellant claimed excess Input Tax Credit in GSTR-3B for December 2020 relating to debit notes and transactions of FY 2018-19 and sought waiver of interest and penalty under Section 128A CGST Act applicable to period 1st July 2017 to 31st March 2020 - Appellant contended excess ITC pertained to 2018-19 transactions though declared and paid in December 2020 and that liability should be treated as relating to eligible period - Whether Section 128A benefit available when excess ITC availed for first time in December 2020 though underlying transaction belonged to FY 2018-19 - HELD - Section 128A provides statutory waiver of interest and penalty only for demands pertaining to period 1 July 2017 to 31 March 2020. The decisive and material factor is the point of time at which disputed ITC was actually availed and became subject matter of Section 73 proceedings not merely the financial year in which debit notes were originally issued - Records show excess ITC forming subject matter of demand was claimed in GSTR-3B for December 2020 and was not ITC availed in FY 2018-19 carried forward through subsequent monthly returns. The demand confirmed pertains to ITC claim made in December 2020 and does not constitute demand pertaining to period 1 July 2017 to 31 March 2020 for purposes of Section 128A – The fact that underlying liability traced to debit note of earlier period cannot enlarge statutory temporal scope of Section 128A. Legislature expressly prescribed limited period for Amnesty scheme and scope cannot be enlarged by adjudicating or appellate authority beyond period expressly prescribed – Further, the CBIC Circular No. 238/32/2024-GST does not dispense with statutory requirement that demand must pertain to prescribed period - Appellant failed to establish that the disputed demand of excess ITC, as confirmed under Section 73(9) of the Act, pertains to the period 1st July 2017 to 31st March 2020. The demand arose from the ITC claim made in December 2020 and, therefore, falls outside the temporal scope of Section 128A of the CGST Act. Consequently, the Appellant is not entitled to waiver of interest and penalty under Section 128A of the Act – The appeal is dismissed [Read less]

Customs – Deliberate change in Classification with intent to evade duty – Classification of Balloons - CTH 9503 versus CTH 4016 versus CTH 9505 - Functional and Specific Classification versus Material-Based Classification - Appellants imported balloons made of natural rubber latex declared as Decorative or Festival Balloons and classified under CTH 40169590 and 95059090, availing concessional rate of duty under Notification No. 50/2018-Customs. Prior investigations and prior imports by the appellants indicated classification under CTH 95030090 - Department alleged that goods were toy balloons correctly classifiable und... [Read more]

Customs – Deliberate change in Classification with intent to evade duty – Classification of Balloons - CTH 9503 versus CTH 4016 versus CTH 9505 - Functional and Specific Classification versus Material-Based Classification - Appellants imported balloons made of natural rubber latex declared as Decorative or Festival Balloons and classified under CTH 40169590 and 95059090, availing concessional rate of duty under Notification No. 50/2018-Customs. Prior investigations and prior imports by the appellants indicated classification under CTH 95030090 - Department alleged that goods were toy balloons correctly classifiable under CTH 95030090 attracting Basic Customs Duty at 60% - Whether natural rubber latex balloons are classifiable as toy balloons under CTH 9503 or as other articles of vulcanised rubber under CTH 4016 9590 or as festive decoration articles under CTH 9505 9090 - HELD - Once toy balloons are specifically covered under CTH 9503 as per HSN Explanatory Notes, there is no reason to resort to any general or residual entry. HSN Explanatory Notes constitute a safe and internationally accepted guide for interpretation of tariff entries and have consistently been relied upon - Rule 1 of General Rules of Interpretation provides that classification shall be determined according to terms of headings and any relative section or chapter notes. Where tariff itself provides an unambiguous appropriate entry, resorting to interpretative rules does not arise - Classification under Chapter 40 is material-based classification whereas Chapter 95 provides specific functional classification for toys. Functional and specific classification prevails over material-based residual classification. Since imported goods are specifically recognised as toy balloons under Chapter 95, classification under Chapter 40 is not acceptable – Further, the HSN Explanatory Notes to heading 9505 nowhere include toy balloons made of natural rubber latex. Explanation to CTH 40169590 and 40169990 inserted vide Notification No.02/2021-Customs dated 1-2-2021 provides that this entry does not include toy balloons made of natural rubber latex as toy balloons are classified under Customs tariff heading 9503. Once a product is specifically covered under a specific heading, recourse to a general heading is not permitted - Change in classification from CTH 9503 to CTH 4016 was carried out with intent to avoid BIS compliance and avail exemption and pay lower duty. Such actions reveal malafide intent. Prior imports classified under CTH 95030090 establishing deliberate change from correct to incorrect classification with intent to evade duty. Statements under Section 108 coupled with conduct establishing clear malafide intent justifying penal consequences – The classification under CTH 95030090 is upheld and classification under CTH 4016 9590 is rejected - The impugned orders are upheld and the appeals stand dismissed [Read less]

Customs - Tariff Classification of imported goods declared as "Mixed Lot of Polyester Knitted Fabric” - Tariff Item No. 6006 9000 versus 6006 3200 - The appellant imported polyester knitted fabrics declared as Mixed Lot of Polyester Knitted Fabric and classified under Customs Tariff Item No. 6006 9000, claiming benefit of concessional Basic Customs Duty under Notification No. 82/2017-Customs. The Revenue reclassified the goods under Customs Tariff Item No. 6006 3200 as knitted fabrics of synthetic fibres, attracting duty at 20% rate and demanded differential duty along with interest and penalty - Whether the goods merite... [Read more]

Customs - Tariff Classification of imported goods declared as "Mixed Lot of Polyester Knitted Fabric” - Tariff Item No. 6006 9000 versus 6006 3200 - The appellant imported polyester knitted fabrics declared as Mixed Lot of Polyester Knitted Fabric and classified under Customs Tariff Item No. 6006 9000, claiming benefit of concessional Basic Customs Duty under Notification No. 82/2017-Customs. The Revenue reclassified the goods under Customs Tariff Item No. 6006 3200 as knitted fabrics of synthetic fibres, attracting duty at 20% rate and demanded differential duty along with interest and penalty - Whether the goods merited classification under Customs Tariff Item No. 6006 9000 as claimed by the Appellant or under Customs Tariff Item No. 6006 3200 as re-determined by the Revenue - HELD - Once the Proper Officer has assessed the Bills of Entry and allowed the classification claimed therein, the same cannot be departed from merely on the basis of a subsequent change of opinion without establishing any mala fides or wilful suppression on the part of the importer - The material composition of textile goods, particularly mixed textile materials, cannot be determined merely from the invoice, packing list or visual examination. The Department had the statutory powers to examine goods, subject them to physical examination or draw representative samples for testing at the time of original assessment but the record does not disclose that any such laboratory testing was undertaken. Without affirmative evidence establishing that the goods in their actual composition necessarily merited classification under Customs Tariff Item No. 6006 3200, a subsequent change in the classification cannot furnish a sufficient basis for unsettling the assessment originally accepted by the proper officer - The fact that the Department had raised queries and enhanced the declared assessable value cannot obviate the necessity of establishing the correct tariff classification by appropriate evidence. The contemporaneous practice of accepting the classification under Customs Tariff Item No. 6006 9000 in respect of identical goods imported by other importers constitutes a relevant circumstance to be taken into consideration. The reclassification under Customs Tariff Item No. 6006 3200 is set aside and the classification of the goods under Customs Tariff Item No. 6006 9000 is upheld - The demand of differential Customs Duty together with applicable interest is set aside. The penalty imposed under Section 114A of the Customs Act, 1962 is set aside - The appeal is allowed [Read less]

Customs - Valuation of imported wallpaper - Transaction value of similar goods - Appellant imported wallpaper at declared value of USD 2.2 per kg which was enhanced by Faceless Assessment Group to USD 3.5 per kg based on NIDB data from port showing identical goods assessed at higher value - Appellant contended that declared value was supported by proforma invoice and contemporaneous imports at same value and enhancement was not in accordance with Customs Valuation Rules - Whether value enhancement based on Rule 5 of Customs Valuation Rules using comparable data of similar goods is sustainable when higher value has been fou... [Read more]

Customs - Valuation of imported wallpaper - Transaction value of similar goods - Appellant imported wallpaper at declared value of USD 2.2 per kg which was enhanced by Faceless Assessment Group to USD 3.5 per kg based on NIDB data from port showing identical goods assessed at higher value - Appellant contended that declared value was supported by proforma invoice and contemporaneous imports at same value and enhancement was not in accordance with Customs Valuation Rules - Whether value enhancement based on Rule 5 of Customs Valuation Rules using comparable data of similar goods is sustainable when higher value has been found in contemporaneous imports - HELD - Rule 12 of Customs Valuation Rules empowers proper customs officer to reject declared transaction value and re-determine value if there is reasonable doubt regarding truth or accuracy of declared value. Availability of higher import values of identical goods as per NIDB provides sufficient reason for assessing officer to reject value. Rule 5 of Customs Valuation Rules provides that value shall be transaction value of similar goods sold for export and imported at or about same time. In exercise of this Rule assessing officer found that transaction value of similar goods at same commercial level same quantity same country of origin was available - Contemporary import vide Bill of Entry for same goods at USD 3.5 per kg was properly considered by assessing officer. The description of goods as wallpaper only without specifications regarding size thickness or patterns does not mean goods imported are not identical for comparison purposes. Out of contemporaneous imports assessing officer took lowest value amongst imports which is in accord with statutory requirement to apply lowest transaction value. The contemporary Bill of Entry relied upon by appellant pertains to 01.11.2020 which is earlier than subject Bill of Entry dated 04.01.2021 and hence not truly contemporaneous - The value enhancement at USD 3.5 per kg based on Rule 5 of Customs Valuation Rules is sustainable – The impugned order is upheld and the appeal is dismissed [Read less]

GST - Transportation of goods without E-Way Bill - Substantive non-compliance versus procedural lapse - During transportation of iron goods under tax invoice, the vehicle was intercepted by Mobile Squad. As E-Way Bill was not available with the driver at that time, tax and an equal penalty were imposed under Section 129(3) of CGST Act - Whether the absence of E-Way Bill at the time of interception constitutes substantive non-compliance establishing intention to evade tax, or whether it is merely a procedural lapse that can be cured by subsequent production of E-Way Bill - HELD - It is an admitted fact that no E-Way accompa... [Read more]

GST - Transportation of goods without E-Way Bill - Substantive non-compliance versus procedural lapse - During transportation of iron goods under tax invoice, the vehicle was intercepted by Mobile Squad. As E-Way Bill was not available with the driver at that time, tax and an equal penalty were imposed under Section 129(3) of CGST Act - Whether the absence of E-Way Bill at the time of interception constitutes substantive non-compliance establishing intention to evade tax, or whether it is merely a procedural lapse that can be cured by subsequent production of E-Way Bill - HELD - It is an admitted fact that no E-Way accompanied the goods at the time of transportation. The requirement of carrying an E-Way Bill during transportation is mandatory under Rule 138(1) of the GST Rules. The E-Way Bill is an integral part of the statutory mechanism for monitoring movement of taxable goods. The non-generation of an E-Way Bill leaves scope for subsequent manipulation of the books of accounts at the convenience of the taxpayer - The E-way bill generation is an online process, whereas the tax-invoice is issued manually by the taxpayer. If the trader generated the E-way bill online, it would have appeared in his outward supply records preventing him from manipulating his books of accounts at his convenience. This fact established the trader's intention to evade tax - Transportation of goods without an E-Way Bill constitutes substantive non-compliance and establishes an intention to evade tax - The original order passed under Section 129(3) imposing tax and penalty is restored - The appeal filed by the revenue is allowed [Read less]

GST - Interlocutory Applications for early hearing of appeals - The appellants filed 21 appeals before the Tribunal claiming refund involving a huge sum of money. The appellants contended that the pendency of such appeals is likely to prejudice their financial interest and urged the tribunal to hear those appeals on priority basis for ends of justice - HELD - Each of the 21 interlocutory applications have been supported by affidavit sworn by the authorized signatory of the appellants and the applications include all the information prescribed in GSTAT FORM-01. The appellants have contended that if their appeals claiming re... [Read more]

GST - Interlocutory Applications for early hearing of appeals - The appellants filed 21 appeals before the Tribunal claiming refund involving a huge sum of money. The appellants contended that the pendency of such appeals is likely to prejudice their financial interest and urged the tribunal to hear those appeals on priority basis for ends of justice - HELD - Each of the 21 interlocutory applications have been supported by affidavit sworn by the authorized signatory of the appellants and the applications include all the information prescribed in GSTAT FORM-01. The appellants have contended that if their appeals claiming refund are not heard on priority basis, they are likely to suffer from huge financial loss - All the 21 appeals are listed together after three weeks for hearing. The interlocutory applications for early hearing are allowed [Read less]

GST – Allegation of reuse of e-Way Bill based on presumption - Reuse of E-Way Bills - During transportation of goods by vehicle, the goods were checked at 01:27 p.m. and again at the same location at 09:52 p.m. on the same day. The officer of Mobile Squad drew inference that the papers were being reused for another transaction to evade tax. A demand including penalties was created - Whether goods can be presumed to be re-transported and liable to penalty on the sole basis of an inference drawn from earlier verification of E-Way Bill without cogent evidence of actual re-transportation - HELD - The finding that the goods w... [Read more]

GST – Allegation of reuse of e-Way Bill based on presumption - Reuse of E-Way Bills - During transportation of goods by vehicle, the goods were checked at 01:27 p.m. and again at the same location at 09:52 p.m. on the same day. The officer of Mobile Squad drew inference that the papers were being reused for another transaction to evade tax. A demand including penalties was created - Whether goods can be presumed to be re-transported and liable to penalty on the sole basis of an inference drawn from earlier verification of E-Way Bill without cogent evidence of actual re-transportation - HELD - The finding that the goods were being “re-transported” is based principally on an inference from the earlier verification of the E-Way Bill. No independent and cogent evidence has been produced to establish that the same goods had already completed an earlier journey and had been delivered - The facts on record do not establish any discrepancy in description, quantity, value or ownership of goods. The goods were accompanied by relevant tax documents including invoice, e-invoice and E-Way Bill. It is settled law that presumption cannot take the place of evidence - Department has not established any cogent material such as crossing of a toll plaza during course of transportation that goods actually underwent an earlier completed transportation or that same goods were being re-transported. The respondent failed to establish that the bill for repairing the concerned vehicle is fake or forged - The appellate order and the original order passed under Section 129 are set aside. The amount deposited by the appellant is refunded in accordance with law – The appeal is allowed [Read less]

Service Tax - Sovereign and Statutory Functions - Certification of SOFTEX Forms and Issuance of No-Objection Certificates - Public Authority Performing Government Functions – Appellant collected charges for certification of SOFTEX forms and issuance of No-Objection Certificates to STP and software exporting units - Whether activities of certification and issuance of No-Objection Certificates are sovereign or public authority functions outside scope of Service Tax or constitute taxable Business Support Services - HELD - Mere fact that activity is regulated by law or that organisation has been authorised by Government to p... [Read more]

Service Tax - Sovereign and Statutory Functions - Certification of SOFTEX Forms and Issuance of No-Objection Certificates - Public Authority Performing Government Functions – Appellant collected charges for certification of SOFTEX forms and issuance of No-Objection Certificates to STP and software exporting units - Whether activities of certification and issuance of No-Objection Certificates are sovereign or public authority functions outside scope of Service Tax or constitute taxable Business Support Services - HELD - Mere fact that activity is regulated by law or that organisation has been authorised by Government to perform activity does not by itself convert every such activity into sovereign function. Distinction must be maintained between activity which can only be performed by State in exercise of sovereign authority and service rendered by autonomous body for facilitating business operations of its clients or members - Certification of SOFTEX forms, issuance of No-Objection Certificates and assistance rendered to STP units are intrinsically connected with business activities of software exporters. Such certification and approvals facilitate their exports, foreign exchange realisation and compliance with regulatory framework - Appellant is providing assistance and support which enables concerned units to carry on their business and export activities. Services have nexus with business or commerce and are covered by scope of Business Support Service. Neither Foreign Trade Development and Regulation Act nor FEMA prescribes impugned amount as statutory levy payable to Government – The charges are credited to separate fund maintained by STPI and utilised towards its establishment and administrative expenditure and not deposited into Government Treasury as tax, cess, fee or compulsory exaction. The fact that charges may have been approved by Governing Council of STPI does not alter their character - Approval of fee by Governing body of autonomous society cannot be equated with statutory levy imposed by Parliament or under Authority of Statute - Activities of certification of SOFTEX forms, issuance of NOC and allied assistance rendered by Appellant to STP and Software Exporting Units cannot be regarded as sovereign and public authority functions. Charges collected are not compulsory statutory levies payable into Govt Treasury, they represent consideration collected for services rendered to concerned business entities and duties are appropriately taxable under Business Support Service – The appeals are dismissed [Read less]

Service Tax – Demand under Reverse Charge Mechanism on charges deducted by foreign and intermediary banks - Service Provider-Recipient Relationship – Appellant-Exporter of goods receiving export proceeds remitted through foreign banking channels and banks deducting charges while transmitting such remittance - The appellant, being an exporter of goods, can be regarded as recipient of services rendered by foreign banks/intermediary banks involved in transmission of export proceeds remitted by foreign buyer and, consequently, service tax is payable by the appellant under RCM on the charges deducted by such foreign banks /... [Read more]

Service Tax – Demand under Reverse Charge Mechanism on charges deducted by foreign and intermediary banks - Service Provider-Recipient Relationship – Appellant-Exporter of goods receiving export proceeds remitted through foreign banking channels and banks deducting charges while transmitting such remittance - The appellant, being an exporter of goods, can be regarded as recipient of services rendered by foreign banks/intermediary banks involved in transmission of export proceeds remitted by foreign buyer and, consequently, service tax is payable by the appellant under RCM on the charges deducted by such foreign banks / intermediaries - HELD - Levy under Reverse Charge contemplated under Finance Act, 1994 must first establish the taxable relationship between service provider and service recipient - Merely because foreign banks deducted charges from export proceeds, cannot automatically be concluded that service provider-service recipient relationship exists between foreign intermediary banks and exporter - For establishing Reverse Charge liability, there must be evidence showing that foreign banks were engaged by exporter for rendering services to it - Absence of any evidence that Appellant had entered into contractual arrangement with foreign banks or was under obligation to pay consideration to such banks for any service rendered to it - Intervention of corresponding or intermediary banks in transmission of funds is essentially part of inter-bank arrangement for transfer of money - Appellant cannot be fastened with Service Tax merely because amount ultimately credited to its account is net of certain bank charges - Service provider must be engaged and there must be contractual nexus for levy of tax to be justified - Tribunal's earlier decision in Appellant's own case for preceding period setting aside demand has not been shown to be reversed or stayed by any higher judicial forum - Demand of Service Tax under Banking and Other Financial Services on charges deducted by foreign and intermediary banks is not sustainable and is set aside - Service Tax - Scientific or Technical Consultancy Services - Classification of Regulatory Documentation Services - Pharmaceutical manufacturer and exporter engaging foreign entities for compilation and preparation of documentation necessary for filing regulatory applications and obtaining approvals before overseas regulatory authorities - Whether services for preparation and compilation of regulatory dossiers and assistance in obtaining regulatory approvals for pharmaceutical products constitute taxable Scientific or Technical Consultancy Services - HELD - Essential character of service must be determined from nature of activity actually undertaken and not merely from professional qualifications of persons rendering service - Possession of scientific or technical expertise by consultant does not ipso facto make every activity undertaken by such consultant a Scientific or Technical Consultancy Service - For taxable service in question there must be advice, consultancy or scientific and technical assistance rendered by scientist, technocrat or science or technology institution or organisation in a discipline of science or technology - Preparation and compilation of documentation for regulatory filings from information already available with service recipient or in published literature cannot, without anything further, be equated with Scientific or Technical Consultancy - In present case Appellant's own earlier decision squarely applies to present period where Tribunal examined very same foreign service providers and substantially identical activities and held that services relating to obtaining permissions and registrations and meeting regulatory requirements for marketing pharmaceutical products abroad cannot be classified as Scientific or Technical Consultancy Services - Service Tax in respect of payments had been discharged under category of Management or Business Consultant Service and amount so paid was appropriated in impugned order while simultaneously confirming demand by reclassifying activity under Scientific or Technical Consultancy Service - Once classification adopted by Revenue itself is found not sustainable, consequential demand cannot survive - Services rendered by foreign entities for preparation and compilation of regulatory dossiers and assistance in obtaining approvals cannot be classified under Scientific or Technical Consultancy Service - Demands under this head are set aside. [Read less]

Service Tax - Construction of Complex Service - Meaning of "Residential Complex" under Section 65(91a) of the Finance Act, 1994 - Appellant undertook construction of residential units contending that individual houses were constructed on independent plots for individual purchasers and did not constitute a residential complex with common areas and common facilities as contemplated under the statutory definition - Whether construction of individual residential houses on independent plots attracts Service Tax under Construction of Complex Service category - HELD - Section 65(91a) contemplates a Residential Complex comprising ... [Read more]

Service Tax - Construction of Complex Service - Meaning of "Residential Complex" under Section 65(91a) of the Finance Act, 1994 - Appellant undertook construction of residential units contending that individual houses were constructed on independent plots for individual purchasers and did not constitute a residential complex with common areas and common facilities as contemplated under the statutory definition - Whether construction of individual residential houses on independent plots attracts Service Tax under Construction of Complex Service category - HELD - Section 65(91a) contemplates a Residential Complex comprising more than 12 residential units, a common area and one or more specified common facilities situated within premises approved by the competent authority - Mere construction of a number of residential houses by itself would not be sufficient unless the statutory requirements are established - In the present case material on record indicates that construction was of individual houses on independent plots for respective purchasers and roads and open spaces were handed over to Municipal Authority - Tribunal did not find sufficient evidence brought on record by Department to establish existence of common area and common facilities belonging to a residential complex in the manner contemplated under the statutory definition - The principle established in decisions of Tribunal that construction of individual residential houses does not fall within taxable category merely because number of such houses are constructed in common layout has been consistently followed - Department has not established that individual residential houses constructed by Appellant satisfied statutory ingredients of Residential Complex so as to attract Service Tax - Demands cannot be sustained - Demands together with interest and penalties are set aside – The appeals are allowed [Read less]

Customs duty on pilfered goods - Custody of imported goods under Major Port Trusts Act and Customs Act - Interaction between saving clause in Section 45(1) and non obstante clause in Section 45(3) of Customs Act - Whether the Notification dated 11.10.2000 approving respondent-Port Trust as the custodian of the notified customs area under Section 45(1) of the Customs Act is valid and consequently whether liability for pilfered goods could be fastened on the respondent in terms of Section 45(3) of the Customs Act - HELD - The saving clause in Section 45(1) operates only where another law for the time being in force itself fa... [Read more]

Customs duty on pilfered goods - Custody of imported goods under Major Port Trusts Act and Customs Act - Interaction between saving clause in Section 45(1) and non obstante clause in Section 45(3) of Customs Act - Whether the Notification dated 11.10.2000 approving respondent-Port Trust as the custodian of the notified customs area under Section 45(1) of the Customs Act is valid and consequently whether liability for pilfered goods could be fastened on the respondent in terms of Section 45(3) of the Customs Act - HELD - The saving clause in Section 45(1) operates only where another law for the time being in force itself fastens liability in respect of pilfered goods upon the custodian. The Major Port Trusts Act does not create any specific liability on the Port Trust for customs duty on pilfered goods and deals only with the bailee's civil liability towards the owner of goods under Sections 42 and 43 thereof - The liability under Section 43 of the Major Port Trusts Act is fundamentally different from the liability created under Section 45(3) of the Customs Act - Section 45(3), inserted by Act 22 of 1995 with effect from 26.05.1995, deliberately employed a non obstante clause so as to give it an overriding effect to the liability created thereunder, notwithstanding the saving clause contained in sub-section (1). The expression used in the non obstante clause, notwithstanding anything contained in any law for the time being in force, necessarily includes the Major Port Trusts Act. Pilferage of goods is distinct from general loss or destruction of goods - Section 13 of the Customs Act absolves the importer from liability in respect of pilfered goods, and it is precisely to address the lacuna that Parliament introduced sub-section (3) of Section 45, thereby fastening the liability to pay duty on the person approved under sub-section (1). Section 45(2) of the Customs Act imposes statutory duties upon the custodian to maintain proper records and prevent removal of goods except with permission of proper officer, regardless of the legal source of custody. Pilferage is a consequence of breach of these statutory obligations, and it is for this reason that liability is fastened on the approved custodian for pilfered goods. The Commissioner of Customs was fully justified in issuing the Notification dated 11.10.2000 approving the respondent-Port Trust as custodian under Section 45(1) of the Customs Act. There is no conflict between Section 45 of the Customs Act and Sections 42 and 43 of the Major Port Trusts Act - The fact that the Board may have contractual or statutory rights of indemnity or recovery against another person responsible for the loss does not detract from its primary statutory liability under Section 45(3) of the Customs Act to discharge the customs duty payable to the revenue - The Notification dated 11.10.2000 issued by the Commissioner of Customs (Import) in exercise of the powers conferred under Section 45(1) of the Customs Act is valid. The impugned judgment of the High Court to the extent it held otherwise and quashed the said Notification is set aside - The challenge to the show cause-cum-demand notices pertaining to the period prior to the date of the Notification dated 11.10.2000 is not pressed by appellants as no liability under Section 45(3) could have arisen in the absence of an approval under Section 45(1). Accordingly, the impugned judgment to the extent it quashed the show cause-cum-demand notices prior to 11.10.2000 is not interfered with. The appeal is disposed of accordingly [Read less]

Customs - Detention and seizure of imported vehicle - Distinction between detention and seizure under Customs Act - Petitioner purchased a Toyota Land Cruiser and upon arrival, Bill of Entry was filed with assessable value of 54,000 USD. The petitioner paid applicable customs duty - DRI conducted a search at residential premises and prepared a Panchnama directing petitioner not to deal with the car. A seizure memo under Section 110(1) was issued only on 17.04.2026, i.e., after more than one year, and thereafter show-cause notice was issued on 08.05.2026 under Section 124 of the Act - Whether detention of goods without a pr... [Read more]

Customs - Detention and seizure of imported vehicle - Distinction between detention and seizure under Customs Act - Petitioner purchased a Toyota Land Cruiser and upon arrival, Bill of Entry was filed with assessable value of 54,000 USD. The petitioner paid applicable customs duty - DRI conducted a search at residential premises and prepared a Panchnama directing petitioner not to deal with the car. A seizure memo under Section 110(1) was issued only on 17.04.2026, i.e., after more than one year, and thereafter show-cause notice was issued on 08.05.2026 under Section 124 of the Act - Whether detention of goods without a proper seizure order under Section 110(1) is valid and whether the limitation period under Section 110(2) for issuance of show cause notice applies from the date of detention or from the date of formal seizure order - HELD - Section 110 of the Customs Act uses the expression "reason to believe" that any goods are liable to confiscation, the proper officer may seize the goods. The first proviso uses the expression "where it is not practicable to remove, transport, the proper officer may give custody on execution of an undertaking". The second proviso further mentions "where it is not practicable to seize the goods". In either scenario, the proper officer is legally bound to satisfy a two-fold statutory obligation before passing a seizure order: first, he must explicitly record reasons that the goods are liable for confiscation, and second, he must record clear satisfaction by passing the order regarding the nature of goods under the respective provisos - The Panchnama cannot satisfy the ingredients of Section 110 of the Act, and an order is mandatory under the proviso to Section 110 for paving way for issuance of notice under Section 124 within a period of six months unless extended. The proper officer cannot consume a considerable period, such as over one year, to pass the seizure order under Section 110(1) after Panchnama was prepared by continuing the detention of the vehicle. When the seizure memo travels beyond the period of one year, the time limit of six months as mentioned in Section 110(2) and the further period of six months as envisaged under the proviso to sub-section (2) of Section 110 will get consumed – The respondents have detained the car vide Panchnama dated 07.02.2025, and in fact the seizure order under Section 110(1) has been passed after a period of one year on 17.04.2026, and in order to escape the limitation of six months, the Notice for confiscation under Section 124(a) of the Act has been issued on 08.05.2026. The order of provisional release dated 18.05.2026 is also illegal, as the conditions mentioned are premised on paragraph No. 2 of Circular No. 35/2017 dated 16.08.2017, which has been struck down by the Delhi High Court - The respondents are directed to release the vehicle. Costs of 10,000 rupees are imposed on the respondents – The petition is allowed [Read less]

GST - Entitlement on budgetary support - Petitioner claimed Input Tax Credit for its eligible unit and subsequently submitted a Chartered Accountant certificate disclosing a lower actual ITC amount than the initial declaration – Non-consideration of CA certificate or affording an opportunity for the petitioner to explain the discrepancy – HELD - When a discrepancy existed between the declaration and the CA certificate, the authorities were required to afford the Petitioner an opportunity to explain the discrepancy before concluding proceedings, particularly since the certificate was produced pursuant to the direction o... [Read more]

GST - Entitlement on budgetary support - Petitioner claimed Input Tax Credit for its eligible unit and subsequently submitted a Chartered Accountant certificate disclosing a lower actual ITC amount than the initial declaration – Non-consideration of CA certificate or affording an opportunity for the petitioner to explain the discrepancy – HELD - When a discrepancy existed between the declaration and the CA certificate, the authorities were required to afford the Petitioner an opportunity to explain the discrepancy before concluding proceedings, particularly since the certificate was produced pursuant to the direction of the authorities themselves. The proceedings were concluded without considering the CA certificate or providing a hearing to explain the error, thereby violating the principles of natural justice and fairness - The proceedings are set aside and matter is remitted back to the authorities to afford the petitioner an opportunity to explain the mistake in the declaration and provide supporting documents – The petition is allowed by remand [Read less]

Central Excise - Refund of Duty on Value Addition - Suo Moto Credit of Differential Duty - Appellant manufacturer availed suo moto credit of differential duty for financial year 2008-09 in account current in April 2010 as per provisions of Notification No. 39/2001-CE - show cause notice was issued for recovery of said credit on 29.02.2016 after period of approximately six years - Whether the appellant by taking suo moto credit of the refund amount has violated the provision of Notification No. 39/2001-CE - HELD - Para 2C(g) of Notification No. 39/2001-CE prescribes that excess amount of credit availed by manufacturer shall... [Read more]

Central Excise - Refund of Duty on Value Addition - Suo Moto Credit of Differential Duty - Appellant manufacturer availed suo moto credit of differential duty for financial year 2008-09 in account current in April 2010 as per provisions of Notification No. 39/2001-CE - show cause notice was issued for recovery of said credit on 29.02.2016 after period of approximately six years - Whether the appellant by taking suo moto credit of the refund amount has violated the provision of Notification No. 39/2001-CE - HELD - Para 2C(g) of Notification No. 39/2001-CE prescribes that excess amount of credit availed by manufacturer shall be reversed within five days from receipt of intimation and if not reversed within above time period it shall be recoverable as if it is recovery of duty of excise erroneously refunded - A combined reading of Notification No. 39/2001-CE and Section 11A of the Central Excise Act, 1944 clearly reveals that SCN for recovery of refund granted erroneously to a manufacturer, can be issued within 5 years from the date of refund - In present matter appellant had availed suo moto credit of duty in April 2010 but notice for recovery was issued on 29.02.2016 i.e. after period of five years from date of taking credit - Entire proceedings emanating from time barred show cause notice are not sustainable - Appellant had submitted statement for annual differential duty for financial year 2008-09 on 11.05.2009 and when no decision was communicated for almost one year appellant took suo moto credit in April 2010 - Appellant cannot be faulted as it acted as per provisions of Notification and breach if any was occasioned by breach of procedure committed by Departmental officer – The impugned order is not sustainable on limitation. Even on merits demand does not survive – The appeal allowed and impugned order set aside [Read less]

GST - Arrest on suspicion without recording reasons to believe - Compliance with Section 69 CGST Act - Petitioner arrested for offences under Section 132 CGST Act including issuance of invoices without actual supply and fraudulent availment of input tax credit - Petitioner contended arrest authorization contained no specific reasons to believe and were based merely on suspicion in violation of Section 69 requirements - Whether arrest can be valid without recording specific reasons to believe and satisfaction of necessity conditions under Section 69 CGST Act - HELD - Section 69 of CGST Act mandates that Commissioner can aut... [Read more]

GST - Arrest on suspicion without recording reasons to believe - Compliance with Section 69 CGST Act - Petitioner arrested for offences under Section 132 CGST Act including issuance of invoices without actual supply and fraudulent availment of input tax credit - Petitioner contended arrest authorization contained no specific reasons to believe and were based merely on suspicion in violation of Section 69 requirements - Whether arrest can be valid without recording specific reasons to believe and satisfaction of necessity conditions under Section 69 CGST Act - HELD - Section 69 of CGST Act mandates that Commissioner can authorize arrest only where he has reason to believe that person has committed specified offences under Section 132(1) which are punishable under designated clauses. The authorization order and arrest memo must record specific reasons to believe tax evasion or conditions specified in Section 132 with corresponding monetary thresholds - Arrest based merely on suspicion without recording concrete reasons to believe requirements specified in Section 69 is invalid. Authorization memo failed to mention monetary limits specified in Section 132 regarding period of conviction based on tax evasion amount indicating arrest was merely on suspicion without factual foundation - Reliance placed on Arnesh Kumar v. State of Bihar and Satender Kumar Antil v. CBI establishing that arrest is discretionary and optional and arrest without adequate reasons breaches arrest principles. Substantial questions remain on whether material circumstances justify arrest particularly given unexamined allegations based on statements of co-accused without cross examination. Court inclined to enlarge petitioner on bail. Petitioner directed to be released on bail on furnishing bail bond and sureties as specified - The petitioner is granted regular bail and the petition is allowed [Read less]

Central Excise - Inclusion of notional value of drawings and designs in assessable value of excisable goods - Rule 6 of Central Excise Valuation Rules 2000 - Appellant is OEM supplying automobile components to motor vehicle manufacturer who provided specifications and drawings free of cost - Department sought to load notional value of drawings and proportionate royalty paid by buyer to third party into assessable value of goods manufactured by Appellant - Whether specifications and designs supplied by buyer at tender stage constitute additional consideration under Rule 6 - HELD - Section 4(1)(b) of Central Excise Act, 1994... [Read more]

Central Excise - Inclusion of notional value of drawings and designs in assessable value of excisable goods - Rule 6 of Central Excise Valuation Rules 2000 - Appellant is OEM supplying automobile components to motor vehicle manufacturer who provided specifications and drawings free of cost - Department sought to load notional value of drawings and proportionate royalty paid by buyer to third party into assessable value of goods manufactured by Appellant - Whether specifications and designs supplied by buyer at tender stage constitute additional consideration under Rule 6 - HELD - Section 4(1)(b) of Central Excise Act, 1994 read with Rule 6 of Central Excise Valuation Rules, 2000 permits inclusion of additional consideration only when buyer supplies goods and services for use in connection with production and sale of goods and only to extent value has not been included in price actually paid. Rule 6 specifically provides that value of drawings blueprints technical maps and charts used in production and value of design work necessary for production can be treated as additional consideration - Specification drawings supplied at tender stage for vendor selection and shortlisting are merely indicative requirements to enable prospective vendors to quote prices and constitute buyers assist not assistance to manufacturer. The specification drawings neither constitute goods used in production nor are they necessary for production as appellant had to prepare detailed drawings and designs using technical support from parent company for which running royalty was paid - Distinction exists between mere specifications and layouts which inform manufacturer of buyers requirements and detailed engineering drawings which contain information necessary for actual manufacture. Specification drawings cannot be said to be drawings used in production or necessary for production – No additional consideration has flowed from buyer to appellant over and above transaction price. Rule 6 of Central Excise Valuation Rules is not attracted - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Invocation of Extended Period of Limitation – Demand based on Third-Party Data from Income Tax Department - Whether invocation of extended period of limitation was sustainable when the demand is based entirely on third-party data obtained from the Income Tax Department and no evidence of suppression, mis-statement, fraud or collusion has been put forth - HELD - Where the demand is merely on the basis of data obtained from Income Tax Department, it cannot be alleged that there was suppression or any wrongful conduct justifying the invocation of extended period - The demand is not sustainable in law as the ex... [Read more]

Service Tax - Invocation of Extended Period of Limitation – Demand based on Third-Party Data from Income Tax Department - Whether invocation of extended period of limitation was sustainable when the demand is based entirely on third-party data obtained from the Income Tax Department and no evidence of suppression, mis-statement, fraud or collusion has been put forth - HELD - Where the demand is merely on the basis of data obtained from Income Tax Department, it cannot be alleged that there was suppression or any wrongful conduct justifying the invocation of extended period - The demand is not sustainable in law as the extended period of limitation cannot be invoked on the basis of third-party data obtained from Income Tax Department without independent evidence of suppression of facts with intent to evade payment of service ta - The appeal is allowed on limitation, without going into the merits of the case [Read less]

Service Tax - Selling of Space for Advertisement - Local Body not Covered under Definition of Person - Statutory Levy versus Service Consideration – Appellant-Municipal Corporation engaged in the selling of space for advertisement to different parties - Whether a sovereign local body is a person liable to pay service tax on selling of space for advertisement and whether licence fee collected under Municipal Corporation Act constitutes consideration for taxable service - HELD - The period involved is from April 2012 to June 2012 and during that time no definition of person was provided in the Service Tax Laws and local bo... [Read more]

Service Tax - Selling of Space for Advertisement - Local Body not Covered under Definition of Person - Statutory Levy versus Service Consideration – Appellant-Municipal Corporation engaged in the selling of space for advertisement to different parties - Whether a sovereign local body is a person liable to pay service tax on selling of space for advertisement and whether licence fee collected under Municipal Corporation Act constitutes consideration for taxable service - HELD - The period involved is from April 2012 to June 2012 and during that time no definition of person was provided in the Service Tax Laws and local body was not covered under the definition of person provided under Section 2(42) of the General Clauses Act. Accordingly, the activity rendered by the Appellant does not fall under the definition of taxable service – The issue involved in the present appeal is no longer res integra as the Tribunal has already dropped the demand of the impugned service in the Appellant’s own case for the earlier period - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Classification of Leasing of Medical Equipment - Transfer of Right to Use Goods - Deemed Sale under Article 366(29A) of the Constitution - Taxability as Supply of Tangible Goods under Section 66E of the Finance Act, 1994 - Appellant engaged in leasing of dialysis equipment and providing comprehensive maintenance contracts and annual maintenance agreements to hospitals retained ownership of equipment and did not transfer possession and effective control to lessee as per contractual terms which indicated appellant was providing services only and not transfer of right to use equipments - Whether leasing of equip... [Read more]

Service Tax - Classification of Leasing of Medical Equipment - Transfer of Right to Use Goods - Deemed Sale under Article 366(29A) of the Constitution - Taxability as Supply of Tangible Goods under Section 66E of the Finance Act, 1994 - Appellant engaged in leasing of dialysis equipment and providing comprehensive maintenance contracts and annual maintenance agreements to hospitals retained ownership of equipment and did not transfer possession and effective control to lessee as per contractual terms which indicated appellant was providing services only and not transfer of right to use equipments - Whether leasing of equipment with retention of ownership and control by lessor constitutes deemed sale not liable to Service Tax or falls within declared service category and liable to Service Tax - HELD - Article 366(29A)(d) of Constitution provides deeming fiction to treat transactions as deemed sale which includes transfer of right to use goods and such transactions are subject to VAT or CST. However transactions involving supply of tangible goods without transfer of right to use goods have been declared to be a service under Section 66E of the Finance Act - In the present case conditions laid down in the principle of BSNL case are not satisfied. Mere permission to enter premises for inspection and maintenance of leased equipment is insufficient to hold the lease as deemed sale. Usage of leased machines throughout lease period was subject to appellant's approval. Maintenance expenses and insurance expenses were borne by appellant - Department has correctly observed that appellant retained ownership of equipment and had not transferred possession and effective control of equipment - Contract is essentially a contract for services and not a deemed sale of goods - Activity in question falls under definition of service and declared service under Section 66E(e) of Finance Act prior to 2012 category was Supply of Tangible Goods under Section 65(105)(zzzzj) of the Act - Payment of VAT by hospital is insufficient to alter the conclusion. Service Tax demand on leasing of equipment is sustainable – The order under challenge is upheld and the appeal is dismissed [Read less]

Service Tax on liability on security services provided by statutory welfare board - Taxability under security agency definition - Appellant is a statutory board constituted under statute and engaged in welfare activities for ex-servicemen by providing security guards to banks on no profit no loss basis - Department sought to levy service tax on amounts received against providing security services classifying them under security agency service - Whether services rendered by statutory welfare board providing security guards for welfare purposes constitute taxable security agency services - HELD - A statutory body performing ... [Read more]

Service Tax on liability on security services provided by statutory welfare board - Taxability under security agency definition - Appellant is a statutory board constituted under statute and engaged in welfare activities for ex-servicemen by providing security guards to banks on no profit no loss basis - Department sought to levy service tax on amounts received against providing security services classifying them under security agency service - Whether services rendered by statutory welfare board providing security guards for welfare purposes constitute taxable security agency services - HELD - A statutory body performing statutory functions and not engaged in commercial business cannot be classified as security agency within meaning of Section 65(105)(w) and Section 65(94) of Finance Act 1994 - The definition of security agency specifically requires that entity be a commercial concern engaged in business of providing security personnel. The Appellant-Board provides ex-servicemen as security guards purely for welfare purposes without earning profit and merely routes payments through Board to maintain administrative control. The consideration received constitutes reimbursement of salary disbursed to guards not commercial consideration for security services. Fee collected by public authority while performing statutory functions is not exigible to service tax as per Board Circular 89/7/2006. The activities performed by statutory board do not fall within definition of security agency service - No suppression of facts or willful misstatement has been established. Revenue has not established fraud collusion wilful misstatement suppression of facts or contravention with intent to evade tax which are prerequisites for extended period invocation - The impugned orders are set aside and appeals are allowed [Read less]

Service Tax liability on leasing of immovable property and club services by development authority - Meaning of term ‘Renting of Immovable Property’ - Appellant is statutory body created under statute for development of Delhi and performs functions under statutory mandate - Department sought to levy service tax on amounts received by Appellant against leasing or renting of land held on behalf of Government and club membership subscription charges - Appellant claimed that as statutory authority performing statutory functions it is not liable to pay service tax - Whether statutory body performing commercial activities of ... [Read more]

Service Tax liability on leasing of immovable property and club services by development authority - Meaning of term ‘Renting of Immovable Property’ - Appellant is statutory body created under statute for development of Delhi and performs functions under statutory mandate - Department sought to levy service tax on amounts received by Appellant against leasing or renting of land held on behalf of Government and club membership subscription charges - Appellant claimed that as statutory authority performing statutory functions it is not liable to pay service tax - Whether statutory body performing commercial activities of renting immovable property and providing club services is liable to service tax - HELD - The appellants were letting/giving on rent/lease, the Nazul lands on behalf of Central Government in the President of India on freehold basis and were receiving ground rent and one time premium holding it to be in the nature of land revenue - Whenever activity of any Governmental authority or authority created under statute amounts to an activity for commerce irrespective of status of such authority it is liable to pay service tax - Where sovereign or public authority performs statutory activity mandatory in nature and collects fee which is compulsory levy deposited into Government treasury such activity is not taxable service. However if such authority performs service not in nature of statutory activity and undertaken for consideration not in nature of statutory fee or levy then service tax is leviable if activity falls within ambit of taxable service - Activity of renting or leasing immovable property, including land, is taxable service under Section 65(105)(zzzz) of Finance Act 1994 - Renting of immovable property includes allowing or permitting use of space in immovable property irrespective of transfer of possession or control. Where Appellant received lease premium or ground rent against allowing use of Nazul land such amounts are not statutory levy but commercial consideration for providing use of property - Appellant earns amounts against renting which are not deposited into Government treasury and are not in nature of statutory levy but revenue earned from commercial activity - Appellant failed to produce documents establishing that activities were sovereign in nature. Further, the club membership and subscription charges for sports complex facilities are clearly commercial activities not statutory functions – The impugned orders are upheld and the appeals are dismissed [Read less]

Service Tax – Eligibility to Interest on delayed refund of pre-deposit when the delay is attributable to assessee in submitting refund request - Appellant's delay in applying for refund - Appellant made pre-deposit of disputed service tax liability on 12.11.2014 and after losing appeal before Tribunal succeeded before High Court vide judgment dated 31.10.2018 - Appellant sent letter requesting refund of pre-deposit only on 1.4.2024 i.e. more than five years after High Court judgment - Department refunded pre-deposit with interest only from date of pre-deposit till date of High Court judgment and not for intervening perio... [Read more]

Service Tax – Eligibility to Interest on delayed refund of pre-deposit when the delay is attributable to assessee in submitting refund request - Appellant's delay in applying for refund - Appellant made pre-deposit of disputed service tax liability on 12.11.2014 and after losing appeal before Tribunal succeeded before High Court vide judgment dated 31.10.2018 - Appellant sent letter requesting refund of pre-deposit only on 1.4.2024 i.e. more than five years after High Court judgment - Department refunded pre-deposit with interest only from date of pre-deposit till date of High Court judgment and not for intervening period of over five years - Whether Appellant entitled to interest under Section 35FF for entire period from pre-deposit till refund despite Appellant's own delay in requesting refund - HELD - Section 35FF of Excise Act provides that interest shall be paid on amount deposited as pre-deposit from date of payment till date of refund. The language is mandatory and unconditional and provides for interest regardless of whether delay in refund was caused by department or assessee or for any other reason - Interest is time value of money and statutory provisions must be applied as they exist without regard to fairness equity or hardship caused. Although Appellant caused delay of over five years through neglect by not promptly submitting letter with copy of High Court judgment to department the statutory obligation to pay interest is independent of culpability or delay on either side - The central principle is that once pre-deposit is made Section 35FF requires interest from date of deposit till date of refund as matter of law. The delay attributable to assessee in submitting refund request cannot deprive it of statutory right to interest. Legal provisions must be applied regardless of inequity or gain to assessee – The appellant is entitled to interest for entire period from 12.11.2014 till date of refund including over five years of delay caused by Appellant's own inaction - The impugned order is modified to grant full interest for entire period – The appeal is allowed [Read less]

Service Tax on adda-fee collected by management contractor - Appellant was engaged as management contractor for operation and maintenance of bus terminals by Government of Punjab under concession arrangement - Appellant collected adda-fee from bus operators at statutory rates fixed by Government - SCN proposed demand of service tax under Business Support Services - Whether collection of adda-fee under State concession agreement without direct contractual relationship with bus operators constitutes BSS - HELD - Service tax is a contract-based levy and presupposes existence of service provider service recipient and contractu... [Read more]

Service Tax on adda-fee collected by management contractor - Appellant was engaged as management contractor for operation and maintenance of bus terminals by Government of Punjab under concession arrangement - Appellant collected adda-fee from bus operators at statutory rates fixed by Government - SCN proposed demand of service tax under Business Support Services - Whether collection of adda-fee under State concession agreement without direct contractual relationship with bus operators constitutes BSS - HELD - Service tax is a contract-based levy and presupposes existence of service provider service recipient and contractual nexus between them. The relevant decision of Tribunal in case of Rohan and Rajdeep Infrastructure Pvt. Ltd. is squarely applicable. In that case it was held that collection of adda-fee under State concession agreement in absence of direct contractual relationship with bus operators does not constitute Business Support Service - It is admitted fact that Appellant has contract with State of Punjab and no contract exists with individual bus operators. At time of entering into contract with State of Punjab Appellant could not have agreed to provide support services to unknown bus operators. Bus terminals are created as public utility service and not as support services for bus operators. The adda-fees are collected as per Government mandate as statutory levy and not as privately negotiated commercial consideration. The essential ingredients of BSS i.e. contractual relationship between service provider and recipient and specific agreement to render support service are absent. The services if at all rendered are to State of Punjab and not to bus operators - Demand for service tax under BSS is set aside and the appeal is allowed [Read less]

Service Tax - Refund claim for service tax on export services - Relevant date for determining limitation - Appellant filed refund claims for service tax and cess paid on input services used in providing services exported under Rule 6A of Service Tax Rules - Refund claims pertained to period July 2012 to September 2013 and were filed on 21.01.2014 and 02.04.2014 - Revenue rejected refund claims as time-barred contending that Notification 14/2016-CE dated 01.03.2016 providing clarification on relevant date has only prospective effect and not retrospective - Whether relevant date for claiming refund in case of export services... [Read more]

Service Tax - Refund claim for service tax on export services - Relevant date for determining limitation - Appellant filed refund claims for service tax and cess paid on input services used in providing services exported under Rule 6A of Service Tax Rules - Refund claims pertained to period July 2012 to September 2013 and were filed on 21.01.2014 and 02.04.2014 - Revenue rejected refund claims as time-barred contending that Notification 14/2016-CE dated 01.03.2016 providing clarification on relevant date has only prospective effect and not retrospective - Whether relevant date for claiming refund in case of export services is date of receipt of foreign exchange and whether refund claims filed were within prescribed time limit - HELD - For refund of service tax on input services used in export services the relevant date is the date of receipt of foreign exchange as quoted by FIRC and not the date of issue of invoice. This position has been held by Tribunal in cases of Bechtel India Pvt. Ltd. and Scionspire Consulting Services - Rule 6(3A) of Service Tax Rules stipulates that export is completed only on date of receipt of foreign exchange. The Notification 14/2016-CE is clarificatory in nature stating what is apparent to remove doubts and does not represent a change in substantive law but merely clarifies pre-existing legal position. The refund claims filed within period from relevant date i.e. date of receipt of FIRC are within prescribed time limit under Section 11B read with Notification 39/2012-ST - Since refund claims are filed within time limit from relevant date they are not barred by limitation - The impugned order is upheld and appeal of Revenue is dismissed [Read less]

GST - Imposition of penalty not proposed in show cause notice - Confusion of penalties between taxpayer and handler/operator - Show cause notice proposed penalty against the petitioner under Section 122(1)(ii) and 122(1)(vii) of the CGST Act. A separate penalty under Section 122(1A) was specifically proposed against the handler/operator. However, in the impugned order, the adjudicating authority has imposed both the penalties including that of the handler/operator under Section 122(1A) on the petitioner, which was never proposed in the show cause notice - Whether the penalty imposed on the petitioner is in accordance with ... [Read more]

GST - Imposition of penalty not proposed in show cause notice - Confusion of penalties between taxpayer and handler/operator - Show cause notice proposed penalty against the petitioner under Section 122(1)(ii) and 122(1)(vii) of the CGST Act. A separate penalty under Section 122(1A) was specifically proposed against the handler/operator. However, in the impugned order, the adjudicating authority has imposed both the penalties including that of the handler/operator under Section 122(1A) on the petitioner, which was never proposed in the show cause notice - Whether the penalty imposed on the petitioner is in accordance with the show cause notice and whether the petitioner is liable for penalties never proposed against him. - HELD - The show cause notice specifically proposed separate penalty on the handler/operator under Section 122(1A) of the CGST Act. However, in the impugned order in original, the adjudicating authority has imposed both the penalties including that of the handler/operator under Section 122(1A) on the petitioner - The respondents have not specifically controverted the facts of mixing up the proposed penalties as specified in show-cause notice while passing the final order in the case of the petitioner. In the similar matter of the handler/operator, this Court has set aside the impugned order of penalty and matter is remanded to the respondent authorities for fresh consideration - The impugned order is quashed and set aside. The matter is remanded back to the adjudicating authority to pass a fresh order, after hearing the petitioner – The petition is disposed of [Read less]

GST - Writ Appeal against dismissal of Writ Petition - Assessment order challenge - Appellant filed a writ petition challenging the assessment order. The Writ Court dismissed the Writ Petition and granted liberty to file appeal against the assessment order - Whether the direction under order dismissing the writ petition would be effective with the observations on merits made by the Writ Court or whether clarification is needed that those observations would not influence the appellate authority's decision - HELD - The appellant does not very seriously object to the conclusion of the Writ Court directing them to file an appe... [Read more]

GST - Writ Appeal against dismissal of Writ Petition - Assessment order challenge - Appellant filed a writ petition challenging the assessment order. The Writ Court dismissed the Writ Petition and granted liberty to file appeal against the assessment order - Whether the direction under order dismissing the writ petition would be effective with the observations on merits made by the Writ Court or whether clarification is needed that those observations would not influence the appellate authority's decision - HELD - The appellant does not very seriously object to the conclusion of the Writ Court directing them to file an appeal. In order that the direction be effective, it is necessary that the observations on merits made by the Writ Court are set aside or at least a direction given to the appellate authority that those observations would not influence the decision in appeal - The direction under order dated 08.06.2026 relegating the appellant to appellate remedy is confirmed with clarification that the observations of the Writ Court on the merits of the assessment shall not stand in the way of an independent adjudication of the appeal in accordance with law - The Writ Appeal is dismissed [Read less]

Customs - Penalty under Section 117 on voluntary disclosure of import discrepancy - Mens rea and bona fide error - Appellant imported scientific equipment and filed Bill of Entry for goods covered under one invoice - Upon opening consignment appellant discovered additional items corresponding to second invoice inadvertently not mentioned by foreign supplier - Appellant voluntarily informed Customs Authorities within six days of clearance and requested for re assessment to pay differential duty - Department imposed penalty of Rupees Two lakhs under Section 117 - Whether penalty under Section 117 can be imposed when appellan... [Read more]

Customs - Penalty under Section 117 on voluntary disclosure of import discrepancy - Mens rea and bona fide error - Appellant imported scientific equipment and filed Bill of Entry for goods covered under one invoice - Upon opening consignment appellant discovered additional items corresponding to second invoice inadvertently not mentioned by foreign supplier - Appellant voluntarily informed Customs Authorities within six days of clearance and requested for re assessment to pay differential duty - Department imposed penalty of Rupees Two lakhs under Section 117 - Whether penalty under Section 117 can be imposed when appellant exhibited bona fide error and voluntarily disclosed discrepancy without mens rea - HELD - Appellant volunteered to point out discrepancy and offered to pay differential duty even after Out of Charge was granted showing absence of mens rea or intention to evade payment of duty. Content of appellant's letter to Deputy Commissioner shows clear knowledge of appellant's intention that after verification upon receiving material they came to know they had received material against both orders and wanted to include later received left out invoice in Bill of Entry for re assessment and requested for needful re assessment. There was no trace of proof that Customs Department would have known of such irregularities had it not been pointed out by appellant who also volunteered to rectify mistake by payment of required customs duty for entire consignment - CBIC Directive issued for self assessment clearly directs that penal provision would not be invoked in cases of bona fide errors in self assessment where mens rea or willful intention to evade duty or non compliance of condition cannot be proved. Express penalty provisions under Sections 112 and 114 of Customs Act are available for such contraventions. Penalising the appellant for exhibiting its loyalty to the said State, that to under a provision of law for which express penal provision is available, is unsustainable – The penalty under Section 117 is unsustainable and set aside – The appeal is allowed [Read less]

Service Tax – Payment of differential service tax along with interest before adjudication order, exemption from levy of penalties under Sections 76 and 77 of the Finance Act, 1994 - Appellant was engaged in construction of residential and commercial projects. During FY 2011-12 there were various projects under construction. Certain projects had construction commenced before 01.06.2007 and were on-going - Appellant continued to pay tax on on-going projects as per new the Composition Scheme. Department disallowed benefit of new scheme for on-going projects and raised demand for differential service tax. Appellant paid diff... [Read more]

Service Tax – Payment of differential service tax along with interest before adjudication order, exemption from levy of penalties under Sections 76 and 77 of the Finance Act, 1994 - Appellant was engaged in construction of residential and commercial projects. During FY 2011-12 there were various projects under construction. Certain projects had construction commenced before 01.06.2007 and were on-going - Appellant continued to pay tax on on-going projects as per new the Composition Scheme. Department disallowed benefit of new scheme for on-going projects and raised demand for differential service tax. Appellant paid differential service tax along with applicable interest and reversed Cenvat credit prior to passing of Order-in-Original - Whether penalties under Sections 76 and 77 can be imposed when entire differential service tax along with interest was paid by Appellant before adjudication order - HELD - The issue involved interpretation and applicability of valuation scheme which attained final clarity only after pronouncement of judgment by Supreme Court in Nagarjuna Construction Company Limited v. Union of India. Under such circumstances there was reasonable cause on part of Appellant for initial non-payment of differential tax - Appellant held bona fide belief that it was entitled to benefit of Composition Scheme even in respect of on-going projects. After pronouncement of judgment by Apex Court when legal position became clear, Appellant immediately paid differential amount of service tax along with applicable interest and also reversed Cenvat credit. Appellant is fully entitled to benefit of Section 80 of Finance Act 1994 which statutorily provides that no penalty under Section 76 or Section 77 shall be imposed if appellant proves that there was reasonable cause for said failure - The penalties imposed upon appellant under Sections 76 and 77 of Finance Act 1994 are not sustainable in law and accordingly set aside - The appeal is allowed - Service Tax - Revenue contended that learned Adjudicating Authority did not properly examine entire case and arrived at conclusion solely on basis of Chartered Accountant certificate placed on record by Appellant. Revenue alleged that learned Commissioner did not examine nature of income from activities other than construction and did not examine project-wise computations - Whether learned Adjudicating Authority properly examined entire case and verified computations project-wise or improperly relied solely on CA certificate without cross-examination - HELD - The ld. Commissioner has thoroughly examined records and recorded proper findings on all grounds raised by Revenue. The ld. Commissioner properly considered CENVAT Register, GAR-7 challans and reversal of CENVAT credit and reconciliation charts submitted by Appellant along with CA certificate - The learned Commissioner has categorically observed in order that he has carefully gone through facts, merits and circumstances of case on record. In order to clear any remaining doubts, appellant filed another CA certificate which clearly explained precise nature of said income. No infirmity found in order passed by learned Commissioner - The order of learned Commissioner is upheld and Revenue's appeal is dismissed [Read less]

Service Tax – 100% EOU – Vague SCN, Demand under Business Auxiliary Service - Appellant engaged in providing Transcription Service to Doctors in USA - Show Cause Notice invoking extended period of limitation - Appellant contended demand is wholly barred by limitation - On merits Appellant argued activity was telecommunication service which is taxable only when provided by person licensed under Indian Telegraph Act and foreign entity Ecostentel is not licensed. - Whether demand is wholly barred by limitation and whether demand for service tax on Business Auxiliary Service is sustainable on merits - HELD - Burden to prov... [Read more]

Service Tax – 100% EOU – Vague SCN, Demand under Business Auxiliary Service - Appellant engaged in providing Transcription Service to Doctors in USA - Show Cause Notice invoking extended period of limitation - Appellant contended demand is wholly barred by limitation - On merits Appellant argued activity was telecommunication service which is taxable only when provided by person licensed under Indian Telegraph Act and foreign entity Ecostentel is not licensed. - Whether demand is wholly barred by limitation and whether demand for service tax on Business Auxiliary Service is sustainable on merits - HELD - Burden to prove allegation of fraud collusion or suppression lies very heavily upon Revenue. SCN alleges Ecostentel rendered Business Auxiliary Service under Section 65(105)(zzb) but does not put appellant to notice of statutory definition of Business Auxiliary Service as provided in Section 65(19) or under which limb of definition Appellant falls - SCN does not rely on any inculpatory statement or agreement bringing out relationship or nature of service as falling under Business Auxiliary Service. SCN has not let in any evidence of any positive act of fraud suppression or wilful misstatement with intent to evade payment of duty. Revenue has failed to adduce any evidence establishing that Appellant engaged in wilful or deliberate suppression of material facts. Nothing on record suggests Appellant acted with any intention to mislead authorities or evade payment of service tax. SCN is bereft of reasons justifying invocation of extended period of limitation - Impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Customs House Agent Service – Taxability of Reimbursable Expenses - Whether reimbursable expenses recovered by Customs House Agent are includible in taxable value of CHA service under Section 67 of Finance Act 1994 read with Rule 5 of Service Tax Determination of Value Rules 2006 for period prior to 14.05.2015 - HELD - During relevant period Section 67 of Finance Act 1994 provided that where service tax was chargeable on any taxable service with reference to its value, such value shall be gross amount charged by service provider for such service. The controversy is whether Rule 5 could enlarge charging prov... [Read more]

Service Tax - Customs House Agent Service – Taxability of Reimbursable Expenses - Whether reimbursable expenses recovered by Customs House Agent are includible in taxable value of CHA service under Section 67 of Finance Act 1994 read with Rule 5 of Service Tax Determination of Value Rules 2006 for period prior to 14.05.2015 - HELD - During relevant period Section 67 of Finance Act 1994 provided that where service tax was chargeable on any taxable service with reference to its value, such value shall be gross amount charged by service provider for such service. The controversy is whether Rule 5 could enlarge charging provision contained in Section 67 so as to include reimbursable expenditure - The judgment of Delhi High Court in Intercontinental Consultants and Technocrats case held that Rule 5 insofar as it sought to include expenditure or costs incurred by service provider, travelled beyond Sections 66 and 67 of Finance Act 1994 and delegated legislation cannot enlarge charging provision. This judgment was affirmed by Supreme Court in Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd. wherein it was held that prior to amendment of Section 67 effective 14.05.2015, expenditure or costs incurred in providing taxable service could not be included in taxable value by virtue of Rule 5 one. The amended provision came into effect only from 14.05.2015 and has no application to period involved in present appeal - For period prior to 14.05.2015, genuine reimbursable expenses incurred on behalf of clients cannot be included in taxable value under Section 67. Mere recovery of such amounts from clients cannot make them taxable consideration - The impugned inclusion of reimbursable expenses in taxable value is unsustainable. Demand of service tax together with interest and penalties is set aside and the appeal is allowed [Read less]

Service Tax - Commission on DTH Recharge Voucher Distribution – Demand under Business Auxiliary Services - Appellant engaged in distribution of recharge vouchers of DTH operator, receiving commission on each voucher sold. The recharge vouchers carried a predetermined maximum retail price which included the commission payable to Appellant and all taxes, on which the DTH operator was discharging service tax. The Department took the view that appellant was required to discharge service tax on the commission as it amounted to consideration for service of distributing activation and recharge vouchers - Whether Appellant was l... [Read more]

Service Tax - Commission on DTH Recharge Voucher Distribution – Demand under Business Auxiliary Services - Appellant engaged in distribution of recharge vouchers of DTH operator, receiving commission on each voucher sold. The recharge vouchers carried a predetermined maximum retail price which included the commission payable to Appellant and all taxes, on which the DTH operator was discharging service tax. The Department took the view that appellant was required to discharge service tax on the commission as it amounted to consideration for service of distributing activation and recharge vouchers - Whether Appellant was liable to discharge service tax on commission received from DTH operators and whether penalty imposed was sustainable - HELD - Where service tax has been paid on the MRP by the main operator, the commission agent or distributor need not pay service tax on commission received by him because commission forms part of M.R.P. on which service tax has already been discharged. Levying service tax on commission separately would amount to double taxation. The issue is settled in Appellant's favour following the ratio of decisions in Kumar's Electronics and other similar cases. The issue is no longer res integra - The impugned order to the extent it upholds the demand imposed on Appellant under BAS along with interest and equivalent penalty is not sustainable and is set aside - The appeal is allowed [Read less]

Customs - Classification of goods declared as 'Lead Concentrate'- Lead Concentrate Vs Lead Scrap/Waste - Appellant imported lead-bearing powder material declaring the same as Lead Concentrate under CTH 2607. Department contended that the imported goods should have been classified as Lead Waste and Scrap under CTH 7802 based on ground that goods originated from used lead acid batteries and lacked silver and gold traces - Adjudicating Authority confirmed demand for differential customs duty, interest and penalties including confiscation and redemption fine under Section 111 of Customs Act - Whether imported goods are classif... [Read more]

Customs - Classification of goods declared as 'Lead Concentrate'- Lead Concentrate Vs Lead Scrap/Waste - Appellant imported lead-bearing powder material declaring the same as Lead Concentrate under CTH 2607. Department contended that the imported goods should have been classified as Lead Waste and Scrap under CTH 7802 based on ground that goods originated from used lead acid batteries and lacked silver and gold traces - Adjudicating Authority confirmed demand for differential customs duty, interest and penalties including confiscation and redemption fine under Section 111 of Customs Act - Whether imported goods are classifiable as Lead Concentrate under CTH 2607 00 00 or as Lead Waste and Scrap under CTH 7802 00 90 - HELD - Tariff classification is determined by the nature and characteristics of goods as imported, not by the identity of importer, the furnaces he operates, or metallurgical processes he is licensed to perform. Multiple test reports from Government laboratories show that lead in samples was predominantly in form of lead oxide and lead sulphate compounds with metallic lead present only in very small quantities in fine particle form - The composition ranging from 60.2 to 68.66 percent lead is consistent with specification of lead concentrate. One test report from Customs Laboratory JNCH Nhava Sheva explicitly described samples as having composition of lead concentrate - Lead oxide is classifiable under Chapter heading 2824 and sulphates of metals are classifiable under heading 2833. Only lead in primary metallic form falls under Chapter 78. Since lead in samples was not in primary metallic form but in oxide and sulphate form comprising approximately 87 to 92 percent of material, classification under Chapter 78 is not sustainable - Conflicting laboratory reports must be analyzed on basis of which report provides detailed scientific analysis and composition data - Kandla Laboratory reports and JNCH reports described goods as having characteristics of lead concentrate. While CRCL opined samples were washed and dried electrode paste, it did not actually report them as lead scrap. Absence of silver cannot be deciding factor and absence of gold or silver cannot preclude classification as concentrate - Pre-Shipment Inspection Certificates themselves describe goods as lead concentrate in description column despite heading referring to metallic scrap. These certificates were issued to certify absence of hazardous materials, not to determine tariff classification. Load Port Customs export documents represent declarations by foreign exporters in foreign nomenclature for foreign regulatory purposes and are not binding on Indian Customs authorities – The burden of proof to establish classification rests on Revenue when customs authorities seek to classify goods differently from assessee's declared classification. In self-assessment regime applicable to imports, classification submitted by assessee must be accepted unless revenue discharges burden of proof through conclusive scientific evidence - When all scientific reports are analyzed, majority and more detailed reports favor classification as lead concentrate, classification under CTH 7802 has absolutely no merit. Confiscation is not sustainable as goods have been cleared for home consumption and do not remain imported goods as defined under Section 2(25) of Customs Act - The impugned order classifying goods under Chapter 78 is set aside. The goods are classifiable as Lead Concentrate under CTH 2607 00 00 - The appeals are allowed [Read less]

Customs – Refund of Redemption Fine - Interest on Delayed Refund - Appellant filed refund claim for redemption fine on 23.08.2023. Respondent sanctioned refund but rejected claim for interest under Section 27A of Customs Act on ground that interest is not payable as matter was sub-judice before Commissioner (Appeals) and refund was sanctioned within three months from date of application - Whether Appellant is entitled to interest on refund of redemption fine deposited during adjudication proceedings even though matter was pending appeal and refund was sanctioned within three months from refund application date - HELD - A... [Read more]

Customs – Refund of Redemption Fine - Interest on Delayed Refund - Appellant filed refund claim for redemption fine on 23.08.2023. Respondent sanctioned refund but rejected claim for interest under Section 27A of Customs Act on ground that interest is not payable as matter was sub-judice before Commissioner (Appeals) and refund was sanctioned within three months from date of application - Whether Appellant is entitled to interest on refund of redemption fine deposited during adjudication proceedings even though matter was pending appeal and refund was sanctioned within three months from refund application date - HELD - After decision of CESTAT, neither confiscation was sustainable nor any fine was payable and whatever amount was paid was never legally due. Provisions of Section 11B of CEA, 1944 and Section 27A of Customs Act 1962 are pari materia. When amount has been refunded which was never legally payable, interest is compensatory in nature and Department is liable to pay interest for period during which Department retained amount of Appellant - The decision relied in impugned order pertains to grant of interest under Section 27A of Customs Act 1962, whereas in present appeals it is revenue deposit which Appellant was compelled to pay in order to redeem goods. Following Division Bench of CESTAT Allahabad in M/s Parle Agro Pvt. Ltd. upheld by Allahabad High Court and M/s Riba Textiles Ltd., the grant of interest at 12 percent per annum is appropriate - Interest is granted at rate of 12 percent per annum on refund of amount deposited during investigation and adjudication from date of deposit till date of actual payment - Appellant is entitled to interest at 12 percent per annum from date of revenue deposit till date of actual payment – The appeals are allowed [Read less]

Service Tax – Cenvat Credit on Outward transportation credit - Place of removal in FOR contracts - Eligibility of credit on goods transported to buyers premises - Appellant is battery manufacturer and Input Service Distributor who transported batteries from depot to dealers on FOR basis bearing freight cost and availed CENVAT credit on Goods Transport Agency services - Whether CENVAT credit on outward transportation up to place of removal is legally admissible - HELD - The Board vide Circular 08.06.2018 clarified that eligibility of CENVAT credit on GTA services depends on whether buyers premises qualify as place of remo... [Read more]

Service Tax – Cenvat Credit on Outward transportation credit - Place of removal in FOR contracts - Eligibility of credit on goods transported to buyers premises - Appellant is battery manufacturer and Input Service Distributor who transported batteries from depot to dealers on FOR basis bearing freight cost and availed CENVAT credit on Goods Transport Agency services - Whether CENVAT credit on outward transportation up to place of removal is legally admissible - HELD - The Board vide Circular 08.06.2018 clarified that eligibility of CENVAT credit on GTA services depends on whether buyers premises qualify as place of removal and this has to be decided on specific facts including terms of sale, transfer of risk and ownership during transit. In FOR destination contracts where freight forms part of invoice value, risk of loss during transit remains with seller, and property in goods passes only at buyers premises, the retailers premises constitutes the place of removal – The FOR destination terms, inclusion of freight in invoice value, retention of risk by Appellant during transit and transfer of property only upon delivery at retailers premises support that retailers premises constituted the place of removal. Payment of duty or VAT at depot cannot be treated as conclusive for determining place of removal under CENVAT Credit Rules. GTA service used for transportation up to such place is input service within meaning of Rule 2(l) and Appellant is eligible to avail CENVAT credit thereon – The credit on outward transportation is admissible - Credit on manpower supply and depot rent services - Input service definition - Nexus with manufacturing activity - Appellant procured manpower at Chennai office and deployed to various factories while godowns were used for storage of finished products - Whether credit on manpower supply and godown depot rent is legally admissible - HELD - The Revenue's contention that services related to post manufacture and post sale activities at customers premises is factually misplaced since the place of removal has been held to be premises of retailers dealers and therefore contention that services are post sale activities cannot be sustained - Rule 2(l) of CCR, 2004 does not restrict input service credit merely because activity is undertaken after sale of goods except where service relates to trading in goods. Activities such as advertising, sales promotion, market research, accounting, auditing though having post sale component may continue to qualify as input services provided requisite nexus with output service or use in manufacture of goods is established. Manpower supply services used for production, packing, maintenance, storage and allied manufacturing activities and godown depot rent used for storage of finished products have requisite nexus with Appellants manufacturing activity - Denial of CENVAT credit on manpower supply and godown depot rent is unsustainable and is set aside - Service Tax - Demand under Rule 14 of the CCR against ISD - The controversy regarding demand under Rule 14 of the CENVAT Credit Rules against the ISD became academic since the Appellant was found eligible for CENVAT credit on outward transportation and manpower supply/depot rent services - Short payment of Service Tax on reverse charge - Limitation period - Invocation of extended period - Appellant received batteries at Chennai depot and paid Service Tax under reverse charge on GTA services and distributed credit through ISD mechanism - Show Cause Notice issued beyond normal period of limitation prescribed under Section 73(1) of Finance Act 1994 - Whether demand is barred by limitation when extended period is not validly invoked - HELD - The normal period for respective periods from January 2010 to March 2013 expired between 25.04.2011 and 25.04.2013 and for subsequent periods expired on 25.04.2014 and 25.10.2014 respectively. SCN dated 30.03.2015 was therefore issued beyond normal period and can survive only if extended period under proviso to Section 73(1) is validly invoked - The mere fact that alleged short payment was noticed during audit cannot by itself justify invocation of extended period. Department is required to establish fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade Service Tax. Appellants contend that relevant particulars were duly disclosed in ST-3 returns and there was no suppression or wilful misstatement with intent to evade payment. Mere non payment of duty or failure to obtain registration absent of fraud suppression or willful misstatement is insufficient to attract extended limitation period - The case for invoking extended period is not made out and demand is barred by limitation. [Read less]

Service Tax - Demand beyond scope of Show Cause Notice and trial balance figures - Materiality of facts versus particulars - Appellant engaged in providing Japanese language training management consultancy and renting of premises and seminar hall - Department issued multiple SCN and SOD proposing various service tax demands including on activities not disclosed in the SCN itself - Whether adjudicating authority can adjudicate on activities and receipts not covered by material facts in SCN - HELD - A distinction must be maintained between material facts and particulars. Material facts are those primary facts which constitut... [Read more]

Service Tax - Demand beyond scope of Show Cause Notice and trial balance figures - Materiality of facts versus particulars - Appellant engaged in providing Japanese language training management consultancy and renting of premises and seminar hall - Department issued multiple SCN and SOD proposing various service tax demands including on activities not disclosed in the SCN itself - Whether adjudicating authority can adjudicate on activities and receipts not covered by material facts in SCN - HELD - A distinction must be maintained between material facts and particulars. Material facts are those primary facts which constitute the foundation of cause of action or defence. Particulars are the details by which such facts are elaborated or established. Different consequences follow from omission of material facts and material particulars - Failure to plead material fact renders case incomplete as it omits essential element of cause of action and is liable to be set aside. Test is not whether every piece of evidence or particular ultimately relied upon was expressly set out in SCN but whether SCN disclosed essential factual and legal foundation of charge and material facts necessary to enable assessee to meet that charge - While particulars and supporting evidence may be developed during adjudication material fact which constitutes foundation of proposed liability cannot be introduced for first time in adjudication order. Relief cannot be founded or demand confirmed on case which assessee was never called upon to answer. Core test therefore is whether assessee was put on notice of essential factual foundation and legal basis of particular demand such that it could reasonably defend itself. If not adjudicating authority cannot cure defect by supplying missing material facts in Order - Demands on activities such as programme coordination fees secretarial support fees awards trophy income workshops and other receipts were introduced for first time during adjudication without corresponding allegation or factual foundation in SCN and adjudicating and appellate authorities travelled beyond scope of SCN by examining nature and taxability of receipts without allegation or factual foundation. Such fundamental defect cannot be cured by remanding matter. Demands on these counts are unsustainable and set aside - Classification of 5S Management training - Appellant contended that activity was undertaken for its own organisational objectives involving training and supply of related books and posters without promoting business of or acting on behalf of any third party - SCN classified activity under Management Consultant Service but Order-in-Original classified it under Business Auxiliary Service for first time - Whether classification under Business Auxiliary Service can be sustained when SCN proposed different classification - HELD - Show Cause Notice is conspicuously brief and does not set out factual foundation necessary to sustain demand. Department proposed classification under Management or Business Consultancy Service but adjudicating authority instead classified activity under BAS apparently relying upon two lines from appellant's reply. Such course amounts to introducing new taxable category and new factual basis for demand at stage of adjudication without affording appellant opportunity to meet that case in SCN - Further OIO rejected appellant's claim for sale proceeds merely on ground that supporting documents had not been produced without discussion of nature of receipts based on evidence available on record or statutory basis for treating them as consideration for taxable service. Even assuming appellant failed to furnish requisite documents adverse inference could have been drawn only upon proper examination of issue including material available on record efforts made by Department and where relevant whether alleged non disclosure was deliberate – The cryptic nature of SCN change in classification at adjudication stage and absence of reasoned examination of disputed receipts demonstrate that demand was not adjudicated on case put to appellant. Impugned order travels beyond scope of SCN on this issue and being unsupported by proper examination of facts and applicable statutory provisions cannot be sustained – The demand on 5S management training is unsustainable and set aside - Invocation of extended period - Hall hire rental and receipts - Classification dispute and scope of SCN - Appellant alleged receipts were taxable under different category than classified by Department - Whether dispute on classification alone justifies invocation of extended period when transactions stood disclosed - HELD - Dispute is essentially one of classification and consequent taxability. Receipts were duly accounted for and Revenue's case is that services ought to have been classified under different taxable category. Mere dispute as to classification where transactions and receipts stand disclosed in records cannot by itself justify invocation of extended period - In facts of case suppression wilful misstatement or intent to evade payment of tax is not established. SCN does not set out material facts and legal basis necessary to sustain proposed change in classification. In absence of such particulars noticee is deprived of reasonable opportunity to meet and defend case sought to be made against it. Adjudication order cannot travel beyond allegations in SCN or cure foundational defect therein. Consequently demand founded on inadequately pleaded charge cannot be sustained - The demand in respect of hall hire rental receipts is unsustainable and set aside - Japanese language training exemption – Demand under “Commercial Training or Coaching Service” from 27.02.2010 - Period of Applicability of amended Notification - Appellant claimed exemption under Notification 24/2004-ST for Japanese language training - Department alleged amendment by Notification 03/2010-ST dated 27.02.2010 made exemption unavailable unless affiliated to National Council for Vocational Training - Whether amended notification applies from date of notification or publication - HELD - Appellant by referring to Gazette of India was able to demonstrate that Notification 03/2010 though dated 27.02.2010 was published only on 22.01.2011 and in terms of paragraph 2 thereof came into force from date of publication. Revenue was unable to rebut submission. The amendment cannot be applied from 27.02.2010. Demand covered by SCN dated 21.10.2011 relating to period from 2005-06 to December 2010 is therefore unsustainable – Further, Board's Circular 59/8/2003-ST dated 20.06.2003 recognised foreign language institutes and hobby classes within exempted category. Amending Notification 03/2010-ST narrowed definition of vocational training institute by prescribing NCVT affiliation and designated trades but did not amend independent definition of recreational training institute under clause two of Explanation to Notification 24/2004-ST. Consequently NCVT affiliation was not condition for availing exemption under recreational limb. SCN proceeds solely on vocational character of courses and neither considers nor establishes that training was not undertaken for recreational or hobby purposes - Demand cannot be sustained by examining only vocational limb of exemption while disregarding independent exemption available to recreational training institute. Appellants are entitled to benefit of Notification 24/2004-ST as amended - Translation interpretation services - Scope of SCN - Appellant engaged in providing translation and interpretation services - Show Cause Notice merely stated that translation interpretation services were taxable under Business Support Service from 01.05.2006 without setting out nature of alleged taxable activity or basis for classification - Whether demand can be sustained on bald statement without material facts - HELD - Show Cause Notice merely stated classification without setting out material facts. Bald [Read less]

GST – Validity of invoking different provisions in Show Cause Notice and Order-in-Original - Rule 27 And Rule 28 of the CGST Rules, 2017 - Procedural Defect - Show Cause Notice issued invoking Rule 28(a) of CGST Rules for determination of value of excavated soil and seeking to recover tax along with interest and penalty - Adjudicating authority admitted that Rule 28(a) of CGST Rules as mentioned in Show Cause Notice was incorrectly invoked. However simultaneously authority invoked Rule 27(c) of CGST Rules and confirmed demand by resorting to different valuation for determination of value of services - Petitioner was neve... [Read more]

GST – Validity of invoking different provisions in Show Cause Notice and Order-in-Original - Rule 27 And Rule 28 of the CGST Rules, 2017 - Procedural Defect - Show Cause Notice issued invoking Rule 28(a) of CGST Rules for determination of value of excavated soil and seeking to recover tax along with interest and penalty - Adjudicating authority admitted that Rule 28(a) of CGST Rules as mentioned in Show Cause Notice was incorrectly invoked. However simultaneously authority invoked Rule 27(c) of CGST Rules and confirmed demand by resorting to different valuation for determination of value of services - Petitioner was never offered any opportunity to meet determination of value under Rule 27(c) of CGST Rules which was invoked and relied upon by adjudicating authority - Whether Show Cause Notice and Order-in-Original can proceed on different and contradictory legal grounds without affording opportunity of hearing to assessee on new ground of valuation - HELD - Invocation of different provision in Show Cause Notice as well as in impugned order is admitted factual position not in dispute. Show Cause Notice failed to allege or even indicate that alleged supply of soil was to any related persons so Rule 28(a) was incorrectly invoked - Adjudicating authority admitted that Rule 28(a) was incorrectly invoked in Show Cause Notice. However simultaneously authority invoked Rule 27(c) of CGST Rules and confirmed demand by resorting to different valuation for determination of value of services. Petitioner was never offered any opportunity to meet with determination of value under Rule 27(c) which was invoked and relied upon by adjudicating authority - Impugned order does not approve Rule 28(a) which was invoked in SCN but invokes Rule 27(c) at adjudication stage without affording hearing to assessee. This causes grave prejudice to Petitioner as it was unable to meet the new grounds raised for first time in adjudication order – The impugned order and Show Cause Notice are quashed and set aside. It is open for Revenue to initiate fresh proceedings by issuing fresh SCN to Petitioner on proper legal grounds with opportunity of hearing - The petition is allowed [Read less]

GST - Reliance on AI-Generated Case Laws - Procedural Defect – Respondent-State Tax Officer passed order cancelling Petitioner's GST registration by relying upon AI-generated case laws which were non-existent or irrelevant – Permissibility of use of AI is in issuing adjudication orders – HELD – The order passed by State Tax Officer by placing reliance exclusively on AI generated case laws citing non-existent and irrelevant judgments is fundamentally defective and suffers from procedural defect. Use of Artificial Intelligence to generate and cite case laws without independent verification and human oversight is impe... [Read more]

GST - Reliance on AI-Generated Case Laws - Procedural Defect – Respondent-State Tax Officer passed order cancelling Petitioner's GST registration by relying upon AI-generated case laws which were non-existent or irrelevant – Permissibility of use of AI is in issuing adjudication orders – HELD – The order passed by State Tax Officer by placing reliance exclusively on AI generated case laws citing non-existent and irrelevant judgments is fundamentally defective and suffers from procedural defect. Use of Artificial Intelligence to generate and cite case laws without independent verification and human oversight is impermissible and renders order unsustainable - Additional Commissioner of State Tax issued administrative instructions to all Joint Commissioners of State Tax prescribing procedure for use of Artificial Intelligence tools. Such instructions shall be scrupulously followed, and any violation of the instructions would amount to contempt of this Court – The Show Cause Notice, Order of cancellation, Order rejecting revocation application and the Appellate Order are quashed and set aside. Respondent authority shall issue fresh notice to petitioner and the petitioner shall fully co-operate with the proceedings – The petition stands disposed of [Read less]

GST - Cancellation of Registration - Declaration of Nil Turnover for specific location - Burden of Proof for Discontinuance of Business - Petitioner declared nil turnover in GSTR 3B returns for period 01.04.2021 to 31.03.2024 as no business turnover was undertaken from that location though petitioner had business activities and turnover from other locations - Respondent authority issued Show Cause Notice proposing to cancel the registration as turnover in GSTR 3B was shown ‘nil’ - Without awaiting reply to SCN, authority suspended registration and cancelled registration order observing that petitioner had shown nil tur... [Read more]

GST - Cancellation of Registration - Declaration of Nil Turnover for specific location - Burden of Proof for Discontinuance of Business - Petitioner declared nil turnover in GSTR 3B returns for period 01.04.2021 to 31.03.2024 as no business turnover was undertaken from that location though petitioner had business activities and turnover from other locations - Respondent authority issued Show Cause Notice proposing to cancel the registration as turnover in GSTR 3B was shown ‘nil’ - Without awaiting reply to SCN, authority suspended registration and cancelled registration order observing that petitioner had shown nil turnover during period and therefore had closed business - Whether mere declaration of nil turnover in returns for specific location suffices to cancel registration - HELD – An obligation is cast upon Proper Officer to arrive at conclusion that business has been discontinued based on cogent and tangible evidence. Mere declaration of ‘nil’ turnover cannot be construed that petitioner had discontinued business – The Section 29 of the CGST Act contemplates that Proper Officer may cancel registration having regard to circumstances where business has been discontinued, transferred fully, amalgamated or demerged or where there is change in constitution of business or where taxable person is no longer liable to be registered - Mere fact that petitioner declared nil turnover in GSTR 3B returns for specific location does not fall within circumstances prescribed under which notice under Section 29(1) can be issued for cancellation - Petitioner produced requisite evidence to show that business was being carried on from registered premises. Respondent authority cancelled registration without verification of factual aspect that petitioner had stopped business merely on premise that petitioner failed to furnish reply to SCN – The proceedings initiated against petitioner by impugned orders is quashed and set aside. However, liberty is reserved in favour of respondent authority to verify whether petitioner's business has continued or not and act in accordance with law - The petition is allowed [Read less]

Central Excise - Refund claim of excess excise duty paid - Appellant claims the assessable value used in the ER-1 return was higher than the correct amount, resulting in overpayment. The lower authorities rejected the refund claim as the Appellant failed to produce proper documentary evidence (invoice-wise Assessable Value statement) – HELD - The Appellant has not produced any proper documentary evidence towards their claim that they have adopted higher Assessable Value in the ER-1 which has resulted in higher payment of Excise Duty - Since the Appellant happens to be a Public Sector Undertaking, in the interest of justi... [Read more]

Central Excise - Refund claim of excess excise duty paid - Appellant claims the assessable value used in the ER-1 return was higher than the correct amount, resulting in overpayment. The lower authorities rejected the refund claim as the Appellant failed to produce proper documentary evidence (invoice-wise Assessable Value statement) – HELD - The Appellant has not produced any proper documentary evidence towards their claim that they have adopted higher Assessable Value in the ER-1 which has resulted in higher payment of Excise Duty - Since the Appellant happens to be a Public Sector Undertaking, in the interest of justice, one more opportunity should be given to the Appellant to make a proper presentation of the documentary evidence before the Adjudicating authority - The matter is remanded to the Adjudicating Authority with directions for the appellant to submit detailed documentary evidence and the Authority to pass orders following the principles of natural justice – The appeal is disposed of [Read less]

Service Tax - Security Agency Services – Determination of Taxable Value - Exclusion of Exempted, Non-Taxable Services and Reimbursable Expenses - Appellant engaged in providing Security Agency Services had claimed that substantial amounts were liable to be excluded from taxable value on account of exempted services, non-taxable services and reimbursable expenses, which were not subjected to any meaningful independent verification before being discarded by the Revenue - Whether amounts which are exempted or non-taxable in nature can be mechanically included in taxable value without proper examination of underlying transac... [Read more]

Service Tax - Security Agency Services – Determination of Taxable Value - Exclusion of Exempted, Non-Taxable Services and Reimbursable Expenses - Appellant engaged in providing Security Agency Services had claimed that substantial amounts were liable to be excluded from taxable value on account of exempted services, non-taxable services and reimbursable expenses, which were not subjected to any meaningful independent verification before being discarded by the Revenue - Whether amounts which are exempted or non-taxable in nature can be mechanically included in taxable value without proper examination of underlying transactions – HELD - A receipt cannot be subjected to service tax merely because it finds reflection in the books of account; what is material is its true legal character and its nexus with consideration for a taxable service. Where a substantial portion of proposed taxable turnover is disputed on the ground that it comprises exempted or non-taxable receipts, the adjudicating authority is required to examine the nature of those receipts and record a reasoned finding as to their taxability - Amounts which are genuinely attributable to exempted or non-taxable services cannot, merely by reason of their reflection in the books of account, be brought within the taxable value of service tax levy. To include receipts which are outside the statutory charging provision would be to travel beyond the four corners of the taxing statute and would be antithetical to the settled principle that a taxing liability must have clear statutory foundation - The legal position concerning reimbursable expenses came to be authoritatively considered by the Hon'ble Supreme Court in Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd. wherein it was held that the value of taxable service could not, during the period prior to the statutory amendment, be enlarged so as to include amounts which were merely reimbursed expenses and did not represent consideration for the service provided. The entire period covered was anterior to the amendment which came into effect on 14.05.2015. The Revenue was required to undertake a proper verification of the constituent elements of the receipts and thereafter determine the taxable value in accordance with law. In the absence of such exercise and without considering reconciliation statements furnished by the Appellant, the computation suffers from a fundamental infirmity – The matter is remanded for re-quantification with directions that exempted and non-taxable services and reimbursable expenses be excluded from taxable value upon proper verification in accordance with law - Service Tax - CENVAT Credit - Denial on Assumptions - Appellant claimed that substantial CENVAT credit was legitimately available and had already been adjusted towards discharge of service tax liability but the same was not given due credit while determining demand, and Revenue proceeded on premise that Appellant had not incurred expenditure on sub-contracting services and that expenditure was predominantly in nature of salary payments - Whether CENVAT credit can be denied without proper examination of Appellant's comprehensive audited financial records showing substantial administrative and office expenses – HELD - The Revenue's approach was unduly restrictive and not borne out by comprehensive examination of Appellant's audited financial records. The Appellant had placed reliance upon audited books to demonstrate that apart from employee-related expenditure, it had incurred substantial administrative and other office expenses in course of carrying on taxable business - Selective reliance upon one part of financial record while completely overlooking another material component thereof cannot furnish a sound basis for determination of tax liability. There was inherent incongruity in Department's approach wherein allegations concerning exemption and CENVAT credit were directed towards particular components yet Department proceeded to recompute entire turnover without demonstrating nexus between particular alleged irregularities and wholesale re-computation - Mere fact that Appellant incurred substantial expenditure towards salaries cannot lead to converse inference that no other expenditure was incurred or that Appellant could not have availed eligible CENVAT credit. CENVAT credit is a substantive statutory benefit and cannot be denied merely on assumptions or generalized conclusions unsupported by cogent evidence. Admissibility of credit must necessarily be determined upon proper verification of underlying records. The substantive benefit of CENVAT Credit, in facts and circumstances of case, must be allowed – The demand necessarily requires to be reworked after giving due effect to eligible CENVAT credit adjustment - Service Tax - Extended Period of Limitation - Invocation without Suppression - Whether extended period can be invoked when foundation of demand itself is drawn from disclosed financial records and facts were within Department's knowledge – HELD - The very figures utilised by Department for raising demand have been substantially drawn from Appellant's audited financial statements, Profit and Loss Accounts, Balance Sheets and other statutory records maintained in ordinary course of business. Such records were not clandestine documents discovered through independent investigation rather they constituted very source from which impugned computation was made - The financial records of Appellant were statutorily maintained and audited and relevant financial particulars were available in ordinary course before competent statutory authorities. In such circumstances, mere circumstance that Appellant had not filed statutory returns cannot without more be elevated into finding of deliberate suppression of material facts with intent to evade service tax. Non-filing of returns may attract consequences specifically provided by law but procedural lapse cannot by automatic process of reasoning be converted into suppression of facts or deliberate intention to evade tax - The extended period invoked cannot be sustained; demand if otherwise found payable can survive only for normal period of limitation - Service Tax - Best Judgment Assessment - Resort Despite Availability of Actual Financial Records - Whether best judgment assessment under Section 72 can be invoked as matter of course despite Department's possession of audited financial statements and actual financial records – HELD - Section 72 embodies machinery for best judgment assessment in circumstances where statutory conditions for invocation stand satisfied but it is not a charter for Department to abandon primary material on record and proceed upon conjecture or estimation for administrative convenience. The expression best judgment cannot in law be equated with best guess - In present case impugned demands for respective periods have been arrived at by resorting to methodologies including applying assumed percentage increase over preceding year's taxable value and adopting highest taxable value of preceding years as basis for determination of liability. Such methodology requires much greater scrutiny before it can constitute legally sustainable best judgment assessment. An assessment even when made to best judgment of assessing authority must bear reasonable nexus with material available on record and cannot rest upon figures which are merely hypothetical or arbitrarily extrapolated - Section 72 power is circumscribed by material available and requirement of rational determination; it cannot be employed to replace actual financial data with artificial mathematical projection without first demonstrating why primary records were incapable of being relied upon or verified - Department had access to or was admittedly aware of substantial financial and statutory material pertaining to Appellant. The impugned order does not satisfactorily explain why such material could not be examined [Read less]

Service Tax – Larger Bench Order - Rule 3 Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 - Works Contract Service, Composition Scheme - Point of Taxation - Appellant provided works contract services to Ministry of Defence, Govt of India and exercised option to pay service tax under the Works Contract Composition Scheme at the rate prevailing at the commencement of contract. When the rate was subsequently revised upward, Appellant continued discharging service tax liability at the original rate for ongoing contracts - Department demanded service tax at the enhanced rate for invoices raised afte... [Read more]

Service Tax – Larger Bench Order - Rule 3 Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 - Works Contract Service, Composition Scheme - Point of Taxation - Appellant provided works contract services to Ministry of Defence, Govt of India and exercised option to pay service tax under the Works Contract Composition Scheme at the rate prevailing at the commencement of contract. When the rate was subsequently revised upward, Appellant continued discharging service tax liability at the original rate for ongoing contracts - Department demanded service tax at the enhanced rate for invoices raised after the rate revision - Whether when opting for Works Contract Composition Scheme, an assessee continues to pay at the same rate applicable at time of opting for scheme till completion of contract, or whether revised rate applies to invoices raised after rate revision - HELD – The Rule 3(1) of Composition Scheme provides that the option to avail composition scheme shall be applicable for entire works contract and shall not be withdrawn until completion of said works contract, however the rule does not stipulate that tax rate prevailing at time of opting into scheme will continue until completion of same works contract whether under composition scheme or otherwise. The Point of Taxation Rules, 2011 answer the question by providing that point of taxation shall be the time when invoice for service provided or agreed to be provided is issued or when payment is received, whichever is earlier, and in cases where there is a change in effective rate of tax, the point of taxation shall be determined in the manner specified in Rule 4 of Point of Taxation Rules, 2011 - The rate of tax shall be the rate as on the point of taxation and not the rate prevailing at the time of exercising the option - The Point of Taxation Rules, 2011 were not brought to attention of Calcutta High Court either before Single Bench or Division Bench in the case of L&T and hence those decisions did not consider these Rules. Before Point of Taxation Rules, 2011, service tax was to be paid as applicable when taxable event, viz., rendition of service had taken place, and after these Rules were notified, the earliest of the three events- rendering service, issuing invoice or receiving advance is the point of taxation and rate of tax prevalent at that point would apply - The referred question is answered affirming that rate of tax shall be determined in accordance with Point of Taxation Rules, 2011 and the rate applicable at point of taxation shall be the rate for paying service tax under Works Contract Composition Scheme – Ordered accordingly [Read less]

Service Tax – Removal of Overburden, Disposal by Way of Sale - Characterization as Service Vs Sale - Mining lessee authorized appellant to dispose of accumulated overburden from mining lease area on payment of applicable royalty and short term permit fee. Appellant admitted that overburden was provided free of cost - Appellant subsequently sold boulder collected from overburden to third parties and charged consideration. Department contended that removal and disposal of overburden by Appellant constituted rendering of taxable service to JSL classifiable as Business Auxiliary Service for which no amount was paid by JSL di... [Read more]

Service Tax – Removal of Overburden, Disposal by Way of Sale - Characterization as Service Vs Sale - Mining lessee authorized appellant to dispose of accumulated overburden from mining lease area on payment of applicable royalty and short term permit fee. Appellant admitted that overburden was provided free of cost - Appellant subsequently sold boulder collected from overburden to third parties and charged consideration. Department contended that removal and disposal of overburden by Appellant constituted rendering of taxable service to JSL classifiable as Business Auxiliary Service for which no amount was paid by JSL directly but consideration was amount received by Appellant from its customers on sale of boulders - Whether transaction of removing overburden constitutes sale or rendering of service, whether royalty and permit fees were subject to service tax, and whether extended period of limitation was validly invoked - HELD - Mere allocation of export quotas does not create vested rights. Transaction between JSL and Appellant is not one of sale as no consideration or price exists for sale of overburden. Invoices are accounting jugglery and camouflage to hide activity of service. Lifting and disposal of overburden by Appellant is rendering of service to JSL for which no amount was paid directly but consideration received by Appellant from its customers on sale of boulders represents amount which Appellant should have received from JSL for providing service - Under mining laws JSL was responsible for removal of overburden and if JSL had hired Appellant to do so, JSL would have paid service charges. There is no justification why Appellant would lift and remove overburden without charging any amount. This reflects understanding between parties to evade liability of service tax. No quarrel with proposition that to be classified as service there must be activity carried out by one person for another for consideration - Revenue correctly treats amount received by Appellant from its customers for further sale to them as consideration received by Appellant for rendering service to JSL for disposal of overburden. Amount charged by Appellant from its customers is actually amount which Appellant should have received from JSL for providing service and same should form gross amount as per Section 67 of Act - Service tax on royalty and permit fees for removal of overburden is payable as periodic charges made by business entities to Government are not exempted though assignment of right to use natural resources prior to 01.04.2016 are exempt from one time charges only - Appellant suppressed true nature of relationship and transaction between it and JSL. Invoices are nothing but camouflage. Ingredients specified under proviso to Section 73(1) are fully satisfied and extended period of limitation has been validly invoked – The appellant is liable to pay service tax on amount received against sale of overburden and service tax on royalty and permit fees paid to Government – The appeals are dismissed [Read less]

Service Tax – Refund of unutilized Cenvat Credit - Appellant is 100% export unit engaged in providing Business Support Services and Information Technology Software Services to overseas entities - Appellant availed Cenvat credit in respect of General Insurance Services, Works Contract Services and Commercial or Industrial Construction Services - Lower authority partially rejected refund claims on ground of lack of nexus with exported output services - Whether refund of Cenvat credit can be denied when availment of credit was not challenged by Department under Rule 14 of Cenvat Credit Rules, and whether General Insurance S... [Read more]

Service Tax – Refund of unutilized Cenvat Credit - Appellant is 100% export unit engaged in providing Business Support Services and Information Technology Software Services to overseas entities - Appellant availed Cenvat credit in respect of General Insurance Services, Works Contract Services and Commercial or Industrial Construction Services - Lower authority partially rejected refund claims on ground of lack of nexus with exported output services - Whether refund of Cenvat credit can be denied when availment of credit was not challenged by Department under Rule 14 of Cenvat Credit Rules, and whether General Insurance Services, Works Contract Services and Commercial or Industrial Construction Services are eligible input services - HELD - It is settled principle of law that availment of Cenvat credit, its utilisation and its refund are different aspects provided under Credit Rules. It is nowhere provided under Rule 5 of CCR, 2004 that eligibility of Cenvat credit can be determined by Department at time of seeking refund by assessee. When availment of Cenvat credit was not challenged by Department in first place under Rule 14 of Credit Rules, refund of same cannot be denied to appellant now under Rule 5 of Credit Rules. Each of the input services on which refund has been denied falls under definition of input service and each has been held to be input service by many decisions of Tribunal and Courts. The denial of refund on ground of lack of nexus is not sustainable - The impugned order is set aside and the appeal is allowed [Read less]

Customs - Inflation of the FOB value and availment of excess DEPB benefits - Recovery of excess DEPB benefit under Section 28 of the Customs Act, 1962 - Deduction of Bunker Adjustment Factor (BAF) and Currency Adjustment Factor (CAF) - Appellants are manufacturers and exporters of viscose yarn and cotton blends who availed export incentives under DEPB Scheme - During scrutiny Department found that freight actually paid to liners was higher than freight declared in shipping bills resulting in inflation of FOB value and consequential availment of excess DEPB benefits - Department alleged that Currency Adjustment Factor and B... [Read more]

Customs - Inflation of the FOB value and availment of excess DEPB benefits - Recovery of excess DEPB benefit under Section 28 of the Customs Act, 1962 - Deduction of Bunker Adjustment Factor (BAF) and Currency Adjustment Factor (CAF) - Appellants are manufacturers and exporters of viscose yarn and cotton blends who availed export incentives under DEPB Scheme - During scrutiny Department found that freight actually paid to liners was higher than freight declared in shipping bills resulting in inflation of FOB value and consequential availment of excess DEPB benefits - Department alleged that Currency Adjustment Factor and Bunker Adjustment Factor are required to be deducted from CIF value and recovery was sought under Section 28 of Customs Act 1962 - Whether recovery of alleged excess DEPB benefit under Section 28 is permissible - HELD - The Revenue proceeded on the premise that BAF and CAF, being charges recovered by the shipping lines towards variations in fuel costs and foreign exchange rates respectively, necessarily form part of freight and, therefore, have to be deducted from the CIF value along with insurance for determining the FOB value for DEPB purposes - The controversy is directly covered by decision of this Tribunal in Cheran Spinners Ltd. wherein on identical issue concerning deduction of CAF and BAF for determination of FOB value and recovery of alleged excess DEPB benefit under Section 28 it was held that recovery under Section 28 was not permissible - Customs Authorities do not have jurisdiction to reduce excess credit taken as DGFT authorities have proper jurisdiction. DEPB credit is not duty and same cannot be realised under Section 28. Power to recover DEPB credit wrongly availed by exporter is vested in DGFT - The demand in question arises from allegation that exporter obtained DEPB credit in excess of entitlement on account of incorrect determination of FOB value and nature of alleged liability cannot be altered by describing DEPB as customs duty exemption. The nature of the alleged liability cannot be altered merely by describing DEPB as a customs duty exemption - Once basis of demand under Section 28 fails, consequential demand of interest and penalties cannot survive – The impugned orders confirming recovery are set aside – The appeals are allowed [Read less]

Customs/DGFT - Retrospective withdrawal of Service Exports from India Scheme benefits - Vested rights and retrospective amendments - Petitioner engaged in providing maritime support services including towing covered under Foreign Trade Policy derived benefits under Service Exports from India Scheme under Public Notice 3/2015-20 - Petitioner made exports and earned foreign exchange during financial year 2019-20 believing scheme would continue - By Notification dated 31.03.2020 FTP 2015-20 was extended till 31.03.2021 with service categories and reward rates for FY 2019-20 to be notified in Appendix 3X - By Notification date... [Read more]

Customs/DGFT - Retrospective withdrawal of Service Exports from India Scheme benefits - Vested rights and retrospective amendments - Petitioner engaged in providing maritime support services including towing covered under Foreign Trade Policy derived benefits under Service Exports from India Scheme under Public Notice 3/2015-20 - Petitioner made exports and earned foreign exchange during financial year 2019-20 believing scheme would continue - By Notification dated 31.03.2020 FTP 2015-20 was extended till 31.03.2021 with service categories and reward rates for FY 2019-20 to be notified in Appendix 3X - By Notification dated 23.09.2021 issued after one and half years Appendix 3X was notified with reduced rates and denial of benefits under Appendix 3E for FY 2019-20 - Whether impugned Notifications dated 31.03.2020 and 23.09.2021 can be given retrospective effect to deny or withdraw SEIS benefits already accrued for financial year 2019-20 when services were rendered and foreign exchange earned prior to notifications - HELD - Although Government has power to withdraw scheme under Section 5 of Foreign Trade Development and Regulation Act question is whether same could have been done retrospectively – The Section 5 of Act does not empower Government to make amendments with retrospective effect thereby taking away rights already accrued in favour of exporters under scheme. Once scheme remained in operation and was amended from time to time giving rise to claims of beneficiary vested rights cannot be taken away retrospectively - Where vested right has accrued in favour of beneficiaries who achieved target stipulated in scheme and thereby became eligible for grant of duty credit entitlement that cannot be snatched from such persons by making amendment retrospectively – Where all exports were made during FY 2019-20 and foreign exchange was earned during same period beneficiary has vested right to claim accrued benefits under scheme as it existed at time of export. Petitioner prevented from filing applications for SEIS benefits for FY 2019-20 because department applied Notification dated 23.09.2021 retrospectively. Insertion of Para 3.08 and 3.08(c) in Appendix 3E resulted in retrospective denial of accrued SEIS benefits for services rendered during FY 2019-2020 - The impugned Notifications dated 23.09.2021 and 31.03.2020 shall become effective from date they were issued and their retrospective effect is quashed. Respondents directed to process applications filed for SEIS benefits and pay all benefits accruing till issuance of impugned notifications – The petition is allowed [Read less]

GST – West Bengal AAR - Passenger Transportation Service - Place of supply and taxability of passenger transportation services on international passenger air transportation where passenger boards from outside India and travels to India – Applicant contended that where a passenger boards from Dhaka, Bangladesh and travels to Kolkata, India, the place of embarkation is outside India and therefore the supply is not taxable in India - Whether the place of supply being outside India, the transaction falls outside the charging provisions of the GST Acts - HELD - The place of supply of passenger transportation service is dete... [Read more]

GST – West Bengal AAR - Passenger Transportation Service - Place of supply and taxability of passenger transportation services on international passenger air transportation where passenger boards from outside India and travels to India – Applicant contended that where a passenger boards from Dhaka, Bangladesh and travels to Kolkata, India, the place of embarkation is outside India and therefore the supply is not taxable in India - Whether the place of supply being outside India, the transaction falls outside the charging provisions of the GST Acts - HELD - The place of supply of passenger transportation service is determined with reference to Section 13(10) of the IGST Act, 2017 where the location of the supplier or recipient is outside India. The place of supply is the place where the passenger embarks on the conveyance for a continuous journey. In this scenario, the place of embarkation is outside India. Since the place of supply is outside India, the transaction does not fall within the ambit of the GST charging provisions. No GST is leviable in India on such supplies – Accordingly, no GST is applicable on passengers boarding from outside India and coming to India - GST - Place of supply and taxability of passenger transportation services - Whether GST is leviable on international passenger air transportation where passenger boards from India and travels to foreign country - Petitioner contended that where a passenger boards from Kolkata, India and travels to Dhaka, Bangladesh, the supply originates in India through the Indian branch and the place of embarkation is Kolkata - Whether the place of supply being within India, CGST and SGST are leviable - HELD - Section 12(9) of the IGST Act, 2017 applies where both the supplier and recipient are located in India. The place of supply is the place where the passenger embarks on the conveyance for a continuous journey, which in this case is Kolkata, West Bengal. Since the location of the supplier and the place of supply are both in West Bengal, the supply is treated as an intra-state supply under Section 8 of the IGST Act. The supply is accordingly liable to CGST and SGST at the applicable rate - For a passenger travelling in economy class where the supplier does not avail the corresponding input tax credit, the applicable tax rate is 5% GST. For a passenger travelling in any class other than economy class, the applicable rate is 18% GST - The Advance Ruling is issued holding that CGST and SGST are applicable on passengers boarding from India for flights to foreign countries - GST - Place of supply and taxability of passenger transportation services - Continuous journey with single ticket - Whether GST is leviable on international passenger air transportation where passenger holds a single ticket from a foreign country to India with a transit stop in an intermediate location - HELD - Section 13(10) of the IGST Act, 2017 applies where either the supplier or the recipient is located outside India. The place of supply is determined with reference to the place where the passenger embarks on the conveyance for a continuous journey - A transit stop for a short duration does not constitute a stopover as defined in the explanation clause to Section 2(3) of the IGST Act. A stopover involves a break in the journey with a change of aircraft and transshipment of luggage, whereas a transit stop is an intermediate landing where the aircraft briefly stops without the passenger disembarking to leave the airport. The transit stop does not break the continuity of the journey undertaken by the passenger from the point of embarkation to the final destination. Since the first point of embarkation is London, which is outside India, the place of supply is outside India. The transaction does not fall within the ambit of the GST charging provisions and no tax is leviable - The Advance Ruling is issued holding that no GST is applicable on passengers on continuous journey with single ticket from a foreign country to India with a transit stop - GST - Place of supply and taxability of passenger transportation services - Continuous journey with single ticket - Whether GST is leviable on international passenger air transportation where passenger holds a single ticket from India to a foreign country with a transit stop in an intermediate location - HELD - Section 12(9) of the IGST Act, 2017 applies where both the supplier and the recipient are located in India. The place of supply is determined with reference to the place where the passenger embarks on the conveyance for a continuous journey - A transit stop for a short duration does not break the continuity of the journey. It cannot be equated with stopover as defined in the explanation clause to Section 2(3) of the IGST Act. The transit stop in no way breaks the continuity of the journey undertaken by the passenger from Kolkata to London. The first point of embarkation is Kolkata, which is within West Bengal, India. The place of supply is accordingly Kolkata. Since the location of the supplier and the place of supply are both in the same State, the supply is treated as an intra-state supply under Section 8 of the IGST Act. The supply is accordingly liable to CGST and SGST at the applicable rate - For a passenger travelling in economy class where the supplier does not avail the corresponding input tax credit, the applicable rate is 5% GS. For a passenger travelling in any class other than economy class, the rate is 18% GST - The Advance Ruling is issued holding that CGST and SGST are applicable on passengers on continuous journey with single ticket from India to a foreign country with a transit stop - GST - Place of supply and taxability of passenger transportation services - Continuous journey with single ticket - Whether GST is leviable on international passenger air transportation where passenger holds a single ticket from one foreign country to another foreign country with a transit stop in India - HELD - Section 13(10) of the IGST Act, 2017 applies where either the supplier or the recipient is located outside India. The place of supply is determined with reference to the place where the passenger embarks on the conveyance for a continuous journey. A transit stop for a short duration does not constitute a stopover as defined in the explanation clause to Section 2(3) of the IGST Act. The transit stop in no way breaks the continuity of the journey undertaken by the passenger from Dhaka to London. Here both the supplier and the recipient are located outside India. The place of supply is the place of embarkation, namely Dhaka, which is outside India's taxable territory. The transaction does not fall within the ambit of the GST charging provisions and no tax is leviable - The Advance Ruling is issued holding that no GST is applicable on passengers on continuous journey with single ticket between two foreign countries with a stop in India - GST – Scope of Supply - Transportation of human remains by air - Whether transportation of human remains falls within the definition of supply under Section 7 of the CGST Act, 2017 - HELD - Section 7 of the CGST Act, 2017 includes all forms of supply for consideration in the course or furtherance of business. Schedule III appended to the CGST Act, 2017 specifies activities or transactions which shall be treated neither as a supply of goods nor a supply of services. Clause 4 of Schedule III refers to services of funeral, burial, crematorium or mortuary including transportation of the deceased. The services mentioned in Clause 4 are all related to services offered to a person after he passes away. It includes transportation of the deceased - Since transportation of the deceased is neither a supply of goods nor a supply of services, it does not come under the ambit of Section 7(1) of the CGST Act, 2017 and hence there is no question of any tax being imposed on such services - Transportation of human remains does not constitute a supply within the mea [Read less]

Service Tax - Voluntary Compliance Encouragement Scheme - Rejection of declaration - Pending investigation - Appellant filed declaration in Form VCES-1 on 04.10.2013 declaring tax dues for period December 2008 to December 2012 and remitted entire Service Tax dues – Rejection of declaration on ground that inquiry investigation was initiated and pending as on 01.03.2013 in response to summons dated 18.09.2012 - Whether rejection of VCES declaration by Designated Authority is correct in law where time limit prescribed by Board for rejecting declaration has lapsed - HELD - Section 106(2) of Finance Act 2013 provides that whe... [Read more]

Service Tax - Voluntary Compliance Encouragement Scheme - Rejection of declaration - Pending investigation - Appellant filed declaration in Form VCES-1 on 04.10.2013 declaring tax dues for period December 2008 to December 2012 and remitted entire Service Tax dues – Rejection of declaration on ground that inquiry investigation was initiated and pending as on 01.03.2013 in response to summons dated 18.09.2012 - Whether rejection of VCES declaration by Designated Authority is correct in law where time limit prescribed by Board for rejecting declaration has lapsed - HELD - Section 106(2) of Finance Act 2013 provides that where declaration is made by person against whom inquiry or investigation in respect of Service Tax has been initiated and such inquiry investigation or audit is pending as on first day of March 2013 then designated authority shall by order reject such declaration - CBEC Circular 08.08.2013 stipulated that notice proposing to reject declaration must be served within 30 days of date of filing declaration. The summons dated 18.09.2012 was issued in routine manner and could aptly be termed as roving in nature and could never partake character of investigation within meaning of Section 106(2) - When special statutory enactment prescribes time limit same is applicable to Department. If law specifies exactly how and when officer must act, they cannot create their own alternative timelines. Even Section 111 of Finance Act 2013 mandates that where Commissioner has reason to believe declaration was substantially false, he must serve notice within period of one year from date of declaration which has not been done. Moreover, even Section 111 is not case of Revenue that any such notice has been issued – The rejection is unjustified and set aside with direction to Designated Authority to issue Discharge Certificate as mandated in Form VCES-3 – The appeal is allowed [Read less]

GST - Section 74 of the CGST Act, 2017 - Fraud and Suppression of Facts - Allegation must be in Notice – Show Cause Notice under Section 74 alleging fraud or concealment of facts but SCN contains only bland statement without specifying how fraud was inferred or how concealment was detected – While the extended period of limitation fell on 28.02.2025, SCN issued on 13.06.2025 - Whether Show Cause Notice issued under Section 74 alleging fraud or suppression of facts without detailed specifications in notice itself is valid when notice is barred by limitation under Section 73, and whether allegations of fraud and concealm... [Read more]

GST - Section 74 of the CGST Act, 2017 - Fraud and Suppression of Facts - Allegation must be in Notice – Show Cause Notice under Section 74 alleging fraud or concealment of facts but SCN contains only bland statement without specifying how fraud was inferred or how concealment was detected – While the extended period of limitation fell on 28.02.2025, SCN issued on 13.06.2025 - Whether Show Cause Notice issued under Section 74 alleging fraud or suppression of facts without detailed specifications in notice itself is valid when notice is barred by limitation under Section 73, and whether allegations of fraud and concealment must be contained in notice or can be supplemented by counter affidavit - HELD - When authority issues notice or order, requirements to make notice or order valid should be contained in such notice or order and cannot be supplanted by counter affidavit in Court where notice or order is alleged to be invalid for reason of non-application of mind. SCN is beyond the time of three years provided under Section 73 for determination of tax short paid for any reason other than fraud, willful misstatement or suppression of facts - Notice can only be issued under Section 74 when there is fraud or willful misstatement or suppression of facts alleged and allegation has to come out from notice itself. Bare reading of notice indicates that but for bland statement of fraud or concealment of facts, nothing is stated as to how fraud was inferred or concealment of facts was detected - What is required for extended time to be applied are allegations which lead to inference of fraud or concealment as attempted by assessee resulting in suppression of facts, should emanate from notice itself. It cannot be mechanical use of words fraud, willful misstatement or suppression of facts without listing out aspects which persuades assessing officer to conclude that there has been employed either of these surreptitious devices by assessee - Extended period of limitation under Section 74 cannot be initiated without specific, detailed and clear allegations of fraud or suppression of facts in notice itself – The Show Cause Notice and the impugned order of High Court is set aside. Respondent-State is directed to desist from taking any further proceedings in pursuance of SCN. No further proceedings can be initiated as SCN is barred by limitation under Section 73 and the requirements to invoke Section 74 are not satisfied – The appeal is allowed [Read less]

Service Tax – Maintainability of appeal before the High Court - Department sought to levy of service tax on the royalty under the ‘Intellectual Property Rights’ under reverse charge mechanism. The other question is as to whether the services rendered would amount to ‘Business Auxiliary Service’ or ‘Technical Inspection and Certification Service’ – HELD - The appeal cannot be entertained before the High Court as it involved issues relating to taxability and classification, which are maintainable only before the Supreme Court under Section 35L of the Central Excise Act, 1944 read with Section 83 of the Financ... [Read more]

Service Tax – Maintainability of appeal before the High Court - Department sought to levy of service tax on the royalty under the ‘Intellectual Property Rights’ under reverse charge mechanism. The other question is as to whether the services rendered would amount to ‘Business Auxiliary Service’ or ‘Technical Inspection and Certification Service’ – HELD - The appeal cannot be entertained before the High Court as it involved issues relating to taxability and classification, which are maintainable only before the Supreme Court under Section 35L of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - the present appeal is not maintainable and the same is dismissed accordingly. It shall be open for the appellant-Department to pursue the appropriate remedy in accordance with law [Read less]

GST - Cancellation of GST registration - Limitation in filing appeal - Whether cancellation of registration can be upheld on the ground of delay in filing appeal beyond 30 days when the Commissioner has no power to condone delay - HELD - The provisions of GST enactment cannot be interpreted so as to deny right to carry on trade and commerce to any citizen. The Constitutional guarantee is unconditional and unequivocal and must be enforced regardless of shortcomings in the scheme of GST enactment - The right to carry on trade or profession cannot be curtailed contrary to the Constitutional guarantee under Article 19(1)(g) an... [Read more]

GST - Cancellation of GST registration - Limitation in filing appeal - Whether cancellation of registration can be upheld on the ground of delay in filing appeal beyond 30 days when the Commissioner has no power to condone delay - HELD - The provisions of GST enactment cannot be interpreted so as to deny right to carry on trade and commerce to any citizen. The Constitutional guarantee is unconditional and unequivocal and must be enforced regardless of shortcomings in the scheme of GST enactment - The right to carry on trade or profession cannot be curtailed contrary to the Constitutional guarantee under Article 19(1)(g) and Article 21 of the Constitution of India. If the person is not allowed to revive the registration, the State would suffer loss of revenue and the ultimate goal under GST regime will stand defeated - Since it is merely a matter of cancellation of registration, the question of limitation should not bother the court since it cannot be said that any right has accrued to the State which would rather be adversely affected by cancellation - The orders canceling the GST registration are quashed and set aside. The registration is valid from 29.02.2024 onwards subject to the condition that the petitioner files up to date GST returns and deposits entire pending dues along with applicable interest, penalty, late fees in terms of Rule 23(1) of the MGST Rules 2017 – The Writ Petition is allowed [Read less]

Customs - Recovery of drawback erroneously paid - Limitation period for recovery of drawback - Whether recovery proceedings initiated more than ten years after drawback was availed can be sustained when no statutory period of limitation is prescribed in Rule 16 of Customs, Central Excise Duties and Service Tax Drawback Rules - HELD - It is a settled principle of law that fraud vitiates all solemn acts and that a person cannot be permitted to take advantage of his own fraud, irrespective of the passage of time. However, in the present case, there is no allegation that petitioner fraudulently obtained the drawback or suppres... [Read more]

Customs - Recovery of drawback erroneously paid - Limitation period for recovery of drawback - Whether recovery proceedings initiated more than ten years after drawback was availed can be sustained when no statutory period of limitation is prescribed in Rule 16 of Customs, Central Excise Duties and Service Tax Drawback Rules - HELD - It is a settled principle of law that fraud vitiates all solemn acts and that a person cannot be permitted to take advantage of his own fraud, irrespective of the passage of time. However, in the present case, there is no allegation that petitioner fraudulently obtained the drawback or suppressed any material facts. The only allegation is that petitioner had not produced proof of realisation of export proceeds - Where the statute does not prescribe a period of limitation, the proceedings must nevertheless be initiated within a reasonable time. What constitutes a reasonable time would depend upon the facts and circumstances of each case. The drawback was availed during the period from 2004 to 2007 and last payment was made on 28.12.2007. The show cause notice was allegedly issued only in 2018 and the impugned order was passed in 2022. No reason has been assigned for the delay in initiating the recovery proceedings. There is also no explanation for the considerable delay between the alleged issue of the show cause notice and passing of the impugned order - Recovery proceedings initiated after such an inordinate delay cannot be sustained - The impugned order passed for recovery of drawback is set aside. Consequently, the attachment of the petitioner's bank account is also set aside - The Writ Petition is allowed [Read less]

U.P. VAT Act, 2008 - Imposition of penalty despite acceptance of Books of Account - Appellant was engaged in manufacturing welding electrodes and goods were seized on ground that Column No. 6 of Form-38 was blank; penalty proceedings initiated solely on ground of technical omission in Form-38 - Whether penalty can be sustained merely on account of technical discrepancy when books of account and turnover have been accepted in assessment order – HELD - Once books of account and disclosed turnover of Appellant have been accepted by assessing authority and no other material has been brought on record to establish mens rea on... [Read more]

U.P. VAT Act, 2008 - Imposition of penalty despite acceptance of Books of Account - Appellant was engaged in manufacturing welding electrodes and goods were seized on ground that Column No. 6 of Form-38 was blank; penalty proceedings initiated solely on ground of technical omission in Form-38 - Whether penalty can be sustained merely on account of technical discrepancy when books of account and turnover have been accepted in assessment order – HELD - Once books of account and disclosed turnover of Appellant have been accepted by assessing authority and no other material has been brought on record to establish mens rea on part of Appellant to evade payment of tax or to suppress tax liability, penalty proceedings cannot be sustained merely on account of technical discrepancy. It is settled that existence of mere technical or procedural irregularity, in absence of any material demonstrating an intention to evade tax, cannot by itself justify imposition of penalty - Once assessment order was passed after due consideration of books of account, disclosed turnover and penalty proceedings initiated against Appellant, and no adverse finding was recorded with regard to turnover or genuineness of transactions, no adverse inference could thereafter have been drawn against Appellant in penalty proceedings - The non-filling of Column No. 6 of Form-38 was attributable to urgency of requirement of goods and not due to any deliberate intention to evade tax. The goods were found to constitute raw material used in manufacturing process and authorities never found that said goods were sold by Appellant – The impugned penalty order is not sustainable and quashed – The revision is allowed [Read less]

GST - Petition challenging adjudication order on ground that order is unreasoned and replies filed during assessment proceedings were not considered. Petitioner alleged mismatches in GSTR-3B and GSTR-2A and discrepancies in GSTR-9 without adequate reconciliation – HELD - The adjudicating authority had applied mind to dispute examined issues within scope of show cause notice afforded hearing and recorded reason that reconciliation had not been made. No hard and fast rule can determine what constitutes sufficient reasons and individual facts variable responses and expressions used by adjudicator determine extent of reasoni... [Read more]

GST - Petition challenging adjudication order on ground that order is unreasoned and replies filed during assessment proceedings were not considered. Petitioner alleged mismatches in GSTR-3B and GSTR-2A and discrepancies in GSTR-9 without adequate reconciliation – HELD - The adjudicating authority had applied mind to dispute examined issues within scope of show cause notice afforded hearing and recorded reason that reconciliation had not been made. No hard and fast rule can determine what constitutes sufficient reasons and individual facts variable responses and expressions used by adjudicator determine extent of reasoning - on a plain reading of the impugned order, it is apparent that the Adjudication Authority had applied its mind to the dispute in issue, and it has examined within the scope of show cause notice, the reply furnished by the petitioner after affording opportunity of hearing, it cannot be said that the order is completely non-speaking - the assessee was required to show cause on specific issues of difference in GSTR -2A and GSTR- 3B, as also discrepancy noticed in GSTR- 9. Therefore, the burden was on the petitioner to explain those discrepancies by not only filing a reconciliation chart but also explaining facts to establish that the entries in the statutory forms considered by the Adjudicating Authority did not indicate such discrepancy. Unless, that burden was discharged by the assessee, the Adjudicating Authority may not have been burdened to offer any other consideration - The writ petition is disposed of with observation that petitioner's appeal against impugned order may be entertained on own merits [Read less]

GST – Insolvent Supplier, Applicability of Ghanashyam Mishra & Sons (P.) Ltd. case - Eligibility to Input Tax Credit under Section 16(2)(c) of the CGST Act, 2017 - Insolvency Proceedings - Petitioner availed Input Tax Credit on basis that supplier had already paid tax. Supplier subsequently became insolvent and insolvency proceedings were initiated under Insolvency and Bankruptcy Code 2016 - Department failed to claim tax against supplier in insolvency proceedings and since tax liability remained unpaid, demand was imposed on Petitioner under Section 16(2)(c) of CGST Act, 2017 - Whether Petitioner can be held liable for ... [Read more]

GST – Insolvent Supplier, Applicability of Ghanashyam Mishra & Sons (P.) Ltd. case - Eligibility to Input Tax Credit under Section 16(2)(c) of the CGST Act, 2017 - Insolvency Proceedings - Petitioner availed Input Tax Credit on basis that supplier had already paid tax. Supplier subsequently became insolvent and insolvency proceedings were initiated under Insolvency and Bankruptcy Code 2016 - Department failed to claim tax against supplier in insolvency proceedings and since tax liability remained unpaid, demand was imposed on Petitioner under Section 16(2)(c) of CGST Act, 2017 - Whether Petitioner can be held liable for tax unpaid by defaulting supplier - HELD – The Section 16(2)(c) of CGST Act is mandatory condition subject to Section 41 requiring that tax charged in respect of supply be actually paid to Government and unless same is paid, availing of ITC is prohibited – The purchasing dealer cannot be held entitled to claim Input Tax Credit unless all conditions up to clause (c) are satisfied. Burden lies on dealer to establish entitlement up to clause (c) as per Section 155 of CGST Act. Purchaser without ascertaining whether supplier paid tax should not have availed ITC and recovery of same becomes permissible once availed without supplier payment – The judgment in Ghanashyam Mishra & Sons (P.) Ltd., relied upon by learned counsel, deals with the consequences flowing from an approved resolution plan under the IBC and does not dispense with the statutory condition governing the entitlement to Input Tax Credit of purchasing dealer under Section 16(2)(c) of the CGST Act – The writ petition is dismissed [Read less]

GST - Maintainability of Appeal before GSTAT in the absence of First Appellate Authority Order - Appellant filed an appeal with the First Appellate Authority and simultaneously filed another appeal with the Tribunal on the same day as the Department was in the process of recovery, however, at the time of filing the appeal with the Tribunal, no order passed under Section 107 or 108 of the CGST Act, 2017 was in existence. The First Appellate Authority order was subsequently passed after the filing of the appeal with the Appellate Tribunal - Whether a person aggrieved can file an appeal with the GSTAT in the absence of an ord... [Read more]

GST - Maintainability of Appeal before GSTAT in the absence of First Appellate Authority Order - Appellant filed an appeal with the First Appellate Authority and simultaneously filed another appeal with the Tribunal on the same day as the Department was in the process of recovery, however, at the time of filing the appeal with the Tribunal, no order passed under Section 107 or 108 of the CGST Act, 2017 was in existence. The First Appellate Authority order was subsequently passed after the filing of the appeal with the Appellate Tribunal - Whether a person aggrieved can file an appeal with the GSTAT in the absence of an order passed under Section 107 or 108 of the Act - HELD – The Section 112(1) CGST Act stipulates that any person aggrieved by an order passed against him under Section 107 or 108 of the Act may appeal to the Appellate Tribunal - The appeal filed with the Appellate Tribunal is not in accordance with Section 112(1) of the Act as the First Appellate Authority order was not in existence at the time of filing of the appeal. The First Appellate Authority order came into existence after the filing of the appeal with the Appellate Tribunal - When no order passed under Section 107 or 108 is in existence at the time of filing of the appeal, there is no order against which an appeal can be maintained before the Appellate Tribunal - The Appeal is not maintainable, hence dismissed with liberty to the Applicant/Appellant to file an appeal with GSTAT, if they desire so, in accordance with law [Read less]

Customs - Undervaluation of Imported Goods - Evidentiary Value of Export Documents -The appellants imported cigarettes and declared value at USD 5 per thousand sticks on the basis of contract with supplier in Hong Kong. The Department proposed enhancement to USD 18 per thousand sticks based on Certificate of Origin and shipping bills allegedly obtained from port of export - Whether the Department can reject declared transaction value and enhance it based on unauthenticated export documents obtained from third parties in the absence of contemporaneous price evidence - HELD - Before rejecting the invoice price, the Departmen... [Read more]

Customs - Undervaluation of Imported Goods - Evidentiary Value of Export Documents -The appellants imported cigarettes and declared value at USD 5 per thousand sticks on the basis of contract with supplier in Hong Kong. The Department proposed enhancement to USD 18 per thousand sticks based on Certificate of Origin and shipping bills allegedly obtained from port of export - Whether the Department can reject declared transaction value and enhance it based on unauthenticated export documents obtained from third parties in the absence of contemporaneous price evidence - HELD - Before rejecting the invoice price, the Department has to give cogent reasons for such rejection and the Department has to find out whether there are any imports of any identical goods or similar goods at a higher price around the same time. Unless the evidence is gathered in that regard, the question of importing Section 14(1A) does not arise. In the absence of such evidence, invoice price has to be accepted as the transaction value - Casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value of imported goods. There is a valid contract between the appellant and supplier in Hong Kong with agreed upon price of USD 5 per 1000 sticks. Appellants have not sought any preferential treatment or exemption benefit warranting production of country-of-origin certificate - The Certificate of Origin was neither specifically produced by the Appellant nor was any claim for exemption made based on said certificate and same was not part of any declaration by the party nor obtained officially by the Department from authorities issuing such origin certificate. Hence reliance placed on said document per se is not tenable – The statements under Section 108 are relevant and admissible but need to be corroborated by other admissible and urgent evidence. Documents procured from foreign customs authorities must be authenticated. Xerox copies or export declarations not even attested would not make such genuine declarations – The export declaration value cannot be made basis for increasing value of goods in India when value is derived from Section 14(1). No evidence from side of Department showing contemporaneous imports at higher price - Department has not been able to produce cogent and substantive evidence in support of wrong declaration of transaction value to reject the same - The impugned order is set aside and the appeal is allowed [Read less]

Customs - Fraudulent claim of Certificate of Origin and denial of duty exemption benefit - Origin of goods imported under preferential trade agreement - Appellant imported Cold Rolled Stainless Steel Coils and claimed exemption under Notification 46/2011-CUS based on Certificate of Origin purportedly issued by Malaysian supplier - Department found through inquiry with Malaysian Ministry that supplier company was not registered in their ePCO system and had never received CoO application from supplier - Whether exemption benefit can be denied based on non-verification of CoO from issuing authority and retracted statements - ... [Read more]

Customs - Fraudulent claim of Certificate of Origin and denial of duty exemption benefit - Origin of goods imported under preferential trade agreement - Appellant imported Cold Rolled Stainless Steel Coils and claimed exemption under Notification 46/2011-CUS based on Certificate of Origin purportedly issued by Malaysian supplier - Department found through inquiry with Malaysian Ministry that supplier company was not registered in their ePCO system and had never received CoO application from supplier - Whether exemption benefit can be denied based on non-verification of CoO from issuing authority and retracted statements - HELD - While the statutory framework under AIFTA and Customs Tariff Rules requires retroactive checks to be done in time bound manner with reasons, the Department must conduct specific verification of CoO with issuing authority from exporting country rather than making assumptions based on general emails regarding other certificates or general statements about supplier's business activities. The testimonial evidence comprising retracted statements of proprietor made two years after initial statement requires proper examination-in-chief and cross-examination as mandated by statute and established judicial precedent before being relied upon. Where statements are recorded during investigation but provided only with Show Cause Notice then retraction within reasonable time of communication of such statements is valid. The requisite verification of specific CoO for goods imported by appellant has not been conducted or completed as per prescribed procedures - Documentary evidence of CoO issued by Government Authority must be preferred over presumptions and assumptions regarding capacity or business activities of exporting country or supplier. When documentary evidence in form of valid CoO certified by Government authorities is produced importer is entitled to preferential treatment and burden cannot be placed on importer to prove circumstances under which certificate was issued - The Department failed to follow prescribed statutory verification procedure before making allegations of fraudulent CoO and consequent denial of exemption benefit. General email pertaining to check of other 87 CoOs cannot be generalized to assume that appellant's three specific CoOs are also non-authentic. Without statutory verification specific to appellant's certificates benefit of Notification cannot be denied – The impugned order is set aside and the appeal is allowed [Read less]

Service Tax liability on interchange fees earned by issuing banks in Credit card services transaction - Appellant is issuing bank earning interchange fees from credit card transactions - Appellant contended that interchange fee is not liable to service tax as no service is rendered to merchant establishment or acquiring bank in respect of such fee and essential ingredients of service provider recipient relationship and contractual nexus are absent - Department alleged that interchange fee is consideration for credit card services provided to cardholders and is liable to service tax under Section 65(33a) and 65(105)(zzzw) o... [Read more]

Service Tax liability on interchange fees earned by issuing banks in Credit card services transaction - Appellant is issuing bank earning interchange fees from credit card transactions - Appellant contended that interchange fee is not liable to service tax as no service is rendered to merchant establishment or acquiring bank in respect of such fee and essential ingredients of service provider recipient relationship and contractual nexus are absent - Department alleged that interchange fee is consideration for credit card services provided to cardholders and is liable to service tax under Section 65(33a) and 65(105)(zzzw) of Finance Act 1994 - Whether interchange fee earned by issuing bank constitutes taxable service under credit card services entry - HELD - The issue has been conclusively decided by the Tribunal in case of ABN Amro Bank wherein it was held that amount received by issuing bank does not qualify as credit card services - The definition of credit card services under Section 65(33a) clause three requires service to be in relation to settlement of any amount transacted through card. Admittedly the issuing bank is not engaged in settlement of amount as settlement is done by acquiring bank - Issuing bank is not the settlement agency and acts only as issuing bank verifying and facilitating transaction with cardholder. Acquiring bank is liable to pay service tax on entire Merchant Discount Rate. Where acquiring bank has discharged service tax liability on amount in question no service tax is payable by issuing bank. When service tax has already been paid by one party on transaction no double taxation can result from similar levy on another party - The Tribunal's decision in case of Citi Bank N.A. has been upheld by the Hon'ble Supreme Court on identical issue. Interchange fee amount does not fall within definition of taxable service under credit card services entry as issuing bank does not undertake settlement function. Demand for service tax on interchange fees is not sustainable - The impugned orders are set aside and the appeals are allowed [Read less]

GST – Scope of Section 161 of the CGST Act, 2017 - Denial of Opportunity to be Heard, Consideration to reply in rectification order - Ex-Parte Order - Petitioner was issued show-cause notice under Section 74 and submitted replies on 13.07.2021 and 18.07.2021; wholly ex-parte order came to be passed on 30.01.2025 without offering any consideration to replies furnished; subsequently order dated 05.02.2025 passed under Section 161 purporting to rectify error by offering ex-parte consideration to replies – Whether Adjudicating Authority can offer ex-parte consideration to reply in rectification order when fundamental error... [Read more]

GST – Scope of Section 161 of the CGST Act, 2017 - Denial of Opportunity to be Heard, Consideration to reply in rectification order - Ex-Parte Order - Petitioner was issued show-cause notice under Section 74 and submitted replies on 13.07.2021 and 18.07.2021; wholly ex-parte order came to be passed on 30.01.2025 without offering any consideration to replies furnished; subsequently order dated 05.02.2025 passed under Section 161 purporting to rectify error by offering ex-parte consideration to replies – Whether Adjudicating Authority can offer ex-parte consideration to reply in rectification order when fundamental error was denial of opportunity to be heard – HELD - When show-cause notice is issued, fundamental principle of natural justice requires that Petitioner be afforded meaningful opportunity to place its case on record and be heard. Denial of opportunity of hearing vitates proceedings beyond cure - Where Adjudicating Authority admits that replies were furnished by Petitioner and had not been considered in original order, the order suffered from fundamental procedural defect. Once fundamental error of denial of consideration to Petitioner's replies is noted, the power of rectification under Section 161 cannot be exercised to offer ex-parte merit review or to pass order creating tax demand without notice. The appropriate course was to recall original order and pass fresh order after issuing fresh notice to Petitioner for personal hearing. To allow ex-parte consideration in rectification order would amount to conceding power to review order on merits without issuing notice. Principles of natural justice are violated where Adjudicating Authority passes second ex-parte order after noticing that first order failed to consider Petitioner's submissions. The third proviso to Section 161 regarding non-prejudicial rectification does not apply where rectification involves fundamental procedural error – The impugned order is set aside; matter remitted to Adjudicating Authority to pass fresh order after affording opportunity of hearing to petitioner – The petition is allowed [Read less]

GST – Appeal – Exclusion of time spent in pursuing Rectification Application - Period of Limitation for Filing Appeal - Appellate Authority rejected appeal by impugned order solely on ground of limitation. Appellate Authority computed limitation period from date of original order instead of from date of rectification order - Whether period of limitation for filing appeal against order rejecting refund claim must be computed from date of original adjudication order or from date of order deciding rectification application filed within statutory period - HELD - When rectification application under Section 161 of the CGST ... [Read more]

GST – Appeal – Exclusion of time spent in pursuing Rectification Application - Period of Limitation for Filing Appeal - Appellate Authority rejected appeal by impugned order solely on ground of limitation. Appellate Authority computed limitation period from date of original order instead of from date of rectification order - Whether period of limitation for filing appeal against order rejecting refund claim must be computed from date of original adjudication order or from date of order deciding rectification application filed within statutory period - HELD - When rectification application under Section 161 of the CGST Act, 2017 is filed within prescribed statutory period of 90 days, Appellate Authority was required to examine appeal and decide on merits instead of rejecting on ground of limitation by computing period from date of original order. Filing and disposal of rectification application was vital aspect which would directly impact calculation of limitation period provided under Section 107 of CGST Act - Where rectification application has been filed within prescribed period and has been duly considered and decided by Adjudicating Authority by reasoned order, appeal against such order must be filed within prescribed period calculated from date of rectification order not from original adjudication order. If appeal was found to be barred by limitation even when period computed from rectification order, the Appellate Authority would be entitled to reject on that ground. However, it is not permissible to reject appeal by computing period from original adjudication order when rectification application filed within prescribed period has been duly considered and decided. Appellate Authority was required to examine details filled in by petitioner in GST APL-01 form before rejecting appeal on ground of delay – The impugned orders passed by Appellate Authority are quashed and set aside. Matters are remanded to Appellate Authority which shall decide appeals afresh on merits and in accordance with law – The petitions are allowed [Read less]

GST - Issuance of show cause notice and demand order against deceased taxpayer - Validity of proceedings against dead person - Whether show cause notices and demand orders issued against a deceased taxpayer on GSTN portal only can bind the legal heir when the legal heir was unaware and not involved in the business - HELD - The petitioner is a housewife of the deceased assessee who passed away during Covid Pandemic on 03.05.2021. The petitioner was not remotely connected to the proprietorship and ultimately, the registration was cancelled on 16.07.2021 of the proprietorship. After the period of almost three years, on 14.06.... [Read more]

GST - Issuance of show cause notice and demand order against deceased taxpayer - Validity of proceedings against dead person - Whether show cause notices and demand orders issued against a deceased taxpayer on GSTN portal only can bind the legal heir when the legal heir was unaware and not involved in the business - HELD - The petitioner is a housewife of the deceased assessee who passed away during Covid Pandemic on 03.05.2021. The petitioner was not remotely connected to the proprietorship and ultimately, the registration was cancelled on 16.07.2021 of the proprietorship. After the period of almost three years, on 14.06.2024, the respondent authority issued the pre-show cause notice intimation to the deceased assessee under the provisions of Section 73(5) of the CGST Act intimating about the proposed tax liability. Thereafter, the proceedings further continued and the notices were issued and affixed at the factory premises of the deceased assessee. Since no one appeared, as the taxpayer was deceased, the respondent authority passed the impugned order confirming the demands - It is true that the respondent authority was not aware about the death of the husband, who was connected with the business activities of the proprietorship. However, the petitioner, being a housewife, was not even remotely connected with the business and was unaware of the niceties of the GSTN portal - The show cause notices as well as the impugned orders passed thereafter are quashed and set aside. It will be open for the respondent to initiate proper proceedings in accordance with law against the petitioner for the outstanding demand - The present petition is allowed [Read less]

GST - Jurisdiction of Proper officer - Competency of Officer to issue Show-Cause Notice - Petitioner challenged show-cause notice issued under Section 122 of UPGST Act on ground that officer issuing notice lacked jurisdiction as proper officer was not clearly defined and notice was issued by Deputy Commissioner though penalty proposed was above monetary limit for which Additional Commissioner should have issued it – Whether show-cause notice issued by Deputy Commissioner can be quashed on ground of lack of jurisdiction – HELD - The State Circulars dated 11.12.2018 and 10.05.2022 clarify that Deputy Commissioner has bee... [Read more]

GST - Jurisdiction of Proper officer - Competency of Officer to issue Show-Cause Notice - Petitioner challenged show-cause notice issued under Section 122 of UPGST Act on ground that officer issuing notice lacked jurisdiction as proper officer was not clearly defined and notice was issued by Deputy Commissioner though penalty proposed was above monetary limit for which Additional Commissioner should have issued it – Whether show-cause notice issued by Deputy Commissioner can be quashed on ground of lack of jurisdiction – HELD - The State Circulars dated 11.12.2018 and 10.05.2022 clarify that Deputy Commissioner has been vested with power to issue show-cause notice under Section 122 and has pecuniary jurisdiction in cases involving amount exceeding Rs. 2.5 crores. The question of jurisdiction can be raised at any stage, however writ jurisdiction under Article 226 of Constitution is discretionary and required to be exercised judiciously - Where petitioner did not raise objection regarding jurisdiction when notice was issued but appeared before officer and advanced submissions on merits. Having suffered the impugned order, the petitioner has now taken a volte-face and challenged the impugned order on the ground of lack of jurisdiction - The authority which issued show-cause notice was not lacking in jurisdiction. The writ petition is disposed of; liberty granted to Petitioner to avail statutory appellate remedy under Act – The petition is disposed of [Read less]

UP VAT Act, 2008 - Classification of mobile battery and charger - Applicability of concessional tax rate – Revisionist-assessee was engaged in trading of mobile phone accessories including mobile batteries chargers power banks and data cards during assessment year 2015-16 - Assessing Authority levied tax at 12% rate treating goods as unclassified items - Revisionist contended that mobile battery and charger are parts of mobile phone and fall under Entry No.28 of Schedule II-B of UP VAT Act 2008 and are liable to tax at rate of 5% - Whether mobile battery and charger sold individually without being sold as composite packa... [Read more]

UP VAT Act, 2008 - Classification of mobile battery and charger - Applicability of concessional tax rate – Revisionist-assessee was engaged in trading of mobile phone accessories including mobile batteries chargers power banks and data cards during assessment year 2015-16 - Assessing Authority levied tax at 12% rate treating goods as unclassified items - Revisionist contended that mobile battery and charger are parts of mobile phone and fall under Entry No.28 of Schedule II-B of UP VAT Act 2008 and are liable to tax at rate of 5% - Whether mobile battery and charger sold individually without being sold as composite package with mobile phone sets qualify for concessional tax rate under Schedule II-B Entry No.28 - HELD - The items sold by the revisionists were individual items, namely, data cards, mobile phone accessories, battery chargers, and power banks, and not mobile phones sold along with batteries and mobile chargers as a composite package - The benefit of concessional tax rate of 5% applicable to mobile phone sets sold along with batteries and chargers is available only when such goods are sold as composite package comprising mobile phone together with battery and charger and value of such sets does not exceed prescribed limit – The items sold by Revisionist are not covered under any specific entry of Schedule and are rightly treated as unclassified items attracting residuary tax rate. The judgment in Samsung Electronics case relied upon by Revisionist is of no assistance as goods in that case were sold as composite package containing mobile phone battery and charger whereas in present case Revisionist admitted that items were sold separately. No case has been made out by Revisionist to establish entitlement to concessional tax rate applicable only to composite packages – The revisions are dismissed [Read less]

Customs - Classification of Kitchen Exhaust Hoods - Appellant is engaged in ventilation solutions and routinely imports kitchen exhaust hoods - The appellant was initially classifying the products under Customs Tariff Heading 84148090 relating to residuary entries of Chapter 8414 and subsequently filed an application before the Customs Authority for Advance Rulings to reclassify the same under Customs Tariff Heading 84145990 relating to ventilating or recycling hoods incorporating a fan - The appellant had submitted additional documents and information in support of its claim to an incorrect email address, which was not co... [Read more]

Customs - Classification of Kitchen Exhaust Hoods - Appellant is engaged in ventilation solutions and routinely imports kitchen exhaust hoods - The appellant was initially classifying the products under Customs Tariff Heading 84148090 relating to residuary entries of Chapter 8414 and subsequently filed an application before the Customs Authority for Advance Rulings to reclassify the same under Customs Tariff Heading 84145990 relating to ventilating or recycling hoods incorporating a fan - The appellant had submitted additional documents and information in support of its claim to an incorrect email address, which was not considered by the AAR Authority while passing the impugned order - HELD - The Respondent Authority has come to a definite finding that the product would not contain a fan, whereas the appellant contends that the exhaust kitchen hoods contain fans. The Respondent Authority did not have the opportunity to examine the additional material submitted by the appellant as the same were sent to an incorrect email address - In the interest of justice, the appellant needs to be provided an opportunity to prove that the kitchen exhaust hoods contain fans and to establish its case before the Respondent Authority. The respondent Authority shall examine the additional material or submission and pass appropriate order on the basis of such examination - The impugned order is set aside and the matter is remitted back to the Respondent Authority for Advance Rulings – The appeal is disposed of [Read less]

Customs/DGFT - Validity of export prohibition notification for sugar - Vested Rights and Legitimate Expectation - Petitioners are merchant exporters who had entered into contracts with overseas buyers for export of sugar and received advance payments prior to issuance of Impugned Notification - DGFT issued Impugned Notification dated 13th May 2026 changing export policy of sugar from restricted to prohibited with immediate effect until 30th September 2026 except for certain specified exceptions. Petitioners challenged Notification contending that it violates their legitimate expectations and vested rights created by earlie... [Read more]

Customs/DGFT - Validity of export prohibition notification for sugar - Vested Rights and Legitimate Expectation - Petitioners are merchant exporters who had entered into contracts with overseas buyers for export of sugar and received advance payments prior to issuance of Impugned Notification - DGFT issued Impugned Notification dated 13th May 2026 changing export policy of sugar from restricted to prohibited with immediate effect until 30th September 2026 except for certain specified exceptions. Petitioners challenged Notification contending that it violates their legitimate expectations and vested rights created by earlier Notifications, violates Article 14 and 19(1)(g) of Constitution, causes irreparable prejudice and constitutes arbitrary action - Whether issuance of export prohibition notification in respect of sugar is valid and whether it violates legitimate expectations, vested rights or constitutional guarantees of Petitioners - HELD - Mere allocation of export quotas under earlier Notifications does not create any vested or accrued rights in favour of exporters. Policy decision to prohibit export was taken in larger public interest after due deliberation by Committee of Ministers considering that sugar is essential commodity and domestic production had declined significantly from estimated 343 lakh metric tonnes to actual 308 lakh metric tonnes with closing stock likely to fall below safe level of 40 lakh metric tonnes - Legitimate expectation is not an enforceable right more particularly in context of well-reasoned policy decision taken in public interest. Petitioners failed to comply with statutory requirements including holding Irrevocable Commercial Letter of Credit before issuance of Notification as mandated by paragraph 1.05(b) of Foreign Trade Policy 2023. Earlier relaxation granted in 2022-23 season cannot constitute binding precedent for subsequent seasons as each sugar season has different market conditions - Earlier Notifications dated 14th November 2025 and 13th February 2026 were issued under Essential Commodities Act for quota allocation whereas Impugned Notification was issued under Foreign Trade Development and Regulation Act dealing with export policy and both operate under different statutes for distinct purposes. Impugned Notification does not operate retrospectively and contains prospective language – The exceptions in Notification for consignments already in physical export pipeline must be read in context of Section 51 of Customs Act requiring actual permission from proper officer for clearance and loading of goods for exportation and shipping bills filed. Petitioners have not fulfilled conditions required under Section 51 of Customs Act such as Let Export Order or evidence of shipment commencement before Notification - Doctrine of promissory estoppel and legitimate expectation cannot override policy decisions taken in accordance with law and in public interest unless policy is shown to be irrational, perverse or actuated by mala fides - Constitutional guarantee under Article 19(1)(g) is not absolute and permits reasonable restrictions in public interest. Protection of domestic sugar supply and pricing at relevant time appears to be need of hour – Petitioners remain at liberty to sell retained sugar quantities in domestic market subject to compliance with Sugar Control Orders and applicable laws - The writ petitions are dismissed [Read less]

GST – Rajasthan AAR - Applicability of e-invoicing Notification No. 13/2020-Central Tax dated 31 March 2020 to coaching services through registered third party recipients - Determination of recipient and place of supply - Applicant is educational institution providing commercial coaching for competitive exams receiving fees from parents guardians or business enterprises some of whom are GST registered - Applicant seeks ruling on whether e-invoicing notification applies when registered third party furnishes GSTIN for coaching services rendered to student beneficiaries and whether supplier must verify recipient's ITC eligi... [Read more]

GST – Rajasthan AAR - Applicability of e-invoicing Notification No. 13/2020-Central Tax dated 31 March 2020 to coaching services through registered third party recipients - Determination of recipient and place of supply - Applicant is educational institution providing commercial coaching for competitive exams receiving fees from parents guardians or business enterprises some of whom are GST registered - Applicant seeks ruling on whether e-invoicing notification applies when registered third party furnishes GSTIN for coaching services rendered to student beneficiaries and whether supplier must verify recipient's ITC eligibility - HELD - Notification No.13/2020 dated 21.03.2020 read with Rule 48(4) CGST Rules requires e-invoice generation for registered persons whose turnover exceeds prescribed threshold in respect of supplies to registered recipients. Applicability of notification is confined to genuine business-to-business supplies where recipient is person liable to pay consideration under contract of supply. Identity of recipient under Section 2(93)(a) CGST Act is determinative of place of supply and must be identified in relation to actual supply - Where coaching service is rendered to and consumed by student enrolled student integral to recipient identity and cannot be divorced therefrom. Liability to pay consideration must flow from being party to contract of supply not merely from being source of funds. Mere furnishing of GSTIN by third party does not transform substance of business-to-consumer educational supply into B2B supply - E-invoicing obligation attaches only to genuine B2B supplies made to registered recipient where person furnishing GSTIN is person liable to pay consideration under contract – The supplier's obligation under notification operates independently of recipient's credit eligibility. However applicant's own acknowledgement that coaching fees appear personal in nature engages bar under Section 17(5)(g) CGST Act. No finding warranted that endorses characterizing personal educational expenditure as B2B supply. Ruling confined to facts as pleaded – The e-invoicing applies to genuine B2B supplies where recipient is contractually liable person and determination of each transaction requires factual examination – Ordered accordingly [Read less]

Karnataka Value Added Tax Act, 2003 - Transfer of Right to Use Goods – Taxability of Rental Charges for Electronic Data Capture Terminals – Appellant-Bank providing payment processing services to merchant establishments and installing Electronic Data Capture Terminals (EDCT) commonly known as swiping machines with connected accessories and printers at merchant premises - Merchant establishments collected transaction-based charges as Merchant Discount Rate and separate fixed charges including monthly terminal rental charges, installation charges and maintenance charges - Appellant treated entire consideration as conside... [Read more]

Karnataka Value Added Tax Act, 2003 - Transfer of Right to Use Goods – Taxability of Rental Charges for Electronic Data Capture Terminals – Appellant-Bank providing payment processing services to merchant establishments and installing Electronic Data Capture Terminals (EDCT) commonly known as swiping machines with connected accessories and printers at merchant premises - Merchant establishments collected transaction-based charges as Merchant Discount Rate and separate fixed charges including monthly terminal rental charges, installation charges and maintenance charges - Appellant treated entire consideration as consideration for banking and financial services and discharged service tax - Department during reassessment proceedings held that rental charges for EDCT machines constituted consideration for transfer of right to use goods and amounted to deemed sale liable to tax under KVAT Act - Whether rental charges collected for EDCT machines constitute consideration for transfer of right to use goods liable to VAT - HELD - Transaction may contain different elements and may attract different levies under different statutes provided respective taxing fields are distinct and statutory requirements are satisfied - Payment of service tax on service component does not by itself exclude power of State to levy VAT on sale element if transfer of right to use goods is established - EDCT machines are identifiable and tangible goods installed at merchant premises and are separately identifiable from mere provision of banking service. Unlike SIM cards which are merely incidental to service rendered and do not confer independent right or utility, EDCT machines are separately identifiable and tangible equipment installed at premises of merchant establishments. Machine performs distinct function independent of mere provision of banking service - Merchant establishments are provided possession and operational access to identified equipment for accepting customer transactions, separate rental consideration is collected for such equipment - EDCT machines stand on different footing as compared to SIM cards in cellular operations. Retention of ownership and supervisory rights by Bank does not negate transfer of right to use such goods - Rental charges collected by Appellant in respect of EDCT machines constitute consideration for transfer of right to use goods and are liable to tax under VAT Act – The findings recorded by authorities below are based upon contractual terms, nature of equipment supplied and manner in which EDCT machines were made available to merchant establishments and do not suffer from any error warranting interference – The Revision Petition is dismissed [Read less]

GST - Demand against Deceased Taxpayer - Lack of Jurisdiction - Petitioner is legal heir (wife) of deceased taxpayer - Show Cause Notice under Section 74(1) along with FORM DRC-01 was issued on deceased taxpayer seeking recovery of tax liability. Order along with FORM DRC-07 was passed confirming demands in absence of reply from deceased taxpayer - Whether notice and order can be issued and passed against deceased taxpayer and whether such proceedings are without jurisdiction and nullity in eye of law - HELD – The notice under Section 74(1) and order under Section 74(9) of GGST Act can be issued or passed against person ... [Read more]

GST - Demand against Deceased Taxpayer - Lack of Jurisdiction - Petitioner is legal heir (wife) of deceased taxpayer - Show Cause Notice under Section 74(1) along with FORM DRC-01 was issued on deceased taxpayer seeking recovery of tax liability. Order along with FORM DRC-07 was passed confirming demands in absence of reply from deceased taxpayer - Whether notice and order can be issued and passed against deceased taxpayer and whether such proceedings are without jurisdiction and nullity in eye of law - HELD – The notice under Section 74(1) and order under Section 74(9) of GGST Act can be issued or passed against person chargeable with tax. Definition of person under Section 2(84) of GGST Act includes individual in case of proprietorship concern and not legal heirs of such individual. Proprietor taxpayer passed away on 29.07.2020 whereas impugned notice was issued only on 26.06.2025 and order was passed only on 04.12.2025. Nil dues were determined at time of cancellation of registration of deceased proprietor. In view thereof neither notice under Section 74(1) nor order under Section 74(9) can be issued or passed against deceased person – The impugned proceedings against deceased taxpayer are without jurisdiction and nullity in eye of law. Petitioner is housewife not connected with husband's business and GSTIN was cancelled in 2021 with nil demands. Authority issued notice and order to dead person being unaware about death of taxpayer. Impugned notice and order are passed against person who is no longer alive and hence cannot be served or heard – The impugned notice and impugned order are quashed and set aside. It is open for respondents to initiate proper proceedings in accordance with law against Petitioner (legal heir) for outstanding demand if any, following proper procedure – The petition is allowed [Read less]

Customs AAR - Classification of “Window Glass” or “CG - Window”, a critical component of an electronic device Display Assembly – HELD - Window Glass as being imported by the applicant is designed for use solely and principally in the Display Assembly, it satisfies the criteria laid down in Note 2(b) of Section XVI and, therefore, merits classification under CTH 8529. Even if it is considered that the Window Glass could be covered within the scope of “safety glass” under CTH 7007, the final classification would still fall under CTH 8529 by application of Rule 3(c) of the General Rules for the Interpretation (G... [Read more]

Customs AAR - Classification of “Window Glass” or “CG - Window”, a critical component of an electronic device Display Assembly – HELD - Window Glass as being imported by the applicant is designed for use solely and principally in the Display Assembly, it satisfies the criteria laid down in Note 2(b) of Section XVI and, therefore, merits classification under CTH 8529. Even if it is considered that the Window Glass could be covered within the scope of “safety glass” under CTH 7007, the final classification would still fall under CTH 8529 by application of Rule 3(c) of the General Rules for the Interpretation (GRI) – The Rule 3(c) stipulates that when classification cannot be determined under Rules 3(a) or 3(b), the product shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. Hence, even if the product could arguably fit both under CTH 7007 and CTH 8529, it would still merit classification under CTH 8529, as this heading occurs later in numerical order – The product ‘Window Glass’ are classifiable under Tariff item 8529 90 90 of the First Schedule to the Customs Tariff Act, 1975 – Ordered accordingly [Read less]