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2026-VIL-1373-CESTAT-CHD-CE | CESTAT CENTRAL EXCISE

Central Excise - CENVAT credit on inputs procured from manufacturers availing exemption notification - Applicability of Rule 12 of CCR, 2004 - Department took the view that CENVAT credit on inputs cleared by exempted units was not admissible before the amendment in Rule 12 by way of Notification No.02/2014-CE dated 20.01.2014 - SCN invoking extended period of limitation demanding denial of CENVAT credit - Appellant contended that Rule 12 does not restrict availment of credit under Rule 3, the amendment is merely a clarification and should apply retrospectively - Whether CENVAT credit is admissible on inputs procured from manufacturers availing exemption notification before the amendment in Rule 12 dated 20.01.2014 - HELD - The scheme of CENVAT credit has to be read in a harmonious manner and not in isolation with reference to one or two Rules. The scheme of CENVAT credit provides that credit of inputs or input service shall be admissible to the manufacturer under the following conditions: the input or input service has suffered duty, such input or input service are used in the manufacture of final products, and such credit is received under the cover of prescribed invoice or document. In the instant case, none of these conditions are disputed - CENVAT credit cannot be denied merely because express provision for credit from exempted supplies came at a later date by amendment. Before the amendment in Rule 12 there was no express prohibition in the CENVAT Credit Rules to deny credit availed by the appellant. The absence of an express permission at an earlier date cannot be construed to mean that credit is only admissible from the date of amendment - The amendment to Rule 12 is in the nature of clarification and does not create a new permission but merely clarifies what was permitted by the scheme - Regarding invocation of extended period, where the issue arises on basis of audit and involves legal interpretation of statutory provisions, extended period cannot be invoked. The fact that Department conducted audits regularly and processed refund claims shows Dept had knowledge of the facts. The appellant succeeds both on merits and on the question of limitation - The impugned order is set aside and the appeal is allowed [Read less]

2026-VIL-1372-CESTAT-ALH-CE | CESTAT CENTRAL EXCISE

Central Excise - Place of removal, Inclusion of transportation cost in assessable value in FOR destination sales - Appellant manufactured and supplied goods to customers on FOR destination basis. Audit revealed that the Appellant had not paid central excise duty on the value of transportation of goods from its factory to buyers' premises resulting in short payment of duty - Whether the place of removal for goods sold on FOR destination basis is the buyer's premises or factory gate - HELD - When goods are sold on FOR destination basis, the place of delivery is the buyer's premises and the cost of transportation up to the bu... [Read more]

High Court Judgement | High Court SGST

GST - Prosecution of Director for company's offence - Vicarious liability and requirement to implead company - A complaint was filed against Petitioner, a Director, under Section 132 of CGST Act, 2017 for wrongfully availing Input Tax Credit. The Department alleged that M/s NIPL, a registered person and company of which Petitioner was Director, had availed fraudulent ITC without receipt of goods through invoices of dummy firms. Though the Department had issued Show Cause Notice to M/s NIPL and the company had filed appeal, the complaint was filed against the Petitioner individually without arraigning M/s NIPL as an accused. Petitioner contended that prosecution against him without impleading the company was not maintainable - Whether a Director of a company can be prosecuted individually under Section 137 of CGST Act without the company being arraigned as an accused - HELD - Section 137 of CGST Act use the term ‘person’ and refer it to a Company. Applying strict construction of penal statutes and consistent with binding precedent of the Apex Court, the commission of offence by the company is an express condition precedent to attract vicarious liability of others - The words “as well as the company” appearing in Section 137 make it clear that when the company can be prosecuted, only then the persons mentioned in other categories could be vicariously liable. Commission of offence by the company-M/s NIPL is an express condition precedent to attract the vicariously liability of the petitioner, who was the Director of M/s NIPL at the relevant time – Further, it is M/s NIPL, which is a registered person within the meaning of Section 2(94) of the CGST Act. It is M/s NIPL which has availed the ITC fraudulently. It is also the admitted position that demand-cum-show cause notice was issued to M/s NIPL and it was M/s NIPL which filed an appeal before the Appellate Authority – The prosecution of the Director in personal capacity without arraigning the company cannot proceed against settled principles of law - The complaint against petitioner is quashed and all subsequent proceedings are set aside. The respondent is at liberty to proceed for the offence under Section 132 of CGST Act in accordance with law - The petition is allowed [Read less]

2026-VIL-1362-CESTAT-BLR-CE | CESTAT CENTRAL EXCISE

Central Excise - CENVAT Credit on services availed outside the Factory Premises - Services Used in Setting Up of Unit - Appellant, a cement manufacturer, collected fly ash from NTPC's electricity generation plant and incurred costs for loading, transportation, unloading and maintenance of the fly ash pond as per Pollution Control Board specifications - The appellant claimed CENVAT credit for services rendered at the fly ash pond as well as for loading, unloading and freight charges for movement of fly ash – Denial of credit on the ground that services were rendered outside the factory premises and hence CENVAT credit was not eligible - Whether CENVAT credit can be taken for services used in or in relation to manufacture of final products even when such services are rendered outside the factory premises - HELD - The definition of input service under Rule 2(l) of CENVAT Credit Rules 2004 does not impose any requirement that the service must be received by the manufacturer within the factory premises. The Rule states that input services include any service used by a manufacturer whether directly or indirectly in or in relation to the manufacture of final products and clearance thereof up to the place of removal. The definition expressly includes services relating to procurement of inputs, setting up of factories and inward transportation of inputs which are often rendered outside factory premises - The mere location of service delivery outside factory premises does not make it ineligible for credit if it is used in or in relation to manufacture. Fly ash is admittedly the raw material and input for manufacturing cement and the services incurred in loading, unloading, transportation and maintenance of fly ash pond are directly used in relation to manufacture of cement. The services do not need to be rendered within the factory premises to qualify as input services - The CENVAT credit is available for services related to fly ash operations and other operations even when conducted outside the factory premises - The impugned order denying CENVAT credit is set aside and the appeal is allowed [Read less]

2026-VIL-46-GSTAT-THN | Tribunal SGST

GST – Jurisdiction of Tribunal to examine transitioned ITC - Proceedings under pre-GST regime versus GST regime - Appellant transitioned ITC balance by filing Form GST TRAN-1 under Section 140 of CGST Act including credits of CENVAT credit of eligible duties and VAT credit on stock-in-trade goods. Department issued Notice disputing the transitioned ITC alleging non-production of relevant evidence to substantiate eligibility under GST law - Appellant contended that credits were never disputed under erstwhile regime and cannot be questioned under CGST regime - Whether CGST authorities can initiate proceedings under Section 74 of CGST Act to question admissibility of ITC transitioned from pre-GST regime when such credits were never challenged under erstwhile law - HELD - Section 142(6)(a) and Section 174(2)(e) of CGST Act make it clear that recovery proceedings related to inadmissible credit under erstwhile laws can be initiated only under provisions of erstwhile laws even after enactment of CGST Act. The CGST authorities are not empowered to initiate proceedings under CGST Act for determining correctness of credits availed and transitioned from erstwhile regime - Following the ratio of High Court of Jharkhand in Usha Martin Ltd and in Steel Authority of India Ltd cases, the proceedings initiated by respondents to deny transitioned ITC on ground that such credits were inadmissible under erstwhile laws are beyond jurisdictional powers vested under CGST Act - An Appellant under Section 140(1) is entitled to carry forward CENVAT credit of eligible duties reflected in returns preceding 01.07.2017 subject to conditions specified. Since credit was never disputed or challenged under erstwhile regime, same cannot be questioned under CGST Act. Examination of correctness and eligibility of credit availed under erstwhile law under guise of powers under Section 140 is without authority of law - Reliance of the revenue on Section 174 of the CGST Act is also of no avail inasmuch as it only authorizes continuation of the proceedings initiated under the erstwhile law. However, it doesn’t authorize the officers appointed under the CGST Act to examine correctness of ITC availed by the appellant under the erstwhile regime - The ITC transitioned by the appellant is in accordance with law and same is held to be eligible. The impugned order is set aside and the appeal is allowed - Transition of Krishi Kalyan Cess (KKC) – HELD - The Appellant had transitioned the same into the GST regime by filing Form GST TRAN-1. However, due to lack of clarity regarding the availability of ITC in respect of KKC, the Appellant, out of abundant caution, reversed the amount under protest – As per the ratio of Godrej & Boyce Mfg Co Ltd judgment, transitional credit of Krishi Kalyan Cess is in order. Merely because the revenue is before the Hon’ble Supreme Court that cannot be sole reason to hold our decision, particularly when the Apex Court has not granted the stay from the operation of the Bombay High Court judgment. Moreover, the view on the issue of transition of KKC is not only based on the judgment in the case of Godrej & Boyce but also on our independent interpretation of the provision and Board’s Circular dated 02.01.2019. The transition of Krishi Kalyan Cess by the Appellant is in order - Transitioned VAT Credit under Section 140(6) – HELD - With respect to VAT credit transitioned into the GST regime, the Appellant had provided all the details required to claim VAT credit on Stock-in-Trade goods lying in stock as on 30.06.2017. There is no finding to the contrary to deny this amount of transitioned credit. Without giving any specific objection for denial of this credit, the lower authorities have rejected this credit considering it to be part and parcel of the other credits. Thus, in the absence of contrary findings, denial of this credit cannot be countenanced. Moreover, the revenue has not brought any material evidence on record to justify denial of VAT credit and consequent transition thereof to GST regime – Further, certain other reasons given to deny transitional credit such as incorrect address on the invoice, description of service not mentioned, copies of invoice or credit register not produced, etc are not sustainable at this stage especially when at the stage of claiming credit such objections were not raised. [Read less]

2026-VIL-778-CAL | High Court SGST

GST - Cross empowerment, Adjudication by Bureau of Investigation officers - Adjudication order was passed by Deputy Commissioner posted at Bureau of Investigation, State GST, holding that ITC claimed on inward supplies from five suppliers was ineligible - Petitioner contention that respondent officer being vested at Bureau of Investigation Unit lacks jurisdiction to adjudicate and that State Tax Authorities have no jurisdiction when petitioner is administratively assigned to Central Authorities without corresponding notification under Section 6 of CGST Act - Whether officers posted at Bureau of Investigation have power of adjudication under Section 74 of CGST Act, 2017 - HELD - A jurisdictional issue questioning the competence of an authority to exercise power raised in a writ petition may be entertained even when alternative remedy exists if such issue is a pure question of law and does not involve adjudication of disputed facts - The order of adjudication was passed by officer posted at Bureau of Investigation who is vested with enforcement activity and investigation including ITC investigation but it prima facie appears such officers may lack jurisdiction to make adjudication under Section 74. There is divergence of opinion among High Courts on cross empowerment issue - The Madras High Court held that State authorities have no jurisdiction when assessee is administratively assigned to Central authority without corresponding notification under Section 6. However Kerala and Jammu and Kashmir High Courts held that cross empowerment is automatic by legislative mandate and no separate notification is required. Since various jurisdictional issues are involved and have not been decided by the adjudicating authority, the matter should be remanded to allow petitioner to raise all jurisdictional issues - The adjudication order and appellate order and all consequential steps were set aside and quashed. Liberty granted to petitioner to submit comprehensive reply to SCN raising all points including jurisdictional issues. The adjudicating authority was directed to fix date of hearing after expiry of reply period and decide jurisdictional issue as first issue and thereafter other issues afresh in accordance with law - The writ petition is allowed [Read less]

2026-VIL-1363-CESTAT-HYD-ST | CESTAT SERVICE TAX

Service Tax - Scope of Entry No. 9(b) of Notification No. 25/2012-ST dated 20.06.2012 - Services relating to conduct of examination - Appellant conducted various National Level Talent Search Examinations and Olympiad and claimed exemption under Entry No. 9(b) of Notification No. 25/2012-ST as services provided to an educational institution by way of services relating to conduct of examination by such institution - Recovery of service tax on ground that the examinations conducted were optional talent search examinations not forming part of prescribed curriculum of schools and therefore not covered under exemption notification - Whether the services rendered by appellant are covered under Entry No. 9(b) of Notification No. 25/2012-ST or exemption can be denied by importing a condition that examinations should necessarily form part of prescribed curriculum or be Board Examinations - HELD - The Notification uses the expression "services relating to conduct of examination" and not narrower expressions like "services relating to conduct of curriculum examinations" or "Board Examinations". Plain reading shows the legislature consciously employed broad language. The Adjudicating Authority erred in importing an additional condition that examinations should form part of prescribed curriculum which amounts to judicial legislation - The words "relating to" are of wide amplitude and have consistently been interpreted by Courts to include all activities having direct and proximate nexus with principal activity. Preparation of question papers, printing and supply of examination material, OMR sheets, evaluation of answer scripts, tabulation of marks and declaration of results are all integral components of the process of conducting an examination. Once these services are rendered to an educational institution for conducting examinations, they fall squarely within Entry No. 9(b) - The schools are the recipients of service as they identify participating students, collect examination fees, forward list of students, conduct examinations within their premises and deduct tax at source. Merely because benefit of examination ultimately accrues to students cannot alter identity of recipient of service. Recipient is determined by contractual and commercial relationship and not by identifying ultimate beneficiary – Further, the optional nature of participation does not alter identity of recipient of service where educational institution itself engages the service provider for conducting examinations - The exemption notification is beneficial in nature and must be given liberal construction in accordance with object sought to be achieved. When exemption notification speaks of services relating to conduct of examination and not of examinations conducted pursuant to statutory mandate, interpretation limiting its scope is not permissible - The services rendered by appellant are covered by Entry No. 9(b) of Notification No. 25/2012-ST as services provided to educational institutions relating to conduct of examinations. The finding recorded by the Adjudicating Authority denying the exemption is set aside – The appeal is allowed - Service Tax - Extended period of limitation - Invocation on allegation of suppression of facts with intent to evade payment - Whether the extended period of limitation under Section 73(1) of the Finance Act, 1994 was validly invoked on the allegation of suppression of facts with intent to evade payment of Service Tax – HELD - For the Department to invoke extended period of limitation, there must be an active and deliberate act on part of the assessee to evade payment of tax. Mere non-payment of tax without element of intent or suppression is not sufficient to attract extended limitation period - The appellant had maintained regular books of accounts, disclosed receipts in financial statements and Income Tax Returns, and furnished requisite information during investigation. The entire demand was worked out from records maintained by the appellant itself – Further, during the relevant period, divergent judicial opinions existed regarding taxability of examination-related services and the issue travelled to various High Courts. Such divergence of legal opinion itself demonstrates that the dispute was interpretational in nature. Mere adoption of a legal interpretation subsequently found to be incorrect does not amount to suppression of facts or willful mis-statement so as to justify invocation of extended period - The extended period of limitation was wrongly invoked. The demand extending beyond the normal period is liable to be set aside - Service Tax - Penalty - Validity when underlying tax demand is not sustainable - Penalties were imposed under Section 78 (equivalent to tax amount), Section 77 and upon the director of the appellant based on allegation of suppression with intent to evade payment of tax - Whether the penalties imposed under Sections 77 and 78 can survive when the underlying tax demand itself is found to be not sustainable and the extended period invocation is found to be without authority of law - HELD - The penalty under Section 78 was entirely founded upon the allegation of suppression with intent to evade payment of tax. The penalties under Section 77 and upon the Director are only consequential to the principal demand. When the tax demand itself is liable to be set aside, the penalties automatically fall. The material on record clearly establishes that the appellant entertained bonafide belief regarding the applicability of exemption notification. The dispute concerns interpretation of statutory provisions and exemption notifications. There is nothing on record to suggest any deliberate attempt to evade tax. Therefore, even on independent ground, penal consequences would not have been justified - The penalties imposed under Section 77 and 78 as well as upon the Director are not sustainable - Once the demand itself is held to be not sustainable, the penalty cannot survive. [Read less]

2026-VIL-1366-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Manpower supply service - Classification of contract as labour contract or job work - Appellant was engaged to operate plant and machinery and execute the entire manufacturing process by deploying its own labour for production of goods - Whether the activity undertaken by appellant was manpower supply service or contract for job work or manufacture of goods – HELD - The work order must be examined in entirety and not in isolation. Reading the various clauses of the work order as a whole leaves no manner of doubt that it was a work order for labour contract - Though the measure of consideration was on per MT basis, the bills were explicitly stated to be labour bills to be submitted every month and to be paid every month - The settlement of contract clearly reflects consensus ad idem that appellant was appointed as labour contractor. The dominant nature of activity continues to be supply of manpower even when payment is linked to output or productivity - The activity undertaken by appellant constitutes manpower supply service which is taxable under service tax - The impugned order is upheld and the appeal is dismissed - Service Tax - Invocation of extended period on ground of suppression and intent to evade payment - Appellant was well aware of the nature of the contract being labour supply but chose not to disclose and pay service tax - Department seeks to validate demand on basis of Form 16A - Whether extended period of limitation was justified and whether penalty under Section 78 can be upheld - HELD - The appellant was well aware of the nature of contract as labour supply and there was no doubt of any kind. The fact that appellant did not come clean and produce all records justifies that investigation was to be done on basis of accounts available. Form 16A shows that appellant was paid certain sums and tax was deducted from them. The nature of business of appellant is clear from the contract. If the sums received were not for rendering taxable services but for some other purpose, it was for appellant to say so. No such indication was found in the submissions and synopsis of the appellant. The invocation of extended period of limitation was justified as there was willful non-payment of tax with intention to evade. The penalty under Section 78 is also justified - The extended period of limitation was rightly invoked. The penalty under Section 78 imposed by the Adjudicating Authority is sustainable. The impugned order upholding the demand with interest and penalty is upheld. [Read less]

2026-VIL-1365-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Beneficiation of coal - Taxability of Activity of beneficiation and washing of coal undertaken by respondent prior to 01.06.2007 - Whether the activity undertaken by respondent is taxable under "Business Auxiliary Service" prior to 01.06.2007 - HELD - It is settled by judicial pronouncements that the activity of beneficiation and washing of coal is a taxable service in relation to mining of minerals only w.e.f. 01.06.2007. Prior to 01.06.2007 the activity undertaken by respondent does not fall under the category of BAS as the same is classified under Mining Service w.e.f. 01.06.2007. Following the principle t... [Read more]

2026-VIL-1367-CESTAT-BLR-CU | CESTAT CUSTOMS

Customs - Courier service - Liability for connivance in movement of contravened goods - Whether the courier service can be held liable for having connived with movement of contravened goods – HELD - Investigation revealed that three persons were masterminds behind entire smuggling operations and they admitted their role in matter. No evidence has been brought on record to implicate the courier service. The accused persons have not at any stage alleged that the authorized courier was aware of presence of gold in consignment - The contraband could be found out only when subjected to X-ray test on arrival at courier cell of... [Read more]

2026-VIL-771-MAD | High Court SGST

GST - Bail - ITC Fraud - Petitioners were arrested for alleged offences under Section 132(1)(c) of the CGST Act for fraudulently obtaining GST registrations in names of different persons, generating fake tax invoices and unlawfully availing ITC. The Department opposed bail contending that investigation was still in progress and multiple Aadhaar cards were recovered suggesting possible role in larger conspiracy - Whether bail should be granted in a GST fraud case where the maximum punishment is five years and the petitioners have already undergone more than 55 days of incarceration - HELD - In cases involving ITC fraud and ... [Read more]

2026-VIL-1360-CESTAT-CHD-ST | CESTAT SERVICE TAX

Service Tax - Conditions for entitlement to benefit of Exemption Notification - Non-filing of export return in time - Appellant engaged commission agents located overseas for export of goods and claimed exemption under Notification No.18/2009-ST and Notification No.42/2012-ST. Department alleged that appellant did not file EXP-3 Returns within prescribed time and failed to submit documents with EXP-4, thereby violating mandatory conditions of the notification. Department demanded service tax on commission payments - Whether substantive benefit of exemption notification can be denied when the procedural condition of timely filing of EXP-3 Return is breached - HELD - The conditions prescribed in exemption notifications must be examined and distinguished between mandatory substantive requirements and procedural requirements. The substantive requirements being those which go to the heart of the exemption such as engagement of commission agents outside India and payment of commission to such agents. The procedural requirements being those pertaining to filing of forms and returns within time - When an assessee has complied with the substantive requirements of an exemption notification, denial of the benefit on account of procedural lapses such as delayed filing of returns or lack of proper authentication of documents would be inequitable and contrary to settled principles of tax law. Procedural requirements which are technical in nature cannot be allowed to override the substantive benefit earned by the assessee. The observations of the Commissioner (Appeals) were self-contradictory as he found on one hand that documents were not authenticated and on the other that they were not submitted. The original authority correctly concluded that delay in filing EXP-3 does not amount to violation of mandatory substantive provisions and cannot disentitle the appellant from exemption benefit when the substantive conditions are satisfied - The appeal is allowed and the demand is set aside [Read less]

2026-VIL-1359-CESTAT-CHD-ST | CESTAT SERVICE TAX

Service Tax - Invocation of extended period of limitation - Appellant claimed exemption under the small-scale exemption notification and asserted that income from weigh bridge service was not taxable, while paying service tax on Technical Inspection and Certification Agency Service - Department raised show cause notice demanding service tax on weigh bridge income, alleging that exemption was forfeited by payment of tax on other services, and invoked extended period of limitation claiming suppression of facts with intent to evade tax - Whether extended period of limitation can be invoked when issue involves legal interpreta... [Read more]

2026-VIL-1354-CESTAT-KOL-ST | CESTAT SERVICE TAX

Service Tax on Profit from Investment in Venture Capital Fund Units – Demand under Banking and Financial Services - Classification of profit from venture capital fund investment - Appellant was a unit-holder Venture Capital Fund and received profit from sale of units held in the fund. Department sought to tax this profit as consideration for fund management services under Banking and Financial Services - Whether profit from investment in venture capital fund units can be taxable under banking and financial services on the basis of accounting nomenclature - HELD - A unit-holder receiving its rightful share of profits from a venture capital fund has not provided any fund management service for which such profit could be consideration. The appellant did not manage the funds of Adharshila Venture Capital Fund for this specific receipt, rather, the appellant was a unit-holder receiving its rightful share of profits - The nomenclature used in books of accounts cannot determine the taxability of a transaction. The profit was earned as a unit-holder receiving distribution from the fund upon its exit or valuation gain, not as a service provider managing the fund's assets. The revenue relied entirely on accounting nomenclature and the difference between ST-3 returns and audited financial statements to claim taxation but failed to produce any evidence of a taxable service provided by the appellant. The income earned by the appellant on the basis of differential figures between the books of accounts and ST-3 Returns, cannot form the taxable service provided by the appellant - The demand of service tax on profit from investment in Venture Capital Fund is set aside and no penalties are imposable on the appellant – The impugned order is set aside and the appeal is allowed - Intellectual Property Services - Royalty received for use of copyright - Statutory exclusion of copyright from intellectual property rights - Appellant received royalty from another entity for permitting use of computer software and website portal which were registered as copyright works. Department classified the royalty as taxable intellectual property service - Whether royalty for the use of copyright, which is statutorily excluded from the definition of intellectual property right, can be taxed as intellectual property service - HELD - The statutory definition of intellectual property right under Section 65(55a) of the Finance Act specifically states that it means any right to intangible property including trademarks, designs, patents or any other similar intangible property, but does not include copyright. The transaction involved granting of right to use registered copyright of a literary work which constitutes computer programme, which is a literary work under Section 13(1)(a) of the Copyright Act, 1957. The copyright was the essential character of the transaction for which royalty was paid at ten percent of gross revenues, while the trademark transfer was merely incidental with nominal consideration. Therefore, the royalty received for the use of copyright which is expressly excluded from the definition of intellectual property right cannot be taxed under intellectual property service - The demand is set aside - CENVAT Credit - Denial on technical grounds - Procedural defects in documentation - Appellant availed CENVAT credit on service tax paid by the suppliers for input services which were used for provision of output services. The credit was denied on technical grounds such as non-submission of documents, mismatch of addresses and invoices issued in the name of key managerial personnel - Whether substantive CENVAT credit can be denied merely on procedural or clerical discrepancies in invoices when the receipt of services, payment of tax by supplier and use for output services are not disputed - HELD - It is a well-settled principle that the substantive right to avail CENVAT credit cannot be denied due to curable procedural defects. The appellant had availed credit on payment of service tax by the supplier which is not disputed by the revenue. The services were received by the appellant for its business and were used for provision of output services. The invoices were in the name of the appellant's key managerial personnel but the receipt of services and payment of tax by the supplier and use for output services were not disputed by the revenue. Merely on technical grounds or clerical discrepancies, the substantive CENVAT credit cannot be denied when the material facts are not disputed - The credit is allowed - Limitation - Extended period of limitation - Invocation on basis of difference between returns and audited accounts - Whether the extended period of limitation can be invoked on the basis of difference between returns and audited financial statements - HELD - The extended period of limitation can only be invoked if the non-payment of tax is occasioned by fraud, collusion, wilful misstatement or suppression of facts with deliberate intent to evade payment of tax. The burden of proving such mala fide intent lies squarely on the revenue. In this case, the show-cause notice was issued on the basis of audit of books of accounts and scrutiny of profit and loss account. The invoices dated 31.03.2008 on which the demand was based were available in the financial report for the year 2007-2008 itself. No fresh material has been brought by the revenue to allege any suppression of facts with intention to evade tax. The demand of service tax cannot be confirmed merely on the difference between returns and audited accounts. The show-cause notice issued on 17.10.2012 is barred by limitation - Imposition of penalties under Section 77 and Section 78 of Finance Act, 1994 - Penalties under Section 77 and Section 78 were imposed on the appellant on the basis of the alleged short payment of service tax - Whether penalties can be imposed when the underlying demand of service tax is set aside - HELD - When the demand of service tax is not sustainable against the appellant, consequently, no penalties imposed on the appellant on the basis of that demand are also not sustainable. The penalties cannot be allowed to stand independently when the underlying demand on which they were based is set aside. Therefore, the penalties imposed under Section 77 and 78 of the Finance Act, 1994 are set aside. [Read less]

2026-VIL-1368-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs - Penalty for mis-declaration and fraudulent importation - Role and liability of Customs Broker - Customs Broker and its G-Card Holder filed Bills of Entry for consignments of baby garments imported by a trader – DRI alleged mis-declaration with respect to quantity of the declared goods and fraudulent importation. The appellant-Customs Broker was proposed for penal action under Sections 112(a), 112(b) and 114AA of the Customs Act, 1962 - Whether penalties under Section 112(a)(ii) of the Customs Act, 1962 could be imposed on the Customs Broker for its role in the alleged mis-declaration and fraudulent importation ... [Read more]

2026-VIL-774-DEL | High Court SGST

GST - Parallel Proceedings - Forum Shopping - Maintainability of Writ Petition when Statutory Appeal Pending - Whether a writ petition challenging the same assessment orders is maintainable when the petitioner has already filed statutory appeals challenging the identical orders - HELD - When a petitioner has already filed statutory appeals challenging assessment orders before the appellate authority and the very same assessment orders are subsequently challenged by way of writ petition before the High Court, the petitioner cannot be permitted to simultaneously invoke the jurisdiction of multiple forums as such practice is ... [Read more]

2026-VIL-777-RAJ | High Court SGST

GST - Condonation of delay in filing statutory appeal - Non-communication of order and denial of personal hearing - Whether delay in filing statutory appeal beyond prescribed period can be condoned when impugned order was not effectively communicated to the taxpayer and mandatory personal hearing was denied - HELD - While the Appellate Authority is bound by statutory provisions of limitation provided under Section 107 of CGST Act 2017, considering the reasons for non-filing of appeal being beyond the control of the petitioner, non-adjudication of the appeal on merits would cause grave injury and prejudice. The delay is bon... [Read more]

2026-VIL-1369-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs - Revocation of Customs Broker License and forfeiture of security deposit for alleged violations of KYC and due diligence requirements under Customs Brokers Licensing Regulations – Overvaluation of export goods to avail undue benefits under the MEIS and Duty Drawback Scheme - Whether the Customs Broker License could be revoked and security deposit forfeited for alleged violations of Regulations 10(d), 10(e), 10(m) and 10(n) CBLR, 2018 in relation to alleged overvaluation of exported goods by the exporter - HELD - There is no valid offence report as contemplated under Regulation 17 of CBLR, 2018 and in the absence of a valid offence report, the revocation proceedings initiated under CBLR, 2018 are not sustainable. There is no evidence brought on record showing connivance, knowledge or involvement of the Appellant in the alleged overvaluation - A Customs Broker cannot be expected to function as an investigating agency and verify whether the valuation adopted by the Customs Broker for the goods exported are proper or not. The Customs Broker filed export documents before the Customs authorities on the basis of the documents furnished by the exporter. The shipping bills were assessed by Customs officers and Let Export Orders were issued after examination and clearance by the Customs authorities. The Customs Broker cannot be held responsible if at a later stage, the goods exported were found to be overvalued - The Customs Broker cannot be penalized merely because at a later stage, the exporter is alleged to have indulged in irregularities, particularly when the Appellant had completed KYC verification and acted upon documents appearing genuine on their face. The Customs Broker is a processing agent of documents and is not an inspector to weigh the genuineness of the transaction - The appellant has not violated any of the provisions of Regulations 10(d), 10(e), 10(m) and 10(n) of the CBLR, 2018 - The impugned order revoking the License, forfeiting the security deposit and imposing penalty on the appellant is set aside and the appeal is allowed [Read less]

2026-VIL-772-P&H | High Court SGST

GST - Service - Notice and Order Through Common Portal - Effectual Service - Whether uploading of SCN and order-in-original on the common portal amounts to effectual service when the petitioner has no actual knowledge of such uploading and no acknowledgment of receipt has been obtained - HELD - Service of SCN or order-in-original by merely uploading on the common portal cannot be deemed to constitute proper service merely on account of uploading unless its receipt is acknowledged or a reply is filed by the assessee in response to the SCN. The CGST Rules expressly limit the utility of the common portal to specific functions... [Read more]

2026-VIL-768-DEL-ST | High Court SERVICE TAX

Service Tax - Appeal before High Court - Maintainability - Questions relating to rate of duty and taxability - Whether appeal before High Court is maintainable against CESTAT order determining the taxability of a particular service under Section 35L of the Central Excise Act - HELD - where the CESTAT determines the taxability of a particular service, an appeal against such determination would lie before the Hon'ble Supreme Court under Section 35L of the Central Excise Act, 1944, and not before the High Court - The Allahabad High Court decision in NKG Infrastructure Ltd. v. Commissioner did not consider the maintainability ... [Read more]

2026-VIL-1361-CESTAT-BLR-CE | CESTAT CENTRAL EXCISE

Central Excise - CENVAT Credit on Structural Steel Items - Capital Goods - Immovable Property - Whether structural steel items and materials used for fabrication of support structures that become permanently affixed to the ground and form part of immovable property can be claimed as CENVAT credit on inputs or capital goods, and whether the amendment to CENVAT Credit Rules 2004 dated 07.07.2009 is clarificatory or prospective in operation - HELD - The issue of CENVAT credit eligibility for structural steel items used in fabrication of support structures for capital goods is no longer res integra having been considered in ca... [Read more]

2026-VIL-45-GSTAT-HYD | Tribunal SGST

GST - Pre-deposit requirement in cases involving only penalty, Validity of Retrospective application of amendment to Section 112(8) of CGST Act, 2017 to period prior to 01.10.2025 - Appellant preferred appeal before Tribunal but Registry pointed defects and raised question of statutory pre-deposit requirement. Appellant contended that the impugned order involved only penalty without any tax demand, and that pre-deposit requirement under proviso to Section 112(8) was introduced by Finance Act 2025 effective from 01.10.2025 whereas impugned order was issued on 12.01.2024, prior to such amendment - Whether statutory pre-deposit is required under Section 112(8) of CGST Act for an appeal against order demanding only penalty when such order was issued prior to 01.10.2025 - HELD – The proviso to Section 112(8) was effective from 01.10.2025 vide Finance Act, 2025 dated 29.03.2025, wherein pre-deposit was prescribed in cases where issue involved is only the penalty - In the present case, the SCN was issued on 29.09.2022, Order-in-Original was issued on 28.08.2023 and impugned order was issued on 12.01.2024. Thus, the impugned order was issued very much before the amendment became effective i.e. 01.10.2025 - The requirement of pre-deposit in cases involving only penalty before the amendment became effective was decided by the High Court of Calcutta which held that where the appeal is carried against an order pertaining only to penalty and there is no amount of tax in dispute, no requirement for making any pre-deposit exists - When a statute provides for a right to prefer appeal, conditions can limit such right but non-existent conditions affecting substantive rights cannot be imported into statute by any authority. The amendment to proviso of Section 112(8) by Finance Act 2025 effective from 01.10.2025 did not indicate any retrospective application or necessary implication - As the impugned order was issued much before 01.10.2025, the requirement of pre-deposit shall not be applicable - No pre-deposit is required to be made for admission of the appeal in the present case – Ordered accordingly [Read less]

2026-VIL-1357-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs - Classification of ‘Final Gear Kit, Differential', Application of General Explanatory Notes to Section XVII - Imported goods comprising Final Gear Kit, Differential, Gear Differential Side, Pinion Differential and other gears were declared under CTI 84834000 by importer - Department reclassified the said goods under CTI 87085000 arguing they were parts of rear axle assembly used in motor vehicles - Appellant-importer contended that gears and gearing are specifically covered under Heading 8483 and cannot be classified as vehicle parts under Section XVII and further that goods were integral to transmission function not exclusive to motor vehicles - Whether goods specifically covered under Heading 8483 can be reclassified as parts under Heading 8708 of Section XVII - HELD - Gears and Gearing are specifically mentioned in Heading 8483 and are more specifically covered under Tariff Item 8483 40 00 in Section XVI. Section Note 1(l) of Section XVI explicitly excludes articles of Section XVII from that Section. The HSN Explanatory Notes to Heading 84.83 specifically state that transmission equipment including differentials designed for use solely or principally with vehicles fall in Section XVII but this exclusion does not apply to gears as such - The General Explanatory Notes to Section XVII under category Parts and Accessories stipulate that parts must comply with all three conditions cumulatively. The condition that parts must not be more specifically included elsewhere in the Nomenclature is critical. Since the impugned goods are gears and gearing which are specifically and more precisely covered under Heading 8483, the third condition is not satisfied. Therefore the goods cannot be classified as parts and accessories under Heading 8708. The fact that goods are suitable for use with motor vehicles does not override the more specific coverage under Heading 8483. The classification under CTI 84834000 is correct and the reclassification is untenable - The impugned goods are classifiable under Heading 8483 in terms of Rule 1 itself there is no need to revert to the subsequent Rules of interpretation - The impugned demand for differential customs duty is set aside and the classification under CTI 84834000 is upheld - When the reclassification of goods is set aside and the original classification is found to be correct, the consequent demand for differential duty cannot be sustained - The demand is set aside and the appeals are allowed - Interpretation of explanatory notes to HSN - General explanatory notes given below the General Rules for the Interpretation of the First Schedule stipulates that where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by “-“ the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading, with the further explanation that where the description of an article or group of articles is preceded by “- -“, the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has “-“. Thus, any goods as listed against a heading, sub-heading or tariff item in the schedules of chapters of Section XVII, including ‘parts thereof’, would qualify as “articles of Section XVII”, so long as they are liable to be classified thereunder in accordance with the relevant chapter notes and section notes, read with the explanatory notes to HSN where they are also applicable - Customs - Confiscation and Redemption Fine - Applicability when underlying duty demand is unsustainable - Department held the impugned goods liable for confiscation under Section 111(m) of the Customs Act on the ground that they were imported with short payment of customs duties and the goods were misclassified. A redemption fine of substantial amount was imposed in lieu of confiscation - Whether goods can be held liable for confiscation when the underlying classification and duty demand on which the confiscation is based is found to be erroneous and unsustainable - HELD - Confiscation under Section 111(m) can be ordered only when the goods are found to have been imported with under-payment of duties or in violation of customs law. When the underlying duty demand is set aside as erroneous, the basis for confiscation ceases to exist. The goods cannot be held liable for confiscation when they were correctly classified and no under-payment of duty occurred. Therefore the redemption fine imposed in lieu of confiscation is also liable to be set aside - Customs - Penalties - Imposition on company and individuals - Section 112(a) and Section 114AA - Penalties were imposed on the importer company under Section 114AA and on individual officers under Sections 112(a), 114AA and 117 on the ground that the goods were misclassified, mis-declared and short duty paid customs duties was rendered liable for confiscation - Whether penalties can be imposed when the underlying classification is found to be correct and no duty evasion or misclassification occurred - HELD - Penalties are consequential upon the finding of a contravention. When the underlying duty demand and confiscation are set aside because the classification adopted by the importer is found to be correct, no contravention of customs law occurred. The act of claiming a particular classification based on the understanding of the tariff nomenclature and HSN explanatory notes, when the importer adopts the classification in good faith based on the provisions of the tariff and the General Rules for Interpretation, does not constitute wilful misclassification or misstatement. Penalties cannot be imposed on the company or on the individual officers as no violation of customs law is established. The penalties imposed under Sections 112(a), 114AA and 117 are all set aside. [Read less]

2026-VIL-1364-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax – Liability of Sub-contractor, Applicability of Extended Period of Limitation – Whether sub-contractor is liable to pay service tax on services provided to main contractor when principal contractor has already discharged service tax liability and whether extended period of limitation under Section 73(1) proviso can be invoked – HELD – On merits the issue is covered by decision of Larger Bench in CST New Delhi vs Melange Developers Pvt Limited establishing that even if main contractor has discharged service tax liability, it does not discharge sub-contractor of its independent obligation of paying tax on... [Read more]

2026-VIL-773-RAJ | High Court SGST

GST - Assessment of deceased assessee - Whether tax liability can be recovered from legal representatives under Section 93 of the CGST Act, 2017 without complying with procedural requirements of notice and hearing under Section 75(4) and (6) of the CGST Act - HELD - Section 93 of the CGST Act provides that where an assessee dies, the legal representative of the deceased shall be liable to pay out of the estate of the deceased any tax, interest or penalty that was determined whether before or after the death of the assessee. However, this statutory provision for recovery from legal representatives is subject to compliance w... [Read more]

2026-VIL-769-BOM-CU | High Court CUSTOMS

Customs - Classification of Pneumatic Tyres - Mining vs Truck and Bus Radial Tyres - Petitioner importers imported pneumatic tyres declared as Brand New All Steel Radial Mining Tyres classified under CTI 4011 8000, which are freely importable under Foreign Trade Policy - Revenue alleged the goods should be classified under CTI 4011 2010 (Truck and Bus Radial tyres), which is a restricted category requiring BIS compliance - Whether pneumatic tyres marked with speed symbol D corresponding to maximum speed of 65 kmph can be classified as restricted Truck and Bus Radial tyres requiring BIS certification when such tyres are expressly excluded from BIS standards IS 15636:2022 and from Quality Control Order 2009 by virtue of speed limit below 80 kmph, and whether goods can be deemed prohibited for provisional release purposes when they fall under restricted category and merely lack certification rather than being completely banned - HELD - A fundamental distinction exists between prohibited goods which are completely banned under the Customs Act and restricted goods which can be imported subject to obtaining requisite authorizations and complying with prescribed standards. Tyres marked with speed symbol D corresponding to maximum speed of 65 kmph fall outside the scope of IS 15636:2022 which only covers tyres with speed symbol F to H corresponding to speeds of 80 kmph and above - Quality Control Order 2009 expressly exempts commercial vehicle tyres identified by speed symbols A to E from mandatory BIS marking requirements. Therefore tyres with speed symbol D cannot be treated as requiring BIS compliance. The goods cannot be classified as prohibited merely because they lack certification when the applicable standard does not cover them. Since no notification under the Customs Act or any law prohibits the import of these tyres, they remain in the restricted category at most, not prohibited - The distinction between prohibited and restricted is crucial - prohibited goods cannot be released even provisionally whereas restricted goods can be released provisionally pending adjudication. Where classification itself is in dispute and established only through investigation findings rather than a conclusive notification, provisional release cannot be denied – The CESTAT had correctly directed provisional release subject to bond, bank guarantee and undertaking that goods shall not be sold for on-road use in commercial vehicles. The test reports and investigations must be conclusive before treating goods as prohibited - The Writ Petitions filed by assessees are allowed and directions are issued for provisional release of the seized goods within four weeks subject to compliance of conditions. The Writ Petition and Appeals filed by the Customs Department are dismissed [Read less]

2026-VIL-766-GUJ-CU | High Court CUSTOMS

Customs – Validity of Retrospective application of Circular No. 9/2012 dated 23.03.2012 - Petitioner imported iron ore pellets classified under CTH 2601 which was exempted from Additional Customs duty under Notification dated 01.03.2006. Petitioner obtained clearance of nine consignments from April 2011 to February 2012 on nil duty basis. Subsequently, vide Circular No.9/2012 dated 23.03.2012, the Board clarified that ores and concentrates are two distinct products and that the exemption notification applies only to ores and not to concentrates – SCN issued demanding recovery of additional customs duty with retrospective effect from 06.04.2011 - Whether a clarificatory Circular which restricts the scope of an existing exemption and adopts the concept of manufacture under Central Excise Act into Customs Tariff can be applied retrospectively to recover duty from traders who had obtained clear assessments prior to its issuance - HELD - A clarificatory Circular which clarifies the scope of an existing exemption has the potential to be oppressive and not beneficial to the assessee. When a clarification by the Board restricts the scope of an exemption that was previously operative and traders had relied upon such exemption in obtaining goods cleared at nil duty on proper assessment by the Customs Authority, such clarification cannot be applied retrospectively - The principle established in Suchitra Components case is that a beneficial Circular is to be applied retrospectively but an oppressive Circular limiting the scope of exemption is to be applied prospectively. The Board has borrowed the concept of manufacture from Note 4 of Chapter 26 of Central Excise Act, 1944 and has attempted to apply it to the Customs Tariff Act, 1975, which operate in different spheres and are governed by separate statutes. The Circular cannot be applied retrospectively to impose financial liabilities on traders who had obtained proper clearances prior to its issuance - The show-cause notices demanding differential duty with retrospective effect are quashed and set aside - The writ petitions are partly allowed [Read less]

2026-VIL-1355-CESTAT-HYD-CU | CESTAT CUSTOMS

Customs – Classification of Facsimile Machines - Appellant imported Facsimile Machines and parts declaring goods under Customs Tariff Heading 8443 3260 as Facsimile machines capable of connecting to automatic data processing machine or to a network, claiming exemption under Notification No. 24/2005-Cus – Later on, the Dept took view that imported Facsimile Machines were not capable of connecting to network within meaning of Heading 8443 3260 but merited classification under Heading 8443 3970 – Dept issued notice proposing recovery of differential Customs Duty and imposition of penalties invoking extended period under Section 28(4) of Customs Act – Whether imported Facsimile Machines requiring external Analogue Telephone Adapter (ATA) device for network connectivity are classifiable under CTH 8443 3260 for machines capable of connecting to network or under CTH 8443 3970 for machines not so capable – HELD - Revenue failed to discharge burden of proving that imported Facsimile Machines merit classification under CTH 8443 3970. The Tariff employs expression capable of connecting and does not prescribe requirement of direct cable connection without external interface device – In modern information technology architecture, network connectivity is frequently achieved through routers, gateways, adapters, converters, wireless interfaces and other intermediary devices, such devices do not cease to be network-capable merely because connectivity is achieved through external interface. Department's own investigation records establish and acknowledge that imported machines can be networked through Analogue Telephone Adapter or similar interface devices, thereby admitting network capability - It is well-settled that classification under Customs Tariff must be determined primarily on basis of language employed in tariff itself and resort to HSN Explanatory notes permissible only as aid to interpretation where statutory language is ambiguous - Classification must ultimately be based upon actual characteristics of imported goods and not upon unduly restrictive reading of Explanatory material – Burden of establishing that goods fall within particular tariff entry lies upon Revenue and must be discharged by adducing satisfactory evidence and not by mere reinterpretation – The B/Es were filed declaring imported goods as Facsimile Machines under CTH 8443 3260, goods were examined by proper officers after physical verification. The classification was not mere self-assessment accepted mechanically but assessment undertaken after physical verification by Dept itself. The demand of differential duty, interest and penalties not sustainable – The impugned order is set aside and the appeal is allowed - Applicability of Extended Period of Limitation – HELD - Extended period under Section 28(4) of Customs Act can be invoked only where duty has not been levied or has been short levied by reason of collusion, wilful misstatement, suppression of facts or fraud requiring deliberate intent to evade payment of duty – Appellant disclosed goods as Facsimile machines, produced relevant invoices, catalogues and technical literature and claimed classification under tariff heading which according to it correctly described goods, such conduct wholly inconsistent with any allegation of fraud or deliberate suppression – Every material fact necessary for assessment was available before Department at time of import itself and Revenue has not pointed out any document that was concealed or false declaration made. The subsequent change of opinion on classification cannot by itself constitute suppression of facts or wilful misstatement – In the present case, the conditions precedent for invoking extended period is absent. [Read less]

2026-VIL-1371-CESTAT-MUM-ST | CESTAT SERVICE TAX

Service Tax – Taxability of Leasing of equipment - Deemed sale or supply of taxable service - Appellant collected lease rental charges from dealers and distributors on account of supply of computerized tinting machines used for mixing base paint with colour shades - Department interpreted the leasing activity as taxable service under category of Banking and Other Financial Services for leasing of equipment and raised service tax demand invoking extended period of limitation - Whether the leasing of tinting machines to dealers and distributors constitutes a taxable service or a deemed sale not liable to service tax - HELD - For determining whether a transaction involves transfer of right to use goods, the five-point criteria established by the Supreme Court in BSNL case must be examined. The agreement entered into by the appellant with dealers and distributors satisfied all five conditions laid down by the Supreme Court - The lease agreement specifically provided that goods are identified and delivered to lessee with acknowledgment of receipt, lessee uses equipment without intervention of lessor in daily activities, lease rentals are paid by lessee to lessor, equipment is kept and used only at lessee's premises and is returned upon completion of lease period in same condition - The CBIC Circular No. 198/08/2016-ST dated 17.08.2016 clarified that where goods or equipment is given under lease arrangement wherein both possession and effective control have been handed over to lessee, it would be categorised as deemed sale leviable to VAT and service tax will not be charged on such activities. The fact that VAT was already paid by the Appellant on lease rental charges and reflected in periodical VAT returns acknowledged that these activities are in nature of deemed sale not taxable service - In present case operating lease constitute deemed sale. The activities undertaken by appellant do not amount to taxable service under Finance Act, 1994. Extended period of limitation cannot be invoked for interpretation of law issues. Penalty cannot be imposed when service tax demand is not sustainable on merits - The impugned order is set aside and the appeal is allowed [Read less]

2026-VIL-1358-CESTAT-CHD-CE | CESTAT CENTRAL EXCISE

Central Excise – Refund of duty paid on Supplementary Invoices for price enhancement rejected by buyer – Appellant issued supplementary invoices seeking increase in rates of automobile parts already cleared against original invoices but buyer did not accept enhanced prices and did not pay any amount against supplementary invoices – Appellant filed refund claim for duty paid on proposed price enhancement – Original authority rejected refund claim alleging that even if customer did not honour increased price, appellant remained liable to pay duty on transaction value – Whether appellant is entitled to refund of dut... [Read more]

2026-VIL-767-GUJ-ST | High Court SERVICE TAX

Service Tax – Taxability of Construction services for construction of residential quarters, Validity of remand by the CESTAT where there exists settled legal precedent – Demand of service tax on construction of residential quarters for State Police Housing Corporation - Petitioner appealed before CESTAT contending that since the work was undertaken for a Government organization, Service Tax provisions did not apply. The CESTAT, despite settled legal precedent on issue chose to remand the matter to adjudicating authority - Whether CESTAT was correct to remand the matter to adjudicating authority when there is settled le... [Read more]

2026-VIL-1370-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Determination of status as manufacturer vs trader - Applicability of representations made to secure business orders - The appellants were engaged in the business of trading and supplying goods and represented themselves to Power Supply Corporations as manufacturers for the purpose of securing orders – Dept alleged that the appellants were actual manufacturers and demanded duty invoking extended period - Whether the appellants were manufacturers or traders of the goods in question and whether Central Excise duty should be demanded from them based on their representations as manufacturers to Power Supply C... [Read more]

2026-VIL-71-SC | Supreme Court VAT

Gujarat Sales Tax Act, 1969 - Supersession of Circular and Applicability of Exemption Benefit - Assessees received benefit of exemption during 2001-2005 pursuant to Circular dated 19.02.2001. The said Circular was sought to be superseded by the impugned Circular dated 02.09.2005. The 2005 Circular was assailed by the respondents/Assessees before the Gujarat High Court. The matter ultimately travelled to the Supreme Court and by order dated 04.02.2009, the same was remanded to the High Court to answer two questions of law which were framed by the Supreme Court - Whether the two questions of law framed by the Supreme Court s... [Read more]

2026-VIL-1356-CESTAT-DEL-CE | CESTAT CENTRAL EXCISE

Central Excise - Cenvat Credit - Actual Physical Receipt of Inputs - Appellant, a manufacturer of aluminium products, claimed Cenvat Credit on imported aluminium scrap and other input materials - Department found that although imports were made in the Appellant's name, the scrap was diverted to third parties in connivance with co-noticees and was never physically received in the Appellant's factory - Whether Cenvat Credit can be validly claimed when the claimed inputs are not actually received in the factory - HELD - Cenvat Credit is admissible only when inputs are actually received in the factory as required under Rule 3(1) of the Cenvat Credit Rules, 2004. The documentary evidence including gate endorsements directing diversion of scrap, corroborated statements of Custom House Agents, and admissions of the Appellant itself clearly established that the imported scrap was never received in the factory. The Appellant failed to produce any cogent evidence beyond its own account ledger to support the claimed credit. The named suppliers had made no transaction or supply to the Appellant as per department investigation. The technical plea of non-admissibility of evidence raised by the Appellant was not acceptable given the facts and circumstances. The Cenvat credit has been wrongly availed in violation of Rule 3(1) and the reversal as ordered by the Commissioner (Appeals) has been rightly upheld - Central Excise Duty - Clandestine Removal of Manufactured Goods - HELD - The evidence on record including freight vouchers, dispatch details, booking registers and lowery receipt books clearly established that the Appellant cleared finished products clandestinely in collusion and connivance with co-noticees thereby causing evasion of excise duty. The admissions of the Appellant and the recipient parties were corroborated by the documentary evidence. The adjudicating authority meticulously examined all records and correctly concluded that the clearance was fraudulent. As the case involved fraud and willful suppression of facts rather than mere procedural lapses, the extended period of limitation was rightly invoked. The imposition of penalty was justified in view of the fraudulent conduct. The demand of excise duty has been rightly confirmed and penalty was imposed. [Read less]

2026-VIL-770-GUJ-CU | High Court CUSTOMS

Customs - Duty Drawback - All Industry Rate (AIR) - Retrospective Application of Clarificatory Circular - Petitioner claimed entitlement to AIR customs duty drawback at 1% on exports of Soya Bean Meal despite having availed CENVAT credit. The Customs Department denied the benefit on the ground that the clarificatory Circular No. 35/2010-Cus dated 17.09.2010 expressly stating that duty drawback was available to SBM merchants despite CENVAT availed only operated prospectively from 20.09.2010 onwards and could not be applied retrospectively to the years 2008-2010 - Whether a clarificatory circular that merely explains and settles the scope of benefit under previous notifications can be given retrospective operation - HELD - A distinction exists between a clarificatory Circular which explains the scope of existing provisions and one which introduces a new fiscal regime. The Circular No. 35/2010-Cus dated 17.09.2010 is clarificatory and explanatory in nature and does not substantively modify or amend the previous CBEC Notifications Nos. 81 of 2006, 68 of 2007, 103 of 2008 and 84 of 2010 - The language of the Circular does not expand or alter the scope of previous Notifications but merely cements the claim of merchant exporters who were entitled to receive the benefit of AIR customs duty drawback since 2007. By virtue of the Circular, no new right or benefit was created but the actual scope of the benefit was explained and settled. The Circular merely clarified that the benefit of 1% customs duty drawback under prior Notifications was available to SBM merchants despite having availed CENVAT. Being explanatory in nature, the Circular cannot be construed as adopting a fresh fiscal regime for rebate of customs duty intended to affect vested rights - The doctrine of fairness requires that where a beneficial provision merely explains existing entitlements without inflicting undue burden, retrospective effect should be granted. The petitioner is entitled to the benefit of 1% AIR customs duty drawback on export of SBM from 2008 onwards with retrospective operation to the Circular - The impugned order denying the drawback is quashed and set aside – The writ petition stands allowed [Read less]

2026-VIL-775-TEL | High Court SGST

GST - Assessment - Non-adherence to Statutory Time Period – Challenge to assessment on multiple grounds including that show cause notice was issued less than six months prior to passing of order as mandated by Section 74(2) of the CGST Act, 2017 and that the assessment was passed in violation of principles of natural justice without affording genuine opportunity of hearing - Whether the requirement of issuing show cause notice at least six months prior to passing of assessment order under Section 74(2) is mandatory and whether non-compliance thereof vitiates the assessment order - HELD - The provision of Section 74(2) requiring issuance of SCN at least six months prior to passing of assessment order does not appear to be mandatory in nature as no consequences thereof are provided and mere use of the word shall in such situation will not render it mandatory. Even otherwise such provisions must be tested on whether the assessee has suffered any prejudice. In the facts of the case the petitioner was granted multiple opportunities for filing reply and personal hearing at different stages after issuance of show cause notice - The personal hearing notices were issued and the petitioner participated in the hearing on 23.03.2026. The order was passed on 28.03.2026 well within the period of limitation for passing assessment order. The petitioner had not raised the grounds of non-observance of Section 74(2) in the earlier writ petitions filed before this court - The assessment order has been passed after affording multiple opportunities to the petitioner. No real prejudice has been caused to the petitioner by non-adherence to the time period of six months. The Supreme Court in its order dated 13.05.2026 has relegated the petitioner to avail the statutory remedy of appeal and in the modification order dated 29.05.2026 has observed that it is up to the petitioner to prefer statutory appeal or avail any other remedy in law. In the circumstances the writ petition should not be entertained - The writ petition is dismissed and the petitioner is relegated to avail the statutory remedy of appeal as per the observations of the Supreme Court - GST - Dismissal of appeal for non-deposit of statutory pre-deposit, Opportunity to cure procedural defects through defect memo - At the time of filing appeal, there was a shortfall in statutory pre-deposit of 10% required under Section 107(6)(b) of the CGST Act. The Appellate Authority rejected the appeal on the sole ground that statutory pre-deposit was not completed at the time of filing. However, prior to passing the Order-in-Appeal dismissing the appeal, the Petitioner had completed the shortfall deposit well within the one-month grace period under the statute and before the order was passed - Whether an appeal can be dismissed merely on procedural ground of non-deposit of statutory pre-deposit when such defect was subsequently rectified before the order of dismissal was passed - HELD – The procedural requirements for filing appeals such as deposit of statutory pre-deposit are mandatory but cannot be used as an excuse to deny justice without first giving the appellant adequate opportunity to rectify the defect. When a procedural defect exists in an appeal, the Appellate Authority is duty-bound to issue a defect memo intimating the Appellant of the deficiency and providing reasonable time to cure it, rather than summarily dismissing the appeal. Justice cannot be denied for failure to comply with procedure without granting opportunity to the Appellant to rectify procedural defects - The principles of natural justice require that when a defect has been cured before the order of dismissal is passed, the appeal should not be rejected on the basis of the defect. In this case the shortfall in pre-deposit was completed within the grace period provided by statute and before the appellate order was passed, therefore the ground for dismissing the appeal ceased to exist. The Appellate Authority acted in a mechanical manner without adequate consideration of the facts and without giving opportunity for cure - The Order-in-Appeal is set aside and the appeal is restored with direction to Appellate Authority to hear the matter on merits – The writ petition stands allowed [Read less]

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