More Judgements

1. Home
2. More Judgements

Central Excise - Denial of abatement towards discounts for failure to provide one-to-one correlation between clearances and sales – Appellant adopted provisional assessment to determine the value based on the cost of gold and making charges, and claimed abatement towards discounts and sales tax based on actual realization at the point of sale - Department rejected the abatement on the ground that transaction-wise correlation and documentary evidence for each clearance were not produced. The Commissioner (Appeals) upheld the denial on the reasoning that the entire stock transferred may not have been sold within the same y... [Read more]

Central Excise - Denial of abatement towards discounts for failure to provide one-to-one correlation between clearances and sales – Appellant adopted provisional assessment to determine the value based on the cost of gold and making charges, and claimed abatement towards discounts and sales tax based on actual realization at the point of sale - Department rejected the abatement on the ground that transaction-wise correlation and documentary evidence for each clearance were not produced. The Commissioner (Appeals) upheld the denial on the reasoning that the entire stock transferred may not have been sold within the same year and that one-to-one correlation between clearances and sales was not established – HELD – The insistence on one-to-one correlation is not only impractical but also contrary to the commercial realities of the appellant's business model, where the goods are not sold at the factory gate but are stock transferred to multiple locations and sold over a period of time. The Supreme Court in Union of India v. Bombay Tyres International Ltd., held that trade discounts actually passed on to buyers are admissible deductions and must be considered while determining the assessable value. The requirement of transaction-wise correlation cannot be elevated to a rigid condition so as to defeat the substantive benefit, and that reasonable methods of determination must be accepted where compliance with such requirement is impracticable due to the nature of the trade - The evidence produced by the appellants, including CA certificates and consolidated sales data, is sufficient to establish the claim of abatement, and that the methodology adopted by the Department in denying the same is legally unsustainable - The denial of abatement solely on the ground that the evidence is not in a particular format amounts to elevating procedural requirements above substantive entitlement, which is impermissible. The Department's approach of denying the entire abatement without suggesting any alternative methodology is arbitrary and disproportionate – The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Admissibility of CENVAT credit on outward transportation service, outward courier service, and insurance service – HELD - The issue is no longer res integra and has been decided by the Larger Bench of the Tribunal in the case of M/s. The Ramco Cements Limited - In a case where the clearances of goods are on a FOR (Free on Road) contract basis, the place of removal needs to be ascertained by applying the judgments of the Supreme Court in Emco Ltd. and Roofit Industries Ltd., the decision of the Karnataka High Court in Bharat Fritz Werner Ltd., and the CBEC Circular dated 08.06.2018. If the buyer's premise... [Read more]

Central Excise - Admissibility of CENVAT credit on outward transportation service, outward courier service, and insurance service – HELD - The issue is no longer res integra and has been decided by the Larger Bench of the Tribunal in the case of M/s. The Ramco Cements Limited - In a case where the clearances of goods are on a FOR (Free on Road) contract basis, the place of removal needs to be ascertained by applying the judgments of the Supreme Court in Emco Ltd. and Roofit Industries Ltd., the decision of the Karnataka High Court in Bharat Fritz Werner Ltd., and the CBEC Circular dated 08.06.2018. If the buyer's premises is found to be the place of removal, the appellant would be eligible for CENVAT credit on the outward transportation service - The CENVAT credit on outward courier service is also admissible, as it is an input service used by the appellant directly or indirectly in the manufacture of the goods - The appellant is eligible for CENVAT credit on the outward transportation service, outward courier service, and insurance service, as the buyer's premises is the place of removal - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Manpower Recruitment or Supply Agency Service - The appellant, an educational institution, collected placement-related fees from students and facilitated their interaction with prospective employers, without undertaking recruitment on behalf of such employers – Demand of service tax under Manpower Recruitment or Supply Agency Service - HELD - The activity of the appellant does not fall within the ambit of "Manpower Recruitment or Supply Agency Service" under Section 65(105)(k) of the Finance Act, 1994. The statutory definition of "taxable service" under Section 65(105)(k) contemplates a service provided to ... [Read more]

Service Tax - Manpower Recruitment or Supply Agency Service - The appellant, an educational institution, collected placement-related fees from students and facilitated their interaction with prospective employers, without undertaking recruitment on behalf of such employers – Demand of service tax under Manpower Recruitment or Supply Agency Service - HELD - The activity of the appellant does not fall within the ambit of "Manpower Recruitment or Supply Agency Service" under Section 65(105)(k) of the Finance Act, 1994. The statutory definition of "taxable service" under Section 65(105)(k) contemplates a service provided to a client, namely an employer or prospective employer, in relation to recruitment or supply of manpower. In the present case, the consideration flows from students and not from employers, and the appellant merely facilitates interaction between students and prospective employers without undertaking recruitment on behalf of such employers. Reliance on Circular No. 96/7/2007-ST dated 23.08.2007 by the Revenue is misplaced, as executive instructions cannot override or expand the scope of the charging provision - The impugned order is set aside and the appeal filed by the appellant is allowed [Read less]

Central Excise - Cenvat credit on CVD – Disallowance of Cenvat credit of CVD paid in respect of import of goods under Notification No. 79/95-Cus dated 31.03.1995 on the ground that under this notification, only BCD was exempt, and CVD portion was not forgone at the time of import of goods - Whether the appellant is entitled to Cenvat credit on the CVD paid in respect of import of goods under Notification No. 79/95-Cus dated 31.03.1995 – HELD - The amount which the appellant had requested for either allowing as Cenvat credit or by way of refund, was not paid towards CVD and therefore, its credit is not admissible to the... [Read more]

Central Excise - Cenvat credit on CVD – Disallowance of Cenvat credit of CVD paid in respect of import of goods under Notification No. 79/95-Cus dated 31.03.1995 on the ground that under this notification, only BCD was exempt, and CVD portion was not forgone at the time of import of goods - Whether the appellant is entitled to Cenvat credit on the CVD paid in respect of import of goods under Notification No. 79/95-Cus dated 31.03.1995 – HELD - The amount which the appellant had requested for either allowing as Cenvat credit or by way of refund, was not paid towards CVD and therefore, its credit is not admissible to them. The goods imported by availing the benefit of Notification No. 79/95-Cus were only exempt from BCD and not of CVD. In the entire duty calculation as per the order of the Settlement Commission, it is nowhere reflected that the CVD portion was also calculated as duty liability in respect of Advance licenses issued under Notification No. 79/95-Cus. Therefore, the appellant is not entitled to Cenvat credit on the CVD paid in respect of import of goods under Notification No. 79/95-Cus dated 31.03.1995 - The appeal is rejected [Read less]

Central Excise - Valuation of excisable goods manufactured by job worker - Whether the value of the excisable goods has to be determined in accordance with Rule 10A(iii) read with Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – HELD – The Rule 8 will not apply in the present case as the finished products manufactured by the Appellant on job work basis were sent back to the principal-manufacturer and consumed by the principal-manufacturer for further manufacture of the final product. The lis regarding the nature of the particular transaction and its exigibility to excise ... [Read more]

Central Excise - Valuation of excisable goods manufactured by job worker - Whether the value of the excisable goods has to be determined in accordance with Rule 10A(iii) read with Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – HELD – The Rule 8 will not apply in the present case as the finished products manufactured by the Appellant on job work basis were sent back to the principal-manufacturer and consumed by the principal-manufacturer for further manufacture of the final product. The lis regarding the nature of the particular transaction and its exigibility to excise duty had attained finality between the parties and there is no allegation or evidence that the present transactions were of a different nature - The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Non-reversal of Cenvat credit on SAD component during transfer of inputs 'as such' from one unit to another - Appellant cleared certain imported inputs 'as such' from one of its factory units to another. While making such transfers, the appellant had reversed the Cenvat credit taken on CVD and education cess but not on the SAD component -Department issued notices invoking Section 11A(4) of the Central Excise Act, 1994, for recovery of the duty along with interest and penalty - Whether the invocation of the extended period under Section 11A(4) for demanding the Cenvat credit taken on the SAD component was j... [Read more]

Central Excise - Non-reversal of Cenvat credit on SAD component during transfer of inputs 'as such' from one unit to another - Appellant cleared certain imported inputs 'as such' from one of its factory units to another. While making such transfers, the appellant had reversed the Cenvat credit taken on CVD and education cess but not on the SAD component -Department issued notices invoking Section 11A(4) of the Central Excise Act, 1994, for recovery of the duty along with interest and penalty - Whether the invocation of the extended period under Section 11A(4) for demanding the Cenvat credit taken on the SAD component was justified, and whether the revenue neutrality argument put forth by the appellant was applicable in the instant case - HELD - The appellant had admitted that the reversal of the Cenvat credit on the SAD component was required, but due to the inadequate knowledge of its staff, it was not done. However, when the matter was brought to the appellant's notice during the Special Audit, the appellant refused to make the reversal, citing the lapse of the normal period of limitation under Section 11A(1) - The revenue neutrality argument put forth by the appellant was not applicable in the instant case, as the appellant had chosen not to make the payment or reversal after the normal period, which would have precluded it from availing the Cenvat credit under Rule 9(1)(b) of the CCR, 2004. The failure to acknowledge the transfer in the ER-1 return and the appellant's refusal to make the reversal after being pointed out by the department, along with the lapse of time, were indicative of the appellant's intention to evade the payment of duty, thus justifying the invocation of the extended period under Section 11A(4) - The orders of the lower authorities, confirming the demand along with interest and penalty is upheld and the appeal is dismissed [Read less]

Central Excise - Captively Consumed Sugar Syrup in Biscuit Manufacturing - Whether Sugar Syrup is an Excisable Goods and Classifiable under Tariff Heading 17029090 – HELD - The sugar syrup manufactured by the appellant and consumed captively within the factory premises for the manufacture of biscuits is not an excisable goods and is not classifiable under tariff heading 17029090.The Tribunal relied on the ratio laid down in the Rishi Bakers case, wherein it was held that for classification under tariff heading 17029090, the sugar syrup must contain 50% or more fructose by weight in the dry stage, which was not establishe... [Read more]

Central Excise - Captively Consumed Sugar Syrup in Biscuit Manufacturing - Whether Sugar Syrup is an Excisable Goods and Classifiable under Tariff Heading 17029090 – HELD - The sugar syrup manufactured by the appellant and consumed captively within the factory premises for the manufacture of biscuits is not an excisable goods and is not classifiable under tariff heading 17029090.The Tribunal relied on the ratio laid down in the Rishi Bakers case, wherein it was held that for classification under tariff heading 17029090, the sugar syrup must contain 50% or more fructose by weight in the dry stage, which was not established in the present case - The marketability of the product has to be established in the condition in which it emerges, and the mere fact that invert sugar syrup is sold in the market does not mean that the sugar syrup manufactured by the appellant is also marketable, as the two products may not be identical – Further, the test report submitted by the appellant showed that the fructose content in the sugar syrup was only 31%, which is less than the required 50% for classification under 17029090. Accordingly, impugned order is set aside and the appeal is allowed [Read less]

Service Tax – Vague Show Cause Notice - liability on commercial coaching and training services in computer graphics and animation – HELD - The show cause notices issued were vague and lacked details of the statutory provisions invoked to bring the activities of the appellant within the alleged taxable services rendered. Unless it is demonstrably shown referring to the specific provisions that the appellant has performed activities that fall under the particular statutory definition of the service and attracts the levy of tax, an assessment of the liability itself cannot be made - The appellant's contention that under t... [Read more]

Service Tax – Vague Show Cause Notice - liability on commercial coaching and training services in computer graphics and animation – HELD - The show cause notices issued were vague and lacked details of the statutory provisions invoked to bring the activities of the appellant within the alleged taxable services rendered. Unless it is demonstrably shown referring to the specific provisions that the appellant has performed activities that fall under the particular statutory definition of the service and attracts the levy of tax, an assessment of the liability itself cannot be made - The appellant's contention that under the business model as per the agreement entered into with MAAC, the appellant has provided infrastructural support for which it is being paid, and the fees are collected by way of direct deposit in the account of MAAC on which MAAC discharges the service tax liability, remained uncontroverted. Service tax cannot be charged twice on the same service transaction - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Limitation period for issuance of demand notice under Finance Act, 1994 - Execution of works contract claiming exemption under the Mega Exemption Notification - Petitioner contended that the issuance of the Demand-cum-Show Cause Notice is ex facie barred by limitation as prescribed under Section 73(1) of the Finance Act, 1994 – HELD - The prescription of limitation under Section 73(1) is not a matter of procedural convenience but a substantive fetter on jurisdiction. Once the statutory period expires, the authority stands divested of the power to initiate proceedings. The distinction between the normal peri... [Read more]

Service Tax - Limitation period for issuance of demand notice under Finance Act, 1994 - Execution of works contract claiming exemption under the Mega Exemption Notification - Petitioner contended that the issuance of the Demand-cum-Show Cause Notice is ex facie barred by limitation as prescribed under Section 73(1) of the Finance Act, 1994 – HELD - The prescription of limitation under Section 73(1) is not a matter of procedural convenience but a substantive fetter on jurisdiction. Once the statutory period expires, the authority stands divested of the power to initiate proceedings. The distinction between the normal period and the extended period is also not cosmetic, as the extended period can be invoked only upon satisfaction of stringent jurisdictional facts, namely fraud, suppression, or wilful misstatement with intent to evade tax - In the present case, the Demand-cum-Show Cause Notice dated 11.04.2022 pertained to the FY 2016–2017, and even assuming the applicability of the extended period, the notice was issued beyond the statutorily permissible period. Consequently, the very initiation of proceedings was vitiated in law, and Adjudicating Authority, lacking the foundational jurisdiction to proceed, could not have passed the impugned order - The impugned adjudicating order is quashed and set aside. The writ petition is allowed [Read less]

Central Excise – Valuation, Trade discount to bulk buyer, Additional consideration - Whether the trade discount extended by the appellant to a bulk buyer can be treated as an "additional consideration" to be included in the assessable value under Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – HELD - The entire case of the department rests on the assumption that bulk buyer (NMMT) provided its premises and infrastructure free of cost to the appellant, which is an additional consideration to the appellant. This foundational assumption of the department is factually incorre... [Read more]

Central Excise – Valuation, Trade discount to bulk buyer, Additional consideration - Whether the trade discount extended by the appellant to a bulk buyer can be treated as an "additional consideration" to be included in the assessable value under Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – HELD - The entire case of the department rests on the assumption that bulk buyer (NMMT) provided its premises and infrastructure free of cost to the appellant, which is an additional consideration to the appellant. This foundational assumption of the department is factually incorrect - The appellant had entered into a sub-lease agreement with NMMT for the land and had incurred the entire expenditure for setting up the CNG dispensing facility. In the absence of any evidence of additional consideration flowing from NMMT to the appellant, the trade discount extended to NMMT could not be treated as "additional consideration" under Rule 6 – The trade discount was a legitimate commercial discount and could not be loaded onto the assessable value - The impugned order upholding the duty demand is set aside and the appeal is allowed [Read less]

Central Excise - Inclusion of "type test charges" in the assessable value of transformers for the purpose of levy of Central Excise duty - Appellant, engaged in the manufacture of transformers, was not including the 'type test charges' recovered from customers under contractual arrangements in the assessable value of the transformers - Department issued show cause notice proposing recovery of duty on the ground that these charges formed part of the consideration for sale - Whether the "type test charges" collected by the appellant are liable to be included in the assessable value of transformers for the purpose of levy of ... [Read more]

Central Excise - Inclusion of "type test charges" in the assessable value of transformers for the purpose of levy of Central Excise duty - Appellant, engaged in the manufacture of transformers, was not including the 'type test charges' recovered from customers under contractual arrangements in the assessable value of the transformers - Department issued show cause notice proposing recovery of duty on the ground that these charges formed part of the consideration for sale - Whether the "type test charges" collected by the appellant are liable to be included in the assessable value of transformers for the purpose of levy of Central Excise duty – HELD - The "type test" is not a mandatory or routine test forming part of the manufacturing process, but is conducted only at the request of the customers for their own satisfaction or due to lack of testing facilities, and the cost of such testing is borne separately by the customers. The "type test charges" are in the nature of consideration for a distinct and optional service rendered to the customer after the completion of manufacture, and not intrinsically linked to the manufacture and sale of the goods - The "type test charges" are not includible in the assessable value of transformers for the purpose of levy of central excise duty - The impugned order, to the extent it upholds the inclusion of "type test charges" and confirms the duty demand, is set aside and the appeal is allowed [Read less]

Service Tax - Works contract vs Trading activity – Activity of laying pipes from river to plant to supply treated water on a Build, Own, Operate and Transfer (BOOT) basis - Whether the billing of goods, used in the project, by the sub-contractor to the appellant can be treated as "trading" or an "exempted service" for the purpose of CENVAT credit reversal under Rule 6 of the CENVAT Credit Rules, 2004 – HELD - The activity of the appellant reimbursing the sub-contractor for materials purchased and utilized in the project does not amount to "trading activity" or an "exempt service". The contract is a single, indivisible ... [Read more]

Service Tax - Works contract vs Trading activity – Activity of laying pipes from river to plant to supply treated water on a Build, Own, Operate and Transfer (BOOT) basis - Whether the billing of goods, used in the project, by the sub-contractor to the appellant can be treated as "trading" or an "exempted service" for the purpose of CENVAT credit reversal under Rule 6 of the CENVAT Credit Rules, 2004 – HELD - The activity of the appellant reimbursing the sub-contractor for materials purchased and utilized in the project does not amount to "trading activity" or an "exempt service". The contract is a single, indivisible BOOT contract for a water transmission project using pipelines, primarily for work and labour, and not a contract for sale of goods. The laying of pipeline, as in this case, is an example of works contract, where passing of property in the pipe is part of the works contract - The transfer of property in goods consumed while executing the contract is a part of the execution of the works contract, and not a separate activity of "trading". The legal fiction introduced by Article 366(29A)(b) of the Constitution, which divides the contract into a sale and service, should only be used for its intended purpose of levying tax on both sale and service in an indivisible contract, and cannot be used to convert the reimbursement of payment for goods by the sub-contractor into "trading" or treat the value of the deemed sale of goods as an "exempt service" - The appellant maintained separate records for availment and compliance of the inputs/input services, and the credit on works contract service invoices was used only to discharge output service tax on the works contract provided. Therefore, Rule 6(3) of the CENVAT Credit Rules, 2004, would not be applicable, and no reversal of CENVAT credit was required - The impugned order is set aside and the appeal is allowed [Read less]

Customs - Use of Distillate Marine Fuel for industrial purposes vs. marine purposes only - Seizure of the consignment of Distillate Marine Oil (for industrial use only) (HSN 27101961) - Petitioner contended that as per the scope of IS 16731:2019/ISO 8217:2017, the Distillate Marine Fuel can also be used other purposes also i.e. for industrial purpose and in the engines or any other similar purpose apart from it being used for marine purpose - Dept insisted that the petitioner should furnish an end-use declaration restricting the use of the Distillate Marine Fuel solely for marine purposes - Whether the Distillate Marine Fu... [Read more]

Customs - Use of Distillate Marine Fuel for industrial purposes vs. marine purposes only - Seizure of the consignment of Distillate Marine Oil (for industrial use only) (HSN 27101961) - Petitioner contended that as per the scope of IS 16731:2019/ISO 8217:2017, the Distillate Marine Fuel can also be used other purposes also i.e. for industrial purpose and in the engines or any other similar purpose apart from it being used for marine purpose - Dept insisted that the petitioner should furnish an end-use declaration restricting the use of the Distillate Marine Fuel solely for marine purposes - Whether the Distillate Marine Fuel imported by the petitioner can be used for industrial purposes or should be restricted to marine purposes only – HELD - As per the scope and introduction of IS 16731:2019/ISO 8217:2017, the Distillate Marine Fuel can only be used for marine purposes and not for industrial purposes. The marine fuels, as mentioned in IS 16731/ISO 8217 finds its origin in the cooperation with various stakeholders to meet the requirements of marine fuel for consumption “on board ships”. The IS of marine fuels mentions about the marine fuels to be supplied for consumption of ships - On a combined reading of IS 16731/ISO 8217 are prescribed for petroleum products – fuels (Class F) of marine fuels, emphatically establishes that Distillate Marine Fuel is used for Marine purposes only. By applying the doctrine of “Ejusdem generis”, the expression used in the scope “of the same or similar type” as those used for marine purposes has to be read in context with the diesel engines or similar type used in ships or for marine purpose only - The end-use declaration prescribed by the Directorate General of Shipping, which restricts the use of Distillate Marine Fuel solely for marine purposes, is reasonable and the petitioner cannot be allowed to deviate from the same. The petitioner can get the confiscated product released upon executing the end-use declaration as prescribed by the authorities - The petition is dismissed [Read less]

Customs – Classification of Monodisperse Aerosol Generator – Whether Monodisperse Aerosol Generator falls under CTH 9032 as classified by the Department or CTH 9027 as declared by the Appellant – HELD - The imported product is an aerosol generator, which is used for producing mono-disperse droplets and aerosol particles for physical and chemical analysis. The product does not operate in isolation and forms a key component of the entire system apparatus, without which the system will be unable to generate its physical analysis experimental data. Once the aerosol is generated, the product has no in-built mechanism to m... [Read more]

Customs – Classification of Monodisperse Aerosol Generator – Whether Monodisperse Aerosol Generator falls under CTH 9032 as classified by the Department or CTH 9027 as declared by the Appellant – HELD - The imported product is an aerosol generator, which is used for producing mono-disperse droplets and aerosol particles for physical and chemical analysis. The product does not operate in isolation and forms a key component of the entire system apparatus, without which the system will be unable to generate its physical analysis experimental data. Once the aerosol is generated, the product has no in-built mechanism to measure, control or maintain its parameters on its own. Further, the product has no means to constantly or periodically measure the actual value or parameters of the generated aerosol, which is a pre-requisite for classifying an item under Chapter heading 9032. Hence, the entire system and apparatus, including the products, are classifiable under Chapter Heading 9027 - Further, the extended period of limitation invoked by the Department to confirm the demand and impose penalty was unsustainable, as there was no evidence of suppression or wilful misstatement of facts by the Appellant. The impugned order is set aside and the appeal is allowed [Read less]

Customs - Import of Ammonium Nitrate – Determination of Country of Origin – Levy of Anti-dumping Duty - Appellant imported ammonium nitrate declaring the country of origin as Uzbekistan and claimed exemption from Anti-dumping duty (ADD) under Notification No.44/2017-Customs (ADD) dated 12.09.2017. However, the customs authorities rejected the declared country of origin, treated it as Iran, and demanded ADD - Whether the appellant was entitled to the exemption from ADD based on the declared country of origin of the imported goods – HELD - The appellant had submitted the Country of Origin Certificate issued by the Duba... [Read more]

Customs - Import of Ammonium Nitrate – Determination of Country of Origin – Levy of Anti-dumping Duty - Appellant imported ammonium nitrate declaring the country of origin as Uzbekistan and claimed exemption from Anti-dumping duty (ADD) under Notification No.44/2017-Customs (ADD) dated 12.09.2017. However, the customs authorities rejected the declared country of origin, treated it as Iran, and demanded ADD - Whether the appellant was entitled to the exemption from ADD based on the declared country of origin of the imported goods – HELD - The appellant had submitted the Country of Origin Certificate issued by the Dubai Chamber, which clearly showed the origin of the goods as Uzbekistan. The statements recorded by the authorities and the electronic evidence relied upon were not supported by credible documentary evidence and did not establish any misrepresentation of the country of origin - The authorities failed to verify the authenticity of the Country of Origin Certificate submitted by the appellant, as required by law. The authorities had passed a contradictory order in a similar matter, which amounted to discrimination. The appellant is entitled to the exemption from ADD based on the declared country of origin of the imported goods – The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Refund of Cenvat credit voluntarily reversed under Section 11A(2B) of Central Excise Act - Appellant paid Cenvat credit of service tax on outward freight due to audit objections, but later found to be eligible for the credit as per CBIC Circular. Appellant applied for refund – Rejection of refund claim on the ground that since the matter was settled under Section 11A(2B), the appellant cannot now dispute the merits of the case – HELD - The lower authorities had rejected the refund claim on grounds beyond the scope of the show cause notice, which is not permissible. The appellant was otherwise eligible ... [Read more]

Central Excise - Refund of Cenvat credit voluntarily reversed under Section 11A(2B) of Central Excise Act - Appellant paid Cenvat credit of service tax on outward freight due to audit objections, but later found to be eligible for the credit as per CBIC Circular. Appellant applied for refund – Rejection of refund claim on the ground that since the matter was settled under Section 11A(2B), the appellant cannot now dispute the merits of the case – HELD - The lower authorities had rejected the refund claim on grounds beyond the scope of the show cause notice, which is not permissible. The appellant was otherwise eligible for the Cenvat credit on outward freight as per the CBIC Circular, and hence, insistence on reversal by audit was not warranted. The appellant had reversed the Cenvat credit along with interest under Section 11A(2B) of the Central Excise Act to settle the matter, and the lower authorities had rejected the refund claim on the ground that the matter was concluded under this provision. The appellant is entitled to the refund of the amount reversed, along with the interest – The appeal is allowed [Read less]

Service Tax - Applicability of Service Tax on construction of residential units and project works – Appellant is engaged in providing construction services to government organizations and private parties - Whether the services rendered by the appellant in relation to construction of residential units and project works are liable to service tax – HELD - The services rendered by the appellant in relation to construction of residential quarters/colony for the Housing Project are not taxable as they were for residential purposes and not for any commercial activity. The services relating to residential units are not covered... [Read more]

Service Tax - Applicability of Service Tax on construction of residential units and project works – Appellant is engaged in providing construction services to government organizations and private parties - Whether the services rendered by the appellant in relation to construction of residential units and project works are liable to service tax – HELD - The services rendered by the appellant in relation to construction of residential quarters/colony for the Housing Project are not taxable as they were for residential purposes and not for any commercial activity. The services relating to residential units are not covered under the definition of "Construction of Complex Service" or "Residential Complex Service" - The appellant is right in arguments that certain activities like white washing, distempering and painting in the residential colony area, raising of ash-dyke for environmental preservation, and works executed for railways are not taxable under the "Commercial or Industrial Construction Service" – Further, the extended period of limitation cannot be invoked as the revenue authorities have not proved any willful suppression of material facts by the appellant with the intent to evade payment of duty. Mere non-payment of tax or non-filing of returns does not by itself constitute suppression of facts - The appeal is allowed partially on merits and fully on the ground of limitation [Read less]

Service Tax - Exemption from Service Tax under Notification No.14/2012-ST dated 17.03.2012 for import of technology - Appellant, engaged in the manufacture of Colour Television sets, claimed exemption from service tax equivalent to the Research and Development (R&D) Cess paid on import of technology – Department denied the exemption on the ground that the appellant failed to pay the R&D Cess before payment of service tax as required under the notification - Whether the appellant is entitled to the exemption from service tax under Notification No.14/2012-ST dated 17.03.2012 for the import of technology – HELD - While th... [Read more]

Service Tax - Exemption from Service Tax under Notification No.14/2012-ST dated 17.03.2012 for import of technology - Appellant, engaged in the manufacture of Colour Television sets, claimed exemption from service tax equivalent to the Research and Development (R&D) Cess paid on import of technology – Department denied the exemption on the ground that the appellant failed to pay the R&D Cess before payment of service tax as required under the notification - Whether the appellant is entitled to the exemption from service tax under Notification No.14/2012-ST dated 17.03.2012 for the import of technology – HELD - While the amended Notification No.47/2011-ST introduced specific temporal conditions requiring R&D cess to be paid before or contemporaneously with service tax payment for exemption to be available, the assessee had produced detailed charts with correct figures and relevant dates of payment of both R&D cess and service supported by proper documentary evidence demonstrating due compliance with the notification conditions. The assessee had paid R&D cess on royalty payable on technical knowhow and R&D fee amounts and thereafter availed exemption of equivalent amount of service tax on the strength of proper documents - Department was continuously aware of the assessee's working methodology as the assessee regularly filed statutory ST-3 returns, had entered into agreements with the foreign service provider since 2005 - The figures provided in ST-3 were provisional, and the actual figures were finalized upon payment of royalty after deduction of service tax, demonstrating that the assessee had actually paid more than the credit availed. The non-disclosure of adjustment of R&D cess before discharge of payment did not constitute suppression or misstatement of facts with intent to evade service tax, as the Department possessed complete knowledge and all relevant information was transparently maintained in statutory filings. Therefore, the extended period of limitation was not invokable, there was no evasion of service tax, and interest on the alleged tax amount was not leviable - The impugned orders passed by the Commissioner (Appeals) confirming the demand of service tax, interest, and penalty are set aside and quashed – The appeal is allowed [Read less]

Service Tax - Manufacturing activity under Job Work or Renting of immovable property services – Appellant entered into an agreement with Aurobindo Pharma Ltd (APL) to manufacture their products in the its manufacturing facility on job work basis - Department felt that the activity would be covered under 'Renting of Immovable Property Services' (RIPS) under section 65(105)(zzzz) of the Finance Act, 1994 - Whether the activity undertaken by the appellant is a manufacturing activity and therefore not leviable to service tax, or is it a case of renting of immovable property services - HELD - The activity undertaken by the ap... [Read more]

Service Tax - Manufacturing activity under Job Work or Renting of immovable property services – Appellant entered into an agreement with Aurobindo Pharma Ltd (APL) to manufacture their products in the its manufacturing facility on job work basis - Department felt that the activity would be covered under 'Renting of Immovable Property Services' (RIPS) under section 65(105)(zzzz) of the Finance Act, 1994 - Whether the activity undertaken by the appellant is a manufacturing activity and therefore not leviable to service tax, or is it a case of renting of immovable property services - HELD - The activity undertaken by the appellant amounts to manufacturing and is not covered under RIPS. There was a clear job work agreement between the parties, where the appellant was undertaking conversion work for manufacturing specified goods as per the standards and specifications of APL. The definition of 'Business Auxiliary Service' under section 65(19) excludes any activity that amounts to 'manufacture' within the meaning of clause (f) of section 2 of the Central Excise Act, 1944 - The mode and method of payment of conversion charges is not determinative of the fact that it was in the nature of rent, as the agreement provided that in case the actual conversion charges incurred by the appellant exceeds the agreed amount, APL will be liable to pay the excess amount. The reimbursable expenses paid by APL to the appellant cannot be subjected to service tax - The impugned order is set aside and the appeal is allowed [Read less]

GST - Electricity Regulatory Commission - Levy of levy of service tax/GST on statutory regulatory commissions discharging quasi-judicial functions - Whether the regulatory and adjudicatory functions performed by the petitioner, a quasi-judicial body, would fall within the scope of "supply of goods or services" under the CGST Act, 2017 – HELD - The regulatory functions discharged by the Electricity Regulatory Commissions, including tariff determination and licensing, are statutory in nature and cannot be construed as activities undertaken in the course or furtherance of ‘business’ - A regulatory commission is a statut... [Read more]

GST - Electricity Regulatory Commission - Levy of levy of service tax/GST on statutory regulatory commissions discharging quasi-judicial functions - Whether the regulatory and adjudicatory functions performed by the petitioner, a quasi-judicial body, would fall within the scope of "supply of goods or services" under the CGST Act, 2017 – HELD - The regulatory functions discharged by the Electricity Regulatory Commissions, including tariff determination and licensing, are statutory in nature and cannot be construed as activities undertaken in the course or furtherance of ‘business’ - A regulatory commission is a statutory body vested with adjudicatory and regulatory functions. Such functions are neither in the nature of trade, commerce, nor business and the element of “consideration” as contemplated under Section 2(31) of the CGST Act is absent – Further, the Schedule III expressly excludes services rendered by courts and Tribunals. Any attempt to artificially segregate regulatory and adjudicatory functions is untenable – The impugned demand notices and orders are quashed. The writ petition is allowed [Read less]

GST - Refund of tax paid against zero-rated supply - Rejection of claims for refund of tax paid against zero-rated supply for different periods – HELD - The Division Bench of the High Court had earlier dealt with an identical issue involving the same petitioner, wherein it was held that the petitioner can claim refund of the cess paid on purchase of coal used for manufacturing of goods exported being zero-rated supplies. The coal is used as an input for manufacturing purposes undertaken by the petitioner the final product of which is exported - The respondents do not dispute the fact that the issue involved in these writ... [Read more]

GST - Refund of tax paid against zero-rated supply - Rejection of claims for refund of tax paid against zero-rated supply for different periods – HELD - The Division Bench of the High Court had earlier dealt with an identical issue involving the same petitioner, wherein it was held that the petitioner can claim refund of the cess paid on purchase of coal used for manufacturing of goods exported being zero-rated supplies. The coal is used as an input for manufacturing purposes undertaken by the petitioner the final product of which is exported - The respondents do not dispute the fact that the issue involved in these writ petitions is identical which is already disposed of in respect of the very same petitioner in a batch of writ petitions - The impugned orders are set aside and matter is remanded to the original authority to take a fresh decision in accordance with law after providing an opportunity of hearing to the petitioner – The writ petitions are allowed [Read less]

GST - Cancellation and restoration of GST registration, Carrying out of business from mobile phone - Petitioner’s registration was initially cancelled, but later restored upon explanation - Respondents issued show cause notice and imposed penalties based on the fact that the petitioner was not operating from the registered principal place of business – HELD - There is no embargo on the right of the petitioner to carry out his business not only from the principal place of business, but also from the mobile phone. That by itself, would not disentitle him to carry on the business - Since the petitioner's GST registration ... [Read more]

GST - Cancellation and restoration of GST registration, Carrying out of business from mobile phone - Petitioner’s registration was initially cancelled, but later restored upon explanation - Respondents issued show cause notice and imposed penalties based on the fact that the petitioner was not operating from the registered principal place of business – HELD - There is no embargo on the right of the petitioner to carry out his business not only from the principal place of business, but also from the mobile phone. That by itself, would not disentitle him to carry on the business - Since the petitioner's GST registration was ultimately restored, the basis for issuing the show cause notice and imposing penalties was no longer valid. The restoration of registration meant the petitioner was entitled to carry on business not just from the principal place of business, but also from other locations - The impugned order imposing penalties is based on conjectures and surmises about the petitioner not operating from the registered principal place of business, which was proved to be incorrect - The impugned order imposing penalties is quashed and the authorities are directed to reconsider the matter after hearing the petitioner – The petition stands allowed [Read less]

GST - Demand against non-existent entity after merger - Petitioner was formed after the merger of Vodafone Mobile Services Ltd (VMSL) and Vodafone India Limited with Idea Cellular Limited as per an order of the National Company Law Tribunal. The GST authorities were duly informed about the merger at the time of amendment of the GST registration of Idea Cellular Limited - DGGI issued a show-cause notice to VMSL, even though VMSL had ceased to exist after the merger - Whether the DGGI had the jurisdiction to issue a show-cause notice and demand against the non-existent entity of VMSL after the merger – HELD - The principle... [Read more]

GST - Demand against non-existent entity after merger - Petitioner was formed after the merger of Vodafone Mobile Services Ltd (VMSL) and Vodafone India Limited with Idea Cellular Limited as per an order of the National Company Law Tribunal. The GST authorities were duly informed about the merger at the time of amendment of the GST registration of Idea Cellular Limited - DGGI issued a show-cause notice to VMSL, even though VMSL had ceased to exist after the merger - Whether the DGGI had the jurisdiction to issue a show-cause notice and demand against the non-existent entity of VMSL after the merger – HELD - The principles laid down by the Supreme Court in Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd. apply to the present case. Once the proper officer was duly informed about the merger and its legal consequences, namely that the amalgamating company VMSL had ceased to exist upon the approval of the scheme of amalgamation/merger, the officer lacked jurisdiction to issue the notice against VMSL. The proceedings against a non-existent entity are void ab initio – Further, the provisions of Section 87 of the CGST Act, relied upon by the respondents, are not applicable to the facts of the present case as the ingredients stipulated therein are not attracted. The Section 87 only preserves the transactions between the amalgamating companies during the intervening period from the date on which the order takes effect till the date of the order, and does not empower the Department to issue a show-cause notice on a non-existent entity post merger/amalgamation. Post-merger or amalgamation the merged entity has no status in the eyes of law, and therefore no proceedings can be initiated against it - The impugned show-cause notice issued against the non-existent entity is quashed – The writ petition is allowed [Read less]

GST - Mandatory Pre-deposit under GST Act for Appeal, Procedural glitch in making pre-deposit payment, Failure to debit Cash Ledger - The petitioner challenged the order of the Appellate Authority dismissing its appeal against the Order-in-Original on the ground of non-compliance with the mandatory requirement of pre-deposit under Section 107(6) of the CGST Act, 2017 – HELD - While the petitioner did make efforts to make the pre-deposit, there appeared to be a procedural glitch. However, the Appellate Authority should have provided the petitioner with a reasonable opportunity to cure the defect, rather than dismissing th... [Read more]

GST - Mandatory Pre-deposit under GST Act for Appeal, Procedural glitch in making pre-deposit payment, Failure to debit Cash Ledger - The petitioner challenged the order of the Appellate Authority dismissing its appeal against the Order-in-Original on the ground of non-compliance with the mandatory requirement of pre-deposit under Section 107(6) of the CGST Act, 2017 – HELD - While the petitioner did make efforts to make the pre-deposit, there appeared to be a procedural glitch. However, the Appellate Authority should have provided the petitioner with a reasonable opportunity to cure the defect, rather than dismissing the appeal on technical grounds – The right to appeal is a valuable right, and principles of natural justice and fair play require that the petitioner be given a chance to address any deficiencies - The Appellate Authority cannot deprive the petitioner of the right to appeal on purely procedural grounds, and must consider the substance of the matter - The impugned order is set aside and the matter is remanded to the Appellate Authority to decide the appeal on its own merits, after the petitioner cures the defect and secures the pre-deposit amount - The petition is allowed [Read less]

GST - Failure to provide personal hearing before passing adverse order - Violation of principles of natural justice – HELD - Before any adverse decision is even contemplated against an assessee under the 2017 Act, the respondent-revenue is under a statutory obligation to provide to the assessee an opportunity of hearing which, admittedly, in the case in hand, has not been done. The submission of Revenue that since to the show cause notice, the petitioner did not file a written response, no opportunity of hearing was required to be granted to the petitioner is rejected in view of Section 75(4) of the CGST Act, 2017 - Furt... [Read more]

GST - Failure to provide personal hearing before passing adverse order - Violation of principles of natural justice – HELD - Before any adverse decision is even contemplated against an assessee under the 2017 Act, the respondent-revenue is under a statutory obligation to provide to the assessee an opportunity of hearing which, admittedly, in the case in hand, has not been done. The submission of Revenue that since to the show cause notice, the petitioner did not file a written response, no opportunity of hearing was required to be granted to the petitioner is rejected in view of Section 75(4) of the CGST Act, 2017 - Further, in the absence of a written response, if the petitioner had been granted an opportunity of hearing, it could, at the time of such hearing, produce its original record in the form of account books, ledgers etc. and/or file written arguments in defence and make an attempt to satisfy the Assessing Officer to withdraw the show cause notice served upon him - The adjudication order is set aside on the ground that the respondent-authorities failed to provide an opportunity of personal hearing to the petitioner before passing the adverse order, which violated the principles of natural justice and the statutory requirement under Section 75(4) of the CGST Act - The impugned adjudication order is set aside granting liberty to respondent-revenue to proceed against the petitioner but only after following the provisions of law including Section 75(4) of the Act – The petition is allowed [Read less]

GST - Consolidation of Show Cause Notices for multiple financial years – Challenge to issuance of consolidated show cause notices and orders for multiple financial years, contending that it was not permissible under the CGST Act, 2017 – HELD - The High Court in its previous judgments in Ambika Traders and Vallabh Textiles, had held that the consolidation of SCNs and orders for multiple financial years is permissible under the CGST Act. The language of the relevant provisions, i.e., Sections 74(2) and 74(10) of the CGST Act, does not prohibit such consolidation - Since this Court has consistently taken a view that conso... [Read more]

GST - Consolidation of Show Cause Notices for multiple financial years – Challenge to issuance of consolidated show cause notices and orders for multiple financial years, contending that it was not permissible under the CGST Act, 2017 – HELD - The High Court in its previous judgments in Ambika Traders and Vallabh Textiles, had held that the consolidation of SCNs and orders for multiple financial years is permissible under the CGST Act. The language of the relevant provisions, i.e., Sections 74(2) and 74(10) of the CGST Act, does not prohibit such consolidation - Since this Court has consistently taken a view that consolidation of the notices for various financial years is very much permitted, there is no reason to take a different view than the view which is already consistently expressed by this Court - Merely, because the other High Courts i.e., Madras High Court and High Court of Andhra Pradesh have taken a different view that would not persuade us to deviate from the view which has already been expressed in the said judgment – The writ petitions stand dismissed [Read less]

Central Excise - Extended period of limitation under Central Excise Act - The appellant had maintained proper records and filed them with the department, but the department did not scrutinize them – HELD - The extended period of limitation under section 11A(4) of the Central Excise Act could not have been invoked as the appellant had maintained proper records and filed them with the department, and the department did not scrutinize them. The Supreme Court has held that when the department has full knowledge about the manufacture of goods, the extended period of limitation cannot be invoked. Mere failure to declare does n... [Read more]

Central Excise - Extended period of limitation under Central Excise Act - The appellant had maintained proper records and filed them with the department, but the department did not scrutinize them – HELD - The extended period of limitation under section 11A(4) of the Central Excise Act could not have been invoked as the appellant had maintained proper records and filed them with the department, and the department did not scrutinize them. The Supreme Court has held that when the department has full knowledge about the manufacture of goods, the extended period of limitation cannot be invoked. Mere failure to declare does not amount to wilful suppression, and there must be a positive act from the assessee's side to find wilful suppression. In the present case, the department was aware in 2015 that the appellant had taken over the unit, but the show cause notice was issued only in 2020, after an inordinate delay. Therefore, the extended period of limitation could not have been invoked - The impugned order is set aside and the appeals are allowed - Relevance of statements recorded under section 14 of the Central Excise Act - The persons whose statements were recorded under section 14 were not examined as witnesses by the adjudicating authority as required under section 9D – HELD - The adjudicating authority could not have placed reliance on the statements recorded under section 14 of the Central Excise Act as the procedure contemplated under section 9D of the Act was not followed. Section 9D mandates that the persons whose statements were recorded under section 14 have to be examined as witnesses before the adjudicating authority, and the authority has to form an opinion that the statements should be admitted in evidence in the interests of justice. Failure to comply with this procedure would mean that no reliance can be placed on the statements recorded under section 14 - Imposition of penalty under rule 26 of the Central Excise Rules - There was no finding that the goods were liable to confiscation – HELD - The imposition of penalties under rule 26 of the Central Excise Rules on Jasraj Singh Kalra and Sarabjit Singh Kalra cannot be sustained as there was no finding in the impugned order that the goods were liable to confiscation. Rule 26 requires that the goods should be liable to confiscation for the penalty to be imposed, and in the absence of such a finding, the penalties under rule 26 could not have been imposed. [Read less]

GST - Opportunity of personal hearing under Section 75(4) of CGST Act, 2017 - Whether the authorities complied with the statutory requirements of providing opportunity of personal hearing under Section 75(4) – HELD - The authorities had complied with the requirement of providing opportunity of personal hearing as per Section 75(4) of the CGST Act. After issuance of the show cause notice under Section 74(1), the authorities granted three opportunities of personal hearing to the petitioner's authorized representative, who made final submissions - The mandate of Sub-section (4) of Section 75 of the CGST Act, 2017 has been f... [Read more]

GST - Opportunity of personal hearing under Section 75(4) of CGST Act, 2017 - Whether the authorities complied with the statutory requirements of providing opportunity of personal hearing under Section 75(4) – HELD - The authorities had complied with the requirement of providing opportunity of personal hearing as per Section 75(4) of the CGST Act. After issuance of the show cause notice under Section 74(1), the authorities granted three opportunities of personal hearing to the petitioner's authorized representative, who made final submissions - The mandate of Sub-section (4) of Section 75 of the CGST Act, 2017 has been fully complied with. In fact, requirement of giving a personal hearing arises only when the Assessing Authority contemplates passing an adverse order - The opportunity of personal hearing is to be given to an assessee immediately after the Assessing Officer contemplates passing an adverse order. By no stretch of imagination, it can be said that the hearing is to be given once again. This would amount to adding something to the statute which are not there – The challenge to the opportunity of personal hearing is dismissed, while keeping the issue of limitation period under Section 73(10) open for further consideration – Ordered accordingly [Read less]

Central Excise - Fraudulent availment of Cenvat credit - The investigation revealed that the appellant had availed Cenvat credit on the basis of fake invoices - Whether the appellant was entitled to cross-examination of material witnesses whose statements were relied upon by the Revenue to make out a case against the appellant – HELD - The appellant had the right to cross-examine the material witnesses whose statements were relied upon by the Revenue to make out a case against the appellant. The adjudicating authority had rejected the request for cross-examination without giving any sufficient grounds, which was a violat... [Read more]

Central Excise - Fraudulent availment of Cenvat credit - The investigation revealed that the appellant had availed Cenvat credit on the basis of fake invoices - Whether the appellant was entitled to cross-examination of material witnesses whose statements were relied upon by the Revenue to make out a case against the appellant – HELD - The appellant had the right to cross-examine the material witnesses whose statements were relied upon by the Revenue to make out a case against the appellant. The adjudicating authority had rejected the request for cross-examination without giving any sufficient grounds, which was a violation of the principles of natural justice - The appeals are allowed by way of remand to the original authority who was directed to comply with the requirement of Section 9D and afford an opportunity of cross-examination and thereafter pass a reasoned order in accordance with law – The appeals are disposed of [Read less]

Customs - Classification of Bluetooth Wireless Earphones/Headphones/Neckbands, Eligibility to benefit of Notification No. 57/2017 dated 30.06.2017 - Whether the goods imported by the appellant are classifiable under CTI 8517 62 90 (Telephone sets, including smartphones and other telephones for cellular networks or for other wireless networks) or under CTI 8518 30 00 (Headphones and earphones, whether or not combined with a microphone) – HELD - The primary function of the imported goods is audio reproduction (sound output) and not transmission or reception of voice/data in a wireless network. The Bluetooth connectivity is... [Read more]

Customs - Classification of Bluetooth Wireless Earphones/Headphones/Neckbands, Eligibility to benefit of Notification No. 57/2017 dated 30.06.2017 - Whether the goods imported by the appellant are classifiable under CTI 8517 62 90 (Telephone sets, including smartphones and other telephones for cellular networks or for other wireless networks) or under CTI 8518 30 00 (Headphones and earphones, whether or not combined with a microphone) – HELD - The primary function of the imported goods is audio reproduction (sound output) and not transmission or reception of voice/data in a wireless network. The Bluetooth connectivity is merely a technology by which the audio signal reaches the device and does not transform the earphones into a "data transmission machine" for classification purposes. Applying the principles laid down by the Supreme Court in Welkin Foods, the CTH 8518 (Headphones and earphones) is a classic eo nomine provision, which names the article, and the Bluetooth/Wireless connectivity is a technology that does not change the essential character of the product. Further, the use of the earphones with mobile phones is the "actual use" that cannot determine the classification, which must be based on the objective characteristics and properties of the goods at the time of import - The impugned order has correctly found that the primary function of the imported goods is audio reproduction (sound output) and not transmission or reception of voice/data in a wireless network. The fact that the earphones contain a Bluetooth chip to receive audio wirelessly does not make them “machines for transmission of data” any more than a radio receiver’s ability to receive electromagnetic waves makes it a “data transmission machine”. This is precisely the principle of the eo nomine identity of a product not being overridden by secondary functional characteristics - The goods imported by the appellant are classifiable under CTI 8518 30 00 and not under CTI 8517 62 90. As the goods are classifiable under CTH 8518 30 00, the demand is upheld for the normal period of limitation under section 28(1) of the Customs Act, but the demand confirmed for the extended period of limitation under section 28(4) is set aside. The imposition of penalty under section 114A is also set aside as the extended period of limitation could not have been invoked – The appeal is partly allowed [Read less]

GST - Grant of anticipatory bail in an economic offence case - Summons under Section 70 of the CGST Act, 2017 to appear and produce documents related to alleged wrongful availment of input tax credit - Whether the petitioner is entitled to the benefit of anticipatory bail in the present case – HELD - The petitioner is alleged to have committed a grave economic offence by wrongfully availing ITC through fake invoices and onward passing of credit, which has long-term and far-reaching ramifications on the financial health of the country and affects national interest at large. The petitioner has not cooperated with the ongoi... [Read more]

GST - Grant of anticipatory bail in an economic offence case - Summons under Section 70 of the CGST Act, 2017 to appear and produce documents related to alleged wrongful availment of input tax credit - Whether the petitioner is entitled to the benefit of anticipatory bail in the present case – HELD - The petitioner is alleged to have committed a grave economic offence by wrongfully availing ITC through fake invoices and onward passing of credit, which has long-term and far-reaching ramifications on the financial health of the country and affects national interest at large. The petitioner has not cooperated with the ongoing inquiry, as he has failed to appear pursuant to the summons issued under Section 70 of the CGST Act - The nature of the alleged offence necessitates the petitioner's custodial interrogation to facilitate effective investigation and to unearth the fraud in all facets. Any latitude may enable the petitioner to tamper with the evidence or manipulate the records by taking undue advantage of legal and procedural loopholes. Considering the huge amount of public money involved, the lack of cooperation by the petitioner, and the grave nature of the alleged offence, no exceptional or extraordinary circumstance has been made out in favor of the petitioner for the grant of anticipatory bail - The petition for anticipatory bail is dismissed [Read less]

Service Tax - Classification of services as Manpower Supply Services (MSS) or Business Auxiliary Service (BAS) - The appellant claimed that the services provided to ITC Ltd. for processing of unmanufactured tobacco were eligible for exemption under Notification 14/2004-ST and Mega Notification 25/2012-Service Tax as an agriculture-related service - Whether the services provided by the appellant are correctly classified as Manpower Supply Services or Business Auxiliary Service, and whether the services are eligible for exemption from service tax under the relevant notifications - HELD - The dominant and determinative factor... [Read more]

Service Tax - Classification of services as Manpower Supply Services (MSS) or Business Auxiliary Service (BAS) - The appellant claimed that the services provided to ITC Ltd. for processing of unmanufactured tobacco were eligible for exemption under Notification 14/2004-ST and Mega Notification 25/2012-Service Tax as an agriculture-related service - Whether the services provided by the appellant are correctly classified as Manpower Supply Services or Business Auxiliary Service, and whether the services are eligible for exemption from service tax under the relevant notifications - HELD - The dominant and determinative factors - direct supervision, disciplinary control, wage and statutory liability, and the express character of the arrangement as a job-work contract - establish that the Contract Workmen are employees of, and remain under the supervision and control of, the Contractor, and do not stand in an employer-employee relationship with ITC. The contract is therefore a 'contract for service' and not a 'contract of service', and the service is correctly classified under 'BAS' and not 'MSS' – Regarding appellant's claim for exemption from service tax, both under the pre-Negative List regime (Notification No. 14/2004-ST) and the post-Negative List regime (Mega Notification No. 25/2012-ST), the appellant's processing of unmanufactured tobacco, including incidental or auxiliary services, constitutes an intermediate production process in relation to agriculture or agricultural produce. Consequently, the services are eligible for exemption from service tax under the relevant notifications, both pre and post the Negative List - The impugned order is set aside and held that the appellant is eligible for the refund claimed. The appeal is allowed [Read less]

Customs – Maintainability of writ petition challenging show cause notices for denial of preferential tariff benefits under AIFTA - Territorial jurisdiction of High Court - Part of cause of action – HELD - The territorial jurisdiction would exist where any material part of the cause of action arose within Delhi, including cases where the goods were received at ICDs in Delhi, the petitioner was situated in Delhi, or the show cause notice had been issued from the Customs office at Delhi. Except of one petition the territorial jurisdiction is held to exist in the petitions having a Delhi nexus. Even so, the writ petitions ... [Read more]

Customs – Maintainability of writ petition challenging show cause notices for denial of preferential tariff benefits under AIFTA - Territorial jurisdiction of High Court - Part of cause of action – HELD - The territorial jurisdiction would exist where any material part of the cause of action arose within Delhi, including cases where the goods were received at ICDs in Delhi, the petitioner was situated in Delhi, or the show cause notice had been issued from the Customs office at Delhi. Except of one petition the territorial jurisdiction is held to exist in the petitions having a Delhi nexus. Even so, the writ petitions are not maintainable at the stage of show cause notice as the Customs authorities have the jurisdiction to investigate and adjudicate the claims of preferential tariff treatment under the AIFTA. The AIFTA does not divest the sovereign right of the importing country to protect its revenue by investigating and rejecting unjustified claims of preference - The AIFTA establishes a framework for lawful rejection of such claims, which includes the issuance of show cause notices. The Courts have consistently held that a writ petition should normally not be entertained against the mere issuance of a show cause notice, and the petitioners must first raise all objections before the adjudicating authority and exhaust the statutory remedy before approaching the High Court. The petitioners are relegated to the adjudicating authority to raise all defences, including those based on the AIFTA, and the High Court shall not interfere at this stage - The writ petitions are dismissed - Dispute settlement mechanism under AIFTA – HELD - The dispute settlement mechanism under Article 24 of the AIFTA is between the contracting states and not available to private entities like the petitioners to challenge the actions of the State. The provisions of the AIFTA must be incorporated into the municipal law to be enforceable, and the substantive provisions have been incorporated through the Rules of Origin, but the dispute settlement mechanism has not been. Therefore, the petitioners cannot rely on Article 24 to challenge the actions of the Customs authorities - Verification of Certificate of Origin (COO) under AIFTA – HELD - The AIFTA and the domestic laws, including Section 28DA of the Customs Act, 1962 and the CAROTAR, empower the Customs authorities to verify the authenticity and accuracy of the COOs and the origin criteria, including the Regional Value Content (RVC). The Customs authorities are not bound to grant preferential treatment merely because a valid COO has been produced, as the COO is only a prima facie evidence of origin, and the authorities can investigate the substantive compliance with the Rules of Origin. The burden to establish eligibility for preferential treatment lies on the importer, and the Customs authorities are empowered to deny the preference if the importer fails to discharge this burden. [Read less]

Customs - Pre-deposit requirement for filing appeals under Customs Act - The petitioners were prevented from filing their appeals on the ground that they had not made the pre-deposit or submitted proof of the same - Whether the appeals could be entertained without the pre-deposit or proof of pre-deposit being submitted at the time of filing the appeal - HELD - The word 'entertained' in the context of Section 129E of the Customs Act does not mean the mere filing or registration of the appeal, but rather the stage when the appellate authority considers the appeal on its merits - The pre-deposit requirement is not a condition... [Read more]

Customs - Pre-deposit requirement for filing appeals under Customs Act - The petitioners were prevented from filing their appeals on the ground that they had not made the pre-deposit or submitted proof of the same - Whether the appeals could be entertained without the pre-deposit or proof of pre-deposit being submitted at the time of filing the appeal - HELD - The word 'entertained' in the context of Section 129E of the Customs Act does not mean the mere filing or registration of the appeal, but rather the stage when the appellate authority considers the appeal on its merits - The pre-deposit requirement is not a condition precedent for the filing or registration of the appeal, but rather a requirement to be satisfied before the appeal is taken up for consideration on the merits. The revenue authorities cannot refuse to accept the appeals merely on the ground that the pre-deposit or proof of pre-deposit has not been submitted - At the stage of filing/registration, the authority has to accept the appeal even if it is defective due to non-compliance with the pre-deposit requirement. The issue of whether the appeal should be "entertained" can be considered by the appellate authority at the later stage when the matter is placed before it - The proceedings being presented by the petitioners before the Commissioner (Appeals) must be allowed to be filed and registered, even if defective for the reason of non-payment of pre-deposit or lack of proof of pre-deposit. The issue of whether the appeal is to be 'entertained' can be considered by the Commissioner (Appeals) when the matter is placed before it for consideration on the merits - the writ petitions stand disposed of [Read less]

Service Tax liability under Reverse charge on hiring of vessels/dredgers from foreign owners under "supply of tangible goods service" - The Department sought to levy service tax on the appellant under reverse charge mechanism on the ground that the activity was classifiable as "supply of tangible goods service" under Section 65(105)(zzzzj) of the Finance Act, 1994 – HELD - The Bareboat Charter Agreements entailed a transfer of right of possession and effective control of the vessels/dredgers to the appellant, and hence fell under the exclusionary clause of the "supply of tangible goods service" entry and was outside the ... [Read more]

Service Tax liability under Reverse charge on hiring of vessels/dredgers from foreign owners under "supply of tangible goods service" - The Department sought to levy service tax on the appellant under reverse charge mechanism on the ground that the activity was classifiable as "supply of tangible goods service" under Section 65(105)(zzzzj) of the Finance Act, 1994 – HELD - The Bareboat Charter Agreements entailed a transfer of right of possession and effective control of the vessels/dredgers to the appellant, and hence fell under the exclusionary clause of the "supply of tangible goods service" entry and was outside the purview of service tax. The terms of the charter agreements clearly established the transfer of possession and control to the appellant, and mere restrictions on use or sub-leasing by the owner did not negate this – Further, the issue was already settled in the appellant's favour in its earlier decision, which had attained finality, and the Department was bound by the same. The demand of service tax, interest and penalties imposed on the appellant are set aside and the appeal is allowed [Read less]

GST - Parallel proceedings - Petitioner's GST registration was cancelled and show cause notices were issued alleging wrongful availment of Input Tax Credit, leading to the imposition of demands and penalties. Later, another order-in-original was passed for the same period on identical allegations. The petitioner filed a writ petition challenging the second order-in-original - Whether the second proceeding was a case of duplication and abuse of process of law, and thus barred under Section 6(2)(b) of the CGST Act – HELD - While the first part of the test for determining whether the subject matter is "same" may be satisfie... [Read more]

GST - Parallel proceedings - Petitioner's GST registration was cancelled and show cause notices were issued alleging wrongful availment of Input Tax Credit, leading to the imposition of demands and penalties. Later, another order-in-original was passed for the same period on identical allegations. The petitioner filed a writ petition challenging the second order-in-original - Whether the second proceeding was a case of duplication and abuse of process of law, and thus barred under Section 6(2)(b) of the CGST Act – HELD - While the first part of the test for determining whether the subject matter is "same" may be satisfied, the second part (i.e., whether the demand or relief sought is identical) may not be attracted in the present case. The petitioner failed to participate in the second proceeding to bring the overlap to the notice of the authority, as per the guidelines laid down by the Supreme Court in Armour Security (India) Ltd. v. Commissioner, CGST, Delhi - The petitioner may seek rectification of the second proceeding under Section 161 of the CGST Act, as the period of six months has not expired from the date of issuance of the second order-in-original. The petitioner to avail the remedy of filing an appeal against the second order-in-original before the appellate authority – The petition is disposed of [Read less]

Bihar Finance Act, 1981 - Exercise of suo moto revisional jurisdiction and scope of Revisional powers - Revisional authority partly disagreed with appellant’s contention that the transaction constituted only a stock transfer and not an inter-State sale - Whether the exercise of suo moto revisional jurisdiction by the Joint Commissioner is valid when the Supreme Court’s subsequent decision substantially overruled the view on the scope of revisional jurisdiction – HELD - The revisional authority had relied on the law laid down in Ashok Leyland-I, which was substantially overruled by the Supreme Court in Ashok Leyland-I... [Read more]

Bihar Finance Act, 1981 - Exercise of suo moto revisional jurisdiction and scope of Revisional powers - Revisional authority partly disagreed with appellant’s contention that the transaction constituted only a stock transfer and not an inter-State sale - Whether the exercise of suo moto revisional jurisdiction by the Joint Commissioner is valid when the Supreme Court’s subsequent decision substantially overruled the view on the scope of revisional jurisdiction – HELD - The revisional authority had relied on the law laid down in Ashok Leyland-I, which was substantially overruled by the Supreme Court in Ashok Leyland-II. In Ashok Leyland-II, the Supreme Court clarified that although the orders made under Section 6(A)(2) of the Central Sales Tax Act, 1956 are conclusive, they can be reopened on limited grounds such as fraud, collusion, misrepresentation, or suppression of material facts - It would not be appropriate for this Court to make a truncated decision on points of law and then remand the matter to the Tribunal to apply that law to the material on record. The Tribunal’s comprehensive decision, both on points of law and on facts, given the overruling of Ashok Leyland-I by Ashok Leyland-II, would best serve the interests of justice – The matter is remanded to the Tribunal for fresh consideration by considering the rival contentions in the context of the decision of the Hon’ble Supreme Court in the case of Ashok Leyland-II and the impact of the amendment brought about to Section 6(A) of the CST Act by the Finance Act, 2010 – The case is disposed of [Read less]

Andhra Pradesh General Sales Act, 1957 - Revision vs. Reassessment of assessment order - Passing of Reassessment order based on subsequent judgments of the Court - An assessment order was passed against the petitioner for the assessment year 2002-03. Later, based on observations made by the Audit party, the Commercial Tax Officer passed a revised/reassessment order under Section 14(4)(cc) of the APGST Act, 1957 - Whether the Assessing Officer had the power to revise/reassess the earlier assessment order – HELD – The distinction between a revisional proceeding and a reassessment proceeding is that the revisional authori... [Read more]

Andhra Pradesh General Sales Act, 1957 - Revision vs. Reassessment of assessment order - Passing of Reassessment order based on subsequent judgments of the Court - An assessment order was passed against the petitioner for the assessment year 2002-03. Later, based on observations made by the Audit party, the Commercial Tax Officer passed a revised/reassessment order under Section 14(4)(cc) of the APGST Act, 1957 - Whether the Assessing Officer had the power to revise/reassess the earlier assessment order – HELD – The distinction between a revisional proceeding and a reassessment proceeding is that the revisional authority is entitled to take a different view on the basis of the material which was available before the assessing officer. However, the assessing officer cannot pass an order of reassessment on the basis of the same material. An order of reassessment is permissible only where fresh material, which had not been considered by the assessing officer in the earlier assessment order, comes to light and such material is sufficient for conducting a reassessment - In the present case, the impugned order of reassessment had been passed only on the basis of the observations of the audit party that the subsequent judgment of the High Court had resulted in a change in law. This clearly indicates that there was no fresh material available with the assessing officer who had passed this order of reassessment - The subsequent judgments of the Court can never be treated as fresh material for taking up reassessment proceedings - the impugned reassessment order is set aside and the writ petition is allowed [Read less]

GST - Issuing Show Cause Notice under Section 74 of CGST Act, 2017 after payment of tax, Willful suppression of facts - Department issued SCN under Section 74 of the CGST Act alleging short payment of tax and excess availment of input tax credit by the petitioner. The petitioner paid the tax amount as demanded, but did not pay the interest and penalty. The department then passed an order under Section 74 demanding payment of interest and penalty - Whether the show cause notice under Section 74 could be issued after the petitioner had paid the tax amount – HELD – The petitioner's submission that the SCN could have been ... [Read more]

GST - Issuing Show Cause Notice under Section 74 of CGST Act, 2017 after payment of tax, Willful suppression of facts - Department issued SCN under Section 74 of the CGST Act alleging short payment of tax and excess availment of input tax credit by the petitioner. The petitioner paid the tax amount as demanded, but did not pay the interest and penalty. The department then passed an order under Section 74 demanding payment of interest and penalty - Whether the show cause notice under Section 74 could be issued after the petitioner had paid the tax amount – HELD – The petitioner's submission that the SCN could have been issued only under Section 73 of the CGST Act and not under Section 74 since the tax amount had been paid, has no basis to stand. The SCN clearly stated that it was a case of willful suppression, which the petitioner did not contest before the competent authority. The petitioner's representative even admitted the liability before the Assistant Commissioner and stated that the remaining amount of interest and penalty will be deposited within two months - Having taken one stand before the competent authority, the petitioner is estopped from changing its stand before the Court by filing a writ application. The payment of taxes on account of short payment of taxes or wrongful availment of input tax credit after it was pointed out in the audit, the submission that the SCN could not have been issued under Section 74 of the CGST Act, 2017 has no basis to stand – The writ application is dismissed [Read less]

Customs - Duty Demand and Penalty on 100% EOU - Imported marble blocks allegedly diverted to domestic market instead of export - Whether demand of duty on the full quantity of imported marble blocks can be sustained and whether penalties can be imposed under sections 114A and 114AA – HELD - Demand of duty cannot be sustained on marble blocks that are admittedly in stock, as this stock was lying in the factory of the 100% EOU and was not diverted. For the remaining marble blocks which alleged to have been diverted, the demand cannot be sustained as there is no clinching evidence to prove that the imported marble blocks we... [Read more]

Customs - Duty Demand and Penalty on 100% EOU - Imported marble blocks allegedly diverted to domestic market instead of export - Whether demand of duty on the full quantity of imported marble blocks can be sustained and whether penalties can be imposed under sections 114A and 114AA – HELD - Demand of duty cannot be sustained on marble blocks that are admittedly in stock, as this stock was lying in the factory of the 100% EOU and was not diverted. For the remaining marble blocks which alleged to have been diverted, the demand cannot be sustained as there is no clinching evidence to prove that the imported marble blocks were diverted and sold in the domestic market, instead of being exported as final products - The statements relied upon by the Department to show that the exported marble slabs were of Indian origin cannot be admitted as evidence as the requirements of section 138B of the Customs Act were not complied with. Further, the Department's inference that the 'Harmony Brown' marble is available only in India and hence the exported marble slabs could not have been manufactured from the imported marble blocks is not supported by any reliable evidence - The penalty under section 114A also cannot be sustained as there is no evidence of any collusion, wilful misstatement or suppression of facts at the time of import. Similarly, the penalties imposed under section 114AA on the other appellants are also not justified as there is no mis-declaration, let alone a knowing or intentional declaration, in any document - The impugned order is set aside and all the appeals are allowed [Read less]

Customs - Challenge to final findings dated 29.09.2022 of the designated authority to the extent it recommends nil rate of anti-dumping duty on the product under consideration, namely, semi-finished ophthalmics lenses on participating importers and also seeking to exclude lenses of Refractive Index above 1.6 - Violation of principles of natural justice in determining Non-Injurious Price (NIP) - Appellant claimed that the designated authority violated the principles of natural justice by not providing detailed calculations of the NIP along with the Disclosure Statement, thereby denying the appellant an opportunity to proper... [Read more]

Customs - Challenge to final findings dated 29.09.2022 of the designated authority to the extent it recommends nil rate of anti-dumping duty on the product under consideration, namely, semi-finished ophthalmics lenses on participating importers and also seeking to exclude lenses of Refractive Index above 1.6 - Violation of principles of natural justice in determining Non-Injurious Price (NIP) - Appellant claimed that the designated authority violated the principles of natural justice by not providing detailed calculations of the NIP along with the Disclosure Statement, thereby denying the appellant an opportunity to properly respond to the Disclosure Statement - Whether the designated authority's failure to provide detailed NIP calculations to the appellant at the Disclosure Statement stage violated the principles of natural justice – HELD - The Designated authority's failure to provide the detailed NIP calculations to the appellant along with the Disclosure Statement was a violation of the principles of natural justice and the provisions of Rule 16 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995. The determination of NIP has a direct bearing on the determination of normal value and the consequent dumping margin. By not providing the detailed NIP calculations, the appellant was deprived of an opportunity to properly respond to the Disclosure Statement - The judgments of Reliance Industries Ltd. v. Designated Authority and Nirma Limited v. Union of India, have held that the designated authority must disclose the "essential facts" forming the basis of its decision, including the detailed NIP calculations. The final findings are set aside to the extent of nil anti-dumping duty on participating Chinese exporters and matter is remanded to the DA for fresh determination of NIP after providing the appellant a reasonable opportunity to submit its response - The appeal is partly allowed by remand - Exclusion of lenses with Refractive Index above 1.6 - The DA excluded from the scope of the product under consideration semi-finished ophthalmic lenses having a refractive index higher than 1.6. Legal - Whether the exclusion of lenses with refractive index above 1.6 from the product under consideration was justified – HELD - The exclusion of lenses with refractive index above 1.6 from the product under consideration is justified. The appellant was not manufacturing semi-finished ophthalmic lenses with refractive index above 1.6, and such lenses were not technically or commercially substitutable with the lenses manufactured by the domestic industry. When a product is not produced by the domestic industry, imports of the same cannot cause any injury to the domestic industry. The Tribunal relied on the decision in M/s. Mahle Anand Thermal Systems Private Limited v. Designated Authority, which held that mere competence to produce without actual production or sales may not be sufficient to include an item in the definition of the product under consideration - The exclusion of lenses with refractive index above 1.6 from the product under consideration is upheld. [Read less]

Customs - Classification of goods as Marble or Limestone - The appellant imported goods declared as "Raw/Rough Marble slabs" under two advance licences. The Authorities found that the goods were actually "Crystalline Limestone" and not marble, as per the report of Geological Survey of India (GSI). The authorities also found that the actual quantity imported was more than the declared quantity - Whether the imported goods can be considered as Marble or Limestone – HELD - The GSI report was categorical in stating that the imported goods were "Crystalline Limestone" and not "Marble" as declared by the appellant. The Tribuna... [Read more]

Customs - Classification of goods as Marble or Limestone - The appellant imported goods declared as "Raw/Rough Marble slabs" under two advance licences. The Authorities found that the goods were actually "Crystalline Limestone" and not marble, as per the report of Geological Survey of India (GSI). The authorities also found that the actual quantity imported was more than the declared quantity - Whether the imported goods can be considered as Marble or Limestone – HELD - The GSI report was categorical in stating that the imported goods were "Crystalline Limestone" and not "Marble" as declared by the appellant. The Tribunal rejected the appellant's reliance on dictionary definitions, noting that the technical opinion of the GSI, a professional body, should be preferred over general dictionary definitions. As per the Indian Standards Specification (ISS) for "Marble", the imported goods do not satisfy the criteria to be classified as Marble - The appellant had failed to provide any concrete evidence to counter the findings of the authorities regarding the misdeclaration of the nature and quantity of the goods. The confiscation of the goods, imposition of redemption fines, and penalties are justified in view of the clear misdeclaration by the appellant - The classification of the goods as Limestone and the consequent confiscation, imposition of redemption fine and penalty is upheld. The appeal is dismissed [Read less]

Customs - Misclassification of imported goods as Apatite (GR) Calcium Phosphate instead of Calcium Phosphate - The appellant imported goods declared as Apatite (GR) Calcium Phosphate under CTI 2510 20 30 but the department claimed it should be classified under CTI 2835 26 90 as Calcium Phosphate - Whether the imported goods were correctly classified by the appellant under Chapter 25 or deserved to be classified under Chapter 28 of the Customs Tariff Act, 1975 – HELD - The Commissioner concluded that the goods imported through the six Bills of Entry were calcined and would not fall under Chapter 25 of the Tariff Act and w... [Read more]

Customs - Misclassification of imported goods as Apatite (GR) Calcium Phosphate instead of Calcium Phosphate - The appellant imported goods declared as Apatite (GR) Calcium Phosphate under CTI 2510 20 30 but the department claimed it should be classified under CTI 2835 26 90 as Calcium Phosphate - Whether the imported goods were correctly classified by the appellant under Chapter 25 or deserved to be classified under Chapter 28 of the Customs Tariff Act, 1975 – HELD - The Commissioner concluded that the goods imported through the six Bills of Entry were calcined and would not fall under Chapter 25 of the Tariff Act and will fall under Chapter 28 of the Tariff Act. This inference was based on the emails exchanged between the appellant and the supplier, which clearly showed that the supplier was of the opinion that the goods were classifiable under Chapter 28 and not under Chapter 25 and that calcination process had been undertaken - The appellant objected to the use of the word 'calcination' by the supplier with the sole purpose of making out a case that the goods would be classifiable under Chapter 25. There was no occasion for the Department to have carried out tests of the goods that were imported because they had been cleared and investigation had started later. The emails exchanged between the appellant and the suppliers clearly show that the appellant was trying to manipulate the records with the intention of evading appropriate customs duty. The Commissioner was, therefore, justified in holding that the appellant deliberately misdeclared the description of the goods and its classification with the sole intention of evasion of duty. The impugned order directs for payment of differential duty and, therefore, does not call for any interference - The appeals filed by the appellant, its Director and Manager are dismissed - Penalty on director and manager - The impugned order imposed penalties on the director and manager of the appellant company for their involvement in misdeclaration and manipulation of documents – HELD - The penalties imposed on the director and manager were justified based on the evidence showing their active involvement in manipulating documents and correspondence with the supplier to mislead the customs authorities and evade duty. The emails demonstrated that the director and manager were complicit in the misdeclaration and had deliberately attempted to conceal the true nature of the goods. Therefore, the penalties under sections 114AA and 112(a)(ii) of the Customs Act were rightly imposed on them. [Read less]

GST – Tamil Nadu AAAR - Taxability of post-sale non-monetary benefits (Cash discount through credit note and non-monetary benefits like Gifts, compliments, tickets for entertainment shows and trips) received by a wholesaler from manufacturers - The appellant had applied for an Advance Ruling, which held that the benefits received by the appellant is ‘consideration’ towards ‘supply of support service’ and therefore would be covered under Section 7 of CGST Act, 2017 - Whether the non-monetary benefits received by the appellant from the manufacturers and wholesale traders should be considered as a "supply" under the... [Read more]

GST – Tamil Nadu AAAR - Taxability of post-sale non-monetary benefits (Cash discount through credit note and non-monetary benefits like Gifts, compliments, tickets for entertainment shows and trips) received by a wholesaler from manufacturers - The appellant had applied for an Advance Ruling, which held that the benefits received by the appellant is ‘consideration’ towards ‘supply of support service’ and therefore would be covered under Section 7 of CGST Act, 2017 - Whether the non-monetary benefits received by the appellant from the manufacturers and wholesale traders should be considered as a "supply" under the GST Act and subject to GST – HELD - The appellant had initially provided incorrect facts to the Authority for Advance Ruling, stating that it was a franchise of the paint manufacturers and there was no prior agreement regarding the provision of non-monetary benefits. However, during the appeal proceedings, the appellant clarified that it purchases paints from the manufacturers on a principal-to-principal basis and sells them independently to various customers, and the manufacturers extend monetary or non-monetary post-sale benefits to the appellant under dealer schemes based on prior agreements - The change in facts presented by the appellant between the original application and the appeal proceedings made it difficult for the AAAR to pass an order on the ruling issued by the AAR. Accordingly, the matter is remanded to the original Authority for Advance Ruling to take up the matter afresh and pass a ruling by following the principles of natural justice, considering the correct facts presented by the appellant – Ordered accordingly [Read less]

GST - Validity of Show Cause Notice and Order-in-Original by the same officer who had conducted Audit proceedings - The petitioner challenged the validity of the show cause notice and the Order-in-Original passed by the same officer who had conducted the audit proceedings - The petitioner contended that this violated the principles of natural justice as the authority would be guided by the findings made in the Audit report – HELD - The issue of jurisdiction is often raised by assessees and it would be appropriate for the adjudicating authority to consider this aspect. The Deputy Commissioner of Commercial Taxes (Audit) t... [Read more]

GST - Validity of Show Cause Notice and Order-in-Original by the same officer who had conducted Audit proceedings - The petitioner challenged the validity of the show cause notice and the Order-in-Original passed by the same officer who had conducted the audit proceedings - The petitioner contended that this violated the principles of natural justice as the authority would be guided by the findings made in the Audit report – HELD - The issue of jurisdiction is often raised by assessees and it would be appropriate for the adjudicating authority to consider this aspect. The Deputy Commissioner of Commercial Taxes (Audit) to record a finding on the aspect of jurisdiction after obtaining necessary orders from the Joint Commissioner of Commercial Taxes (Administration). All the contentions of the petitioner regarding the aspect of jurisdiction, including those raised in the present petition, are kept open to be adjudicated - The Order-in-Original is set aside and the matter is remitted to be reconsidered – The petition is disposed of [Read less]

Service Tax – Activity of coiling of steel wires supplied by principal manufacturers, demand of 5%/6% on job charges – Demand of 5%/6% of the value of exempted services under Rule 6(3) of the Cenvat Credit Rules, 2004 for the period 2010-11 to 2013-14 - Whether the demand of 5%/6% on the job charges under Rule 6(3) of the Cenvat Credit Rules, 2004 is justified – HELD - The appellant's activity of job work, which included specialized processes on the steel wires received from the principal manufacturers, cannot be treated as "exempted goods" when the duty is ultimately paid by the principal manufacturer - The purpose ... [Read more]

Service Tax – Activity of coiling of steel wires supplied by principal manufacturers, demand of 5%/6% on job charges – Demand of 5%/6% of the value of exempted services under Rule 6(3) of the Cenvat Credit Rules, 2004 for the period 2010-11 to 2013-14 - Whether the demand of 5%/6% on the job charges under Rule 6(3) of the Cenvat Credit Rules, 2004 is justified – HELD - The appellant's activity of job work, which included specialized processes on the steel wires received from the principal manufacturers, cannot be treated as "exempted goods" when the duty is ultimately paid by the principal manufacturer - The purpose of the Cenvat Credit Rules is to streamline the process of payment of duty and to prevent the cascading effect if duty is levied both on the inputs and the finished goods. Further, the exemption under Notification No. 8/2005-ST is available only in respect of goods on which central excise duty is paid by the principal manufacturer, which when read harmoniously with Rule 3 of the Cenvat Credit Rules, would make it clear that the job-worker could use the cenvatable input and input services. The scope of Rule 6 is limited in such a scenario and the demand of 5%/6% on the job charges under Rule 6(3) is not justified – The impugned order is set aside and the appeal is allowed [Read less]

Customs - Imposition of redemption fine and penalty for delayed submission of supporting documents like Legal Metrology Packaged Commodities [LMPC] certificate and the Steel Import Monitoring System [SIMS] certificate - Whether the imposition of redemption fine, penalty under Section 112(a)(i) and penalty under Section 114AA was justified for the delayed submission of the required documents - HELD - There is admittedly a violation of the DGFT import notification conditions by not submitting the documents in time. Nevertheless, these documents were submitted, subsequent to the filing of Bill of Entry, which can certainly be... [Read more]

Customs - Imposition of redemption fine and penalty for delayed submission of supporting documents like Legal Metrology Packaged Commodities [LMPC] certificate and the Steel Import Monitoring System [SIMS] certificate - Whether the imposition of redemption fine, penalty under Section 112(a)(i) and penalty under Section 114AA was justified for the delayed submission of the required documents - HELD - There is admittedly a violation of the DGFT import notification conditions by not submitting the documents in time. Nevertheless, these documents were submitted, subsequent to the filing of Bill of Entry, which can certainly be considered as a procedural lapse. Procedure lapses are minor errors or deviations from established procedures, that do not fundamentally alter the substantive outcome - It is evident that there was merely delayed submission of relevant certificates which establishes that there was no malafide intent on part of the appellant to violate the provision, or any intent to evade – The Section 114AA imposes penalty for knowingly or intentionally using false or incorrect document/statements in customs transactions. No such evidence had been led by the Revenue to establish that the appellant had knowingly or intentionally submitted false declarations. The redemption fine is reduced to Rs. 1,00,000/-, the penalty under Section 112(a)(i) to Rs. 50,000/-, and penalty under Section 114AA is set aside - The appeal is partly allowed [Read less]

Customs - Liability for Special Additional Duty (SAD) on imported silk fabrics - Appellant imported silk fabrics and claimed exemption from paying 4% SAD under Customs Notification No. 20/2006 – Recovery of non-payment of SAD as the exemption was withdrawn by the Finance Act, 2011 effective from 08.04.2011 - Whether the demand of 4% SAD on the imported silk fabrics is justified – HELD - At the time of import, the exemption from SAD stood deleted as per the Finance Act, 2011 and thus, the appellant was liable to pay the SAD – Though the appellant's argument is that since there was VAT exemption in Uttar Pradesh, SAD s... [Read more]

Customs - Liability for Special Additional Duty (SAD) on imported silk fabrics - Appellant imported silk fabrics and claimed exemption from paying 4% SAD under Customs Notification No. 20/2006 – Recovery of non-payment of SAD as the exemption was withdrawn by the Finance Act, 2011 effective from 08.04.2011 - Whether the demand of 4% SAD on the imported silk fabrics is justified – HELD - At the time of import, the exemption from SAD stood deleted as per the Finance Act, 2011 and thus, the appellant was liable to pay the SAD – Though the appellant's argument is that since there was VAT exemption in Uttar Pradesh, SAD should not be levied, the fact that there was an exemption from VAT in State of UP does not mean the same is valid throughout India, as long as the goods are sold anywhere in India – The SAD is a central levy which cannot be made inapplicable to a particular State just because VAT is exempted in that State. Further, no merit in the appellant's contention that the assessment was only provisional and hence, no demand under Section 28 of the Customs Act could be made - The demand of SAD is justified as the appellant did not pay the duty at the time of import and the exemption was no longer available - The demand of 4% SAD on the imported silk fabrics is upheld and the appeal is dismissed [Read less]

Service Tax – Maintainability of Appeal before the High Court - Whether the transaction involving right to use information technology software for commercial exploitation would amount to a sale of goods or a service under the Finance Act, 1994 - HELD – The grounds of challenge pertaining to the taxability or excisability of the transaction are not maintainable under Section 35G of the Central Excise Act, 1944, but would be challengeable only before the Supreme Court under Section 35L of the Act - Determination of any question relating to the rate of duty or the value of the goods/services for the purpose of assessment... [Read more]

Service Tax – Maintainability of Appeal before the High Court - Whether the transaction involving right to use information technology software for commercial exploitation would amount to a sale of goods or a service under the Finance Act, 1994 - HELD – The grounds of challenge pertaining to the taxability or excisability of the transaction are not maintainable under Section 35G of the Central Excise Act, 1944, but would be challengeable only before the Supreme Court under Section 35L of the Act - Determination of any question relating to the rate of duty or the value of the goods/services for the purpose of assessment, including the issue of taxability or excisability, falls within the exclusion carved out under Section 35G and is therefore not within the jurisdiction of the High Court. The High Court's role is limited to considering substantial questions of law, and does not extend to issues of rate of duty or value of goods/services for assessment purposes, which are reserved for the Supreme Court under Section 35L - The Revenue’s appeal is rejected on the ground of maintainability [Read less]

Customs - Refund of Anti-Dumping Duty – Respondent-importer claimed refund of anti-dumping duty paid on imports of phenol from Korea RP, Taiwan and USA - DGAD had recommended the imposition of anti-dumping duty on phenol originating in or exported from these countries. However, in 2012, the DGAD found that the imports of phenol from Taiwan and USA were at lower dumping margins with no injury to the domestic industry, and recommended the withdrawal of the anti-dumping duty - The Ministry of Finance issued a notification revoking the anti-dumping duty, but with a caveat that it would not apply to "things done or omitted to... [Read more]

Customs - Refund of Anti-Dumping Duty – Respondent-importer claimed refund of anti-dumping duty paid on imports of phenol from Korea RP, Taiwan and USA - DGAD had recommended the imposition of anti-dumping duty on phenol originating in or exported from these countries. However, in 2012, the DGAD found that the imports of phenol from Taiwan and USA were at lower dumping margins with no injury to the domestic industry, and recommended the withdrawal of the anti-dumping duty - The Ministry of Finance issued a notification revoking the anti-dumping duty, but with a caveat that it would not apply to "things done or omitted to be done before such suppression" - The respondent's refund claim was rejected by the lower authorities, but the CESTAT allowed the refund – HELD - The DGAD's final findings had concluded that there was no adverse impact on the domestic industry and no justification for continued imposition of anti-dumping duty on phenol imports from Taiwan and USA. Based on this recommendation, the Ministry of Finance issued the Notification dated 29.02.2012 rescinding the Notification dated 03.03.2008, with a clear stipulation that it would not have retrospective effect and would apply only to future imports - The payments made by the respondent prior to the 2012 notification rescinding the Anti-Dumping duty were "things done before rescission" and therefore, the respondent was entitled to the refund - The appeal by the Revenue is dismissed [Read less]

GST - Issue of Multiple Summons - Petitioner challenged the propriety of issuance of multiple notices and summons alleging contravention of statutory provisions under Section 6(2) of the CGST Act and Circulars issued by the Board – HELD - The summons have been issued by the proper officer under Section 70 of the CGST Act who has the power to summon any person whose attendance is considered necessary either to give evidence or to produce documents in any inquiry - The Inquiring Officer is seeking attendance of the Director of the petitioner’s firm to give evidence and/or to produce documents or things of the description... [Read more]

GST - Issue of Multiple Summons - Petitioner challenged the propriety of issuance of multiple notices and summons alleging contravention of statutory provisions under Section 6(2) of the CGST Act and Circulars issued by the Board – HELD - The summons have been issued by the proper officer under Section 70 of the CGST Act who has the power to summon any person whose attendance is considered necessary either to give evidence or to produce documents in any inquiry - The Inquiring Officer is seeking attendance of the Director of the petitioner’s firm to give evidence and/or to produce documents or things of the description which are in the possession and under control of the petitioner. There is no reason to interfere with the summons at this stage as it would amount to scuttling the ongoing inquiry - The petitioner's challenge to the propriety of the summons issued under Section 70 of the Act is not sustainable – The petition is dismissed with cost to petitioner [Read less]

Central Excise - Utilization of CENVAT credit during statutory forfeiture period – Non-payment of Central Excise duty within the prescribed statutory timeline - Invocation of Rule 8(3A) of the Central Excise Rules, 2002 prohibiting the assessee from utilizing its CENVAT credit for future clearances and mandated 'consignment-wise' payments in cash (PLA). Despite this restrictive order, the assessee cleared goods by debiting its CENVAT Credit Account - Whether the assessee's act of discharging duty through CENVAT credit during the forfeiture period can be recognized as a valid 'payment,' or if it remains a 'nullity' under ... [Read more]

Central Excise - Utilization of CENVAT credit during statutory forfeiture period – Non-payment of Central Excise duty within the prescribed statutory timeline - Invocation of Rule 8(3A) of the Central Excise Rules, 2002 prohibiting the assessee from utilizing its CENVAT credit for future clearances and mandated 'consignment-wise' payments in cash (PLA). Despite this restrictive order, the assessee cleared goods by debiting its CENVAT Credit Account - Whether the assessee's act of discharging duty through CENVAT credit during the forfeiture period can be recognized as a valid 'payment,' or if it remains a 'nullity' under the rigors of Rule 8(3A) – HELD - The introduction of the 'deeming fiction' of 'non-payment' in Rule 8(3A) has elevated the 'mode' of payment from a procedural formality to a substantive 'condition precedent' for the lawful removal of goods. Any deviation from the prescribed 'cash/PLA' mode renders the clearance unauthorized, notwithstanding the assessee's argument of 'substantial compliance.' The earlier judgement in Lloyds Steel Industries Ltd. case, which had equated credit with cash, is distinguished on the ground that it predated the 2005/2006 legislative amendments - The 'legal fiction' created by the legislature must be carried to its logical conclusion. If the law deems the goods as cleared 'without payment of duty,' the Revenue is within its statutory rights under Section 11A to demand the duty in the correct mode, namely, cash. However, to avoid the vice of 'Unjust Enrichment' the credit previously utilized must be restored to the assessee's account after the cash payment is made - The demand for duty, interest and reduced penalty is confirmed, but the assessee is directed to first satisfy the liability in cash, following which the utilized Cenvat credit shall be immediately restored – The appeal is disposed of - Penalty under Rule 25 in the absence of mens rea - The assessee had transparently disclosed all clearances in its ER-1 returns, indicating the absence of any 'clandestine removal' or 'intent to evade' duty payment - Whether the imposition of penalty under Rule 25 is legally sustainable in the absence of mens rea – HELD - The ratio in Condor Power Products P. Ltd. case serves to mitigate the quantum of penalty in cases of technical errors, but does not absolve an assessee who consciously bypasses a statutory embargo, even if the transactions were openly disclosed. The element of 'willful defiance' of a specific departmental order in the present case, justifying the imposition of a reduced penalty of Rs. 1 lakh as a necessary deterrent - The reduced penalty of Rs. 1 lakh, as modified by the CESTAT, is upheld. [Read less]

Service Tax - Applicability of Service Tax on fees collected by Deputy Conservator of Forests, Discharging of sovereign function – Demand under the category of "Tour Operator" – Revenue appeal against the CESTAT, which allowed the appeal of the Deputy Conservator of Forests - Whether the fees collected by the Deputy Conservator of Forests in his official capacity for conservation and protection of the Gir Forest, which are credited to the consolidated funds of the Government of Gujarat, can be subjected to service tax - HELD - The Deputy Conservator of Forests is an officer of the Government of Gujarat who is entrusted... [Read more]

Service Tax - Applicability of Service Tax on fees collected by Deputy Conservator of Forests, Discharging of sovereign function – Demand under the category of "Tour Operator" – Revenue appeal against the CESTAT, which allowed the appeal of the Deputy Conservator of Forests - Whether the fees collected by the Deputy Conservator of Forests in his official capacity for conservation and protection of the Gir Forest, which are credited to the consolidated funds of the Government of Gujarat, can be subjected to service tax - HELD - The Deputy Conservator of Forests is an officer of the Government of Gujarat who is entrusted with the job of conservation of the Gir Forest. The duties of collection of charges in the nature of permit fees from various tourists is undertaken by the Deputy Conservator of Forests in his official capacity, and at the behest of the State Government. These activities of issuing permits for entry into the forests and issuing tickets for access to park as well as Camera Fees etc. do not fall under the category of taxable service under the Finance Act, 1994 - The State Government has the exclusive power to levy charges and fees for the conservation and protection of forests within its geographical territory under Article 246(3) of the Constitution of India. The Central Government cannot make any law to levy tax from the statutory charges collected by the State Government for this purpose - The Deputy Conservator of Forests was discharging sovereign function, which cannot be brought within the purview of Service Tax, and the Revenue has wrongly impleaded the respondent in the proceedings - The decision of the CESTAT allowing the appeal of the Deputy Conservator of Forests is upheld and the Revenue appeal is dismissed [Read less]

Maharashtra Municipal Corporation Act, 1949 - Limitation period for assessment of Cess - The Cess Officer issued a show cause notice (Form-H) and passed the impugned assessment order (Form-I) after a delay of over 10 years from the issuance of the show cause notice - Whether the impugned assessment order passed by the Cess Officer after a delay of over 10 years from the issuance of the show cause notice is barred by limitation under the Cess Rules – HELD - The assessment proceedings must be completed within a reasonable period, not exceeding 10 years from the date of issuance of the initial notice in Form-H. The delay of... [Read more]

Maharashtra Municipal Corporation Act, 1949 - Limitation period for assessment of Cess - The Cess Officer issued a show cause notice (Form-H) and passed the impugned assessment order (Form-I) after a delay of over 10 years from the issuance of the show cause notice - Whether the impugned assessment order passed by the Cess Officer after a delay of over 10 years from the issuance of the show cause notice is barred by limitation under the Cess Rules – HELD - The assessment proceedings must be completed within a reasonable period, not exceeding 10 years from the date of issuance of the initial notice in Form-H. The delay of over 10 years in the present case was unreasonable and unjustified. The impugned assessment order is barred by limitation under Rule 25(5) and (7) of the Cess Rules - The delay in adjudication of the show cause notice would cause prejudice to the assessee and defeat the principles of natural justice. The recourse to the Local Body Tax Rules instead of the Cess Rules, as done by the Cess Officer, indicated a lack of diligence and application of mind - The impugned assessment order is quashed and the writ petitions are allowed [Read less]

GST - Rejection of GST refund claim by non-speaking order – Petitioner is engaged in providing research and development services to its group entities located outside India, for which consideration is charged on a cost plus markup basis - Refund claims for the Input Tax Credit which were sanctioned for the period July 2017 to September 2022. However, for the period October 2022 to March 2023, the respondent rejected the refund application. The respondent also issued show cause notices for the financial years 2018-19 and 2019-20, seeking to recover the refunds that were earlier granted - HELD – The impugned order rejec... [Read more]

GST - Rejection of GST refund claim by non-speaking order – Petitioner is engaged in providing research and development services to its group entities located outside India, for which consideration is charged on a cost plus markup basis - Refund claims for the Input Tax Credit which were sanctioned for the period July 2017 to September 2022. However, for the period October 2022 to March 2023, the respondent rejected the refund application. The respondent also issued show cause notices for the financial years 2018-19 and 2019-20, seeking to recover the refunds that were earlier granted - HELD – The impugned order rejecting the refund claim was a non-speaking order and did not consider the submissions made by the petitioner that it was not an agent of its group entity, hence its services were zero-rated supplies eligible for refund. No specific finding has been recorded in the impugned order before rejecting the refund application. The impugned order suffers from the vice of being a non-speaking order vis-a-vis rejection of the refund claim – Further, the show cause notices issued for the financial years 2018-19 and 2019-20, seeking to deny the refunds that were earlier granted, were issued without considering the submissions of the petitioner - The impugned order and the corrigendum are quashed and the matter is remanded back to the respondent for de novo consideration of the refund claim for October 2022 to March 2023 and the show cause notices for the past periods, after providing the petitioner an opportunity of being heard - The petition stands disposed of [Read less]

GST - Cancellation of GST registration due to non-filing of returns - The petitioner challenged the order of cancellation of Registration on the ground that it was unable to carry on its business without the registration – HELD - The suspension/revocation of Registration would be detrimental to the revenue's interest, and a pragmatic view should be taken in the matter to allow the petitioner to continue its business operations. The suspension of registration would be counterproductive as the petitioner would not be able to raise invoices and impact the recovery of tax - The order of cancellation registration is set asid... [Read more]

GST - Cancellation of GST registration due to non-filing of returns - The petitioner challenged the order of cancellation of Registration on the ground that it was unable to carry on its business without the registration – HELD - The suspension/revocation of Registration would be detrimental to the revenue's interest, and a pragmatic view should be taken in the matter to allow the petitioner to continue its business operations. The suspension of registration would be counterproductive as the petitioner would not be able to raise invoices and impact the recovery of tax - The order of cancellation registration is set aside, subject to the condition that the petitioner files its returns for the entire period of default and pays the requisite amount of tax, interest, fine and penalty, if not already paid. The respondents to activate the portal to enable the petitioner to comply with the directions – The petition is disposed of [Read less]

Customs - Import of foreign vehicle by mis-declaring description, value, and origin to avail Customs duty concession - Petitioner declared a 10-seater Cadillac Escalade SUV as an 8-seater, misrepresented the country of origin as Australia instead of USA, and undervalued the goods - Whether the penalty under Section 114AA of the Customs Act, 1962 for use of false and incorrect materials is attracted, and (2) Whether the appropriation of the customs duty already paid is valid. HELD - The show cause notice clearly imputed knowledge to the importer that they had intentionally made and used false and incorrect declaration and d... [Read more]

Customs - Import of foreign vehicle by mis-declaring description, value, and origin to avail Customs duty concession - Petitioner declared a 10-seater Cadillac Escalade SUV as an 8-seater, misrepresented the country of origin as Australia instead of USA, and undervalued the goods - Whether the penalty under Section 114AA of the Customs Act, 1962 for use of false and incorrect materials is attracted, and (2) Whether the appropriation of the customs duty already paid is valid. HELD - The show cause notice clearly imputed knowledge to the importer that they had intentionally made and used false and incorrect declaration and documents to evade payment of legitimate customs duty, which is sufficient to attract penalty under Section 114AA. The importer failed to discharge the burden of proving their innocence – The Tribunal has erred in misreading the show cause notice to hold that there is no specific averment of falsification of documents to attract Section 114AA of the Customs Act, 1962. The order of re-export on payment of redemption fine will not absolve the penal consequence envisaged under the Customs Act, 1962. If this proposition of the CESTAT is to be approved, then all illegal importers, if caught, will offer to pay a paltry sum as fine in lieu of redemption of the goods and re-export the same without suffering any penalty or custom duty for their attempt to violate the Customs Act, 1962 - The appropriation of the Customs duty already paid is valid, as the importer is liable to pay the duty even after redeeming the confiscated goods by paying a fine under Section 125 of the Customs Act. The option to re-export the goods does not absolve the penal consequences under the Act. The Tribunal's order setting aside the penalty and appropriation is perverse and contrary to law and set aside – Revenue appeal is allowed [Read less]

Service Tax - Rendering recovery services to NBFC/Bank – Appellant neither declared these services nor paid any service tax on the consideration received - Whether the arrangement between the appellant and Barclays was a joint venture, thereby exempting the appellant from payment of service tax on the consideration received for the recovery services, or whether it was a case of the appellant providing taxable recovery services to Barclays - HELD – The appellant's contention that the arrangement between it and Barclays was a joint venture is rejected. For something to be a joint venture, there must be an agreement or ar... [Read more]

Service Tax - Rendering recovery services to NBFC/Bank – Appellant neither declared these services nor paid any service tax on the consideration received - Whether the arrangement between the appellant and Barclays was a joint venture, thereby exempting the appellant from payment of service tax on the consideration received for the recovery services, or whether it was a case of the appellant providing taxable recovery services to Barclays - HELD – The appellant's contention that the arrangement between it and Barclays was a joint venture is rejected. For something to be a joint venture, there must be an agreement or arrangement between the parties to run a business or venture sharing their costs, efforts and returns. However, in the present case, Barclays had merely engaged the appellant as a recovery agent to recover the amounts due to it from the borrowers, and the appellant received a commission for the same. This was clearly a case of the appellant providing taxable recovery services to Barclays, and the appellant was liable to pay service tax on the consideration received - The extended period of limitation had been rightly invoked by the authorities, as the appellant had not declared the consideration received for the recovery services and had not paid the applicable service tax. The imposition of penalty on the appellant under Section 78 of the Finance Act, 1994 is also upheld – The impugned order confirming the service tax demand, interest, and penalty is upheld and the appeal is dismissed [Read less]

Central Excise - Delay in issuance of show cause notices and inordinate delay in adjudication proceedings – Petitioner seeking quashing of show cause notices and adjudication proceedings commenced by the department after long delay – HELD - The show cause notices were issued in the year 2008, but the petitioner did not challenge them before any competent court/forum for 18 years. After the receipt of the show cause notices, the petitioner was given several opportunities to participate in the personal hearings, but the petitioner did not do so. The delay in the adjudication cannot be solely attributed to the Department,... [Read more]

Central Excise - Delay in issuance of show cause notices and inordinate delay in adjudication proceedings – Petitioner seeking quashing of show cause notices and adjudication proceedings commenced by the department after long delay – HELD - The show cause notices were issued in the year 2008, but the petitioner did not challenge them before any competent court/forum for 18 years. After the receipt of the show cause notices, the petitioner was given several opportunities to participate in the personal hearings, but the petitioner did not do so. The delay in the adjudication cannot be solely attributed to the Department, as the petitioner itself kept on seeking adjournments and did not participate in the proceedings - It would not be appropriate for the High Court, sitting in its writ jurisdiction, to enter into the merits of the case and examine the validity of the SCNs at this stage. The certain issues of facts are required to be gone into with reference to the materials which may be placed before the competent authority, and it would be in the domain of the competent authority to examine those documents, adjudicate the facts and then apply the law in the facts of the case - The writ applications as framed cannot be entertained. The petitioners, if so advised, may appear before the competent authority. The writ applications stand dismissed [Read less]

Central Excise - Settlement Application under Section 32E of Central Excise Act - Petitioner failed to make full and true disclosure of duty liability - Whether the Settlement Commission was justified in rejecting the settlement application on the ground that the petitioner failed to make full and true disclosure of duty liability – HELD - The Settlement Commission has the discretion to reject a settlement application under Section 32E if the applicant has not made a full and true disclosure of its duty liability and the manner in which it was derived. The Commission found that the applicant had not satisfied this mandat... [Read more]

Central Excise - Settlement Application under Section 32E of Central Excise Act - Petitioner failed to make full and true disclosure of duty liability - Whether the Settlement Commission was justified in rejecting the settlement application on the ground that the petitioner failed to make full and true disclosure of duty liability – HELD - The Settlement Commission has the discretion to reject a settlement application under Section 32E if the applicant has not made a full and true disclosure of its duty liability and the manner in which it was derived. The Commission found that the applicant had not satisfied this mandatory requirement, as the admission of additional duty liability was not supported by documentary evidence and the actual unaccounted production could not be pinpointed. The Commission also noted the complexity of the case involving issues like excess power consumption, raw material procurement, and alleged clandestine clearance of finished goods, which required detailed factual examination and adjudication rather than summary settlement proceedings – The Settlement Commission's decision to reject the application is justified and does not require interference, as the discretion was exercised based on relevant considerations and not in an arbitrary or perverse manner - The Writ Petition filed by the petitioner is dismissed [Read less]

GST - Order imposing tax liability - Lack of Reasons - Petitioner challenge the order passed under Section 74 of the CGST Act, 2017 on the ground that the order was devoid of any independent reasons and findings and merely replicated the statements made in the show-cause notice – HELD - Providing reasons is an indispensable facet of adjudication in an adversarial system, as it allows the person against whom the order is passed to know the reasons for the decision. The order in the present case was a non-speaking order as it did not contain any independent findings by the authority and merely replicated the contents of th... [Read more]

GST - Order imposing tax liability - Lack of Reasons - Petitioner challenge the order passed under Section 74 of the CGST Act, 2017 on the ground that the order was devoid of any independent reasons and findings and merely replicated the statements made in the show-cause notice – HELD - Providing reasons is an indispensable facet of adjudication in an adversarial system, as it allows the person against whom the order is passed to know the reasons for the decision. The order in the present case was a non-speaking order as it did not contain any independent findings by the authority and merely replicated the contents of the show-cause notice - The impugned order is set aside and matter is remanded to the authority to decide it afresh after affording the petitioner an opportunity of hearing and following the principles of natural justice – The writ petition is disposed of [Read less]

GST - Provisional attachment of bank accounts under Section 83 of CGST Act, 2017 – HELD - The petitioner had shown bona fide by furnishing the fixed deposit and the authorities were already in possession of the relevant documents for investigation. Since the petitioner agreed to furnish a fixed deposit of Rs.1.5 crores in favor of the Registrar General of the Court, the provisional attachment order is quashed allowing the petitioner to operate its bank accounts - The authorities can continue their investigation and issue a show cause notice, and the fixed deposit can be adjusted against the petitioner's liability, if any... [Read more]

GST - Provisional attachment of bank accounts under Section 83 of CGST Act, 2017 – HELD - The petitioner had shown bona fide by furnishing the fixed deposit and the authorities were already in possession of the relevant documents for investigation. Since the petitioner agreed to furnish a fixed deposit of Rs.1.5 crores in favor of the Registrar General of the Court, the provisional attachment order is quashed allowing the petitioner to operate its bank accounts - The authorities can continue their investigation and issue a show cause notice, and the fixed deposit can be adjusted against the petitioner's liability, if any, once the show cause notice attains finality. However, the fixed deposit amount is based on rough calculations and the final liability may vary upon adjudication – The petition is disposed of [Read less]

Service Tax - Refund of excess service tax paid – Payment of excess service tax due to difference between the leased area as per agreement and the actual area occupied by the service recipient – Rejection of refund as being time-barred under Section 11B of the Central Excise Act – HELD - The appellant became aware of the excess service tax payment in 2019 but delayed filing the refund claim until 2022, which was a significant delay without adequate explanation. Even in tax matters, the Courts have held that relief may not be granted for claims filed beyond the normally considered reasonable period of 3 months, unless... [Read more]

Service Tax - Refund of excess service tax paid – Payment of excess service tax due to difference between the leased area as per agreement and the actual area occupied by the service recipient – Rejection of refund as being time-barred under Section 11B of the Central Excise Act – HELD - The appellant became aware of the excess service tax payment in 2019 but delayed filing the refund claim until 2022, which was a significant delay without adequate explanation. Even in tax matters, the Courts have held that relief may not be granted for claims filed beyond the normally considered reasonable period of 3 months, unless the petitioner can provide a valid explanation for the delay - Delay or laches (negligence) on the part of the petitioner is a relevant factor that can disentitle them from the discretionary relief, even if the underlying claim has merit. Reasonable time is not a fixed period but is determined by the specific circumstances, the nature of the remedy, and the conduct of the parties involved, with the court ensuring equity for both sides - The rejection of the refund claim is upheld on the ground of delay and lack of diligence on the part of the appellant - The appeal is dismissed [Read less]

GST – Tamil Nadu AAR - Scope of Supply - Transportation facility provided by an employer to its employees by engaging third-party transport service providers - Whether the nominal amounts recovered by the applicant from employees for the transportation services would be considered a "supply" under the CGST Act – HELD - The nominal amount recovered by the Applicant from employees for arranging the transportation services through a third-party transport service provider cannot be considered as a "supply" under Section 7 of the CGST Act, 2017. The transportation facility provided by the Applicant to its employees is a per... [Read more]

GST – Tamil Nadu AAR - Scope of Supply - Transportation facility provided by an employer to its employees by engaging third-party transport service providers - Whether the nominal amounts recovered by the applicant from employees for the transportation services would be considered a "supply" under the CGST Act – HELD - The nominal amount recovered by the Applicant from employees for arranging the transportation services through a third-party transport service provider cannot be considered as a "supply" under Section 7 of the CGST Act, 2017. The transportation facility provided by the Applicant to its employees is a perquisite extended in terms of the contractual employment agreement, and services by an employee to the employer in the course of or in relation to his employment are excluded from the scope of supply under Schedule III of the CGST Act - Further, the transportation service is not provided by the Applicant on its own account, but is merely facilitated through a third-party service provider, and the recovery from employees is in the nature of cost-sharing, without any consideration element accruing to the Applicant. Thus, the basic parameters for an activity to be considered as "supply", i.e., supply should be in the course or furtherance of business and supply should be made for a consideration, are not fulfilled in the instant case. Accordingly, the Applicant is not liable to pay GST on the nominal amounts recovered from employees for the transportation services - Ordered accordingly [Read less]

GST – Tamil Nadu AAR - Liability to pay GST on supply of electrical energy - Applicant, an entity engaged in the development of solar power projects, has entered into a Power Purchase Agreement (PPA) with an off-taker to supply electrical energy generated from a solar power plant installed on the off-taker's factory rooftop - Whether the applicant is required to be registered under GST and collect and pay GST on the supply of electrical energy – HELD - The applicant is not required to be registered under GST, as it is engaged in the exclusive supply of exempted goods, namely 'Electrical Energy'. Under Section 23 of the... [Read more]

GST – Tamil Nadu AAR - Liability to pay GST on supply of electrical energy - Applicant, an entity engaged in the development of solar power projects, has entered into a Power Purchase Agreement (PPA) with an off-taker to supply electrical energy generated from a solar power plant installed on the off-taker's factory rooftop - Whether the applicant is required to be registered under GST and collect and pay GST on the supply of electrical energy – HELD - The applicant is not required to be registered under GST, as it is engaged in the exclusive supply of exempted goods, namely 'Electrical Energy'. Under Section 23 of the CGST Act, 2017 persons engaged exclusively in the supply of goods or services not liable to tax or wholly exempt from tax are not required to be registered - The supply of electrical energy by the applicant is a 'supply of goods' as per Section 7(1)(a) of the CGST Act. However, Electricity is classified under Tariff Heading 27160000 as ‘Electrical Energy’ attracting ‘Nil’ rate of GST vide Notification No. 02/2017-Central Tax (Rate) dated 28 June 2017. Therefore, the applicant is not required to collect and pay GST on the supply of electrical energy, whether it is an intra-state or inter-state transaction – Ordered accordingly - Applicability of the Advance Ruling - As per Section 103 of the CGST Act, the Advance Ruling pronounced shall be binding on the applicant, the concerned officer, and the jurisdictional officer, provided the law, facts, or circumstances supporting the original advance ruling have not changed. This advance ruling pronounced is applicable to the applicant only if the law, facts/circumstances contained in this application on the queries raised in any matter referred to in sub-section (2) of Section 97 of the Act, is same. [Read less]

GST – Tamil Nadu AAR - Classification of Fan Drive Assemblies used in engine cooling systems of motor vehicles - The assemblies function as fluid coupling devices using viscous fluid for power modulation, rather than as traditional mechanical clutches - Whether the Fan Drive Assembly is classifiable under Heading 8483.60 (Clutches and shaft couplings) or under Heading 8708.93 (Parts and accessories of motor vehicles) of the Customs Tariff Act, 1975 – HELD - The Fan Drive Assembly is correctly classifiable under HSN 8483.60.20 (Fluid Coupling) and not under 8708.93 (Clutches). The specific description of "fluid coupling... [Read more]

GST – Tamil Nadu AAR - Classification of Fan Drive Assemblies used in engine cooling systems of motor vehicles - The assemblies function as fluid coupling devices using viscous fluid for power modulation, rather than as traditional mechanical clutches - Whether the Fan Drive Assembly is classifiable under Heading 8483.60 (Clutches and shaft couplings) or under Heading 8708.93 (Parts and accessories of motor vehicles) of the Customs Tariff Act, 1975 – HELD - The Fan Drive Assembly is correctly classifiable under HSN 8483.60.20 (Fluid Coupling) and not under 8708.93 (Clutches). The specific description of "fluid coupling" under Heading 8483.60 prevails over the general description of "clutches" under 8708.93. Further, Note 2 to Section XVII excludes articles of Heading 8483 from classification as parts and accessories under Chapter 87, even if they are used in motor vehicles. Applying the principle of "Generalia Specialibus Non Derogant" (specific description overrides general description), the Fan Drive Assembly, being a self-contained fluid coupling mechanism, must be classified under the specific Heading 8483.60.20 - The Fan Drive Assembly classifiable under HSN 8483.60 and liable to 18% GST under Sl. No. 369A of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended. With effect from 22.09.2025, the product would fall under Sl. No. 468 of Schedule II of Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025 – Ordered accordingly - Parts and Components - The individual parts and components of the Fan Drive Assembly, when procured or purchased separately, are classifiable under HSN 8483.60.90 (Other) as there is no specific heading for parts of fluid couplings. [Read less]

GST - Place of supply of transportation service where supplier of goods is located outside India, Import on CIF basis - Petitioner engaged in the business of providing vessel services on hire and freight basis, was issued notice holding that the place of supply of the transportation service was in India and liable to IGST on such supply of service - Whether the place of supply of the transportation service provided by the petitioner should be considered as India, making the petitioner liable to pay IGST, or whether the place of supply should be considered as the destination of the goods, making the supply of service a part... [Read more]

GST - Place of supply of transportation service where supplier of goods is located outside India, Import on CIF basis - Petitioner engaged in the business of providing vessel services on hire and freight basis, was issued notice holding that the place of supply of the transportation service was in India and liable to IGST on such supply of service - Whether the place of supply of the transportation service provided by the petitioner should be considered as India, making the petitioner liable to pay IGST, or whether the place of supply should be considered as the destination of the goods, making the supply of service a part of the composite supply of goods and not liable to separate IGST – HELD - The petitioner provides vessel services on a Hire and Freight basis and the buyer of the goods pays custom duty on freight and hence the goods are imported on CIF basis. Once the aforesaid goods are imported on a CIF basis and the customs duty in respect thereof has been discharged by the buyer of the goods, then the same amount cannot be liable for IGST under forward mechanism in the hands of the petitioner. The liability to pay the tax cannot be foisted on the petitioner, the supply of services of transportation of goods on behalf of the importer becomes a composite supply, which does not attract an additional tax in the hands of the petitioner – Further, the facts of the present case are squarely covered by the decision of the Supreme Court in the case of Union of India vs. Mohit Minerals Pvt. Ltd. In that case, the Supreme Court had held that in a CIF contract, the supply of goods is accompanied by the supply of services of transportation and insurance, which forms a part of the bundle of supplies between the foreign exporter and the Indian importer, on which IGST is payable. To levy the IGST invoking Section 13(9) of the IGST Act, 2017 on the supply of the service component of the transaction would be in violation of the principle of composite supply enshrined in the GST legislation - The supply of transportation services by the petitioner becomes a part of the composite supply of goods, and cannot be subject to separate IGST levy on the petitioner. The show-cause notice and the order passed by the tax authorities are quashed, and directed the refund of the disallowed amount to the petitioner. The consequential refund which was sought to be disallowed to the petitioner shall be paid along with interest – The writ petition is allowed [Read less]

GST – Goa AAR - Classification of supply of Bakery Products and semi-finished foods items - Whether the sale of these pre-manufactured bakery products without any further cooking, preparation or processing at the outlets constitutes a supply of goods under GST – HELD - The sale of pre-manufactured bakery products at the outlets, without any cooking, preparation or processing, would constitute a supply of goods under GST. The CBIC Circular No. 164/20/2021-GST clarified that the sale of pre-manufactured food items without any cooking or preparation amounts to a supply of goods. The bakery products in the present case are... [Read more]

GST – Goa AAR - Classification of supply of Bakery Products and semi-finished foods items - Whether the sale of these pre-manufactured bakery products without any further cooking, preparation or processing at the outlets constitutes a supply of goods under GST – HELD - The sale of pre-manufactured bakery products at the outlets, without any cooking, preparation or processing, would constitute a supply of goods under GST. The CBIC Circular No. 164/20/2021-GST clarified that the sale of pre-manufactured food items without any cooking or preparation amounts to a supply of goods. The bakery products in the present case are movable properties and fall within the definition of "goods" under the CGST Act. Further, there is a transfer of title in these goods for consideration, and no service element is involved at the point of sale. Therefore, the sale of such pre-manufactured bakery products should be treated as a supply of goods, and the applicable GST rate would be as per the HSN classification of the particular goods - However, in respect of certain supplies like that of Pizza, pasta, salads, shakes, etc. which are cooked/prepared/made/blended at restaurant premises, same are to be treated as supply of ‘restaurant service’ irrespective of whether customer consumes them on restaurant premises or takes away – Ordered accordingly - Dual Treatment of Goods and Services - Whether applicant can charge such two separate GST rates at the same premises – HELD - The applicant is permitted under the GST law to charge GST as goods for items sold without preparation and charge GST as services for items involving preparation/cooking, subject to maintaining separate billing series and accounting records. There is no legal impediment under the GST law that prohibits a registered taxable person from carrying on the business of restaurant service and supply of goods as a trader from the same place of business. However, the applicant will be required to maintain separate series of tax invoices and clear separate records of the turnover of outward supplies on account of restaurant services and the turnover on account of supply of goods. This will pose a challenge for practical accounting purposes, and the best way to tackle it would be to maintain separate series of tax invoices for the two types of supplies. The onus to maintain clarity on this aspect rests with the applicant taxpayer. [Read less]

Service Tax - Limitation period for service tax assessment - The show cause notice was issued beyond the limitation period of 30 months under Section 73(1) of the Finance Act, 1994, seeking to determine service tax liability, penalty and late fee – HELD - The SCN was issued beyond the limitation period of 30 months under Section 73(1) of the Finance Act, 1994. The Revenue sought to invoke the extended limitation period of 5 years under the proviso to Section 73(1) on the ground of suppression. The petitioner had already paid VAT on the sale of goods, and when VAT has been regularly paid, the question of service tax does ... [Read more]

Service Tax - Limitation period for service tax assessment - The show cause notice was issued beyond the limitation period of 30 months under Section 73(1) of the Finance Act, 1994, seeking to determine service tax liability, penalty and late fee – HELD - The SCN was issued beyond the limitation period of 30 months under Section 73(1) of the Finance Act, 1994. The Revenue sought to invoke the extended limitation period of 5 years under the proviso to Section 73(1) on the ground of suppression. The petitioner had already paid VAT on the sale of goods, and when VAT has been regularly paid, the question of service tax does not arise. Further, when there is transfer of possession and effective control of goods, it would amount to deemed sale and not a service. Thus, the show cause notice was issued without jurisdiction - The impugned order is quashed and the writ petition is allowed [Read less]

GST – Tamil Nadu AAR - Applicability of GST rate and admissibility of Input Tax Credit on outdoor catering services - The applicant, engaged in providing outdoor catering services that do not involve hotel accommodation and are not located in any specified premises, has two models of supply: (i) composite outdoor catering services involving supply of prepared food and deployment of manpower, and (ii) supply of food prepared at their premises and delivered to the customer's location without any involvement of labour or on-site service - Whether the applicant has the option to either: (a) Pay GST at the rate of 5% GST with... [Read more]

GST – Tamil Nadu AAR - Applicability of GST rate and admissibility of Input Tax Credit on outdoor catering services - The applicant, engaged in providing outdoor catering services that do not involve hotel accommodation and are not located in any specified premises, has two models of supply: (i) composite outdoor catering services involving supply of prepared food and deployment of manpower, and (ii) supply of food prepared at their premises and delivered to the customer's location without any involvement of labour or on-site service - Whether the applicant has the option to either: (a) Pay GST at the rate of 5% GST without availing ITC, or (b) Pay GST at the rate of 18% GST with availing ITC, as per Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended - HELD - The applicant's services fall under the category of "outdoor catering" under Entry 7(iv) of the Notification, which prescribes a GST rate of 5%, subject to the condition that ITC is not availed. The applicant does not have the option to pay GST at 18% GST with ITC, as the rate specified under Entry 7(iv) is mandatory and cannot be levied at the higher rate under Entry 7(vi) of the Notification – Ordered accordingly - What is the applicable GST rate for food supply services provided for occasional events, where no labour or on-site services are involved, and the food is prepared at the applicant's premises and transported to the recipient's location at their own risk - HELD - The applicable GST rate for such food supply services is also 5% GST, as per Entry 7(iv) of the Notification, with the condition of non-availment of ITC - What is the applicable HSN Code - HELD - The applicable HSN Code (SAC) for both the models of supply of food carried out by the applicant is 996334. [Read less]