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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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