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2026-VIL-1046-PAT-CU | High Court CUSTOMS

Customs – Provisional attachment of bank account under Section 110(5) of Customs Act basis allegations of fraudulent export activities and wrongful availment of Input Tax Credit – Validity of provisional attachment orders issued without approval of Commissioner and without prior written order to bank account holder – Whether provisional attachment can be ordered without compliance with procedural and substantive requirements of Section 110(5) including prior Commissioner approval and issuance of written order to account holder containing reasons – HELD - The power of provisional attachment is draconian in nature and must strictly conform to both substantive and procedural requirements of statute. The Proper officer must form opinion that attachment is necessary for protecting interest of revenue or preventing smuggling based on tangible material. Such opinion must bear proximate and live nexus to purpose of protecting revenue and not merely be expedient - Each ingredient of Section 110(5) is integral and must be strictly complied with. Legislature was conscious of severity of such power and serious consequences flowing from attachment of bank account hence conditioned exercise of power by requiring approval of superior authority; power is not intended to authorize preemptive strikes on property merely because it is available for being attached – The Provisional attachment orders issued without Commissioner approval are not in accordance with statute; post facto issuance of provisional attachment orders to validate earlier debit freezes without prior authorization cannot retrospectively cure the illegality of earlier unauthorized freezes – Further, extension orders issued without prior notice and opportunity of hearing to account holder and without recording reasons are bad in law as Section 110(5) contemplates pre-decisional hearing for extension – The provisional attachment orders issued without Commissioner approval are quashed; extension orders are set aside for non-compliance with statutory requirements of providing reasons and pre-decisional hearing to account holder - Respondent may proceed afresh with provisional attachment orders in accordance with law if so advised by following all substantive and procedural requirements of Section 110(5) – The writ petition is allowed [Read less]

2026-VIL-90-GSTAT-KLK | Tribunal SGST

GST – Refund of accumulated Input Tax Credit under inverted duty structure, Relevance of classification as manufacturer or trader, Basis for refund eligibility – Revenue appealed against refund of accumulated ITC granted by first Appellate Authority under Section 54(3)(ii) of CGST Act 2017 - Revenue contended that respondent is engaged in trading and not manufacturing and therefore not eligible for refund of ITC under inverted duty structure - Respondent-assessee submitted that definition of registered person under Section 2(94) makes no distinction between trading entity and manufacturing entity and that the business involves substantial value addition through processes including bleaching, dyeing, cutting, stitching, packing, branding and labelling – Whether refund of accumulated ITC under inverted duty structure depends on whether the taxpayer is classified as a manufacturer or trader – HELD – In the GST regime the levy of GST is not on the point of manufacture but on the point of supply. As per Section 9(1) of the CGST Act 2017, GST is payable on supplies of goods or services or both. It is immaterial whether the respondent is engaged in trading or manufacturing of goods. The definition of registered person under Section 2(94) does not make any distinction between a trading entity and a manufacturing entity. The statute does not provide that the benefit of refund under Section 54(3)(ii) is available only to a manufacturer as opposed to any other registered person - The first Appellate Authority has correctly discussed in detail the processes adopted by the respondent and concluded that the respondent is engaged in value addition. The fact that respondent purchased raw or semi-finished goods and subjected them to substantial processing before emergence of finished marketable product demonstrates genuine value addition - Revenue's contention that respondent's eligibility for refund should be based on manufacturing classification is unsustainable. Refund eligibility under inverted duty structure depends on accumulation of ITC due to inputs being taxed at higher rate than output supplies, not on the classification of the taxpayer as manufacturer or trader - There is no infirmity in the order passed by the first Appellate Authority – Revenue appeal is dismissed - Refund of ITC under inverted duty structure despite overlapping HSN classification of input and output, Applicability of Circular 135/05/2020-GST, Scope of value addition through processing – Respondent purchased raw and semi-finished goods including ready-made garments and cloth, subjected them to dyeing, bleaching, printing, cutting, stitching, packing and branding and sold finished apparel at 5% GST. The inputs included dyes, chemicals, printing ink, packing materials at rates up to 18 percent and 28 percent – Whether refund of accumulated ITC under inverted duty structure can be denied when input and output have overlapping HSN classification merely on the basis of Circular No. 135/05/2020-GST notwithstanding value addition through processing and use of higher-taxed ancillary inputs – HELD – Circular No. 135/05/2020-GST is applicable only to cases where there is reduction in the rate of GST on the same goods over time. The heading of para 3 of the Circular clearly indicates it addresses refund on account of reduction in GST rate. The wordings such as attracting different tax rates at different points in time clearly indicate the Circular applies only when the same goods attract different rates at different points of time due to rate reduction - In the instant case the issue is entirely different since final products are sold at the same rate of GST with no reduction in rate. The fact that input fabric and output garment may carry overlapping HSN description does not preclude refund where accumulation of ITC arises due to various other inputs taxed up to 18% and 28% being used in manufacture of final product taxed at 5 percent - Section 54(3)(ii) read with Rule 89(5) does not make any distinction between principal and ancillary inputs or minor components. If there is higher rate of tax on other inputs used in the manufacturing process, the taxpayer is entitled to claim refund of unutilised input tax credit. The statutory formula under Rule 89(5) is a self-contained mechanism for computing refund covering all inputs used in manufacture – Revenue's reliance on Circular No. 135/05/2020-GST is factually incorrect and inapplicable to the present case. Refund cannot be denied merely on the basis of overlapping HSN between input and output when genuine value addition through processing and use of higher-taxed ancillary inputs creates inverted duty structure - Computation of refund of accumulated ITC on period-specific or annual basis, Application of Rule 89(5) formula, Significance of annual verification – Revenue contended that refund under inverted duty structure must be determined for each tax period and not on cumulative annual basis – Whether refund of accumulated ITC can be computed on annual basis or must strictly be computed on period-wise basis applying Rule 89(5) formula – HELD – The statutory formula prescribed under Rule 89(5) of CGST Rules 2017 requires computation of refund on the basis of Net ITC calculated for each relevant tax period applying the specific formula. Rule 89(5) does not mandate or permit computation of refund on cumulative annual basis - The operative basis of quantification of refund must be strictly governed by period-wise application of the Rule 89(5) formula to the data of each tax period. However, the overall annual basis verification used by adjudicating and appellate authorities to corroborate that the taxpayer's business model genuinely generates inverted duty structure and that month-to-month fluctuation in ITC accumulation is attributable to ordinary variation in purchase and sale volumes is permissible as verification mechanism. Such annual verification does not constitute the operative basis of computation but serves only to verify the authenticity and genuineness of the inverted duty claim - The computation of refund must be strictly on period-wise basis applying Rule 89(5) formula to period-specific data. The use of annual figures for overall verification to demonstrate genuine inverted duty structure is permissible as a corroborative mechanism but not as the operative basis of computation. The actual quantification undertaken by OAA was on period-wise basis hence there is no violation of Rule 89(5). [Read less]

2026-VIL-1599-CESTAT-ALH-ST | CESTAT SERVICE TAX

Service Tax - Proportionate reversal of CENVAT Credit - Common CENVAT Credit versus Total CENVAT Credit - Rule 6(3A) of CENVAT Credit Rules - The Appellant being service provider availed CENVAT credit and opted for reversal of proportionate CENVAT credit under Rule 6(3A) by taking into consideration only common CENVAT credit instead of total CENVAT credit which included credit on inputs exclusively used for taxable output services - Department alleged that Appellant was engaged in trading activity treated as exempted service and proposed demand of Rs. 10,99,10,976 for short reversal of CENVAT credit - Whether for computing proportionate CENVAT credit for reversal under Rule 6(3A) only common CENVAT credit is to be taken into consideration or total CENVAT credit availed - HELD - It is settled jurisprudence that for computing proportionate CENVAT credit for reversal “total CENVAT Credit” for the purpose of formula under Rule 6(3A) is only total CENVAT Credit on common input service and will not include the CENVAT Credit on input or input service exclusively used for the manufacture of duty of goods. If the interpretation of the revenue is accepted, then the CENVAT Credit of part of input service even though used in the manufacture of dutiable goods, shall stands disallowed, which is not provided under any of the rule of CENVAT Credit Rules, 2004 - The Rule 6(3A) amendment is clarificatory in nature and is to be applied retrospectively. Trading is a transfer of ownership of goods by sale which is excluded from definition of service. Trading is not an exempted service under Rule 2(e) of CENVAT Credit Rules. Services excluded from definition of service under Section 65B(44) are exempt for purposes of Rule 6 not services under Section 66D – Extended period cannot be invoked merely because Revenue missed opportunity of scrutinizing returns filed by Appellant. Where items are disclosed in ST-3 returns veracity of calculation could be verified by calling information. Mere failure to disclose matter not disclosed or called for is not suppression with intent to evade. Mere non-disclosure in periodical returns does not constitute suppression warranting extended period in absence of positive act with intention to evade duty - The impugned order is set aside and the appeal is allowed [Read less]

2026-VIL-1601-CESTAT-ALH-CU | CESTAT CUSTOMS

Customs - Misdeclaration of goods, Concealment of undeclared branded goods, Violation of Intellectual Property Rights Enforcement Rules, Confiscation under Sections 111 and 118 of Customs Act – Consignment was found to be grossly mis-declared in quantity, description and value. Large quantities of branded goods of internationally recognized brands were concealed within the declared goods without any purchase order or NOC from brand owners. Importer claimed goods were wrongly shipped by supplier due to packing mistake - Right holders of branded goods joined the proceedings and submitted technical reports requesting strict action against the importer – Whether goods that were mis-declared and contained undeclared branded goods in violation of Intellectual Property Rights Enforcement Rules can be confiscated and penalty can be imposed under Section 112 of Customs Act – HELD – Goods are liable to confiscation under Section 111 of Customs Act as they were used to conceal and smuggle prohibited branded goods and were imported in violation of IPR Enforcement Rules. The importer who claimed innocence and attributed goods to supplier's mistake presented an afterthought defense which was not supported by any contemporaneous documentary evidence such as invoice, purchase order or any shipping documents - The Customs authority correctly followed procedures of IPR Enforcement Rules by informing brand owners and obtaining their technical reports. The goods were seized in presence of the importer and independent witnesses. The importer cannot claim innocence when clear breach of IPR rules was established and large quantities of undeclared branded goods were found without any authorization from brand owners - Redemption originally imposed is found to be excessive and was reduced to 10 percent of declared assessed value. Penalty of Rs. 4 lakhs originally imposed under Section 112 of Customs Act for misdeclaration and violation of IPR rules is found to be excessive and reduced to Rs. 2 lakhs as the statutory violation was established though full quantum of penalty was not warranted – Order of confiscation of branded goods is upheld - The appeal is partially allowed [Read less]

2026-VIL-1603-CESTAT-MUM-CU | CESTAT CUSTOMS

Customs – Rejection of declared transaction value, Burden of proof on Department to establish under-valuation, Evidentiary requirements for displacing transaction value under Rule 12 of Customs Valuation Rules 2007 – Importer imported fresh apples from Brazil through a French intermediary on CIF terms - Revenue rejected the declared CIF transaction value and sought to re-determine it on the basis of upstream Brazilian supplier's FOB price – Whether declared transaction value can be rejected and replaced with an upstream FOB price when no evidence has been brought on record of any additional or extra payment by the importer beyond the declared CIF value or any flow-back of funds – HELD – Section 14(1) of the Customs Act 1962 read with Rule 3(1) of Customs Valuation Rules makes the transaction value being the price actually paid or payable for goods when sold for export to India the primary and preferred basis of customs valuation - The law is settled that the burden of proving under-valuation lies upon the Department and that the declared value cannot be displaced except upon cogent positive evidence such as flow-back of funds, extra consideration passing outside the invoice or a relationship between parties influencing price. No evidence or any finding was brought on record to the effect that the importer made any payment to the foreign supplier in excess of the declared CIF invoice value - The CA-certified reconciliation of remittances placed on record demonstrates that remittances did not exceed and were in fact marginally lower than the declared value in every period under consideration. In the absence of any finding of excess payment or flow-back, the declared transaction value could not have been rejected. Mere suspicion regarding the correctness of the declared CIF price cannot take the place of evidence and without any cogent and corroborative evidence establishing additional payment by the importer or any flow-back of differential amount, the declared CIF transaction value could not have been rejected – The declared CIF transaction value is accepted and the enhancement of assessable value is set aside - Customs – Applicability of Rule 10(2) of Customs Valuation Rules 2007 for addition of freight and insurance – Revenue proposed re-determination of assessable value by adding freight and insurance under Rule 10(2) of CVR 2007 on the basis that the declared CIF price did not include actual freight and insurance elements – Whether freight and insurance can be added under Rule 10(2) when invoices are issued on CIF terms and freight was arranged and paid by the foreign supplier – HELD – Rule 10(2) of CVR 2007 permits addition to the price actually paid or payable of the cost of transport and insurance only to the extent not included therein. Where a contract is on CIF terms, the price paid by the buyer already by definition embeds the cost of freight and insurance to the place of importation and no further addition is warranted unless it is shown that the invoiced price though styled CIF did not in fact include these elements - On the material on record, invoices issued by the foreign supplier to the importer record the destination as Nhava Sheva and are admittedly on CIF terms - No evidence has been brought on record by Revenue of any payment of freight or insurance by the importer to any carrier insurer or to the foreign supplier over and above the declared CIF value - Where the declared transaction value is a CIF price and the Department has not established by cogent and objective material that the freight and insurance attributable to transportation of goods to the place of importation were not comprehended in the price actually paid or payable, no addition can be made under Rule 10. The existence and quantum of any additional cost attributable to transportation or insurance has not been established – No addition of freight or insurance under Rule 10(2) is warranted. The importer's declared CIF price is accepted - Customs – Status of Non-GMO certificates as valuation documents, Relevance of upstream transaction between foreign entities – Revenue relied upon Non-GMO certificates issued by Brazilian authorities for FSSAI compliance which disclosed a FOB value and on upstream FOB invoices issued by Brazilian supplier to the French intermediary to re-determine the assessable value of goods imported by the importer - Revenue proposed that the FOB value appearing on Non-GMO certificates and on Brazilian supplier's invoices be added with actual freight and insurance to determine the assessable value – Whether Non-GMO certificates and upstream FOB invoices can be used as basis for rejecting or replacing the importer's declared CIF transaction value for customs valuation purposes – HELD – Non-GMO certificate issued by competent Brazilian authorities is a regulatory instrument addressed to an entirely different statutory purpose for compliance with FSSAI non-GMO advisory - A Non-GMO certificate by itself cannot be used as basis for determining or enhancing the customs value of imported goods. It is not a valuation document and does not establish the price actually paid or payable nor does it by itself establish the quantum of any price differential. These certificates are neither commercial invoices exchanged between the importer and its seller nor documents prescribed under Section 14 of the Customs Act or CVR 2007 as constituting or evidencing transaction value - Section 14(1) confines the inquiry to the price paid or payable in the transaction when goods are sold for export to India being the sale between the foreign exporter and the importer. A prior upstream transaction in the supply chain between parties other than the importer and its own seller is not the transaction contemplated by the statute and cannot be substituted for it absent a specific finding that the upstream price influenced or was reflected in the price actually paid by the importer - The Brazilian FOB price pertains to an upstream transaction between two foreign entities and cannot be substituted for the CIF transaction value declared by the importer in the absence of evidence establishing that the two transactions were merely different manifestations of the same commercial transaction or that the difference between the two prices represented consideration actually paid or payable by the importer. The Department has failed to establish such a nexus. Elevating an ancillary regulatory compliance document over the primary commercial invoice and treating incidental figures appearing on it as determinative of assessable value is not warranted – Upstream FOB prices and Non-GMO certificates cannot be treated as basis for rejecting or replacing the importer's transaction value. The declared CIF transaction value is accepted - Customs – Invocation of extended period of limitation under Section 28(4), Meaning of suppression of facts and wilful misstatement, Distinction between difference of opinion on valuation and deliberate evasion – Whether extended period of limitation under Section 28(4) can be invoked on the basis of a disputed valuation methodology when no positive finding of collusion wilful misstatement or suppression of facts with intent to evade duty is established – HELD – Section 28(4) of the Customs Act can be invoked only upon a positive finding of collusion wilful misstatement or suppression of facts with intent to evade duty. It is not in dispute that all primary import documents were furnished to Customs at the time of assessment - The declared Incoterm CIF was disclosed on the face of every invoice and nothing was concealed. Suppression in the context of extended period connotes a positive deliberate act with intent to evade duty and not a mere omission nor a difference of opinion on valuation methodology - The present dispute is a contested question of valuation methodology whether an upstream FOB figure on a third party document can override a disclosed CIF transac [Read less]

2026-VIL-1607-CESTAT-HYD-CE | CESTAT CENTRAL EXCISE

Central Excise – Eligibility of services used for setting up manufacturing facility after 01.04.2011 - Department denied credit on the ground that the relevant services were received before commencement of commercial production and that the expression setting up stood deleted from the inclusive portion of Rule 2(l) of CENVAT Credit Rules 2004 with effect from 01.04.2011 - Whether CENVAT credit can be denied on input services used for setting up a manufacturing facility merely because such services were received before commencement of commercial production and because the word setting up was deleted from the inclusive portion of Rule 2(l) – HELD – Deletion of the words setting up from the inclusive limb of the definition does not automatically mean that every service connected with setting up of a manufacturing facility stands excluded from the definition of input service. The substantive portion of Rule 2(l) continued to cover services used by the manufacturer directly or indirectly in or in relation to manufacture of final products. A factory cannot manufacture its final products unless the manufacturing facility is first brought into existence and made operational - Services which have a direct and demonstrable nexus with creation or installation of the manufacturing facility satisfy the substantive part of the definition unless specifically covered by the exclusion clause. The test remains whether the services have a nexus with manufacture and not whether production had actually begun on the date of receipt of each service - The reasoning adopted that credit necessarily becomes inadmissible merely because the services were received prior to commencement of production is not sustainable – The demand relating to CENVAT credit on input services used for setting up the manufacturing facility is set aside - CENVAT Credit – Eligibility of credit on common services for maintenance of infrastructure, Location of facility in relation to factory premises, Nexus with manufacturing activity – Department denied credit principally because these facilities were situated outside the registered factory premises – Whether CENVAT credit can be denied on common services for maintenance of infrastructure such as roads, street lights and drainage merely because the facilities are located outside the physical boundary of the factory premises – HELD – Location of the facility outside the physical boundary of the factory cannot by itself be determinative of admissibility of input service credit - The test remains whether the service has a nexus direct or indirect with manufacture or the manufacturing business. Maintenance of approach roads, common roads, drainage, lighting and similar infrastructure facilitating operation of an industrial premises cannot be treated as wholly unrelated to manufacturing activity merely because the infrastructure is common or situated beyond the factory gate. Such facilities have a nexus with the manufacturing operation and the business activity of the manufacturer - The demand relating to common fixed expense services for maintenance of roads, street lights, drainage and allied infrastructure is set aside - CENVAT Credit – Eligibility of credit on goods as inputs under Rule 2(k), Distinction between capital goods and inputs - CENVAT credit on goods such as stainless steel stools, SS buckets, SS containers, drum racks, HDGI cable tray ladders, fire extinguishers and glass fittings. Department denied credit on the ground that these articles were not capital goods and had not been shown to be used directly in the manufacture of finished goods – Whether CENVAT credit can be denied on goods merely because they are not capital goods and not used directly as components in the final product – HELD – The expression ‘input’ has a wide amplitude and is not confined to goods that form part of the final product or are classified as capital goods. Rule 2(k) as applicable during the material period gave a wide meaning to inputs and subject to specified exclusions included goods used in the factory by the manufacturer in the manufacture of the final product - Department has not disputed that the goods were received and used within the factory. There is also no finding that they fall within any specific exclusion from Rule 2(k). Denial of credit solely for want of direct use in production cannot be sustained – The demand relating to CENVAT credit on goods such as SS stools, buckets, containers, drum racks, HDGI cable trays, fire extinguishers and glass fittings is set aside - CENVAT Credit – Adjustment of differential duty through supplementary GST invoice, Transitional provisions under CGST Act - Department rejected the supplementary invoice principally because of reference to an incorrect provision of Section 142 of CGST Act, discrepancy in quantity and charging of IGST – Whether differential duty liability can be satisfied through a supplementary GST invoice issued under the transitional provisions and whether mere procedural defects in the invoice preclude acceptance of the payment – HELD – Section 142(2)(a) of the CGST Act specifically contemplates issuance of supplementary invoice or debit note where the price of goods supplied prior to the appointed day is revised upwards after the appointed day. CBIC Circular No. 76/50/2018-GST dated 31.12.2018 clarifies that in such cases the rate and nature of tax applicable under GST would govern the supplementary invoice. Merely because IGST was paid on an inter-state supplementary invoice cannot by itself lead to the conclusion that the earlier differential liability remains unpaid. A mere clerical reference to an incorrect sub-clause if the substantive requirements otherwise stand satisfied shall not by itself be a ground to deny benefit. A substantive benefit should not ordinarily be denied merely on account of a procedural lapse – The issue relating to differential duty on CAS-4 valuation is remanded for verification of the payment made through the supplementary GST invoice. No double recovery shall be made if the payment is duly established - CENVAT Credit – Appropriation of credit reversed in statutory returns, Reconciliation of electronic credit ledger and statutory records, Negative balance not bar to credit reversal - Whether CENVAT credit can be denied to the extent reversal results in negative balance in electronic credit ledger when the entire reversal has been recorded in the statutory return – HELD – The relevant question is not merely what was the positive balance in the electronic credit ledger on the date of reversal but whether the appellant had in fact accounted for the entire reversal and whether the consequential tax liability if any arising from a negative balance stood discharged. If the appellant's statutory return records reversal of the entire amount and such reversal has either reduced available credit or increased its output tax liability to the corresponding extent, the same amount cannot again be demanded merely because part of the reversal produced a negative figure in the return. The necessary reconciliation between pre-GST CENVAT records, TRAN-1, GSTR-3B and electronic credit ledger is essentially factual and must be verified. The appellant shall be given credit for the entire amount to the extent the reversal or payment is established from the statutory records. There shall be no duplication of recovery – The issue relating to the alleged unappropriated amount out of the total reversal is remanded for reconciliation and verification of TRAN-1, GSTR-3B, CENVAT records and electronic credit ledger. Appropriate credit shall be given for the amount actually reversed or discharged - Central Excise - Invocation of extended period of limitation on interpretational issues – Whether extended period of limitation can be invoked on the basis of allegation of suppression when the underlying disputes are primarily interpretational in nature and the taxpayer was regularly filing statutory [Read less]

2026-VIL-1602-CESTAT-DEL-CE | CESTAT CENTRAL EXCISE

Central Excise - Eligibility of CENVAT credit on supplementary invoices, Applicability of exclusion clause in Rule 9(1)(b) of CENVAT Credit Rules 2004, Conditions for denial of credit when short-levy of duty by supplier occurred – Appellant availed CENVAT credit on supplementary invoices issued by supplier who had initially excluded certain amounts from assessable value for computation of central excise duty. Supplier later paid differential central excise duty upon dispute and issued supplementary invoices - Revenue disallowed CENVAT credit arguing that supplier had short-paid duty due to suppression of facts and denial... [Read more]

2026-VIL-1608-CESTAT-BLR-ST | CESTAT SERVICE TAX

Service Tax – Determination of taxable value based on differential between Balance Sheet and ST-3 returns, Burden of proof on Department – Demand of service tax on differential value between amounts shown in Balance Sheet and ST-3 returns. Department contended that excess income shown in Balance Sheet compared to ST-3 returns represents unclaimed and untaxed revenue – Whether service tax can be demanded on differential value between Balance Sheet and ST-3 returns without identifying the specific taxable services rendered and without accepting the CA certificate explaining the differences – HELD – The burden lies on the Department to prove the allegation of short payment or non-payment of service tax - Service tax cannot be recovered based on returns shown in income tax returns or balance sheet figures without establishing the specific taxable service provided.. In the present case the CA had given a certificate explaining the differences including amounts pertaining to prior period before 01.06.2007 when renting of immovable property was not subject to service tax, exempted payments like property and municipal taxes, and non-receipt of payment towards services provided for certain periods when liability was based on receipt of consideration - The Department has confirmed the demand without specifying the nature of the service provided as per Section 66 of the Finance Act. Mere numerical differences between accounting records prepared on different bases cannot establish service tax liability. The CA certificate as professional evidence distinguishing accrual and cash basis accounting should have been given due weight – Demand for service tax confirmed based on differential value between Balance Sheet and ST-3 returns is set aside - Service Tax – Eligibility of CENVAT credit on input services used for providing output services, Requirement to produce evidence of receipt of service, Invoices in name of other entities – Department denied credit on two grounds that appellant had not produced proof of actual receipt of services and that certain invoices were addressed to Safina Technology Park and Safina Hotels and not to appellant – Whether CENVAT credit can be denied on input services merely because invoices are in the name of other entities and whether credit requires proof of receipt or merely documentary evidence – HELD – Input services credit is available for services used in providing output taxable services. Most of the services claimed namely pest care, rent, repairs and maintenance, building maintenance, travel and conveyance, telephone charges, license fee and similar services fall legitimately within the category of input services used in business operations - The main issue concerns the documentary evidence and whether credit can be denied based on invoices being in name of other entities. Where the invoices are clearly in the name of entities other than the appellant, namely Safina Technology Park and Safina Hotels, and these are admitted to be separate legal entities irrespective of common ownership or commercial space designation, the invoices cannot be considered as evidence of receipt of service by the appellant - DGFT documents showing Safina Technology Park as part of commercial space do not alter the separate entity status for tax purposes. However services which are demonstrably used by the appellant for its business operations and where proper invoices addressing the appellant are produced are eligible for credit – CENVAT credit on services including pest care, rent, stall fees, membership, repairs and maintenance, building maintenance, travel, telephone charges, license fee and import clearance is allowed. Credit on pooja expenses and credit card payments is rightly denied. Credit cannot be allowed on invoices addressed to Safina Technology Park or Safina Hotels as separate entity invoices - Service Tax – Invocation of extended period of limitation for differential service tax demand and denied CENVAT credit – Whether extended period of limitation can be invoked where the assessee was regularly filing statutory returns and the demand is based on differential value assessment – HELD – Mere difference in figures between Balance Sheet and ST-3 returns does not constitute suppression particularly when the assessee was regularly filing statutory returns disclosing the income and amounts - The appellant was regularly filing ST-3 returns showing the income, departmental audit parties had earlier visited the unit and examination of the records, and earlier show cause notice based on audit observations had not considered these disputed issues. The fact that the Department and audit teams had access to the records and the appellant was openly declaring the income in statutory returns is inconsistent with a finding of deliberate suppression. The demand is based on the Department's interpretation of what constitutes taxable value and not on concealment of facts by the assessee – Invocation of extended period of limitation is set aside. The demand for service tax by invoking extended period is limited to the normal period under Section 73(1) of the Finance Act. Penalties imposed on basis of extended period invocation are set aside - The appeal is partly allowed [Read less]

2026-VIL-1605-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax – Taxability of freight rebate, brokerage and incentives, Nature of activity of cargo space seller – Appellant is a registered service provider of Customs House Agency Services and other services - Demand of service tax on incentives received, airway bill fees, rebate and brokerage. Department took position that activities undertaken by appellant with respect to incentives, airway bill fees, rebate and brokerage would fall under Business Auxiliary Services - Whether profit earned by sale and purchase of cargo space and freight rebate, brokerage and incentives earned by a freight forwarder acting as principa... [Read more]

GSTAT Order | Tribunal SGST

GST - Recredit of excess Input Tax Credit - Jurisdiction of First Appellate Authority to grant recredit – Show cause notice for non-payment of collected tax, non-reversal of ITC on exempted and nil-rated supplies and irregular excess ITC - First appellate authority allowed appeal and granted recredit of excess amounts to taxpayer's electronic credit ledger without recording reasons. Revenue appealed arguing order allowing recredit has no legal sanction - Whether first appellate authority can grant recredit to taxpayer outside refund procedure under Chapter XI and whether order allowing recredit is legally sustainable when no reasons are recorded - HELD - Refund and recredit of tax wrongly paid or paid in excess is not unknown to law. Rule 86(4A) of CGST Rules 2017 explicitly provides that amount of tax wrongly paid or paid in excess if admissible shall be recredited to electronic credit ledger by proper officer - Circular No. 135/05/2020-GST dated 31.03.2020 clarifies that where tax to be refunded has been paid by debiting both electronic cash and credit ledgers refund shall be calculated in same proportion in which cash and credit ledger has been debited for discharging total tax liability – The claim of refund if made in accordance with law cannot be brushed aside. However, FAA did not record any reason as to why it allowed taxpayer to recredit excess amount - FAA computed tax liability at amount significantly lower than what adjudicating authority confirmed but did not explain how this computation was arrived at. Without recording proper reasons first appellate authority cannot grant recredit - Entitlement of taxpayer to recredit must be examined in terms of law and applicable CBIC circulars – The impugned order is set aside lacking proper reasoning and computation basis. Matter remanded to first appellate authority to reexamine entitlement under law and CBIC Circular No. 135/05/2020-GST dated 31.03.2020 and Circular No. 173/05/2022-GST dated 06.07.2022 and pass speaking order and work out fresh computation based on returns and audit reports and pass reasoned order – Ordered accordingly [Read less]

2026-VIL-85-GSTAT-LCK | Tribunal SGST

GST - Transportation of goods - Vehicle number mismatch in E-way bill - Penalty under Section 129 - Goods transported in vehicle different from vehicle declared in e-way bill. Consignor claimed first transaction was completed and subsequent movement by purchaser where original vehicle allegedly broke down and goods transferred to different vehicle. Fresh e-way bill was later generated by purchaser for further sale but old vehicle number was inadvertently mentioned - Whether discrepancy in vehicle number mentioned in e-way bill and vehicle actually transporting goods constitutes violation of statutory requirements justifying penalty under Section 129 of the CGST Act, 2017 - HELD - E-way bill is statutory documentary requirement for movement of goods and must correspond with actual vehicle carrying goods. No valid e-way bill corresponding to actual vehicle transporting goods had been generated although value of goods was more than Rs. 50,000/-. Weight of goods as recorded at weighment slip showed gross weight and net weight but weight calculated from gross weight of actual vehicle and its unladen weight was different from quantity declared in invoice contrary to Section 31 and Rule 138 read with Section 129(1) - Appellant failed to produce satisfactory contemporaneous evidence establishing that original vehicle broke down and goods were subsequently transferred. Explanation regarding breakdown remained substantially claim made subsequently during appellate proceedings. Physical quantity of goods and absence of fake invoice or undervaluation or actual revenue loss do not absolve from statutory documentary compliance – Further, the discrepancy in vehicle number cannot be characterized as minor or technical lapse. Once first movement concluded any subsequent movement required separate and valid documentary trail. Where vehicle was changed vehicle particulars in e-way bill required to correspond with vehicle actually carrying goods. Statutory documentary trail did not correspond with actual movement at time of interception. Absence of satisfactory evidence explaining change of vehicle gives rise to reasonable inference of intention to evade tax – Levy of penalty is upheld and the appeal is rejected [Read less]

2026-VIL-1044-UTR | High Court SGST

GST – Rectification of order under Section 161 of CGST Act, Timeline for decision on rectification application – Rejection of rectification application on the ground that the time period prescribed for deciding the rectification application had expired - Whether rejection of rectification application solely on the ground that more than three months have elapsed since filing is sustainable notwithstanding that application was filed within prescribed time – HELD – The petitioner's application for rectification was made well within the time prescribed under Notification No. 22/2024-CT dated 08.10.2024. The competent a... [Read more]

2026-VIL-1036-ALH | High Court SGST

GST – Denial of Input Tax Credit - Show Cause Notice under Section 74A - Applicability of Section 61 scrutiny requirement - Petitioner engaged in works-contract services and sub-contracted works to registered sub-contractors. Department issued Notice alleging sub-contractors were bogus and non-existent and petitioner wrongfully availed Input Tax Credit - Petitioner contended SCN should have been preceded by Section 61 of the CGST Act, 2017 scrutiny and invocation of Section 74A(5)(ii) lacked jurisdictional foundation - Whether Section 61 scrutiny of returns is mandatory prerequisite before issuing Show Cause Notice under Section 74A and whether Section 74A(5)(ii) requires proof of fraud, wilful misstatement or suppression of facts - HELD - Section 61 is not invariable jurisdictional precondition to issuance of every Section 74A notice. Section 61 provides pre-adjudicatory verificatory mechanism for scrutiny of returns already filed. Section 73 and 74A operate independently and are attracted whenever tax has not been paid or is short-paid or Input Tax Credit wrongly availed which Department may determine through several mechanisms including scrutiny under Section 61 or audit or inspection or independent verification - The provisions of Rule 99 or the mandatory word of ‘shall’ occurring in Rule 99(1) comes into play only when Section 61 has already been invoked, which is not the present case herein - Proper officer under Section 74A has unfettered power indicated by words where it appears and is not tethered to any one source of information. Where proper officer possesses only return-based discrepancy material and no independent source Section 61 and Rule 99 may be mandatory procedural safeguard but not invariable condition - Allegation that entire sub-contract chain and invoices were engineered around fictitious entities is allegation of fraudulent claim of ITC squarely capable of attracting Section 74A(5)(ii). Show Cause Notice sufficiently alleges foundational facts under Section 74A(5)(ii) and its correctness is matter for adjudication not amenable to summary writ jurisdiction - All objections available to petitioner are available to be urged before adjudicating authority - Petitioner directed to file reply raising all factual and legal contentions with all rights and contentions kept open - Writ petition dismissed - Whether the impugned notice suffers from a jurisdictional error inasmuch as it invokes Section 74A(5)(ii), which is for invoking Section 74 was raised – HELD - It is one thing to say that the Show Cause Notice does not contain any of the ingredients as mentioned under Section 74A(5)(ii) and an absolutely different thing to say that the allegations mentioned are disputed or erroneous, because the former being an issue of jurisdiction error can always be raised in a writ petition, however, for the later an adjudication of the Show Cause Notice necessarily has to follow as per law - The impugned Show Cause Notice discloses the foundational facts to attract Section 74A(5)(ii), and its correctness is a matter for adjudication and cannot be a cause for pre-emptive foreclosure by the Court. [Read less]

2026-VIL-1592-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs – Import of aircraft - Conditions for exemption under Notification No. 21/2002-Cus - Violation of post-import conditions - The Appellant imported an aircraft claiming exemption from duty under Notification No. 21/2002-Cus subject to condition no. 104 which required that aircraft be used only for providing non-scheduled charter services with requisite approval from DGCA. An NOC to operate non-scheduled charter services had expired on 23.09.2007 with express intimation that no further extension would be granted. The Appellant began commercial charter operations on 29.12.2007 after expiry of the NOC and operated without any valid NSOP permit - The Revenue demanded duty alleging violation of the condition of exemption and proposed confiscation of aircraft - Whether the customs authorities have jurisdiction to demand duty for post-import violation of conditions of exemption notification or whether such matters fall exclusively within jurisdiction of DGCA and whether goods are liable to confiscation when conditions are violated - HELD - Once the registration is cancelled and an application for revocation of cancellation is filed and rejected and thereafter the appellate authority restores the registration, the taxpayer is functioning as a regular taxpayer. Section 111(o) of the Act makes goods liable to confiscation where goods exempted subject to any condition from duty are imported and the conditions are not observed unless non-observance is sanctioned by the proper officer - The proper officer has the function to determine if conditions for exemption from duty are violated. Customs authorities have jurisdiction in matters of assessment of duty and recovery of duty for non-fulfilment of conditions of exemption notifications. The interpretation of licences or permits issued by DGCA can be done only by DGCA but where there is no licence or permit for the relevant period the DGCA has no role and customs authorities can adjudicate the matter - The Appellant operated aircraft for over 100 hours commercially without approval which constituted unauthorised operations and violation of the substantive conditions of exemption - The Appellant cannot be said to have used the aircraft exclusively for the specified purpose hence the undertaking to pay duty on demand was triggered. The goods are liable to confiscation under section 111(o) of the Act. Duty is recoverable under section 125(2) of the Act and the limitation under Section 28 does not apply - The duty confirmed is upheld but the matter is remanded to re-compute duty considering actual cost of transport and transit insurance instead of notional values. Penalties imposed are upheld - the impugned order is modified and the appeal of the importer is partly allowed to the extent of directing re-computation of the duty payable reckoning the actual cost of transport and transit insurance of the aircraft instead of notional values under Rule 9(2) of the Valuation Rules. Rest of the impugned order is upheld [Read less]

2026-VIL-1594-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs - Imposition of penalty beyond statutory limit - Regulation 12(8) of Handling of Cargo in Customs Area Regulation - Show Cause Notice proposing penalty under Section 112(a) and Section 114AA of Customs Act and Section 125 as well as cancellation of licences under Regulation 11 - On adjudication the adjudicating authority imposed only penalty under Regulation 12(8) and did not impose penalties under other sections or cancel the licence. The penalty imposed was Rs. 15,00,000/- whereas Regulation 12(8) provides for maximum penalty of Rs. 50,000/- only - Whether adjudicating authority can impose penalty beyond the stat... [Read more]

2026-VIL-1590-CESTAT-DEL-CE | CESTAT CENTRAL EXCISE

Central Excise - Valuation of Goods - Amortized Value of Tools and Dies – Appellant manufactures automobile parts and accessories supplied to original equipment manufacturers; tools and dies were supplied by customers free of cost or manufactured and recovered from customers through separate invoices – Whether the entire value of tools and dies recovered by the appellant from customers should be included in the assessable value of the final products or only the amortized value should be included under Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – HELD – The final p... [Read more]

2026-VIL-1589-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs - Adjudication of Show Cause Notice - Adjudicating Authority Cannot Travel Beyond Scope – Appellant, an authorised courier under the Courier Imports and Exports (Clearance) Regulations, 2010, accepted export consignment through intermediary agents and filed Courier Shipping Bill; examination revealed pseudoephedrine hydrochloride concealed in garment embroidery; Show Cause Notice alleged unauthorised sub-contracting of courier services and non-compliance with Know Your Customer requirements for identity verification – Whether the adjudicating authority can introduce for the first time in the Order-in-Original new material facts and legal foundations not disclosed in the Show Cause Notice, including alleged violation of different regulations, treatment of the appellant as consignor, and attribution of knowledge of attempted smuggling – HELD – The adjudicating authority cannot travel beyond the scope of the Show Cause Notice by introducing new material facts which constitute the very foundation of the proposed liability; a distinction must be maintained between material facts which form the foundation of the charge and particulars which elaborate such facts; the material facts necessary to constitute a complete cause of action must be stated in the Show Cause Notice to enable the assessee to reasonably defend itself; the essential test is whether the Notice disclosed the essential factual and legal foundation of the charge so as to enable the noticee to effectively defend itself; findings based on material facts not contained in the Show Cause Notice, such as alleged violation of Regulations 13(a) and 13(c), treatment of the appellant as consignor/exporter, and attribution of knowledge or conscious participation in smuggling, are unsustainable – Impugned order set aside to the extent it rests on such travel beyond the Notice - Customs - Courier Regulations - Identity Verification - Appellant, an authorised courier, accepted an export consignment on the basis of one identity document (driving licence) which contained both identity and address particulars; Show Cause Notice alleged contravention of Regulation 13(i) of the Courier Imports and Exports (Clearance) Regulations, 2010 for failure to obtain two identity documents as required by Know Your Customer instructions – Whether acceptance of a consignment on the basis of a single genuine identity document containing both proof of identity and address particulars constitutes contravention of Regulation 13(i) of the Courier Regulations – HELD – Regulation 13(i) requires verification of the antecedents, correctness of Importer Exporter Code number, identity of the client and functioning at the declared address using reliable, independent and authentic documents and information, but does not mandate two identity documents; the requirement for two documents originated from Board's Know Your Customer instructions issued vide Circular No. 33/2010 and was subsequently relaxed by Circular No. 7/2015-Cus which accepted one document if it contained both identity and address particulars; non-production of a second identity document may constitute a procedural lapse but absent evidence that the consignor's identity or address could not be verified from the undisputedly genuine identity document, it does not establish breach of Regulation 13(i); the circular, though prospective, supports the distinction by recognising that one prescribed document serving as proof of both identity and address is sufficient – Finding of contravention of Regulation 13(i) set aside - Customs - Courier Regulations - Sub-contracting of Core Functions vs Non-core Activities – Appellant, an authorised courier, arranged for pick-up and collection of export consignments through intermediary agents without obtaining written permission of the Commissioner of Customs; SCN alleged unauthorised sub-contracting in violation of Regulation 13(j) of the Courier Imports and Exports (Clearance) Regulations, 2010 – Whether outsourcing of physical pick-up and collection of export consignments from the consignor constitutes prohibited sub-contracting of functions under Regulation 13(j) of the Courier Regulations – HELD – Regulation 13(j) prohibits sub-contracting or outsourcing of functions permitted or required to be carried out by an authorised courier only when such functions are regulatory functions contemplated by the Courier Regulations; the regulation does not prohibit all commercial outsourcing but only those functions which the Regulations themselves designate as courier functions; pick-up and collection of export consignments are not assessment or clearance functions which constitute the core regulatory functions of an authorised courier under the Courier Regulations; Circular No. 59/2016-Cus recognises pick-up as a non-core activity not requiring prior written permission but only due diligence and intimation; installation of the appellant's software at the agent's premises shows knowledge of the arrangement but does not prove that a regulatory function was outsourced; mere outsourcing of physical pick-up therefore does not violate Regulation 13(j) – Finding of contravention of Regulation 13(j) set aside - Customs - Smuggling - Courier Liability for Concealed Contents - Knowledge and Connivance Required – Appellant, an authorised courier, filed Courier Shipping Bill for export of garments; examination revealed pseudoephedrine hydrochloride concealed ingeniously within embroidered portions of the garments; Show Cause Notice alleged that appellant knowingly filed a false or incorrect declaration and aided smuggling of prohibited narcotic drugs; penalties were proposed under Sections 114(i) and 114AA of the Customs Act, 1962 – Whether an authorised courier can be held liable for concealed prohibited contents discovered in export consignments in the absence of evidence of the courier's knowledge, connivance or collusion in the misdeclaration or concealment – HELD – A courier cannot be held liable for concealed contents merely because the consignor had incorrectly declared the contents of the consignment; Section 114(i) of the Customs Act requires an act or omission rendering goods liable to confiscation while Section 114AA requires use of false or incorrect material with knowledge or intent; mere filing of the courier declaration on the consignor's information followed by discovery of prohibited goods does not establish a knowing false declaration; installation of the appellant's software at another entity's premises or receipt of the consignment through an intermediary does not by itself establish knowledge and control or failure to discharge a specific regulatory obligation; no cogent evidence has been produced to establish that the appellant knew of, participated in, or facilitated the misdeclaration or the ingenious concealment of the narcotic substance which could be detected only by cutting open the garments; neither the ingredient of knowledge nor the ingredient of intent to make a false declaration is present – Penalties under Sections 114(i) and 114AA set aside; appeal allowed. 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2026-VIL-83-GSTAT-ERN | Tribunal SGST

GST - Power and jurisdiction of Appellate Authority to remand matter to original adjudicating authority - Section 107(11) of CGST Act 2017 - Revenue filed appeal against Rectification Order wherein First Appellate Authority partially allowed appeal and partially remanded matter to adjudicating authority for verification of documents and tax computation - Whether Appellate Authority has power to remand matter back to original adjudicating authority for verification of documents and tax computation instead of deciding appeal finally on merits - HELD - Section 107(11) of CGST Act 2017 explicitly provides that Appellate Authority shall after making such further inquiry as may be necessary pass such order as it thinks just and proper confirming modifying or annulling the decision or order appealed against but shall not refer the case back to the adjudicating authority that passed the said decision or order - The statute contemplates only three courses of action available to the Appellate Authority namely to confirm modify or annul the impugned decision or order. The power to remand has been expressly excluded by the legislature through the plain language of Section 107(11) - Where necessary the Appellate Authority may undertake or cause to be undertaken such further inquiry as it considers necessary and thereafter adjudicate the matter on its own merits without referring it back to the adjudicating authority. The Appellate Authority has the statutory power to call for records examine documents verify figures and undertake all necessary inquiries at its own level and then pass a final reasoned order. An order remanding matter to adjudicating authority for verification is in contravention of the express statutory bar against such remand - An order giving directions to the adjudicating authority without final determination on the merits amounts to referring the case back which is statutorily prohibited. The legislature has deliberately omitted the power to remand to ensure finality and closure of appellate proceedings. Any such remand exceeds statutory appellate jurisdiction and renders the order without legal authority - The Rectification Order to the extent it remands matter to adjudicating authority is set aside. The First Appellate Authority is directed to conduct necessary verification at its own level and pass a fresh final order on merits confirming modifying or annulling the demand following principles of natural justice – The appeal is disposed of [Read less]

2026-VIL-84-GSTAT-ERN | Tribunal SGST

GST - Refund of unutilized Input Tax Credit under inverted duty structure - Section 54(3) and Rule 89(5) of CGST Act 2017 - Show cause notice for rejection of refund on ground of ineligible ITC - Show cause notice was vague lacking invoice-wise details and specific grounds for rejection - First Appellate Authority introduced new grounds for rejection not contained in show cause notice or adjudication order - Whether refund application can be rejected on ground of ineligible ITC without initiating formal proceedings under Section 73 or Section 74 - HELD - The show cause notice must be specific detailed and clear indicating the precise grounds and basis for proposed action. Where a show cause notice merely alleges ineligibility without furnishing invoice-wise details nature of ineligibility or specific computation it denies the assessee proper opportunity to defend its case - The determination of eligibility or otherwise of ITC is permissible only under Section 73 or Section 74 of CGST Act. There cannot be any disallowance of ITC dehors these provisions. Until and unless an order has been passed under Section 73 or Section 74 disallowing the ITC taken such ITC is presumed to be in order - Where ITC has been availed in statutory returns and not challenged through formal proceedings under Section 73 or Section 74 the same cannot be reopened in refund proceedings under Section 54 as a collateral matter. The refund proceedings under Section 54(3) read with Rule 89(5) cannot be converted into proceedings to re-adjudicate eligibility of ITC which is the exclusive domain of Section 73 or Section 74 – The settled position that there cannot be two different yardsticks one for permitting credit and another for eligibility to refund is legally well-established. Without questioning the credit taken the eligibility to refund cannot be questioned - Further, the Appellate Authority cannot transgress the boundaries of the show cause notice and introduce new grounds for rejection not contained therein. Such introduction of extraneous grounds violates principles of natural justice - The portion of the Order-in-Appeal sustaining denial of refund is set aside. The refund application is to be allowed for the amount rejected. The grounds for rejection introduced by the Appellate Authority beyond the SCN are set aside – The appeal is allowed [Read less]

2026-VIL-87-GSTAT-ERN | Tribunal SGST

GST - Maintainability of Departmental appeal - Application of monetary limits under Circular No. 207/1/2024-GST – Maintainability of Revenue appeal below prescribed monetary threshold - HELD - Circular No. 207/1/2024-GST dated 26-6-2024 fixed standard minimum monetary limits for filing appeals by the Department. Where the dispute pertains to demand of interest only the amount of interest shall be considered for applying the monetary limit for filing appeal. The Board exercised its statutory powers under Section 120 of the CGST Act and fixed monetary limits of Rs. 20,00,000/- below which appeals shall not ordinarily be fi... [Read more]

2026-VIL-88-GSTAT-ERN | Tribunal SGST

GST – Power of Appellate Authority to remand case - Interpretation of Section 107(11) of CGST Act, 2017 - Commissioner (Appeals) partially allowed the assessee appeal and directed the original adjudicating authority to verify documents and delete unwarranted demands if found in order, Revenue in appeal contending that appellate authority violated statutory provisions as appellate authority has no power to refer matter back to adjudicating authority - HELD - The Section 107(11) of CGST Act expressly provides that the Appellate Authority shall after making such further inquiry as may be necessary pass such order as it thin... [Read more]

2026-VIL-89-GSTAT-ERN | Tribunal SGST

GST - Cancellation and Revocation of Registration - Maintainability of Revenue appeal - Appellate authority restored registration already cancelled once by original authority and taxpayer functioned as regular taxpayer - Revenue filed fresh appeal against the restoration order, and subsequently registration was cancelled on independent statutory ground for non-filing of returns - Whether appeal becomes infructuous when registration is restored and functioning regularly and thereafter cancelled again on independent statutory ground - HELD - Once the Registration is cancelled and an application for revocation of cancellation... [Read more]

2026-VIL-1581-CESTAT-CHE-CE | CESTAT CENTRAL EXCISE

Central Excise – CENVAT Credit – Countervailing Duty on Capital Goods Imported by Separate Entity – Appellant, engaged in manufacture of cement, availed CENVAT credit of Countervailing Duty paid on capital goods imported by M/s Coromandel Electric Company Ltd., a separately incorporated Special Purpose Vehicle established for captive power generation. The appellant subsequently acquired majority shareholding in the Special Purpose Vehicle and the electricity generated was exclusively used in manufacture of dutiable cement products by the appellant. The Department disallowed the credit on the ground that the capital goods were imported by a separate legal entity distinct from the appellant – Whether the appellant was entitled to avail CENVAT credit on duty paid by another independent incorporated entity notwithstanding the captive power arrangement, economic integration and shareholding relationship between the two companies – HELD – The appellant is not legally entitled to avail CENVAT credit of Countervailing Duty paid on capital goods imported by M/s Coromandel Electric Company Ltd., a separate incorporated legal entity. Statutory tax benefits must attach to the legal entity recognized by statute and not merely to the economic beneficiary of the transaction. The imported capital goods stood in Bills of Entry filed in the name of the Special Purpose Vehicle and customs duty including Countervailing Duty was discharged by that entity as importer of record. The CENVAT Credit Rules do not recognize any principle by which credit legally accruing to one incorporated entity may automatically stand transferred to another merely because both entities are commercially interconnected or because the appellant holds majority shareholding. The doctrine of separate juristic personality remains fundamental to company law and cannot be selectively disregarded merely because such disregard would yield tax advantage. Rule 3 and Rule 4(3) of the CENVAT Credit Rules permit credit only by a manufacturer or eligible person in prescribed modes and do not recognize transfer of credit entitlement between separate legal entities. The appellant neither imported the goods directly nor acquired them under any arrangement contemplated under the Rules. The statutory conditions for availment of credit therefore remain unfulfilled. The decisions in Vikram Cement v Commissioner of Central Excise and Birla Corporation Ltd. v Commissioner of Central Excise concerning single assessee claiming credit within integrated manufacturing operations do not apply to the present situation involving two separate incorporated entities. The economic integration and functional nexus cannot create statutory entitlement where the statute does not confer one – The impugned order is upheld and the appeal filed by the appellant is dismissed - Central Excise – CENVAT Credit – Recovery of Inadmissible Credit – Interest and Penalty – Having determined that the appellant was not entitled to avail CENVAT credit of Countervailing Duty paid on capital goods imported by another separate entity – Whether the demand for recovery of the credit together with applicable interest and equal penalty under Section 11AC of the Central Excise Act, 1944 and Rule 15(2) of the CENVAT Credit Rules, 2004 was sustainable – The appellant contended that the availment was based on bona fide interpretation of the Rules, the transaction was revenue neutral as duty was already discharged by the separate entity, and the dispute was purely interpretational in nature – HELD – The demand for recovery of inadmissible CENVAT credit is legally sustainable. Having held that the appellant was not legally entitled to avail the disputed CENVAT credit, recovery of the same under Rule 14 of the CENVAT Credit Rules, 2004 is the inevitable statutory consequence. The plea of revenue neutrality cannot validate credit availed contrary to statutory provisions or defeat recovery of inadmissible credit, as equitable considerations cannot create a substantive right where the statute does not confer one. The appellant admittedly availed credit on capital goods imported by another independent corporate entity without any statutory provision permitting such availment. Recovery of statutory interest, being compensatory in nature, follows automatically as a consequence of recovery of inadmissible credit. The imposition of equal penalty under Section 11AC is also sustainable as the appellant availed credit without any statutory authority. The fact that the dispute involves interpretation of law does not set aside interest and penalty when credit is availed in violation of the statutory framework. The demand confirmed under the impugned Order-in-Original is therefore legal and sustainable. [Read less]

2026-VIL-1045-TEL | High Court SGST

GST – Binding nature of Order-in-Appeal under Section 107(16), Operative effect when further appeal is contemplated, Obligation of subordinate authorities to implement appellate order – Appellate Authority allowed assessee’s appeal holding that the restriction under Section 17(5)(d) did not apply since the construction was not undertaken on the petitioner's own account but was intended for leasing - The refund authority declined to process the refund claiming the appellate order was subject to review by competent authority who opined it was not legal and proper – Petitioner contended that Section 107(16) makes the Order-in-Appeal final and binding on parties – Whether refund authority can withhold grant of refund on the ground that Order-in-Appeal setting aside demand has not attained finality and that Department proposes to challenge such order before GSTAT – HELD – A plain reading of Section 107(16) of the CGST Act demonstrates that merely because a further statutory remedy may be available or contemplated, the appellate order does not cease to operate unless it is modified, stayed or set aside in accordance with law - On the date of the impugned order dated 12.01.2026 there was no order under Section 108 nor was there any order of GSTAT, High Court or Supreme Court modifying, staying or setting aside the Order-in-Appeal. The Department's appeal was filed only on 25.03.2026 subsequent to the impugned order. The Order-in-Appeal dated 16.09.2025 remained operative and binding upon the parties as on 12.01.2026 - The subsequent filing of an appeal before GSTAT does not retrospectively render the Order-in-Appeal inoperative as on the date when the impugned order was passed - In the absence of any order staying, modifying or setting aside the Order-in-Appeal, the respondents were required to give due effect to the appellate decision in accordance with law - The mere decision or intention to challenge the appellate order could not have the effect of nullifying, suspending or rendering inoperative the order. The observation that the Order-in-Appeal has not attained finality inasmuch as the competent authority reviewed it and decided to file an appeal cannot justify rejection of refund claim – The refund authority was obligated to give effect to the operative Order-in-Appeal. The rejection of refund claim on the ground that the Order-in-Appeal had not attained finality is unsustainable and set aside – The petition is allowed - GST – Refund authority cannot reopen substantive findings of appellate authority, Impermissibility of indirectly questioning or disregarding appellate determinations, Principle of judicial discipline – The refund authority sought to use refund proceedings to indirectly reopen substantive determination of appellate authority on admissibility of ITC relating to construction of warehouses intended for leasing – Whether refund authority can rely upon depreciation schedules and other material not placed before appellate authority to indirectly question or reopen substantive findings regarding admissibility of ITC already rendered by appellate authority – HELD – The Refund authority while exercising the distinct statutory function of processing refund claim effectively reopened and disregarded findings which had already been adjudicated upon by the appellate authority. The refund sanctioning authority could not use the refund proceedings as a means of reopening or indirectly questioning the substantive determination already rendered by the appellate authority in respect of the disputed ITC - If the respondents considered that the appellate determination required reconsideration in light of any additional material, the remedy lay in pursuing the statutory appellate or revisional mechanism and not in disregarding the operative appellate order at the stage of processing the refund. The refund authority cannot reopen indirectly questioning or refusing to give effect to substantive findings of the operative Order-in-Appeal on the very issue which formed basis of the demand. The aforesaid course of action is contrary to the principle of judicial discipline - The refund proceedings constitute an independent statutory process governed by Section 54 which is distinct from the adjudication proceedings and cannot be converted into a collateral proceeding for reconsidering substantive findings of appellate authority - GST – Statutory mechanism under Section 54(11) for withholding refund, Specific conditions for withholding including opinion of Commissioner and malfeasance or fraud – Refund authority rejected refund application without invoking the specific statutory mechanism under Section 54(11) – Whether refund authority could reject refund application on ground of pending or contemplated appeal without complying with specific statutory mechanism prescribed under Section 54(11) – HELD – Section 54(11) of the CGST Act provides a specific statutory mechanism for withholding a refund where order giving rise to refund is subject matter of appeal or further proceedings or where other proceedings under Act are pending and the Commissioner is of opinion that grant of refund is likely to adversely affect the revenue on account of malfeasance or fraud committed. The provisions specifically contemplate that opportunity of being heard must be afforded to the taxable person before refund is withheld - The petitioner was not afforded any opportunity of being heard before refund was withheld. The respondents could not circumvent the specific statutory mechanism under Section 54(11) by rejecting refund application under Section 54(8) on ground that Order-in-Appeal was under review or proposed to be challenged. If respondents intended to withhold refund they were required to fulfill statutory requirements of Section 54(11) including recording requisite opinion and affording petitioner opportunity of hearing. The mere decision to pursue further proceedings cannot serve as basis for rejecting refund in absence of compliance with Section 54(11) – Refund authority improperly rejected refund application without complying with specific statutory mechanism under Section 54(11). [Read less]

2026-VIL-1043-CAL | High Court SGST

GST - Blocking and freezing of GST portal preventing access to file Form GSTR-1 under Section 37 of CGST Act, 2017 – Cancellation of registration – Petitioner had GST portal access blocked by the Department after issuance of show cause notice for cancellation of registration alleging that petitioner conducted no business at declared premises and issued invoices without actual supply of goods - Whether blocking of GST portal access can be justified as an interim measure during pendency of show cause proceedings for registration cancellation – HELD - The opportunity already granted by Department to furnish documents to... [Read more]

2026-VIL-1042-MP | High Court VAT

Madhya Pradesh Value Added Tax, 2002 – Classification of Furnace Oil and Light Diesel Oil, Distinction based on technical and chemical characteristics, Principle of classification in tax statutes – Revenue classified Furnace Oil under the same entry as Light Diesel Oil and imposed tax at identical rate arguing that both products are used as fuel and have similar characteristics. Petitioner contended that Furnace Oil and Light Diesel Oil are two distinct commodities with different technical specifications and chemical composition and that Furnace Oil should not be taxed at the same rate as Light Diesel Oil - Whether Furnace Oil and Light Diesel Oil can be classified under the same tariff entry and taxed at the same rate on the basis that both are fuels despite significant differences in their technical and chemical specifications – HELD – A comparative analysis of the technical specifications, physical characteristics and legal arguments demonstrates that Furnace Oil and Light Diesel Oil are distinct commercial and chemical commodities. The differences are not merely superficial but are fundamental and material - Due to significant variance in viscosity and combustion profile, Furnace Oil cannot substitute for Light Diesel Oil without causing mechanical failure or fuel-pump seizure in engines designed for lighter fuels. Crude oil undergoes fractional distillation yielding fractions based on escalating boiling points and carbon chain lengths. Light Diesel Oil distils at an intermediate middle-distillate phase whereas Furnace Oil is a heavier bottom-fraction residual fuel oil - The principle of tax classification requires that goods are classified based on their actual characteristics and nature not merely on a general category such as fuel. Classification cannot be based on a single common characteristic such as usage as fuel while ignoring all other distinguishing characteristics – The material tax liability cannot be imposed on FO at par with LDO under an omnibus concept of "fuel". The fact that legislature provides a specific distinct tariff heading for Light Diesel Oil means an identical rate cannot be extended to Furnace Oil in the absence of a shared uniform entry - The impugned orders classifying Furnace Oil under the Light Diesel Oil entry are quashed. Furnace Oil and Light Diesel Oil must be treated as distinct commodities for tax purposes - The writ petitions are allowed [Read less]

2026-VIL-1591-CESTAT-DEL-CE | CESTAT CENTRAL EXCISE

Central Excise - Reliability of documents seized during search for establishing clandestine removal, Contradictions in evidence of panch witnesses and investigating officers, Requirements of evidence for proving suppression or concealment of production – The Department relied on the Panchnama drawn during the search and documents listed therein to establish clandestine removal and proposed duty demand. The appellant contended that the panch witnesses in their cross-examination categorically stated that no such documents were recovered during the search and that the Panchnama contained contradictions regarding timing of the search and execution – Whether the demand for central excise duty can be sustained on the basis of documents purportedly seized during search when panch witnesses contradict the recovery of such documents and the Panchnama contains contradictions as to dates and timing – HELD – The Panchnama drawn during search is not reliable as Panch witnesses gave contradictory statements regarding the time of conclusion of the search; documents mentioned in the Panchnama and not produced before the Adjudicating Authority are not reliable evidence to allege clandestine removal - When the documents on the basis of which the demand was proposed in the show cause notice were not shown to the appellant and are not produced before the appellate authority for verification such documents are not reliable evidence - The statement of the appellant's proprietor recorded during investigation wherein he stated that he was not aware who prepared the rough entries and was signing first and last page without understanding the contents was not contradicted by the Revenue with cogent evidence and therefore cannot be treated as an inculpatory statement - With deduction of clearances based on unreliable documents the total turnover falls within the Small Scale Industries exemption limit and the appellant is not liable to pay duty. Consequently the impugned order is set aside and the appeal is allowed [Read less]

2026-VIL-1595-CESTAT-CHE-CE | CESTAT CENTRAL EXCISE

Central Excise - Interest on delayed refund - Relevant date for computing interest - Payment made under protest - Appellant was ordered to pay duty on coconut oil packed in small containers based on CBEC circular classifying such goods as cosmetics. Appellant filed writ petition and obtained interim stay. Appellant later registered and paid duty under protest and filed electronic refund claims. Hon'ble High Court allowed writ petition and held Circular ultra vires. Appellant subsequently filed formal refund claim in prescribed form and refund was sanctioned within three months. After four years appellant claimed interest under Section 11BB of CEA, 1944 from date of electronic claims - Whether claim for interest on refund is barred by limitation and delay and whether interest is to be calculated from date of electronic claims or subsequent formal claim - HELD - Payment of interest under Section 11BB is not dependent on claim by party and is a self-executing statutory obligation discharged suo motu by Department. Pendency of litigation does not postpone date from which interest runs under Section 11BB. Second proviso to Section 11B(1) contemplates that duty would sometimes be paid under protest because its leviability is disputed and such payment is protected independently by statute without regard to litigation pendency - Doctrine of laches and Limitation Act do not apply to self-executing statutory obligation cast on Department which Board has directed officers to discharge suo motu. Electronic claims filed without objection and without any deficiency memo constitute complete application from date of receipt. Insistence on subsequent physical claim in prescribed form was administrative preference not finding of documentary deficiency - Clause (ec) of Explanation to Section 11B governs limitation for filing claims not date from which interest runs. Department accepted protest payments and electronic claims without demur for several years and cannot subsequently claim benefit of its own silence and inaction - Interest is to be computed from electronic claims filed contemporaneously with protest payments - Order rejecting interest claim on ground of delay and laches is set aside. Appellant is entitled to interest under Section 11BB computed from date of electronic claims filed. Matter remitted to refund sanctioning authority to verify exact dates of receipt and compute interest at notified rate from expiry of three months from each such date until date of refund sanction – The appeal is allowed by remand [Read less]

2026-VIL-1588-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs - Classification of Sensors - Specific Tariff Entry Prevails Over Residuary Entry – Appellant manufactures passenger and multi-utility vehicles and imported various sensors from group companies; identical components bearing the same part numbers were classified under different Customs Tariff Headings at different points of time - Show Cause Notice issued proposing reclassification and recovery of alleged short-paid duty – Whether temperature sensors, gas analysis sensors and other sensors should be classified under specific tariff headings such as Heading 8533 (thermistors), Heading 9027 (gas analysis apparatus), Heading 8543 (electrical apparatus) and Heading 8708 (motor vehicle parts) or under the residuary Heading 9031 (measuring or checking instruments) – HELD – Where a specific tariff heading applies, the residuary heading cannot be preferred; a thermistor-based temperature sensor whose primary function is to sense temperature through resistance change and transmit the signal to the Engine Control Unit, without performing temperature conversion or calibration itself, is classifiable under Heading 8533 as a thermistor and not under the residuary Heading 9031; gas analysis sensors using electrochemical cells to determine the concentration of constituents in exhaust gas are specifically covered by Heading 9027 and not under Heading 9031; the Sensor Speed which merely detects magnetic field changes and generates electrical signals without performing measurement is classifiable under Heading 8543 as an electrical apparatus; the Retainer Ultrasonic Sensor, being specially designed for use solely with motor vehicles, is classifiable under Heading 8708 and not under the general plastic articles heading – Appeals allowed with modification; classification of specific sensors set aside and appellant's declared classification upheld - Customs Duty - Extended Period of Limitation - Burden on Revenue to Establish Wilful Misstatement – Whether the extended period under Section 28(4) of the Customs Act can be invoked merely on the basis of repeated adoption of different classifications for identical goods without evidence of deliberate suppression or wilful misstatement with intent to evade duty – HELD – The extended period requires a positive act indicating wilful default; mere wrong classification or breach of the self-assessment obligation is insufficient; the Revenue must establish by cogent evidence, either direct or circumstantial, raising adverse inference, collusion, wilful misstatement or suppression of facts with intent to evade duty - The changing pattern of classification adopted by an importer, without more, does not establish deliberate suppression or wilful misstatement; the Bills of Entry contained the relevant particulars and were self-assessed under the statutory scheme; the subsequent adoption of a different classification cannot by itself, without sufficient evidence, establish a charge of suppression or wilful misstatement - The presumption of innocence is a background assumption of the legal system. Therefore in the absence of sufficient evidence, the extended period is not invocable – Demand raised by invoking extended period set aside as barred by limitation - Customs Duty - Section 28 - Reclassification Without Duty Demand Not Permissible – Appellant imported sensors which were classified under specific tariff headings at the time of import; Show Cause Notice proposed reclassification of thirty-six sensors under Section 28 but did not raise any demand of differential duty in respect of them; appellant contended that Section 28 cannot be invoked merely to reclassify goods where no duty demand has been raised – Whether the proper officer can invoke Section 28 merely to alter the classification of goods already assessed under a completed assessment, where no duty or other liability is proposed to be recovered and no short-levy, non-levy or erroneous refund is alleged – HELD – Once the assessment under Section 17 is completed and goods are cleared from Customs control, the proper officer becomes functus officio and cannot review or alter the assessment except under a specific statutory provision empowering such action; Section 28 is a specific provision for recovery of duty not levied, not paid, short-levied, short-paid or erroneously refunded; where no duty is sought to be recovered, a distinction has to be made between re-assessment undertaken to determine and recover duty under a statutory provision and a mere change in classification of goods already assessed - Reclassification of goods in respect of which no differential duty is demanded is beyond the scope of Section 28 proceedings; this finding does not preclude the Department from examining the correct classification at the stage of assessment of any subsequent Bill of Entry as each Bill of Entry constitutes a fresh assessment – Proposed reclassification of thirty-six sensors set aside. [Read less]

2026-VIL-1586-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs – Import of Newsprint under Foreign Trade Policy - Applicability of RNI registration requirement at time of import versus time of clearance - Appellant imported newsprint under Foreign Trade Policy 2009-2014 and 2015-2020, stored it in bonded warehouses and subsequently sold to RNI-registered actual users who filed bills of entry claiming exemption under Notification No. 12/2012-Cus., Sl. No. 264 - Whether prior to 03.06.2016, the appellant, not holding RNI registration certificate, could legally import newsprint under duty-free regime - HELD - Imports made prior to 03.06.2016 cannot be treated as violation of applicable Foreign Trade Policy. The DGFT Notification No. 09/2015-2020 dated 03.06.2016 expressly clarified that RNI registration requirement applies at time of import of goods, whereas prior policy required it at time of clearance. The amended requirement cannot be applied retrospectively to imports made before 03.06.2016. Additionally, Notification No. 12/2012-Cus., Sl. No. 264 did not itself prescribe any condition requiring the importer to be RNI-registered or Actual User. Therefore, exemption from basic customs duty and additional duty was not conditional upon such requirements. The import of newsprint under such exemption followed by sale to RNI-registered actual users could not constitute violation of import policy or Customs Act – Revenue appeals against Order-in-Appeal setting aside confiscation are rejected - Customs - Confiscation of newsprint - Burden of proof for establishing illicit import and diversion to dummy units - Newsprint seized at various premises, Appellant alleged to have imported improperly and cleared to dummy units for illicit consideration, charged under Sections 111(d), 111(o) and Section 112 of Customs Act, 1962 - Whether confiscation and penalty can be sustained based on procedural irregularities such as non-tallying of reel serial numbers without substantive evidence of illegal import or diversion - HELD - The initial burden of establishing that goods were illicitly imported lies with Department. Department must establish foundational facts from which it can be reasonably inferred that goods were illicitly or improperly imported and thereafter supplied to dummy units for illicit consideration. Only upon such foundational facts being established would evidentiary burden shift to person in possession. In present case, no evidence of blame-worthy conduct with intention to evade duty was discerned. Allegations that goods were cleared to dummy units against illicit consideration were neither charged nor proved. Procedural irregularities and serial number non-tallying do not constitute sufficient evidence of illegal import when every identified importer produced bills of entry, bills of lading, packing lists, invoices, transport documents and payment documents coupled with CA certificate. Confiscation and penalties are not sustainable - Appeals are rejected [Read less]

2026-VIL-1033-CAL-ST | High Court SERVICE TAX

Service Tax - Interest on delayed refund under Section 11BB - Relevant date for computing three-month period - Respondent executed turnkey drinking water supply and distribution project for Kerala Water Authority and paid service tax during dispute period. Later it was clarified laying water pipelines for public welfare project did not constitute taxable construction service. Respondent filed refund claims on 5 January 2012 and 20 March 2012. Department returned second claim as time-barred and rejected first claim. Tribunal allowed appeals and ordered refund - After subsequent deficiency memo and departmental processing refund was sanctioned on 6 January 2025. Respondent then sought interest under Section 11BB from original 2012 application dates. Revenue contended interest not payable as refund was sanctioned within three months of receiving complete documents - Whether interest is payable under Section 11BB when refund is sanctioned years after original applications and which date governs three-month period for interest computation - HELD - Interest under Section 11BB is automatic and statutory consequence of refund sanctioned beyond three months from date of application. Three-month period must be reckoned from date of original applications filed in 2012 not from date of Tribunal's order or date of subsequent submission of requested administrative documents - Respondent's letter dated 12 September 2024 was merely follow-up representation requesting implementation and cannot be construed as fresh application. Subsequent communication about submission of documents does not create new application date. Department's own correspondence and final refund sanction order explicitly reference 2012 application dates - Pendency of appellate proceedings does not postpone date from which interest runs. Amount deposited under mistake of law does not bear character of duty and does not partake nature of tax. Statutory interest rate cap of 6% under Notification No. 24/2014-CE (NT) is inapplicable to refunds arising from mistake of law - Tribunal's award of compensatory interest at 9% is just equitable and supported by High Court precedents - Tribunal correctly exercised powers under Rule 41 to ensure final order was not rendered otiose. Appeal under Section 35G not maintainable against procedural direction under Rule 41 – The Revenue appeal is dismissed [Read less]

2026-VIL-1600-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - CENVAT Credit - Input service for recovery agents - Recovery service as part of lending activity - The Appellant provided banking and financial services including money lending on hypothecation basis. The Appellant availed CENVAT credit on services of recovery agents engaged to recover loans from defaulting customers and repossess vehicles - Department disallowed fifty percent of CENVAT credit alleging that recovery agent service was not used for providing output service of lending as recovery becomes necessary only after default which is subsequent to completion of lending activity. The Appellant contended that recovery is integral part of lending activity - Whether service of recovery agents qualifies as input service under Rule 2(l) of CENVAT Credit Rules for a lending activity and whether recovery is severable from lending - HELD - The business of lending money by a bank or NBFC is not exhausted by disbursement of loan. Lending is a continuing exposure that remains open until amount lent is realised whether by voluntary repayment or by recovery and enforcement of security. Default and consequent recovery is not extraneous contingency but inherent and inseparable incident of extending credit - To treat recovery as wholly discrete activity disconnected from lending artificially fragments what is commercially and functionally single continuous activity - the service of the recovery/collection agents engaged by the appellant, for recovery of instalments in default and enforcement of the security furnished by way of hypothecation of the financed vehicle, is a service used by the appellant “for providing” its output service of lending, within the “means” clause of Rule 2(l) of the CCR- Service of recovery agents falls within includes clause as ‘service in relation to’ financing and security. Rule 6(3B) of CENVAT Credit Rules being non-obstante provision applicable to NBFC engaged in extending loans overrides restrictions in Rule 6(1), (2) and (3) - The issue involved bona fide question of interpretation on which extended period cannot be invoked in absence of positive act establishing suppression or intent to evade - CENVAT credit availed on service tax paid on commission to recovery agents is credit on eligible input service. The demand of ineligible credit availed is set aside. Extended period of limitation was not validly invokable. Penalties imposed are set aside – The appeal is allowed [Read less]

2026-VIL-1604-CESTAT-CHE-CE | CESTAT CENTRAL EXCISE

Central Excise - Applicability of customs exemption conditions to domestic manufacturers under mutatis mutandis clause, Interpretation of procedural conditions in exemption notifications governing International Competitive Bidding supplies – Appellant engaged in manufacture of electric motors cleared alternators during June 2013 to August 2014 without payment of duty by availing exemption under Notification No. 12/2012-CE against International Competitive Bidding contracts. Department alleged non-fulfilment of conditions under corresponding Customs Notification No. 12/2012-Cus and demanded central excise duty - Whether procedural conditions prescribed under corresponding Customs exemption notification applicable to importers can be mechanically imported and enforced against domestic manufacturers claiming exemption under excise exemption notification incorporating such conditions mutatis mutandis – HELD – The expression mutatis mutandis occurring in the excise exemption condition cannot be read to mean that every condition prescribed under the Customs notification automatically applies in the same manner to a domestic manufacturer. Only those conditions which are capable of being applied in the context of domestic clearances can be imported into the excise notification. Conditions which are specifically connected with import procedures cannot by themselves be mechanically enforced against a manufacturer supplying goods within India under ICB contracts - Once Project Authority Certificate stands issued and its authenticity remains undisputed, insistence upon further procedural compliance would defeat the legislative object of maintaining parity between imported and domestically manufactured goods supplied against International Competitive Bidding. Conditions which are procedural in nature should not be interpreted in a manner that defeats the substantive exemption itself - Revenue has nowhere disputed the actual end use of the goods. It is not the Department's case that the alternators cleared by the appellant were diverted misused or supplied to any ineligible entity. Once actual end use project eligibility and authenticity of the Project Authority Certificate remain undisputed, denial of exemption merely on technical procedural objections amounts to elevating form over substance - The appellant had substantially complied with all essential requirements governing exemption under Notification No. 12/2012-CE. The Department has incorrectly assumed that every procedural condition prescribed under the corresponding Customs notification automatically applies with identical force to domestic manufacturers – Denial of exemption to the appellant under Notification No. 12/2012-CE is not legally sustainable. The appellant was entitled to exemption under Notification No. 12/2012-CE – The appeal is allowed - Central Excise – Survival of duty demand, interest and penalties when exemption denial is set aside, Liability to pay interest and penalties when underlying levy is unsustainable – Whether duty demand, interest and penalties can be sustained as derivative liabilities once the substantive basis for levy being the denial of exemption itself is held unsustainable – HELD – Once the substantive basis for levy fails, the consequential liabilities cannot independently survive. The appellant had paid the disputed duty amount during the course of proceedings under protest. Such payment by itself cannot validate a demand which is otherwise not sustainable in law - Interest under Section 11AA is compensatory and presupposes existence of legally recoverable principal duty liability. Since the principal demand itself fails, consequential interest liability automatically fails. The penalties imposed under Rule 25 are equally unsustainable. The appellant had effected clearances openly under the exemption notification, furnished prior intimation, produced the Project Authority Certificate and disclosed all relevant documents. There is neither allegation of suppression nor clandestine removal. The dispute being purely interpretational, penal consequences do not arise. Both the adjudicating authority and Commissioner (Appeals) proceeded on an erroneous assumption that every procedural formality prescribed under the customs exemption notification automatically governed domestic clearances under the excise exemption notification – The entire demand the consequential interest levied under Section 11AA of the Central Excise Act and the penalties imposed under Rule 25 of the Central Excise Rules 2002 are set aside in toto - The appeal is allowed [Read less]

2026-VIL-1606-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax – Eligibility of Group Insurance for CENVAT credit under Rule 2(l) of CENVAT Credit Rules 2004 - Refund claim under Rule 5 of CENVAT Credit Rules, 2004 towards accumulated and unutilised CENVAT credit on input services. The refund claim included service tax paid on Group Insurance premium for employees - Adjudicating Authority rejected the Group Insurance component on the ground that it was an employee-welfare personal service and lacked direct or indirect nexus with the exported output service – Whether Group Insurance paid for employees can be treated as eligible input service under Rule 2(l) of CENVAT Credit Rules for the period January to March 2010 and consequently refundable under Rule 5 – HELD – Rule 2(l) as applicable during the material period prior to 01.04.2011 had a materially wider definition than the amended definition effective from 01.04.2011 whereby activities relating to business got deleted. The refund claim must be tested against the law prevailing during the material period. The expression activities relating to business in the pre-01.04.2011 definition of input service was of wide import and was not confined to services directly used in manufacture - The lower authorities rejected the Group Insurance component principally on the ground that it was an employee-welfare personal service and lacked direct or indirect nexus with the exported output service. Such reasoning cannot be sustained merely because the insurance covered employees. The statutory position and the judicial decisions establish that Group Insurance did not fall to be excluded from Rule 2(l) during the material period – Group Insurance is eligible as CENVAT credit under Rule 2(l) and is refundable under Rule 5 subject to verification of the precise amount and fulfilment of remaining statutory requirements – The rejection of the Club Service component is upheld - The appeal is partially allowed by remand - Service Tax – Eligibility of CENVAT credit for services pertaining to a period subsequent to the refund claim period, Scope of Rule 5 of CENVAT Credit Rules, 2004 refund to cover only accumulated credit available during the specified refund period – Whether service tax credit relating to services provided after 31.03.2010 can be included in and refunded as part of the refund claim for the period January to March 2010 – HELD – A Rule 5 refund for January to March 2010 can cover only eligible accumulated credit available for that refund period. The accumulated credit is the credit that accumulated during the specified refund claim period being January to March 2010. Services pertaining to a period after 31.03.2010 cannot be included in the refund claim for the period January to March 2010 as such credit would not have formed part of the accumulated balance during the claim period - The appellant has not established that the amount relating to services after 31.03.2010 formed part of the eligible accumulated balance for the refund period of January to March 2010. The principle relied upon from Warburg Pincus that a refund authority cannot simply deny credit already availed without prescribed procedure does not answer the separate question whether services pertaining to a later period could form part of the refund claim for an earlier specified period. The statutory framework governing Rule 5 requires that refund claims must be limited to the accumulated credit available during the claimed refund period - Inclusion of credit from a subsequent period would go beyond the scope of the refund claim period itself – The rejection of this amount from the refund claim is upheld. [Read less]

2026-VIL-1572-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax – Determination of Taxable Service and Taxable Value – Appellant rendered services including Erection, Commissioning and Installation Service, Manpower Supply Service and Maintenance or Repair Service and Department alleged services were rendered without registration and wrongly claimed abatement on the basis of differences between Balance Sheet, Income Tax records and ST-3 Returns – Whether service tax demand can be sustained merely on the basis of accounting differences between Balance Sheet and Income Tax records without first establishing the taxable service and taxable value – HELD – Service tax can be levied only after the Department identifies the taxable service, classifies the activity under the appropriate charging entry and determines the taxable value in accordance with Section 67 of the Finance Act, 1994. Mere differences between Balance Sheet, Income Tax records and ST-3 Returns cannot by themselves constitute the basis for confirming service tax liability without first undertaking the statutory exercise or verifying the underlying agreements, invoices, work orders and other contemporaneous records. A Show Cause Notice must clearly identify the taxable services, specify the appropriate taxable category and disclose the basis of computation of demand. A vague or omnibus demand founded merely on financial statements without proper classification cannot be sustained. Accounting entries in financial statements cannot constitute sole basis for determining service tax liability. Figures reflected in Balance Sheet or Income Tax records may justify investigation but cannot by themselves establish taxable value without examination of underlying contracts, invoices and contemporaneous evidence. The Department substantially accepted audit computation based on Balance Sheet without undertaking detailed verification required by law. The controversy stands concluded by the Tribunal's earlier decision in the same assessee's case involving identical facts and issues wherein it was held that the Show Cause Notice failed to properly identify and classify the taxable services or correlate the receipts with the charging provisions of the Finance Act, 1994 and that invocation of extended period was unsustainable. Judicial discipline requires respectfully following the earlier Final Order. The adjudicating authority travelled beyond allegations contained in the Show Cause Notice and burden of establishing taxability always rests upon the Department. Only the admitted liability is sustained – The service tax demand on merits is unsustainable except for the admitted liability which is sustained with applicable interest under Section 75 subject to adjustment of amounts already paid, and the balance disputed demand is set aside - the appeal is partly allowed - Service Tax – Invocation of Extended Period – Department proceeded on basis of non-filing of ST-3 returns, non-registration and incorrect availment of abatement and alleged suppression and wilful misstatement to invoke extended period – Appellant contended that proceedings were based on its own Balance Sheet, Income Tax records and ST-3 Returns and no suppression or wilful misstatement was established – Whether extended period can be invoked when proceedings are founded entirely on appellant's own statutory records – HELD – Extended period under proviso to Section 73(1) can be invoked only where the short-payment of service tax is by reason of fraud, collusion, wilful misstatement, suppression of facts or contravention of statutory provisions with intent to evade service tax. The burden of establishing these ingredients lies squarely upon the Department. The Show Cause Notice itself records that the demand was worked out by comparing appellant's Balance Sheet, Income Tax records and ST-3 Returns and no incriminating documents, parallel accounts or independent evidence of deliberate concealment have been brought on record. The proceedings are therefore founded entirely upon the appellant's own statutory records which substantially negates the allegation of suppression. The controversy stands concluded by the Tribunal's earlier decision in the same assessee's case wherein on substantially identical facts it was held that the Department was already aware of the appellant's activities through earlier audits and proceedings and invocation of extended period was therefore unwarranted. No material factual distinction has been demonstrated. Under settled law, extended period can be invoked only where there is a positive act of fraud, wilful misstatement or deliberate suppression with intent to evade duty and mere omission, accounting discrepancy or difference in interpretation is insufficient. The present dispute essentially relates to classification of services, reconciliation of receipts and admissibility of abatement, all arising from appellant's disclosed statutory records. The Department has failed to establish the statutory ingredients necessary for invoking proviso to Section 73(1) – Interest under Section 75 is payable on the admitted service tax liability subject to adjustment of any amount already discharged. Penalty under Section 78 is set aside as the admitted liability and delay in filing returns do not by themselves establish fraud, wilful misstatement or suppression with intent to evade service tax. [Read less]

2026-VIL-1573-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax – Cum Tax Benefit – Appellant was engaged in rendering taxable services and had obtained service tax registration but was neither paying service tax nor filing returns – Department issued Show Cause Notice proposing service tax demand and the Adjudicating Authority confirmed the demand on the basis that service tax liability should be computed on the gross receipts – Appellant contended that cum tax benefit should be extended as it had not paid service tax and there was no evidence that service tax was separately collected from the service recipients – Whether cum tax benefit should be extended when service tax is not paid and not separately collected from service recipients – HELD – It is a well-settled principle that if service tax is not paid and there is no evidence that it has been separately collected from the service recipients, the amounts received as consideration should be considered as cum tax consideration and cum tax benefit should be extended. When service tax is levied on the consideration received for services and the tax is not paid by the service provider and there is no evidence of separate collection from the recipient, the amounts received must be presumed to include the tax component. The benefit of computing service tax on a reduced taxable value after deducting the tax component is available to the assessee. The appellant is entitled to cum tax benefit for determining the taxable value and computing service tax liability - The matter is remanded to the Commissioner for the limited purpose of calculating the amount of service tax, interest and mandatory penalty payable after extending cum tax benefit for the years 2014-2015, 2016-2017 and 2017-2018 – The appeal is partly allowed - Service Tax – Computation of Demand – Gross Receipts – Appellant rendered taxable services during the period 2014-15 to 2017-18 and the Department issued Show Cause Notice proposing demand of service tax based on gross receipts reflected in Income Tax returns for the years 2014-15, 2015-16 and 2016-17 and on the basis of contract amounts for the year 2017-18 as IT returns and balance sheets were not available for that year – Appellant contested the demand for 2017-18 on the ground that the tax was computed on the basis of contractual amounts instead of actual consideration received – Whether the demand for service tax can be sustained on the basis of contract value when IT returns or balance sheets are not available – HELD – When the Department does not have access to Income Tax returns or balance sheets for the relevant period, the best judgment can only be based on whatever figures are available to it. The demand for service tax can be made on the basis of the agreements entered into by the service provider when other documentary evidence of actual consideration received is not available. The contract value constitutes a reasonable basis for determining the taxable value in such circumstances. However, even when the demand is computed on the basis of contract value, the same principle regarding cum tax benefit applies. If service tax is not paid and there is no evidence that it was separately collected from the service recipients, the amounts received or contracted to be received should be considered as cum tax consideration – The demand for the year 2017-18 computed on the basis of contract value is sustainable but cum tax benefit should be extended in computing the service tax liability for that year as well. The appeal is partly allowed and the matter is remanded to the Commissioner for the limited purpose of calculating the amount of service tax, interest and mandatory penalty payable after extending cum tax benefit. [Read less]

2026-VIL-100-SC | Supreme Court SGST

GST – Requirement of pre-deposit - The Show Cause Notice and the Order-in-Original was passed prior to the amendment prescribing pre-deposit with effect from 1st October, 2025 – Petitioner submits that the condition of pre-deposit cannot be a condition for filing further appeal in this case before the GSTAT – HELD - Issue notice. In the meanwhile, the petitioner is permitted to file an appeal before the GSTAT and the appeal shall be entertained without a pre-deposit. However, this will be subject to the outcome of the present petition – Ordered accordingly

2026-VIL-1035-MAD | High Court SGST

GST - Pre-deposit of penalty - Applicability of proviso to sub-section (6) of Section 107 regarding penalty without tax demand – Issue of order in Form DRC-07 in respect of penalty. Show cause notice was followed by appellate order rejecting appeal solely on ground that petitioner had not pre-deposited 10 percent of penalty as per proviso to sub-section (6) of Section 107 - Whether proviso to Section 107(6) requiring pre-deposit of 10 percent of penalty is applicable where an order confirms demand of tax along with penalty - HELD - Proviso to sub-section (6) of Section 107 is attracted only to cases wherein an order dema... [Read more]

2026-VIL-1016-DEL | High Court SGST

GST - Competence of Proper Officer to issue Show Cause Notice under Section 122 of CGST Act, 2017 - Assignment of functions - Investigations into alleged issuance of invoices without actual supply of goods and wrongful availment of Input Tax Credit. Show Cause Notices under Section 122 were issued by DGGI on 30.06.2025. Petitioners contended that the issuing officer had not been assigned relevant functions under Section 122 at time of issuance and that subsequent assignment through Circular dated 27.10.2025 could not retrospectively validate notices which were void at inception - Respondents relied upon Notification No. 14/2017 which places DGGI officers at par with corresponding rank central tax officers invested with all powers under CGST and IGST Acts, and contended that subsequent Circular merely clarified existing authority - Whether officer of Central Tax who is not specifically assigned function under Section 2(91) can initiate proceedings under Section 122 when empowered under Sections 3 and 5 of CGST Act and invested with powers of corresponding rank by Notification No. 14/2017-CT and subsequent Circular dated 27.10.2025 can retrospectively validate void SCNs - HELD – The statutory scheme distinguishes between designation or rank of officer and assignment of particular statutory function and expression proper officer is function-specific. However, on conjoint reading of Sections 2(91), 3 and 5 of CGST Act and Notification Nos. 02 and 14, Court is unable to hold that in absence of specific assignment officer otherwise empowered by Sections 3 and 5 is denuded of authority to initiate proceedings - Notification No. 14/2017-CT specifically invests DGGI officers with powers exercisable by Central Tax officers of corresponding rank and Notification No. 02/2017-CT assigns various functions to specified classes of officers. Question whether provisions read together constitute sufficient conferment of authority cannot be answered merely on basis of subsequent Circular dated 27.10.2025 which is issued in view of amendments in Finance Act and is clarificatory of manner in which functions are to be exercised and officers who perform such functions but cannot render nugatory or override statutory notifications already issued - Objection as to competence cannot be characterized as patent or self-evident absence of jurisdiction warranting interference under Article 226. Question involves construction of statutory scheme, effect of Notification Nos. 02 and 14, subsequent Circular and interrelationship between proceedings under Sections 73 or 74 and consequential penalties under Section 122, which are matters capable of examination by Appellate Authority which is competent to consider both questions of fact and law - Objection concerning competence of officer does not disclose patent absence of jurisdiction warranting interference in writ jurisdiction. Petitioners remain at liberty to raise said objection in statutory appeals - The writ petitions are disposed of - Applicability of Amended Pre-Deposit Requirement under Section 107(6) to Proceedings Initiated Before Amendment - Whether amended requirement of pre-deposit can be applied retrospectively to proceedings initiated before 01.10.2025 - HELD - Substituted proviso to Section 107(6) which came into force on 01.10.2025 does not govern appeals arising from adjudicatory proceedings initiated by Show Cause Notices issued prior to that date. Appellate remedy including conditions governing its exercise is governed by law applicable on date on which adjudicatory proceedings commenced - Amended pre-deposit requirement shall not apply to appeals arising from Show Cause Notices issued prior to 01.10.2025. Appeals shall be governed by Section 107(6) as it stood on respective dates of issuance of Show Cause Notices and shall not be rejected merely because Orders-in-Original were passed after 01.10.2025. [Read less]

2026-VIL-1014-DEL-CU | High Court CUSTOMS

Customs - Computation of statutory period for adjudication of Show Cause Notice – Application of Section 28(9A) of the Customs Act when interim order restraining coercive action pending – Petitioners imported duty-free raw materials under Advance Authorisation Licences and allegedly diverted the same to domestic market without fulfilling export obligations in breach of actual user condition. A Show Cause Notice was issued on 24.06.2022 under Section 28(4) of the Customs Act, 1962. Petitioners sought deferment of adjudication on account of pendency of writ petition with interim order restraining coercive recovery. Proceedings were transferred to Call Book. Order-in-Original was passed on 29.11.2024 demanding differential customs duty with applicable interest – Whether administrative transfer to Call Book suspends or extends statutory timeline – HELD – Section 28(9A) is a non-obstante provision addressing situations where proper officer is unable to determine amount of duty or interest for reasons enumerated therein including when interim order of stay has been issued by High Court. The provision does not make Call Book transfer itself source of any extension; rather statutory consequence flows from existence of circumstance contemplated therein - In the present case circumstance under clause (b) of Section 28(9A) was squarely attracted inasmuch as issue forming subject matter of writ petition was directly germane to adjudication and pendency thereof coupled with interim protection prevented proper officer from proceeding to final determination. Call Book entry was merely consequential to circumstance already placed before Authority by Petitioners themselves. The requirement of communication under Section 28(9A) was substantially satisfied since it was petitioners who brought to notice of Department the pendency of writ proceedings and identified that circumstance as ground for seeking deferment - Administrative circular regulating manner of Call Book transfer cannot override or displace statutory consequence flowing from circumstance expressly contemplated by Legislature. Circumstance ceased to exist on 08.12.2023 when writ petition was dismissed. From that date statutory period of one year under Section 28(9)(b) commenced which would expire on 08.12.2024. Since Impugned Order-in-Original was passed on 29.11.2024 it was within prescribed period – The Order-in-Original was passed within period prescribed under Sections 28(9) and 28(9A) of the Customs Act, 1962 - The writ petition is dismissed [Read less]

2026-VIL-1579-CESTAT-ALH-CU | CESTAT CUSTOMS

Customs – Valuation – Acceptance Letters and Right to Challenge Reassessment – Appellant imported polyester knitted fabrics from China and declared transaction value in accordance with commercial invoices. Customs authorities questioned the declared value and sought to enhance it based on National Import Database data showing contemporaneous imports at higher values. Appellant made written requests for clearance on payment of duty at enhanced value under protest to avoid demurrage and detention costs. Due to commercial pressures, Appellant submitted letters of acceptance agreeing to the enhancement and waiving the requirement of show cause notice or speaking order. Assessing Officer refused to pass a speaking order relying solely on the acceptance letter. All appeals filed by Appellant were rejected by Commissioner (Appeals) holding that since Appellant accepted enhancement in writing, no speaking order was required and the Appellant was barred from challenging the assessment – Whether an acceptance letter given at the threshold of clearance, essentially under commercial compulsion to avoid detention and demurrage charges, operates as an unconditional waiver of the statutory right to appeal against the valuation enhancement itself, or whether it only waives the procedural requirement of a speaking order under Section 17(5) of the Customs Act – HELD – Acceptance letters given under commercial pressure do not foreclose the statutory right to challenge the reassessment and valuation enhancement. The waiver of speaking order under Section 17(5) of the Customs Act is a limited procedural concession and cannot be construed as abandonment of the independent substantive right of appeal conferred by Section 128 of the Customs Act, 1962. There is no estoppel in taxation matters and consent given by an assessee cannot take away rights otherwise available under law. The mandate of Rule 12(2) of the Customs Valuation Rules, 2007 to communicate to the importer in writing the grounds for doubting the truth or accuracy of the declared value is mandatory and cannot be ignored or waived. The mere mention in an acceptance letter that contemporaneous import data has been shown to the Appellant without disclosing the actual comparable data including quantity, quality, and time of import does not constitute valid fulfillment of the statutory requirement. The formation of opinion regarding reasonable doubt and communication of the said grounds to the importer in writing is mandatory and subterfuge to bypass this mandate is unacceptable. The principles established by the Hon'ble Delhi High Court in Niraj Silk Mills v. Commissioner of Customs (ICD) Patparganj, squarely cover the facts of the present appeals and hold that the right to question the correctness of the decision of the proper officer is protected by statute and cannot be abandoned through acceptance letters. The reliance placed by the Department on M/s S.S. Overseas v. Union of India is misplaced as that decision addresses only the narrow question of whether a writ of mandamus lies for issuance of a speaking order and does not adjudicate upon the independent statutory right of appeal against the reassessment itself – The impugned Orders-In-Appeal are unsustainable in law and are set aside and the appeals are allowed with consequential relief as per law. [Read less]

2026-VIL-1593-CESTAT-AHM-CU | CESTAT CUSTOMS

Customs - Classification of imported Naphtha - Naphtha versus Natural Gasoline Liquid - Burden of proof on Revenue to establish mis-classification - Applicability of BIS standards and test methodology - The Appellant imported goods declared as Naphtha under CTH 2710 1229 based on contracts, commercial invoices and test reports. The Revenue proposed re-classification as Natural Gasoline Liquid under CTH 2710 1290 alleging mis-classification and demanded differential duty based on prices from a website. The Appellant contended that four independent agencies had certified through comprehensive testing that the goods were Naphtha, that the test reports of Revenue agencies were cryptic and based on incomplete parameters - Whether the Revenue can reject the declared classification of goods as Naphtha and re-classify them as Natural Gasoline Liquid without scientific evidence and laboratory testing and whether valuation can be determined on ad-hoc basis using retail fuel prices - HELD - The Revenue must establish that the classification adopted by the importer is incorrect and mere suspicion of mis-classification is not sufficient. The Department must produce technical evidence, scientific evidence and expert opinion before rejecting the declared classification – While the test reports issued by CRCL Kandla and CRCL Delhi were cryptic, the test reports by IIP Dehradun and Geo Chem were comprehensive and tested all standard parameters prescribed by BIS and independently concluded that the samples were Naphtha. The classification under Chapter 60 depends upon fibre composition, weight, predominance, textile construction and cannot be determined merely from invoice, packing list or visual examination. Natural Gasoline Liquid is a subset of the broader genus of chemicals known as Naphtha and even if the goods were NGL they would be correctly classified under CTH 2710 1229. The assessable value of the imported goods declared based on transaction value cannot be rejected based on an ad-hoc value derived from retail-grade high-octane gasoline prices on a website without proper valuation methodology. The proper officer cannot substitute the transaction value of imports but can only re-determine the assessable value through sequential application of Valuation Rules. The imported goods were correctly classified as Naphtha and no infirmity exists in the import or assessment - On the basis of akinness, as also the consequences when tests are inconclusive, or even on the basis of “common parlance” test of “NGL” being species of “Naphtha”, the department has not been able to authoritatively establish the classification it has sought. In the facts and legality of the matter, therefore the classification of the appellant cannot be allowed to be disturbed - The classification of the impugned goods under the tariff entry as claimed by the Appellant is upheld. The re-classification by the Revenue is rejected. The differential duty demand is not sustainable and is set aside. The penalties imposed are not warranted and are set aside – The appeals are allowed - Electronic evidence certificate - Requirement of Section 138C - Admissibility of WhatsApp chat evidence in Customs proceedings - Reliance on WhatsApp chats, digital material - HELD - Evidence gathered can be allowed even if from the whatsapp chats and even if retrieved from the mobile phone if various conditions are fulfilled – The sub Section (3) of Section 38C provides that information if is carried out by different computers i.e. mobiles over that period then all the computers used i.e. mobiles used for the purposes during that period shall be treated for the purpose of section constituting a single computer and term computer (i.e. mobile) shall be construed accordingly - The adjudication order in this case suffers from the vice of relying on untested facts, unproven documents and uncorroborated statements including the digital evidence, therefore, the findings are jeopardized. [Read less]

2026-VIL-1583-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax – Skill development services – Exemption under PMKVY – Appellant conducted PMKVY courses and earned income through M/s Globsyn Skills Development Private Limited which was an approved training partner of National Skill Development Corporation – Whether services provided by appellant as an associate partner of the approved training partner are eligible for exemption under para 9A(iv) of Notification No. 25/2012-ST – HELD – Exemption notifications must be interpreted strictly and the burden lies on the assessee to demonstrate that the case falls within the exemption parameters. Para 9A(iv) provides exemption to services provided by training partners approved by NSDC or Sector Skill Council in relation to NSDC schemes. Appellant was not the directly authorized training partner of NSDC but rendered services as an associate or sub-partner of the approved training partner. The exemption clause does not extend to indirect arrangements through intermediaries. The requirement for strict interpretation of exemption notifications precludes extending the exemption to arrangements not explicitly covered – Appellant is liable to pay service tax - Service Tax – Educational services – Exemption under negative list – Appellant provided distance learning and vocational training courses under Suresh Gyan Vihar University and earned income for rendering such services – Whether the services for providing education are exempt under clause (l)(ii) of section 66D of the Finance Act, 1994 – HELD – Clause (l)(ii) of section 66D provides exemption for services by way of education as part of a curriculum for obtaining a qualification recognized by law. The plain language of the clause does not restrict the exemption to education provided by the University itself but extends to education provided for obtaining a recognized qualification. The adjudicating authority erred in introducing a restrictive interpretation not found in the statutory provision. Where education leading to a statutorily recognized qualification is provided it falls within the exemption even if provided through an authorized educational partner. The demand for services provided to Sahitya Sadawat Samiti is set aside - Service Tax – Extended period of limitation – Department received third party information regarding appellant's differential income and issued show cause notice invoking extended period proposing service tax demand – Whether extended period was validly invoked in the absence of specific evidence of wilful suppression or misstatement – HELD – Extended period of limitation can be invoked only when there is conscious and willful suppression or misstatement with intent to evade tax as established by Supreme Court precedents. Mere non-response to letters or failure to immediately furnish documents does not constitute wilful suppression. The fact that the adjudicating authority ultimately upheld only a portion of the proposed demand after considering documents and information presented by appellant demonstrates the absence of wilful suppression. No specific act of fraud or wilful misstatement was alleged or established in the show cause notice. The extended period was wrongly invoked and cannot be sustained. The demand made for the extended period is set aside. [Read less]

2026-VIL-1582-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service tax – Renting of immovable property – Taxability and extended period of limitation – Appellant was a state-government-owned industrial development corporation providing land on lease for industrial development receiving lease rent and one-time premium. Department issued show cause notices invoking extended period of limitation proposing service tax demand – Whether renting of vacant land and one-time premium are taxable as service and whether extended period of limitation applies – HELD – Renting of vacant land became taxable from 01.07.2010 onwards but prior to that it did not constitute a taxable serv... [Read more]

2026-VIL-1598-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - Taxability of interest on EMI-based loan transactions - Credit card services of “Loan on Phone”, “Dial-an-EMI” and “Balance Conversion” - Interest on loans under negative list - Appellant a banking company extended EMI-based loans through credit card accounts to cardholders. Interest was earned on such loans and additional interest charged for delayed payment - Department demanded service tax on interest on grounds that transactions were intrinsically linked with credit card services and interest constituted consideration for taxable service. The Appellant contended that transactions were loans and advances and interest was excluded from levy under Section 66D(n) of Finance Act - Whether interest earned on EMI-based loan transactions routed through credit card accounts is liable to service tax or represents non-taxable interest on loans and advances - HELD - The business of lending involves disbursement of principal with obligation to repay together with interest. Transaction involving such elements is loan not credit card service. Credit card platform is mechanism or channel for disbursal and recovery not determinant of legal character of underlying transaction – The nature of receipt must be ascertained by substance of transaction and rights and obligations arising therefrom not nomenclature or form. Section 65B(44) defines service as activity for consideration excluding transaction in money. Section 65B(30) defines interest as interest on money borrowed excluding service fees. Section 66D(n)(i) places services by way of extending loans where consideration is represented by interest in negative list - Interest arising from loans and advances cannot be subjected to service tax merely because lending facility routed through credit card platform. Mere fact that borrowers were existing cardholders or repayment routed through credit card accounts does not alter character of transaction. Interest represents return for time value of money lent not consideration for independent credit card service - The RBI regulatory framework treats EMI loan facilities as lending arrangements distinct from credit card operations. Appellant's accounting records show interest accounted as interest income not credit card fees - The same reasoning applies to additional or penal interest charged on delayed payment representing consideration for continued use of money not for tolerating an act - Interest, whether normal or penal, represents compensation for the time value of money and not consideration for any independent service. The additional or penal interest collected by the appellant on delayed payment of loan instalments cannot be subjected to Service Tax, including under Section 66E(e) of the Finance Act, 1994 - Where dispute is essentially interpretational and relevant transactions duly recorded in books and within Department's knowledge prior SCN and audits demonstrate appellant's bona fide belief regarding taxability extended period and penalty cannot be invoked - The impugned Order-in-Original is set aside in toto. Interest earned on EMI-based loan transactions and additional or penal interest on delayed payment is not liable to service tax – The impugned order is set aside and the appeal is allowed [Read less]

2026-VIL-1580-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs – Export Duty Refund – Limitation under Section 27 – Appellant exported non-alloy steel slabs on which export duty was leviable at the rate of 15 per cent ad valorem and voluntarily paid the same calculated on FOB price. The Board issued Circular dated 10.11.2008 clarifying that a policy decision had been taken that till 31.12.2008 the existing practice of computation of export duty by taking FOB price as cum-duty price may be continued and that with effect from 1st January 2009 the practice of computation shall be changed. Appellant filed refund claim for excess export duty paid. The original authority sanctioned the refund, however the Commissioner (Appeals) rejected the refund claim holding it to be time-barred under Section 27 of the Customs Act, 1962 – Whether the refund claim for excess export duty was time-barred under Section 27 when the cause of action arose only at the stage of ascertainment and reassessment of the excess duty – HELD – The refund claim was not time-barred. The cause of action for refund arose only on the date when the excess duty was ascertained and reassessed vide Note dated 21.09.2015 by the Export Department, and not from the date of original payment. The excess duty remained unassessed until the said Note dated 21.09.2015 and the reassessment carried out vide the Note constituted a valid reassessment within the meaning of Section 27(1B)(c) of the Customs Act. Till the assessment order was rectified, the question of refund would not arise and the refund claim filed prior to such reassessment could not be treated as time-barred on the principle established in Commissioner of Customs (Import) v. Indian Farmers Fertiliser Co-Op. Ltd.. The principle of limitation was accordingly inapplicable. The Tribunal declined to resolve the contention that limitation runs from the date of discovery of the mistake under Section 17 of the Limitation Act, 1963 or that Article 265 of the Constitution provides an independent route to refund, as the arguments were foreclosed by the Nine-Judge Bench decision in Mafatlal Industries Ltd. v. Union of India. Order-in-Original No.44746/2016 sanctioning the refund was correctly passed. The impugned order dated 11.08.2016 rejecting the refund claim is set aside – The appeals are allowed - Customs – Export Duty Refund – Interest – Following the determination that the refund claim for excess export duty was not time-barred and order of refund was rightfully passed, whether interest on the refund was payable – HELD – Interest under Section 27A is payable on the refunded amount. The interest runs from the date immediately following the expiry of three months from the date of reassessment on 21.09.2015, that is, from 22.12.2015, until the date of actual refund, at the notified rate. Although the principle established in Ranbaxy Laboratories Ltd. v. Union of India, provides that interest on delayed refund runs from expiry of three months from the date of receipt of the refund application unaffected by the pendency of appellate proceedings, such a premise did not translate to the present facts without modification. The cause of action for the refund, being the ascertained existence of the excess payment, did not arise until the Note dated 21.09.2015. Prior to 21.09.2015, there was no ascertained sum for the Department to have refunded and no delay on its part in refunding one. The delay lay in the reassessment itself becoming necessary and being carried out. To fix the interest clock at the date of the original application while fixing the limitation clock at the date of reassessment for the identical cause of action would be to hold that the claim was both premature and overdue at the same moment, which is an inconsistency the Tribunal declined to introduce. Ranbaxy, properly applied on these facts, requires interest to run from 21.09.2015, the same date fixed as the relevant date under Section 27(1B)(c). Appeal is allowed to the extent that interest is directed to be computed and paid as above. [Read less]

2026-VIL-1575-CESTAT-BLR-ST | CESTAT SERVICE TAX

Service Tax – Works Contract – Taxability Prior to 01.06.2007 – Appellant carried out execution of civil contracts for construction of buildings and tower foundations for government departments and religious institutions. Service tax authority demanded service tax under the categories of Commercial or Industrial Construction Service, Erection, Commissioning or Installation Service for the period from 2004-2005 to March 2006. The Adjudication Authority confirmed the demand and imposed penalties. The Commissioner (Appeals) upheld the demand and penalties – Whether the composite contract entered by the Appellant including supply of material and labour should be classified as Works Contract Service and whether service tax was chargeable on such activities during the period prior to 01.06.2007 when Works Contract Service was introduced in the service tax regime – HELD – The composite contract entered by the Appellant including supply of material is falling under the category of Works Contract and no demand is sustainable before the introduction of service tax on works contract with effect from 01.06.2007. The issue is settled as per the decision of Hon'ble Supreme Court in Commissioner v. M/s Larsen & Toubro holding that composite contracts including supply of material are taxable under Works Contract Service. Service tax on works contracts was introduced only from 01.06.2007 and therefore, the demand made prior to 01.06.2007 for services rendered on construction of government buildings and civil structures is unsustainable. The demand made by invoking extended period of limitation for the period prior to 01.06.2007 is accordingly set aside. The penalties imposed under Sections 77 and 78 of the Finance Act, 1994 for the period prior to 01.06.2007 are also set aside as the demand itself is unsustainable. However, the appropriation of the amount paid by the Appellant with interest from 01.06.2007 to March 2008 under the category of Works Contract is upheld as the service was taxable from that date – The impugned order is modified to this extent – Appeal is partially allowed with consequential relief in accordance with law [Read less]

2026-VIL-1574-CESTAT-BLR-ST | CESTAT SERVICE TAX

Service Tax – Classification of Services as Management, Maintenance or Repair Service versus Works Contract Service – Appellant, a License Contractor, carried out reconstruction, repair and maintenance of damaged portions of irrigation canals. The Adjudication Authority confirmed demand of service tax under Management, Maintenance or Repair Service (MMRS) category and the Commissioner (Appeals) upheld the demand. The Appellant contended that the activities involved supply of property in goods and hence were composite works contracts falling under Works Contract Service, for which VAT had been paid under the Kerala Value Added Tax Rules, 2005 – Whether the services should be classified and taxed under the MMRS category or under the Works Contract Service category – HELD – The services fall within Works Contract Service and not MMRS. As per Section 65(105)(zzzza) of the Finance Act, 1994, Works Contract covers repair, alteration, renovation or restoration services in relation to construction of civil structures. The taxation provisions in Section 65(105) refer only to service contracts simpliciter and not to composite works contracts, such as the repair and maintenance of irrigation canals which involve both provision of labour and transfer of property in goods. The judgment of the Hon'ble Supreme Court in Commissioner v. M/s Larsen & Toubro, held that no attempt has been made by the taxation provisions to remove the non-service elements from composite works contracts by deducting the value of property transferred. As in the similar circumstances in M/s Agarwal Engineering Works v. Commissioner, the materials provided were separately subjected to VAT by the Government, indicating that the services were composite in nature involving both labour and materials. Since the Appellant had paid VAT on materials supplied as part of the works contract, the services cannot be taxed under any other category of services such as MMRS. The demand confirmed under the MMRS category is accordingly unsustainable and is set aside – the impugned orders are set aside and appeals are allowed - Service Tax – Extended Period of Limitation – Following the determination that the service activities were composite works contracts and not taxable under MMRS category, the question arose whether the demand confirmed by invoking the extended period of limitation under Section 73 of the Finance Act, 1994 was sustainable – The Appellant contended that the extended period of limitation could not be invoked as there was neither deliberate suppression of facts nor intention to evade payment of tax, as admitted by the Commissioner (Appeals) in setting aside the penalties imposed under Section 78 – HELD – The demand confirmed by invoking the extended period of limitation is unsustainable. The impugned order itself found that there was no deliberate suppression of facts or intention to evade payment of tax, on which ground the penalties under Section 78 were set aside. The certificate issued under Kerala Value Added Tax Rule, 2005 evidences payment of VAT by the Appellant in compliance with the applicable tax law. In absence of any suppression or evasion intention, there is no justification for invoking the extended period of limitation under Section 73. The invocation of extended period of limitation requires conditions precedent to be satisfied, and once the Appellate Authority itself found absence of suppression and evasion intent, the entire demand confirmed by invoking extended period of limitation is rendered unsustainable - Service Tax – Manpower Recruitment and Supply Agency Service – Extended Period of Limitation – The Adjudication Authority confirmed demand of service tax under the category of Manpower Recruitment and Supply Agency Service for the period from 01.04.2010 to 31.12.2010 – The Appellant contended that the manpower was provided in an emergency situation as a one-time activity and the value of the amount received was well within the exemption limit prescribed for such services. HELD – The demand under the category of Manpower Recruitment and Supply Agency Service is unsustainable. Though the said activity is taxable under the category of Manpower Recruitment and Supply Agency Service, the value of the transaction is below the taxable limit prescribed for such services, rendering the demand unsustainable. Additionally, considering that the Appellant had provided manpower in an emergency situation as a one-time activity, the same cannot be sustained as a regular taxable service. The demand confirmed by the Adjudication Authority and upheld by the Commissioner (Appeals) under this category is accordingly set aside. [Read less]

2026-VIL-1029-CAL | High Court SGST

GST - Show cause notice issued under Section 74 of CGST Act 2017 based on alleged violation of Rule 96(10) of CGST Rules 2017 - Rule 96(10) omitted unconditionally with effect from 8th October 2024 by Notification No.20/2024 Central Tax without any saving clause - Whether proceedings can be initiated or continued based on a provision which has been omitted from the rules without any saving clause - HELD - Upon omission of a Rule provision without any saving clause the provision ceases to exist in the eye of law and no proceedings can be initiated or continued on the basis thereof - The intention to omit the Rule without an... [Read more]

2026-VIL-1576-CESTAT-BLR-ST | CESTAT SERVICE TAX

Service Tax – Manpower Recruitment or Supply Agency Service – Applicability to Non-Commercial Organizations – Appellant is a non-commercial, charitable organization registered under the Travancore Cochin Literacy Scientific and Charitable Societies Registration Act, engaged in organizing economically backward women for full employment and providing them with training in various skills. Appellant organizes women members to ensure every family obtains full employment with full employment comprising work security, income security, food security and social security. The women members, who are part of the organization and constitute its workforce, seek direct employment with clients with organizational endorsement to ensure payment of prompt and correct wages to reduce exploitation. The Department raised demand for service tax under the category of manpower recruitment or supply agency service for the period from 01.05.2006 to 31.12.2007. The Commissioner (Appeals) confirmed the demand without considering the factual aspects of the organization and its functioning – Whether the appellant, a non-commercial charitable organization where the organization and workers are not separately identifiable, is engaged in rendering service for supply of manpower within the meaning of Section 65(68) of the Finance Act, 1994 – HELD – The appellant is not engaged in rendering any service in any manner for the supply of manpower. The appellant organizes women to ensure that every family obtains full employment and the organizational structure suggests it is essentially in the nature of a trade union or workers collective where members constitute the organization. The members acquire knowledge through training programmes organized by the organization and thereafter seek employment with clients with organizational endorsement. No intermediaries exist in this case. The definition of manpower recruitment or supply agency service contemplates a situation where a person is engaged in supply of manpower and presumes an employer-employee relationship between the agency and the individual, with individuals being contractually employed by the manpower recruitment or supply agency. In the present case, the workers and the organization are not separately identifiable and no such contractual employment relationship exists between the organization and the workers. The organization does not supply manpower but rather facilitates direct employment of collective workers. The fact that the appellant is not a commercial concern further distinguishes it from the category of manpower supply agencies. For the period prior to 01.05.2006, the definition of manpower recruitment or supply agency explicitly required the service provider to be a commercial concern, and the appellant does not qualify as such. Even if the activities were to be considered within the scope of manpower supply services, the considerable portion of the amount collected was reimbursed as wages to members and the balance charged as registration and training fees was negligible and did not fall within the monetary limit of taxable service – The adoption of the gross amount without deducting reimbursable wages is unsustainable – The appeal is allowed [Read less]

2026-VIL-1577-CESTAT-HYD-CU | CESTAT CUSTOMS

Customs – IGST Exemption under Advance Authorisation Scheme – Pre-import Condition – Appellant was engaged in manufacture and export of Basic Chromium Sulphate, Chromic Acid and Chrome Oxide Green and imported inputs under Advance Authorisation claiming IGST exemption – During the period from 13.10.2017 to 10.01.2019, a pre-import condition was introduced which required that before availing exemption from IGST, the import of corresponding raw materials must precede the export of finished products – Department alleged that in respect of certain imports, exports of finished products had preceded the corresponding imports of raw materials and therefore appellant had violated the pre-import condition – Appellant contended that export obligations had been discharged as evidenced by issuance of Export Obligation Discharge Certificates and therefore entire demand must disappear – Whether the fulfilment of export obligation by itself can erase the breach of pre-import condition where such breach is otherwise established – HELD – The pre-import condition applicable during the relevant period was valid and the Hon'ble Supreme Court in Union of India Vs Cosmo Films Ltd., has upheld the validity of the pre-import condition. The fulfilment of the export obligation by itself cannot erase the actual breach of the specific pre-import condition where such breach is otherwise established. The subsequent regularisation mechanism provided under CBIC Circular No. 16/2023-Cus dated 07.06.2023 and Trade Notification No. 07/2023-24 issued by DGFT expressly recognises that imports under the Advance Authorisation Scheme made from 13.10.2017 to 09.01.2019 which could not satisfy the pre-import condition may be regularised by making payment as prescribed. The appellant cannot claim complete immunity from payment of IGST merely on the ground that the import obligation under the Advance Authorisations was subsequently fulfilled. To the extent the pre-import condition was factually violated, the IGST is required to be regularised in accordance with the procedure prescribed pursuant to Cosmo Films Ltd. – The appeal cannot be allowed on the ground that export obligations have been discharged but the matter requires fresh determination on re-assessment on Bill of Entry-wise and raw material-wise basis - the appeal is partly allowed and partly remanded - Customs – IGST Demand – Quantification Methodology – Advance Authorisation – Appellant challenged the quantification of IGST demand at Rs. 5,77,38,576/- computed by Adjudicating Authority on an authorisation-wise basis treating the entire Advance Authorisation as one unit without examining each raw material and each Bill of Entry separately – Appellant quantified the IGST at Rs.1,78,38,015/- without prejudice and also contended that the pre-import condition should be examined in relation to the actual import and export correlation for each raw material – Whether the Adjudicating Authority was correct in adopting the methodology of quantifying demand on the basis of the entire Advance Authorisation without Bill of Entry-wise and raw material-wise examination – HELD – The pre-import condition cannot be examined in the abstract for the entire Advance Authorisation without correlating the individual raw material, its import, the corresponding exported product and the chronology relevant to that particular material. The finding that export should be treated as satisfying the pre-import requirement only when at least one consignment of every raw material in an Advance Authorisation has already been imported requires reconsideration. Such an approach may artificially deny exemption even in respect of a raw material which had admittedly been imported before its corresponding export. The violation has to be determined having regard to the actual import-export correlation and the wording of the applicable notification. The plea concerning clubbing of Advance Authorisations cannot be ignored. Where the competent DGFT authority has permitted clubbing and the relevant procedure provides that the clubbed authorisations shall be treated as one authorisation for the prescribed purposes, the Customs Authorities are required to take the legal effect of such clubbing into account while quantifying the liability. The impugned order does not satisfactorily deal with this aspect – The figure of Rs. 5,77,38,576/- cannot be sustained merely on the basis of the methodology adopted in the impugned order without a fresh Bill of Entry-wise and raw material-wise exercise. The matter is remanded to the Appraising Authority for limited purpose of requantification on re-assessment basis - Customs – Interest, Confiscation, Redemption Fine and Penalty – IGST on Breach of Pre-import Condition – Adjudicating Authority imposed interest under Section 28AA, ordered confiscation under Section 111(o), imposed redemption fine of Rs. 4,00,00,000/- under Section 125 and penalty under Section 114A – Appellant contended that during the relevant period 2017-19, Section 3(12) of the Customs Tariff Act, 1975 incorporated provisions of the Customs Act only in relation to recovery of duties and taxes and did not provide the substantive machinery for levy of interest, confiscation, redemption fine and penalty in relation to IGST levied under Section 3(7) of the Customs Tariff Act – Whether interest, confiscation, redemption fine and penalty could be sustained for IGST liability arising from breach of pre-import condition during the relevant period – HELD – The Bombay High Court in the case of AR Sulphonates Pvt Ltd., examined the statutory framework governing imports which violated the pre-import condition prior to the subsequent legislative amendment and found that there was no statutory authority for consequential levy of interest and penal consequences during the relevant period. The Ahmedabad Tribunal in the case of Chiripal Poly Films Ltd., in the context of the very same pre-import condition dispute, held that in the absence of a specific statutory provision authorising levy of interest in IGST paid through the regularisation procedure, such interest could not be sustained. These authorities are applicable to the present dispute pertaining to the period 2017-19. The Revenue cannot impose a fiscal or penal liability merely by borrowing machinery provisions, unless the substantive statute creating the levy so authorises. Apart from the statutory issue, the case arises from interpretation and implementation of a temporary pre-import condition which remained in force only from 13.10.2017 to 09.01.2019 and thereafter became subject matter of extensive litigation. Mere breach of the pre-import condition by itself cannot automatically be equated with suppression or wilful misstatement. The records disclosed the Advance Authorisation numbers in the Bills of Entry and Shipping Bills and these circumstances do not justify sustaining the penalty in the manner imposed – The demand of interest under Section 28AA, confiscation under Section 111(o), redemption fine of Rs. 4,00,00,000/- under Section 125 and penalty under Section 114A are set aside. [Read less]

2026-VIL-1578-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs – Smuggling of ozone depleting substance and imposition of penalties – Appellant collected import documents related to import of goods declared to contain consumer goods like table napkin papers and decorative items in two containers and handed them over to the Customs House Agent who filed Bills of Entry. Upon examination by Directorate of Revenue Intelligence, it was discovered that prohibited R-22 gas, an ozone depleting substance, was concealed in the containers in addition to declared goods. The appellant was found to have conspired with the defacto importers and agreed to facilitate clearance of the contr... [Read more]

2026-VIL-1597-CESTAT-MUM-CE | CESTAT CENTRAL EXCISE

Central Excise - CENVAT Credit on returned goods - Rule 16 of Central Excise Rules - The Appellant engaged in packing and repacking of cement received from supplier. Cement sold by appellant in packed form or in bulk through special bulkers. Due to design of bulkers entire quantity could not be unloaded and cement short-received was returned against which Appellant issued credit note and availed CENVAT credit on returned quantity - Department objected on ground that no records maintained to demonstrate goods sold were received back for purpose under Rule 16(1) of Central Excise Rules - Whether proceedings initiated for rec... [Read more]

2026-VIL-1587-CESTAT-HYD-CU | CESTAT CUSTOMS

Customs - Appellate Procedure - Additional Ground of Law – Appellant exported Iron Ore Fines through Gangavaram Port; assessments were finalized provisionally and then finalized on basis of chemical examination reports treating Fe content on Dry Metric Ton basis - Appellant having accepted the proposed finalization and waived personal hearing challenged final assessments before Commissioner (Appeals) on the ground that Fe percentage should be calculated on Wet Metric Ton basis with reference to total mass including moisture – Whether the Commissioner (Appeals) was justified in rejecting the appeal on the ground that Rule 5 of the Customs (Appeals) Rules, 1982 applies to an additional ground of law raised for the first time in appeal where such ground is based on existing evidence and records – HELD – Rule 5 of the Customs (Appeals) Rules, 1982 regulates production of additional evidence and does not apply to an additional ground of law; the appellant did not seek to introduce any new test report or factual evidence but merely contended that the Fe percentage recorded in the test reports already forming part of the assessment record should be converted and considered on a different basis for determining the tariff entry and rate of duty; such a contention constitutes a legal ground based on existing record and cannot be equated with production of additional evidence; Section 128A(2) of the Customs Act, 1962 specifically enables the Commissioner (Appeals) to permit an appellant to raise a ground not specified in the memorandum of appeal where the omission was not wilful or unreasonable; a pure question of law which can be determined on the basis of facts already available on record may be raised at the appellate stage; the mere fact that the appellant initially accepted the proposed finalization or waived personal hearing does not preclude it from challenging the final assessment through the statutory appeal as there can be no estoppel against correct application of a statutory provision – Appeal allowed by way of remand for fresh consideration - Customs - Export Duty on Iron Ore - Fe Content Determination on Wet Metric Ton Basis – Whether the percentage of Fe content for determining the applicable rate of export duty of Iron Ore should be calculated on Wet Metric Ton basis with reference to the total mass of ore including moisture or on Dry Metric Ton basis – HELD – The percentage of Fe content for determining applicable rate of export duty must be calculated on Wet Metric Ton basis taking into account the moisture content and the condition of Iron Ore as presented for export; after determining the actual quantity of iron, its percentage has to be worked out with reference to the total weight of iron ore available at the relevant time inclusive of moisture; if moisture is excluded while calculating the denominator, the Fe percentage would not represent the condition of the goods as presented for export; the Board has clarified in Circular No. 4/2012-Cus dated 17.02.2012 that for the purpose of charging export duty, assessment of iron ore for determination of Fe content shall be made on Wet Metric Ton basis and not on Dry Metric Ton basis - The basis adopted for determining transaction value under commercial contract and the basis for determining Fe percentage for classification and rate of duty operate in different fields; merely because the contractual price is expressed on Dry Metric Ton basis does not necessarily follow that Fe percentage for tariff purposes must also be taken on Dry Metric Ton basis - The applicable rate of duty has to be determined in accordance with tariff notification, governing statutory provisions and binding judicial precedents – Assessment orders set aside and matter remanded for fresh determination of Fe content on Wet Metric Ton basis. [Read less]

2026-VIL-1584-CESTAT-HYD-ST | CESTAT SERVICE TAX

Service Tax – Refund of service tax already collected and deposited, Unjust Enrichment - Burden of Proof on Claimant – Appellant entered into contract with Transmission Corporation of Andhra Pradesh Ltd for laying, jointing, termination, testing and commissioning of underground electrical cables - appellant discharged Service Tax on advance amount. Subsequently relying on CBEC Circular No. 123/5/2010-TRU clarifying that laying electrical cables between grids, sub-stations and transformer stations was not taxable, appellant claimed refund of Service Tax and interest – Whether a service provider who has collected Service Tax from the service recipient on the basis of a contract price expressly stated to be inclusive of taxes can claim refund of such Service Tax merely by establishing that the activity was later clarified or determined to be non-taxable – HELD – Every refund claim under Section 11B of the Central Excise Act is subject to the doctrine of unjust enrichment; the claimant is required to establish that the incidence of the tax for which refund is sought has not been passed on to any other person; the burden of proving this fact squarely rests on the claimant; a contract stipulation that the price is inclusive of Service Tax supports the finding that the contractual consideration included the tax burden - The statutory presumption regarding passing on of tax incidence cannot be rebutted merely by making an assertion or by raising a legal contention that the activity was subsequently found to be non-taxable. The claimant must produce relevant primary documents including invoices, ledgers, balance sheets and accounting records to establish that the incidence of tax was not passed on or to show that the contract price was reduced or that a credit note was issued to the service recipient – The Notification No. 45/2010-ST cannot be read as conferring an unconditional right for refund of Service Tax already collected and deposited. The notification cannot be construed as authorizing a service provider to recover tax from the recipient and thereafter obtain refund from the Government - The appellant may be correct in contending that the subject activity was covered by the clarification relating to cable-laying or by the provisions concerning transmission of electricity, that finding alone is insufficient to sanction the refund. The appellant was required to cross the statutory bar of unjust enrichment, which it has failed to do – Refund claim dismissed as barred by unjust enrichment due to failure to prove non-passing of tax incidence to service recipient – The appeal is dismissed [Read less]

2026-VIL-1034-BOM-ST | High Court SERVICE TAX

Service Tax - Extended period under Section 11A of Central Excise Act, 1944 - Principle of consistency in revenue matters - Whether Revenue can take different stand on substantially identical facts and invoke extended period of limitation - HELD - Principle of Consistency is sacrosanct in revenue matters. Revenue cannot be permitted to take different stand when facts are almost identical. If permitted same would be contrary to principles of fairness and equity - Earlier appeal involving identical issue cannot be dismissed while later identical appeal is challenged. Revenue having taken conscious decision to accept principl... [Read more]

High Court Order | High Court SGST

GST - Applicability of Section 74 to charitable entity registered under Section 12AA of Income Tax Act, Absence of Wilful Suppression or Fraud - Petitioner was registered under Section 12AA of Income Tax Act and engaged in charitable activities by way of preservation of environment through pollution control treatment and disposal of liquid and solid industrial waste - After introduction of GST regime, petitioner claimed exemptions under Notification No.12/2017 dated 28.06.2017 relating to charitable activities and did not pay GST. As claiming exemption resulted disallowance of input tax credit, petitioner obtained GST registration and thereafter stopped claiming exemption under entry relating to charitable activities from specified date – Issue of notice under Section 74 proposing to demand tax with interest and penalty for period from GST introduction to cessation of exemption claim - Whether Section 74 of CGST Act requiring malafide intent such as fraud, wilful misstatement or suppression can be invoked against the petitioner when the petitioner is engaged in charitable activity and Notification grants exemption from payment of GST - HELD - For invocation of Section 74 requires strict showing of malafide intent such as fraud, wilful misstatement or suppression. Suppression of facts in taxation can have only one meaning that correct information was not disclosed deliberately to escape payment of tax. When facts were known to both parties, omission by one to do what might have been done and not that must have been done does not render it suppression. Mere failure to declare does not amount to willful suppression and there must be some positive act from side of assessee to find willful suppression - From facts of present case, there was no deliberate intention on part of Petitioner not to disclose correct information or to evade payment of tax. Petitioner did not have any malice intent or deliberate intention to evade tax or suppression of facts to evade tax or fraud or willful misstatement made in order to evade tax - Petitioner had stopped claiming exemption and started paying tax since exemption was resulting in losses to disallowance of Input Tax Credit, which cannot be construed that petitioner willfully and deliberately in order to avoid liability of tax did so – The Respondents cannot ignore decision of this Court which is rendered in context of petitioner's activities and registration under Section 12AA of Income Tax Act - The show cause notice which has been issued in ignorance of decision of this Court laying quietus to activities carried out by petitioner which is registered under Section 12AA of Income Act cannot be sustained. - The impugned show cause notice is quashed and set aside – The petition is allowed [Read less]

2026-VIL-1015-P&H | High Court VAT

Punjab VAT Act, 2005 - Applicability of amended Entry 60 of Schedule B of Punjab VAT Act to Digital Still Image Cameras - Petitioner claimed itself to be covered by entry number 60 of Schedule-B which provides for IT products - Dept invoked proviso to Section 8(3) of Punjab VAT Act to issue Notification dated 27.06.2006 whereby entry 60 was substituted with specified IT products and components enumerated with corresponding HSN codes - Petitioner contended that UT Administrator had no jurisdiction to issue notification under proviso to Section 8(3) of Punjab VAT Act and that original entry 60 would continue to be operative for levy of VAT on Digital Still Image Cameras - Whether Administrator of UT Chandigarh had jurisdiction to amend entry 60 vide Notification dated 27.06.2006 and whether Digital Still Image Cameras qualify as Information Technology products under unamended entry 60 - HELD - Unamended entry 60 refers to IT products including computer, telephone, cell phone, Digital Video Disk and Compact Disk Teleprinter and Wireless Equipment and parts thereof. Goods enumerated therein are illustrative of broader expression. When amended entry 60 is examined, expression IT Products continues to form part of amended entry also. Both unamended and amended entry 60 cover IT Products with enumerated products being illustrative - Since petitioner's claim is based only on assertion that its product namely Digital Still Image Camera forms part of expression IT Products and expression IT Products finds place both in unamended entry 60 as well as amended entry 60, petitioner is not prejudiced in any manner by amended notification inasmuch as claim of being covered by expression IT Products remains uninfluenced by notification - Petitioner's claim of coverage by expression IT Products would be determined by reference to whether Digital Still Image Camera constitutes IT Product and not by reference to specific illustrative items listed. Specific enumeration of products in schedule cannot limit scope of broader expression IT Products - Challenge to notification on ground that it was issued without jurisdiction remains academic in importance. Petitioner would be better advised to challenge orders of assessment by filing appeals in accordance with law and all questions regarding coverage and tax liability are left open for examination in such appeals – The petitions are disposed of [Read less]

2026-VIL-82-GSTAT-DEL-NAPA | Tribunal SGST

GST - Anti-Profiteering – Construction of flats under joint venture with different pricing categories – Applicability of anti-profiteering provisions to Lower Income Group and Middle Income Group units where prices are fixed under State Government Notification – Whether the Respondent has contravened the anti-profiteering provisions of Section 171 of the CGST Act in respect of Lower Income Group and Middle Income Group units where prices were statutorily capped by Government notification limiting recovery to direct costs only – HELD – Upon introduction of GST the Respondent became entitled to avail Input Tax Credit on goods and input services unlike the pre-GST regime where credit was restricted. The comparison of ITC in pre-GST and post-GST periods shows that additional benefit accrued to the Respondent. Such benefit is required to be passed on to homebuyers by way of commensurate reduction in prices. However the statutory restriction governing pricing of Lower Income Group and Middle Income Group units assumes material significance - The West Bengal Housing Department issued a notification fixing the maximum sale rate per square foot for LIG and MIG categories and specifically stipulating that only direct costs and no overhead or administrative costs were to be charged. Unlike in the case of Higher Income Group units the Respondent had no commercial discretion to load overheads administrative expenses or other indirect costs including the taxes attributable thereto into the sale price of LIG and MIG units - The pricing mechanism applicable to Lower Income Group and Middle Income Group units was materially different from that applicable to Higher Income Group units. Accordingly no profiteering can be attributed to the Respondent in respect of Lower Income Group and Middle Income Group units and any computation of profiteering if warranted ought to be restricted to Higher Income Group units alone – The Respondent has not contravened Section 171 in respect of Lower Income Group and Middle Income Group categories. No profiteering is attributable to these categories on account of the statutory restriction governing their pricing – The matter is disposed of - Anti-Profiteering – Comparison of Input Tax Credit availed in pre-GST and post-GST periods and passing of benefit to homebuyers – The Respondent constructed Higher Income Group flats entitled to avail additional Input Tax Credit post-GST compared to the pre-GST regime – Whether the Respondent derived additional Input Tax Credit benefit for Higher Income Group units – HELD – The statutory obligation to pass on benefit of reduction in tax rate or additional Input Tax Credit arises at the time of supply by way of commensurate reduction in prices. The Court has recognised genuine commercial cost escalations. Upon re-examination the Authority accepted the Respondent's Cost Escalation submission along with the CA Certificate - The Respondent had provided sufficient evidentiary support to establish passing on of Input Tax Credit benefit through issuance of credit notes and reduction in prices - The profiteered amount determined for Higher Income Group category was restricted to the residual shortfall requiring to be passed on to eligible recipients. – The Respondent derived additional Input Tax Credit benefit amounting to a specified sum inclusive of GST for Higher Income Group category and is liable to pass on such benefit to eligible recipients. The amount previously passed on must be duly verified and credited against the total demand - Anti-Profiteering – Liability to pay Interest on Unpassed Input Tax Credit Benefit – CGST Act Section 171, Rule 133(3)(b) – Whether interest is payable on the profiteered amount determined not to have been passed on and at what rate and for what period – HELD – Interest on unpassed Input Tax Credit benefit is compensatory in nature and intended to ensure restitution of the time value of money that rightfully belongs to the recipients. Section 171 casts statutory obligation to pass on benefit of reduction in tax rate or availability of additional Input Tax Credit by way of commensurate reduction in prices at the time of supply. Rule 133(3)(b) provides that amount not so passed on shall be returned to recipients along with interest at the rate of eighteen percent per annum calculated from the date of collection of the higher amount till the date of its actual return. The Delhi High Court in Reckitt Benckiser judgment held that Section 171 is broad enough to empower authorities to prescribe interest to deter registered persons from pocketing benefits meant for consumers. No special circumstances warrant deviation from the principled approach of awarding interest at eighteen percent in anti-profiteering cases – Respondent is liable to pay interest at the rate of eighteen percent per annum from the respective dates of collection of excess amount until the date of refund to eligible homebuyers - Penalty of ten percent of the profiteered amount is leviable under Section 171(3A) of CGST Act. However penalty shall stand waived if the Respondent deposits the entire profiteered amount with eligible homebuyers within thirty days from the date of the anti-profiteering authority's order. [Read less]

2026-VIL-1596-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax – Place of provision of services under Place of Provision of Service Rules 2012, Classification of intermediary services – Appellant engaged City One Tourism and Travel LLC, Dubai to provide visa processing services for its Dubai visa application website. Appellant hired the foreign service provider to assist in visa issuance procedures. Appellant's clients were all located outside India whereas the service provider was situated in Dubai. Revenue demanded service tax alleging place of provision of service was India as per Rule 3 of POPS Rules since recipient of service was in India – Whether services provided by a foreign service provider to assist in visa processing constitute intermediary services under Rule 9 of POPS Rules, 2012 – HELD – An intermediary service requires a tripartite arrangement where one party facilitates provision of service by the second to the third party. The agreement in the present case was only between the foreign service provider and the appellant and the Government of Dubai was not a party to the agreement - The foreign service provider assisted the appellant in carrying out its work with the Government of Dubai. The agreement specifically forbade both parties from assigning work to any third party without prior consent. Such arrangement does not constitute a tripartite agreement and the services provided were not intermediary services. Therefore Rule 3 of POPS Rules applies and the place of provision of service is the location of the recipient of service that is India - The appellant is liable to pay service tax on the services received from the foreign service provider under RCM - Service tax shall only be charged on service charges paid to the foreign service provider and not on visa fees paid to the foreign Government through the service provider - Sufficient grounds existed to invoke the extended period of limitation as the appellant did not disclose details of services received from the foreign service provider and the facts came to light only during audit - Service tax imposition on visa fee amounts is set aside. Matter is remanded to the original authority for re-computation of service tax on service charges only with consequential adjustments to interest and penalty - The appeal is partly allowed [Read less]

2026-VIL-1017-KAR | High Court SGST

GST - Involuntary Payment made during Search and Inspection Proceedings - Refund of involuntary or coercively recovered amount – Based on discrepancy between GSTR-3B and GSTR-7 records, authorities conducted inspection at Petitioner's premises. During inspection and subsequently thereafter, Petitioner made multiple payments through Form GST DRC-03 under alleged provisions of Section 74(5) of CGST Act, 2017 contending that such payments were made under duress and coercive pressure without any pre-dated subsisting tax demand outstanding at relevant time - Whether payments made during course of search, seizure and inspection proceedings can be treated as voluntary payment made by Petitioner under self-ascertainment in terms of Section 74(5) of CGST Act and whether Petitioner is entitled to refund of said amounts along with interest - HELD – It is undisputed fact that prior to search and inspection conducted, no notice was issued nor any proceedings to ascertain, adjudicate or determine tax, interest and penalty payable by Petitioner which indicates there was no occasion for Petitioner to pay amounts voluntarily by way of self-ascertainment, thereby indicating payment was not voluntary - The Rule 142 of the CGST Rules, 2017 specifically stipulates that if a voluntary payment is made under sub-section (5) of Section 73 or Section 74 in Form GST DRC-03, an acknowledgment of such payment is required to be issued by the concerned authorities in Form GST DRC-04. Admittedly, in the present case, the respondents have not issued GST DRC-04 - Further, sub-section (5) of Section 73 or Section 74 is to be made on the basis of own ascertainment of tax by the taxpayer or as ascertained by the proper officer. In the present case, there is no material on record to indicate any manner of assessment that has been made with regard to the tax on the basis of which the amounts that have been paid - Mere proceedings initiated under Section 79 of the Act will not in any manner indicate that the payments made by the petitioner are voluntary - It is clear from sequence of events that even payment made after issuance of notice requiring petitioner to appear personally was involuntary as said notice was not issued under any provision of law - Direction is issued to respondents to refund the aggregate amount paid together with interest at 6% per annum from date of payment till date of refund - The writ petition is allowed [Read less]

2026-VIL-1032-BOM | High Court SGST

GST – Jurisdiction of Appellate Authority to dismiss statutory appeal for non-prosecution and failure to appear - Petitioner failed to appear for hearing despite three notices and substantial time given - Appellate Authority dismissed appeal for non-attendance and non-compliance on the ground that appellant failed to substantiate grounds of appeal - Whether Appellate Authority has power to dismiss an appeal for want of prosecution or non-appearance of appellant and whether appeal can be disposed without deciding on merits - HELD - The appellate authority under Section 107(11) of CGST Act, 2017 is statutorily mandated to ... [Read more]

2026-VIL-1585-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Penalty for failure to deposit collected service tax - Willful suppression and intent to evade duty - Appellant registered for Manpower Recruitment Agency Service collected service tax at prescribed rate from clients but deliberately failed to deposit the same to government exchequer within statutory time limit - Whether penalty under Section 76 can be imposed for failure to deposit tax without establishing mens rea or intention to evade - HELD - Penalty under Section 76 is for failure to deposit tax in time. When admittedly assessee was not depositing tax by due date, penalties must be imposed even if assessee claims no mens rea, as the statutory provision requires only proof of default in compliance without establishing intent. The deliberate act of collecting service tax from clients but not remitting it to government constitutes willful suppression with intent to evade payment. Statements recorded under Section 108 of Customs Act, 1962 are admissible as substantive evidence, being invested with status of judicial proceedings and neither hit by exclusionary rules of Evidence Act nor violating constitutional protection against self-incrimination. For retraction of statement to be legally potent, it must be contemporaneous. Directors of appellant admitted collecting service tax but not depositing same with government, constituting grave offence. Reduction in penalty imposed on directors was erroneous and unsustainable - Penalty imposed on directors is restored - The appeals filed by the department are allowed and the appeal filed by the assessee is dismissed - Service Tax - Extended period of limitation - Invocation on ground of willful suppression - Appellant failed to declare short-paid service tax liability in statutory ST-3 returns filed for relevant half-yearly periods despite collecting service tax from clients - Whether extended period of limitation can be invoked under proviso to Section 11A where there is willful suppression of facts with intent to evade duty - HELD - Extended period of limitation of five years applies where short payment is by reason of willful suppression of facts with intent to evade payment of duty. Mere omission to give correct information is not suppression unless it was deliberate to stop payment of duty. Suppression means failure to disclose full information with intent to evade payment of duty. When Revenue invokes extended period, burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with willful misstatement. In present case, appellant deliberately concealed short-paid service tax liability from statutory returns despite collecting tax, constituting willful suppression with intent to evade duty - Invocation of extended period of limitation is upheld - Service Tax - Valuation of services - Determination of assessable value for housekeeping services - Department quantified taxable value of housekeeping services without reference to original invoices issued by appellant, appellant contested value and submitted invoices showing lower assessable value - Whether taxable value was correctly determined or whether matter requires remand for re-determination based on original source documents - HELD - Where taxability of services is not disputed but assessable value is contested, the assessable value must be ascertained based on original documents namely invoices available with department. The show cause notice was deficient and vague in not specifying the basis for quantification of taxable value. However, as taxability of services has not been disputed, it is reasonable and proper to remand matter to adjudicating authority for determination of correct assessable value after seeking relevant details and submissions from appellant. The adjudicating authority should re-adjudicate the demand by reference to original invoices and supporting documents - Matter is remanded for re-determination of assessable value and service tax liability with respect to housekeeping services. [Read less]

2026-VIL-1047-KER | High Court SGST

GST – Validity of notice and detention order under Section 129(3) CGST Act, 2017; Adherence to statutory time limits - Petitioner's goods were detained and a notice under Section 129(3) and final order were issued. Petitioner contended that both notices were issued beyond the statutorily mandated time limit – Whether notices and orders issued under Section 129(3) beyond the time frame fixed under the Act are valid – HELD – Prima facie there are issues which ought to have seized the attention of the Single Bench in considering whether notice under Form MOV-7 was issued beyond the time frame fixed under Section 129(3... [Read more]

2026-VIL-1031-CHG | High Court VAT

Chhattisgarh VAT Act 2005 - Taxability of lease rent received from Railways for wagons under ‘Own Your Wagon Scheme’ - Deemed sale and transfer of right to use goods - Assessment authorities and appellate authorities treated lease rent as taxable supply involving deemed transfer of right to use - Whether lease rent received by assessee from Railways in respect of wagons provided under the Central Government's ‘Own Your Wagon Scheme’ constitutes a taxable supply involving transfer of right to use goods under Section 2(s)(vi) read with Section 22 of Chhattisgarh VAT Act - HELD - The Supreme Court in the case of 20th ... [Read more]

2026-VIL-1030-RAJ | High Court SGST

GST - Cancellation of GST registration for non-filing of returns for six consecutive months - Section 29(2)(c) and Section 107 of CGST Act 2017 - Statutory limitation for filing statutory appeal and condonation of delay - Order cancelling registration was passed with retrospective effect from date of default - Statutory appeal was filed beyond prescribed period of limitation and extended condonable period - Appellate Authority dismissed appeal as barred by limitation - Whether High Court can condone delay in filing statutory appeal beyond maximum period of limitation prescribed in statute and remand matter to Appellate Authority for decision on merits when appeal is filed after expiry of prescribed period of limitation - HELD - The statutory period of limitation prescribed for filing appeal under Section 107 of the CGST Act 2017 is binding on the appellate authority. The statute contemplates condonation of delay for a further period of one month beyond the prescribed period. Once appeal is filed beyond the maximum period inclusive of the condonable period the Appellate Authority loses jurisdiction to entertain the appeal - The High Court cannot exercise writ jurisdiction as a matter of course to circumvent the statutory scheme of limitation and entertain a writ petition filed after expiry of the statutory period to condone the delay and remand the matter to the Appellate Authority for consideration on merits. Such exercise of jurisdiction would defeat the legislative intent and render the statutory limitation provisions otiose -. The legislative mandate regarding limitation in special statutes like GST Act is based on fundamental principles of public policy ensuring expeditious adjudication and certainty. Any interference with the statutory scheme of limitation by the High Court except in exceptional and extraordinary circumstances where there is complete disregard of principles of natural justice or manifest lack of jurisdiction would undermine the efficacy of the statutory framework - In the present case the petitioner failed to furnish returns for six consecutive months a clear violation of statutory obligation under Section 39 and failed to file appeal within the prescribed period. No exceptional circumstance warranting interference has been demonstrated. Subsequent compliance with statutory requirements after cancellation of registration does not obliterate the earlier violations. - The writ petition is dismissed - The order cancelling the GST registration and the order of the Appellate Authority dismissing the appeal as barred by limitation cannot be interfered with – The petition is dismissed [Read less]

2026-VIL-1019-RAJ | High Court SGST

GST - Constitutionality of Section 16(2)(c) of the CGST Act, 2017 – Eligibility to input tax credit to bonafide purchasers - Contingent nature of ITC entitlement – Availment of input tax credit on strength of purchases made from registered suppliers whose registrations were subsequently cancelled – Issue of show cause notice under Section 74 of the CGST Act alleging wrongful availment of input tax credit on purchases from certain suppliers - Petitioner challenged the Constitutional validity or, alternately, reding down of Section 16(2)(c) - Whether Section 16(2)(c) of the CGST Act is ultra vires the Constitution and whether the provision should be read down to protect bona fide purchasers - HELD – The provisions of Section 16(2)(c) indicate a deliberate allocation of risk. Parliament has chosen to place the risk of supplier default on the recipient, while simultaneously providing a mechanism for restoration of the credit once the default is cured. Whether that allocation is wise or harsh is a question of legislative policy and not a question of Constitutional validity. Particularly, in view of the fact that benefit of ITC is a contingent statutory entitlement, rather than a vested right, much less a constitutional right - The Supreme Court in Bhandari Scrap Traders v. Union of India has rejected plea to read down the provision and has expressly negated alternative prayer to declare Section as unconstitutional or read down, distinguishing and rejecting decisions of High Courts of Tripura, Karnataka and Gauhati to extent they read down Section 16(2)(c) - The finding of bonafides in those cases rested on specific factual foundation where Department had invoked only Section 73 and not disputed that purchaser had paid tax to supplier. The present case is converse where Department invoked Section 74 alleging fake invoices and bogus supplies involving chain of multi-layered paper transactions in which no goods moved which is precisely the class of case which the reading down does not protect - Section 16(2)(c) suffers from no constitutional infirmity. Further, the existence of the reversal and re-availment mechanism under Section 41, read with Sections 73 and 74, is a sufficient answer to the charge of arbitrariness - The Constitutional challenge to Section 16(2)(c) fails. The plea for reading down is not available in facts of present case – All contentions on the merits, including the contention that the transactions in question are bona fide, are kept open for consideration by the appellate authority in accordance with law - The writ petition is disposed of - Whether dismissal of Special Leave Petitions in Bhandari Scrap Traders case constitute a binding declaration of law – HELD - The petitioner contends that the Hon’ble Supreme Court order being one dismissing special leave petitions, it does not constitute a binding declaration of law. The petitioners’ contention is untenable. The order is a speaking order. It records reasons, expresses “complete and respectful agreement” with the High Court of Gujarat. In no uncertain terms it affirms and upholds the impugned judgment in Maruti Enterprise v. Union of India case. The constitutional challenge to Section 16(2)(c), is thus water under the bridge and no more an issue which is res integra - Jurisdictional Foundation for Invoking Section 74 – Whether show cause notice contains adequate allegation to invoke Section 74 - HELD - The show cause notice running into thirty three pages sets out in detail how multi-layered transactions were routed between bogus suppliers with whom Petitioner dealt, depicts chain of layering in graphic detail and alleges credit was availed on strength of fake invoices and bogus supplies involving paper transactions unaccompanied by any movement of goods which if established would squarely constitute fraud and suppression to evade tax within meaning of Section 74 - Plea of breach of natural justice - Pre-notice intimation requirement under Rule 142(1A) - Non-issuance of Form GST DRC-01A - Whether non-issuance of pre-notice intimation vitiated proceedings, whether same officer conducting investigation and adjudication constitutes bias, and whether inadequate consideration of reply filed by Petitioner amounts to breach of natural justice – HELD - The Rule 142(1A) was amended by Notification dated 15.10.2020 substituting word shall with may, meaning pre-notice intimation is now enabling facility not condition precedent, and non-issuance does not by itself vitiate notice. Petitioner suffered no prejudice as it had already been summoned under Section 70, Director's statement was recorded, records produced and it knew precisely what was alleged and replied on merits - Parliament has consciously placed investigation and determination within competence of same statutory office under scheme of Act and where statute itself confers both functions on same authority, Rule against bias stands displaced to that extent unless material exists suggesting closed mind, animus or personal interest which is not pleaded here - Alleged inadequacy in appreciation of reply filed by Petitioner stands on entirely different footing being arguendo an error within jurisdiction if at all, with appellate authority under Section 107 having plenary power to examine it including power to make further inquiry. Petitioner has been heard at every stage with all contentions remaining fully available in appeal and no prejudice of kind justifying bypass of statutory remedy is made out. [Read less]

2026-VIL-146-AAR | Advance Ruling Authority SGST

GST – Rajasthan AAR – Classification and applicable tax rate on Psyllium Seeds (Isabgol) - Whether Psyllium Seeds (Isabgol) supplied in their natural, raw and unprocessed form as procured through Agricultural Produce Market Committee (APMC) auctions directly from farmers, without undergoing any drying, freezing, crushing or other processing qualifies as “fresh” Isabgol seeds and are exempted under Entry 87 (HSN 1211) of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 or alternately, qualifies as “goods of seed quality” and are exempt from GST under Entry 77 (HSN 12) of Notification No. 10/2025-Cent... [Read more]

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